Home > Party funding > Union donations get their turn in the headlines

Union donations get their turn in the headlines

In the last week we’ve seen the Conservatives going on the attack on party funding – this time on Unite’s role in bankrolling Labour. The Conservatives have been lucky that Unite were already in the headlines with the cabin crew strike. The thrust of the criticism is that Unite have donated over £11 million to the Labour Party since 2007 and are influencing Labour’s campaign and policy. Unite’s Political Director, is also being dubbed Labour’s equivalent of Lord Ashcroft, given his role in advising the Party.

Whether or not you object to large trade union donations, there are differences between union contributions and those from wealthy individuals or companies. First, Unite’s spending power does not flow from any person’s unequal wealth. If Charlie Whelan or any other official has influence, it is not because they are super-rich, but by virtue of the position they hold within the union. The union’s spending is the result of the payments made by its members into the political fund. This leads to the second point, that union donations have to come from a political fund (separate from its general revenues) and members can opt-out of paying into that fund. By contrast, companies can make donations out of their general revenues (so once a company gets approval to make a donation, there is little a dissenting shareholder can do). Trade union donations are sometimes presented as an aggregation of lots of small payments made from individual members. If this is the case, then the union donations look less problematic for political equality.

Thirdly, no questions are ever raised about who is paying into a political fund (namely who is behind the donations) – it is the union members. By contrast, with company donations there are questions about where some companies get their money from. For example, a company making a donation may have received its funds through a transfer from another company (or a payment from an individual). This would only have to be disclosed to the Electoral Commission if there is an agency agreement. So there is greater scope for company donations to lack transparency, in knowing the true source of funds – I don’t know of such a problem for union donations.

If you want to criticise union donations, then the line of argument should be that members only get to choose whether to pay into the political fund and they have no legal right to specify which parties or causes the money should go to (though I guess that might be obvious). You might also question whether members really have the power to hold the leaders to account for the ways political fund is used. The members also have a right only to opt-out of paying into the fund, so critics may also argue that the payments do not reflect the members’ deliberate choice. If you follow this line of argument though, you would have to accept stronger controls on company donations first. Union donations are currently the most heavily regulated.

That Unite is such a large donor may also look like a sign of union strength. In some ways it shows the reverse. Unite is the product of a merger between two unions Amicus and the TGWU. Amicus itself is the product an earlier merger of several unions including the AEEU and MSF. This means that several years ago, Labour would have been funded through a wider range of unions. Labour would not have depended so heavily on a single source. As unions merge, it seems inevitable that the sums given by that one source (now the aggregate of the other unions) will get larger.

Much has focused on the influence of Charlie Whelan. However, the proximity of Charlie Whelan to the Prime Minister is not simply because of Unite’s donations to the Labour Party. Whelan had the Prime Minister’s ear long before he worked for the union. I guess that is why Unite hired him in the first place – so if anything, it is the funds that allowed Unite to buy Whelan’s services (as opposed to the political donations) which have secured that connection.

There are, of course, debates to be had about the role of union donations and there are also questions you may ask about the union’s influence over candidate selection. Personally, I am less troubled by union contributions than other sources of party funding. But if you don’t share this view, it is important to move beyond basic assertions (ie large sum given to a party by a striking union) or the comparisons with wealthy individuals and their companies.

  1. george
    March 17, 2011 at 6:15 pm

    As you state that companies transfer funds to other companies for political donations but you leave out that the Unions do too, through donations to other Liberal Organizations that make political cotributions. In many cases the Union Members are forced to pay because of the pressure from the Unions and its Leadership and Employees are forced to join the Union if they want a job. Not all Uion Members agree with the political stands of the Leaders of the Unions but they don’t have a voice. So let’s put all the facts out there.

    • March 17, 2011 at 9:56 pm

      Thanks for your comment. I was referring to the source of funds for direct union donations, which have to come from the political fund. I understand the point you make on the issue of dissenting union members (which I refer to in the 4th paragraph). There are some safeguards, such as the right to opt out of paying into the political fund. The sufficiency of the safeguard is a matter for debate. As for compelled membership, closed shop arrangements have been outlawed for a number of years. Personally, I would like to see union and company donations subject to roughly equivalent regulatory controls (which they are not at the moment).

  1. July 9, 2010 at 4:30 pm

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