PAUL WILENIUS: The Labour Party may have
new offices in London, but it's still got the same old problems. It needs
money and lots of it. And so staff from these Old Queen Street offices
are on the hunt for cash, wherever they can legally find it.
The Labour Party is in
its worst financial state ever - according to this confidential report
here produced by party officials. Subscriptions from the party's dwindling
membership are down and Tony Blair's been relying on big cash donations
from rich supporters and the unions. But the controversy sparked off by
such donations has forced Labour to seriously consider using more taxpayers'
money to support political parties.
In the past Labour and
the trade unions were indeed brothers in arms. The unions helped to create
the party and so Labour always knew where to get the cash to sustain it.
However, this cosy relationship had a political downside, which eventually
began to rip apart successive Labour governments. The image of the trade
unions demanding favours in return for cash was deliberately whipped up
by their Tory opponents.
THERESA MAY MP: I think damage has been done to
the Labour Party in the past, if you look back in to the '70s for example,
by their relationship with the trade unions, and everybody knowing that
the trade union funding to the Labour Party was driving that party's policy.
WILENIUS: Although Labour is still
knocking on the doors of the unions for money, it knows it comes with big
MATTHEW TAYLOR: The unions I think have recognised
that the position in which they say the money we give to the party is tied
to policy outcomes is simply untenable. You know Tony Blair cannot be seen
to be running a party that is influenced directly, by where its funding
comes from, whether it's a rich individual or a trade union, so that finance
policy link is untenable
WILENIUS: Tony Blair actively tried
to dispel that image by cosying up to big business and even before the
1997 election, Labour was welcomed by some of the biggest companies in
Britain. And after his huge victory the party was able to take away big
cheques from many of the nation's top boardrooms. But things began to
take a turn for the worse when the government changed the rules over party
funding, publishing the names of big supporters. Labour found it harder
to get cash out of corporate donors.
RUTH LEA: It's very hard to justify
to your shareholders if you're giving political donations of more than
five thousand pounds, under the current circumstances. Added to which,
if you just get dragged in to the papers being accused of buying favours
a bit sleazy you know, then that's not gong to help the company either
and the shareholders could well say to the directors, why are you doing
this, why are you giving money, if actually you may be damaging the business,
so certainly, all the stuff that's been in the papers about buying favours
has made it much, much harder for directors to justify political donations.
WILENIUS: It's the damaging accusations
of sleaze, which have really worried Labour. There was the one million
pound gift to the party from Formula One's Bernie Ecclestone , and the
hundred thousand pound donation from porn baron and Express publisher Richard
Desmond, as well as the media storm over the Mittalgate affair. They left
a nasty taste and critics claimed people were buying favours.
MATTHEW TAYLOR: The public don't like high value
donations from rich individuals to parties. That undermines confidence.
The public assumes and maybe they are wrong about this, but they assume
there's something fishy about that amount of money being given. The phrase
they use to us in focus groups is, well people wouldn't give the money
THERESA MAY MP: Perhaps the best example of course
for the Labour Party was the money they received from Bernie Ecclestone
and the policy stance they then took on the issue of tobacco advertising
at Formula One racing. So what we've seen with Labour is that some donations
appear to have been linked to policy decisions by the government and that
really is quite a different order of magnitude from an individual or a
business giving a donation to a party they believe to be generally business
WILENIUS: Labour knows only too
well how damaging any suggestion of sleaze can be. They watched the Tories
suffer appallingly over allegations of cash-for-questions, donations-for-favours
and Knighthoods for big donors. The Conservative Party's credibility
with the electorate evaporated. There are worries that this is fuelling
voter disaffection with all politicians.
TAYLOR: The big issue is the lack.....
the loss of trust in the system as a whole and we see state funding as
a way of helping to restore public trust and focus on the important parts
of politics rather than having these distracting stories every few months,
in which people's whole trust in the system is put in doubt by large donations.
But it's also very important to emphasise that our current system of party
funding is extremely unfair.
WILENIUS: Any hopes of relying
on income from party members are totally unrealistic. At a local branch
meeting in London's Docklands members try to raise extra money through
whip rounds and raffles. It's only a drop in the ocean when faced with
a record deficit. A copy of the Labour Party budget seen by On The Record,
admits it takes more money to service members than the party raises from
TAYLOR: It's vital for the public
interest that political parties become stronger, particularly in the community
level, recruit more members, undertake more activity locally, become more
vibrant and more representative bodies locally. In the present system they
can't do it, they can't do it because they can't afford to do it and because
they can only spend money at the national level because there are much
stricter limits than the local level, that's where their activity takes
place. Under our proposals, parties should have every incentive to become
active in their communities, more representative and that would actually
renew politics. So there's a very big prize behind state funding.
