Corporate rats jump ship, but why are unions still funding New Labour?

From the FT:

Labour is more dependent on trade union funding than it has been for years after personal donations to the party in the first three months of this year collapsed to less than one tenth of their level for the same period of 2007.

In the wake of a series of funding scandals and the government’s political problems, only £203,869 was given by individual donors in the first quarter, compared to £2.23m for the first three months of last year.

The union contribution grew to 88 per cent of the total in the first quarter of 2008, compared with 52 per cent at the start of last year and just 30 per cent in early 2002, giving union leaders extra leverage in their discussions over the party’s next election manifesto. Union donations rarely account for such a high percentage of party funding save in the immediate run-up to a general election.

The unions are set to press for numerous concessions from the government during Labour’s national policy forum in July. These include a more progressive tax system, improved pension provision and the release of non-dangerous prisoners.

Labour is struggling in the opinion polls and suffered a defeat in this month’s local elections, where it came third behind the Liberal Democrats and lost the London mayoralty. Potential donors have also been put off by a series of funding scandals which have dogged the party.

The latest individual donation figures, published by the Electoral Commission on Thursday, represent a drop on the £601,391 raised in the fourth quarter of 2007, £2.87m from the third quarter (including £2m from Lord Sainsbury) and £1.49m from the second quarter.

As a result, Labour’s dependence on union support has became even more pronounced. It raised a total of £3m in the first quarter of this year, the bulk of which was from Unite, the super-union, and other unions including Unison, GMB, Usdaw, CWU and Ucatt.

The Conservatives once again raised more money than the party of government, filing £4.2m of donations to the Electoral Commission.

The gap between the two parties would look even larger if donations to Ken Livingstone’s unsuccessful mayoral campaign were not included in the Labour figures.

Labour, which was founded by the unions, has always depended on their financial contributions to some degree. But the relationship is now more important than ever as private and corporate donations to the party dry up. Companies gave £66,625 to Labour in the first quarter.

The party has £18m of debt, prompting speculation about its financial stability. Chief fund-raiser Jon Mendelsohn is in talks with the millionaires who controversially lent more than £10m in the run-up to the 2005 election to delay repayment.

One Response to “Corporate rats jump ship, but why are unions still funding New Labour?”

  1. Gangs, Bangs and Anti-Scientology Slogans « The Cultural Anarchlyst Says:

    […] on terror’ (Islamophobia Watch) Couldn’t Sky Arts find a Muslim? (Islamophobia Watch) Corporate rats jump ship, but why are unions still funding New Labour? (Rebellion Sucks) Face of British ‘Suicide’ Bomber (Gary Nicks, The Star) Brainwashed […]

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