How to Solve Labour’s Funding Problem

Aaron Bastani

The Trade Union Bill represents an existential threat to the Labour Party. If passed it would change the way workers pay into their union political fund, at present the only means by which the unions are allowed to fund the party. The Bill proposes that, rather than having to opt out of the political levy, as is presently the case, unionists would have to agree to pay, in writing, every five years. There are four million levy payers in unions currently affiliated to Labour; the change could lose the party as much as £8 million a year. The House of Lords voted earlier this month that the proposed reforms should apply only to new members. The reprieve may prove temporary.

The Tories, by comparison, couldn’t be in better shape financially. When David Cameron became leader in 2005, the party was £28 million in debt. He asked Andrew Feldman, who had been in charge of fundraising for his leadership campaign, to take on the same job for the Conservative Party. The Tories have raised more than £250 million in the last ten years, and been debt-free since 2014. In the context of a plummeting membership, most of the money has come from a small number of wealthy donors.

That isn’t the only way to get it, though. The Bernie Sanders campaign shows how effective small, online contributions can be. By the end of last year, Sanders had raised $73 million from more than 2.5 million contributions, only $2 million less than Hillary Clinton. In January, Sanders raised $20 million almost entirely from small online contributions. The following month he outraised Clinton by $13 million, 70 per cent of which came from small donations.

Online contributions played a far bigger role in Obama’s campaign in 2008 than anything we’ve seen in the UK – and that was eight years ago. In fact, Labour has yet to catch up with Howard Dean’s digital campaign in 2003, let alone the current president's. The party is failing to use new media in the three ways that matter: communicating effectively to the electorate, mobilising members and raising money.

Given the success of the Sanders campaign and the threat from the Trade Union Bill, there should be a real focus on this area. Not only would it help deal with a crisis on the horizon; it could be level the playing field with the Tories.

The reasons this hasn’t happened are clear enough. Efforts to control the Parliamentary party have meant that energy isn’t being directed at winning the next election. The small retinue around Jeremy Corbyn is far too cautious. Several of them believe that social media had little to do with his win last summer, even though he raised £200,000 from online contributions, more than all of his rivals put together. Their emphasis remains on old media and old forms of revenue generation. They probably wouldn’t know where to start with a fundraising initiative of this nature, but more worrying is that they don’t seem to think it matters.

It’s true that the leadership is constantly having to firefight on such immediate issues as Syria, the budget and Iain Duncan-Smith’s resignation. What is more, affiliated trade unions are some of the most conservative organisations in the country when it comes to experimenting with digital media. But funding – and the immense opportunity of online contributions – cannot be overlooked for ever. The reactive tendencies of the Labour leadership will leave it ill-equipped to fight a superbly funded Tory machine in four years’ time.

Earlier this year Tom Watson, the deputy leader, was tasked with making a more ‘digitally enabled party’ and leading Labour’s ‘digital discovery’. So far the project looks like fluff, with the perennials of winning – mobilisation, money and members – second to ‘making communication more human’ and ‘building a deeper two-way relationship with members and supporters’. The remit outlined by Watson appears not even to include online fundraising.

It’s a commonplace that the Tories are better funded than Labour because they are backed by the super-rich. But that ignores the fact that the Tories stood on a financial precipice only a decade ago. The difference between them in opposition and Labour now? They had a longterm plan.


  • 31 March 2016 at 3:00pm
    Alan Benfield says:
    It might be a commonplace, but it happens to be true and does not bode well for the future: one of the problems of American politics since the 'Citizens United' decision by the Supreme Court has been the huge influx of cash into the process from extremely wealthy right-wing donors, unbalanced by a similar influx from the left. This imbalance will invariably always be there, however hard the left tries to diversify its sources of income.

    Jane Mayer of the New Yorker has said it far better than I can in a few sentences:

  • 31 March 2016 at 5:22pm
    Graucho says:
    Big money politics is in no one's interest, least of all the rich. Extreme disparity between the opulent and the rest leads to crime and violence ridden societies where the former shelter in secluded gated communities or in extremis the sans culottes roll out the guillotines. The Blair government could and should have instituted a £1 for every vote cast bill to publicly fund political parties and one hopes that the next Labour Government does so, even if I don't live that long.

    • 31 March 2016 at 6:10pm
      Alan Benfield says: @ Graucho
      Agreed, but the problem is (at least in the US) that the rich think it is in their interest (because, in the short term, it is).

      Ban political donations and replace it with state funding and hear who screams the loudest... (here and there)

    • 31 March 2016 at 7:23pm
      Graucho says: @ Alan Benfield
      Or you could just tax political donations say 20% VAT, it is after all a luxury item.

    • 31 March 2016 at 7:29pm
      Graucho says: @ Graucho
      Mind the Value Added part might be contested.

  • 5 April 2016 at 2:27am
    Sean Whitton says:
    I received an e-mail from the Labour Party today containing the words: "We're proud that our party is funded by people like you, making hundreds of small donations every month — thank you!"

    Maybe some LRB Blog readers in their e-mail publicity team.

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