WILENIUS: So should the public
pay? Matthew Taylor's Think Tank - the Institute for Public Policy Research
- will unveil a report this week calling for political parties to be funded
from the State. For every individual donations made to a political party
the Exchequer would also contribute and to clean up politics there would
be a five thousand pound cap or limit on donations for everyone.
TONY BANKS MP: There's an obvious case
for capping donations, otherwise it gives unfair advantage as it were to
rich donors or to political parties that have got access to rich donors.
I think you should cap individual donations and even if you have matching
funds systems that involves Treasury paying over money, that should also
be capped as well.
MAGGIE JONES; I think it's unnecessary
to have that sort of cap, the Labour Party has been at the forefront of
introducing transparency and publicising the donations that are received,
we're miles ahead of any of the other political parties and the work that
we've done on that, and I think that's the issue, the issue has to be about
transparency so that there can be no suggestion of underhand payments.
WILENIUS: The unions feel it's
their party and they can pay if they want to. However, it's not just the
proposals to impose a strict limit on donations which have angered many
in the Labour movement. Some Labour MPs would prefer to have the unions
and members funding the party not the state. They feel it would go down
badly with the voters and party members.
TOM WATSON MP: Well it's very easy for
the IPPR to put these proposals forward because of course they don't have
to justify them to their constituents at fortnightly surgeries. But I
don't support it, it wasn't a manifesto commitment of the Labour Party.
Labour stood on a platform of investment and reform in the public sector,
not to say to voters, I'm putting political parties first, schools and
WILENIUS: This goes to the heart
of the problem facing Tony Blair. State funding would mean he's no longer
dependent on the unions, but they will not agree to such a move without
a damaging fight. Although there are some MPs who feel it's possible to
go down this route, without breaking the link between the unions and Labour.
BANKS: I'm much in favour, totally
in favour of maintaining the historic links between the Labour Party and
the trade union movement, but it shouldn't be one that's just purely based
on the ability of the unions to fund the Labour Party, because that again
raises the big question mark about you know, if you're paying the piper
are you calling the tune, and that creates tension, so my system would
involve the unions themselves going to their own membership in order for
their members to authorise their tax money to go to the Labour Party and
I think that would help the unions in terms of their active involvement
as well as the Labour Party.
WILENIUS: Many in the Labour movement
would applaud those sentiments. Yet there are worries that a part of the
Labour leadership wants something different. That this is more about breaking
the link with the unions, than just clearing the nine million pound deficit.
JONES: I think there's a lot of
suspicion about what the proposals are really intending to do, and there
is suspicion that underlying this there is a desire to break the link between
the unions and the party, and although that's not explicitly spelt out
in the proposals, undoubtedly that is one of the consequences, that is
the road that we believe that the logic of what they're saying would lead
WATSON: There's no doubt about
it that there are people at the centre of the party who would like to see
an end to the link, to break that traditional route. I think if they want
to do that, have the debate out in the open, don't try and do it through
the back door.
Well - it's a hackneyed
phrase - but let's remember the union link did sustain the party through
good times and bad, and there's a lot of trade unionists out there who
do feel slightly threatened by the tone of the debate around state funding
in Westminster and I think that's very sad.
WILENIUS: This leaves party fundraisers
with a major headache for almost everywhere they go to raise cash in the
future, they will find it harder and harder to succeed. If Tony Blair moves
towards state funding he has to get the money from here - the Treasury
- and in turn that comes from the taxpayer. But will the voters be happy
with giving up to twenty million pounds of their money every year to political
parties to help fund their operations? Although there are some who feel
that the public could eventually be persuaded, there are many others who
fear it would spark off a vicious political backlash against the Government.
WATSON: I think that the electorate
will not put up with more Millbank spin doctors, more photo opportunities
for Conservative politicians. We stood at the last election on a platform
of investment and reform of the public sector. If we were to say schools
and hospitals come after political parties it would simply be bonkers.
WILENIUS: It's not just the unions
and many Labour MPs who are against state funding of political parties.
There is fierce opposition from the Conservative Party, who fear the voters
just would not wear it .
MAY: I think if the Labour
Government were to propose state funding for political parties, it would
go down with voters like a lead balloon, and I think voters would give
them a very clear message that they want their tax-payers money to be spent
on improving public services and not on funding the party political activities
of the various political parties.
WILENIUS: Some cynics believe that
it would only take one more scandal like the Bernie Ecclestone affair to
send Britain racing towards state funding. But others are convinced public
resistance is so great that the party fundraisers will have to keep their
begging bowls out for a long time yet.