Labour Party,  UK Politics

Labour’s funding crises

The Labour Party has not only lost most of its individual donors since Ed Miliband became leader it is £10m in debt and  almost 90% of its funding comes from trade unions, according to figures released by the Electoral Commission. It’s a worrying state of affairs.

The high percentage of trade union cash is a major increase on when Gordon Brown was in office when the figure was a little over 50%. The Electoral Commission also revealed that Labour’s biggest individual donor was Alastair Campbell who donated £10,000. Previous big Labour donors, including the likes of Nigel Doughty, Ronald Cohen and Lord Sainsbury, have gone. The drying up of wealthy donors has been going on for years and now it is reaching ahead leaving the party heavily reliant on big trade unions.

“About 87% of donations to Labour came from the unions with only two donations registered from individuals and one of those was the party’s former spin doctor, Alistair Campbell. The party is now nearly £10m in debt.

“Figures compiled by the Conservative party show that in the same period last year, when Gordon Brown was prime minister, just 51% of donations were from unions. Donations to political parties registered between January and March this year reveal that the Tories received £3.6m, Labour £2.8m and the Liberal Democrats just £762,645. The union Unite is still Labour’s biggest source of funding, donating £1,068,075 in the first quarter of 2011,” the Guardian reports.

To be a modern party Labour has to lessen its reliance on trade union money. Ed already suffers from accusations that he only won the leadership race because of union votes. This really doesn’t help his cause or the image of the party.

News of the parlous state of Labour’s finances follows Lord Levy, the party’s chief fundraiser under Tony Blair, calling earlier this year for a cleanup of the system including public funding for parties and cap on donations. The call was supported by Lord Sainsbury who suggested parties could be approximately 85% publicly funded, which would cost taxpayers roughly £50-60m a year.

Although with David Cameron in office this is simply not going to happen. The Conservatives have a relatively healthy bank balance in comparison and are well served by city and industry donations.