Without cross-party support, the Trade Union Bill looks like a Tory stitch-up

The long convention that party funding is a cross-partisan affair has been ripped up.

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“It has become a well-established custom that matters affecting the interests of rival parties should not be settled by the imposition of the will of one side over the other”.

That was Winston Churchill in the 1940s. But what became established as the ‘Churchill convention’ – the idea that reforms directly affecting political parties should be agreed by all parties concerned – looks close to unravelling if the Trade Union Bill goes ahead unchanged.

As things stand, the Trade Union Bill will make some major changes to how Labour is funded. Here’s the situation: nearly all unions currently have a ‘Political Fund’ (separate to the ‘Affiliated Fund’ which Labour-linked unions also have) which allows unions to fund political campaigns. As well as enabling general campaigning, Labour-affiliated unions can currently choose to give money from their Political Funds to Labour, and union members are able opt out of the fund.

In 2014, Ed Miliband passed reforms in the Labour Party which meant that union members would have to ‘opt in’ to unions’ Affiliated Funds – money which goes entirely to the Labour Party. This move was widely seen as a democratisation of Labour’s finances. The reform was designed to increase the influence of individual union members on where their money goes, and decrease the influence of so-called ‘union barons’ on Labour’s income stream.

The Trade Union Bill would mean that, members would now have to ‘opt in’ to Political Funds as well if they want their money to go towards political activities. At first glance, this kind of reform should be welcomed. After all, the public are sick to death of the perceived influence of big donors on parties – and that includes the influence of unions on Labour as well as wealthy private individuals on the Conservatives.

A cap on individual donations is one of the measures needed for a cleaner party funding system, and under an opt-in system the money provided to Labour by unions effectively comes from many individuals rather than one ‘baron’.

So what’s the problem? Well, remember the Churchill convention. This reform is being imposed by the government on their opposition, without reforms to Conservative finances. It risks making party funding reform a tit-for-tat battle, with parties’ funds raided by their opponents every time they lose power.

Neither is this happening in isolation. So-called ‘Short money’ – public funding given to opposition parties to compensate for the fact that the government has hundreds of SpAds, researchers and press officers at its disposal – is being slashed by 20%, set to take a further £1m per year off Labour’s funding.

Public faith in party finances is at rock bottom. Polling for the Electoral Reform Society shows 72% of the public agree or strongly agree that the system of party funding is ‘corrupt and should be changed’ – up from 61% when the same question was asked in 2014 - while 77% think that big donors have too much sway. Party funding – including Labour’s – is in dire need of a clean-up. That’s something we can all accept. But if reform is to be sustainable, it has to be done equitably.

A cap on donations for all parties – with ‘opt in’ union member donations rightly viewed as individual donations – would be a great start. 57% of the public believe that a ‘state-funded political system would be fairer than the one we currently have’ – up from 41% in 2014 – so reversing the planned cuts to Short money would also help.

Today, peers in the House of Lords will debate the Trade Union Bill. Liberal Democrat, Labour and many cross-bench peers are pushing for a cross-party committee on party funding to ensure that we can finally get to grips with this mess. With Labour seen by the public to be at the behest of union bosses, and the Tories at the behest of bankers, Britain’s parties need real, sustainable reform to their finances – not one-sided manoeuvring. So let’s get it right this time.

Katie Ghose is chief executive of the Electoral Reform Society

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