Back to NEC Reports Directory
 
National Executive Committee, 14 December 2006

The NEC was not due to meet again until January, but dramatic developments on the party funding front saw members summoned for an emergency session.  Was it all a storm in a teacup?  I was not privy to all the conversations behind the scenes, but when a meeting is called at 24 hours’ notice, ten days before Christmas, it suggests serious deficiencies either of communication or of substance. 

First we dealt with a couple of routine matters.  The officers proposed a National Policy Forum (NPF) early in 2007 to discuss the work of the cabinet policy review groups, and to consider the defence white paper on Trident.  Pete Willsman and Walter Wolfgang argued that the NPF should express a view on Trident through voting, but given the Forum membership, and the fact that the unions will put deals on pay and rations ahead of foreign policy as they did at Warwick, a vote would probably not help the cause.  In any case it is the Joint Policy Committee, not the NEC, which manages the NPF.  The NEC agreed that the Forum should go ahead, with Walter opposed.  I voted in favour, as with the November meeting already cancelled, the NPF was at risk of subsiding into complete irrelevance.
 
The officers also recommended moving the 2008 annual conference from Brighton to Manchester, after positive feedback this year.  (The 2007 conference would remain in Bournemouth, 2009 in Brighton and 2010 in Manchester, as previously agreed.)  Walter and Christine Shawcroft were concerned about the shortage of reasonably-priced rooms for constituency delegates, but the general secretary assured us that this was being addressed.  I supported the change as Brighton also has accommodation issues, and it is not fair to expect delegates from Scotland and the north to trek down to the south coast every year. Again this was carried with Walter against.

Party Funding: Facts and Rumours

Mike Griffiths and Hazel Blears summarised the story so far.  In the wake of the loans affair, Sir Hayden Phillips was charged with reviewing party funding.  A working group chaired by Jack Straw oversaw the drafting of Labour’s submission, agreed by the NEC and by conference. On 16 November Hayden Phillips published an interim report posing specific questions, including whether there should be a limit on donations.  The Labour party responded in line with conference policy. On 4 December Hayden Phillips issued more detailed proposals. Some were regarded as acceptable, including increased transparency, better enforcement, national and local spending limits, and state funding for purposes such as training candidates and improving feedback from Partnership in Power. 

Others were alarming.  All donations, from individuals and from organisations, would be capped.  Trade unions would no longer operate a collective system of affiliated membership through their political funds.  Instead affiliation would become “individualised”:  the party would have to write to over 3 million union members, every year, explaining how their contribution had been spent and reminding them that they could choose to stop paying.  As Hayden Phillips said, in a masterpiece of understatement, “the proposals will be especially demanding for the trade unions.  They will need to introduce new systems and new accounting arrangements”.  And for the party, the average affiliation payment of £3 a year would be entirely consumed by paperwork.  A Thatcherite dream come true.

What really fuelled the anger was Hayden Phillips’ claim that these plans enjoyed consensus across the parties, leading to a widespread belief that Number 10 insiders were conducting parallel negotiations on their own agenda.  Tony Blair was unable to attend the NEC, but John Prescott assured us that the leader had never had any extra meetings nor departed from the conference mandate.  Other ministers made it clear that they would not introduce laws opposed by the entire parliamentary party.
 
Back from the Brink
 
Mike Griffiths’ statement, printed below and agreed unanimously, dealt with most concerns.  Dennis Skinner argued that union money was clean, given because of shared values and not to buy influence. Others said it was ridiculous to impose the same donation cap on Amicus/TGWU with 1.75 million members as on unions with a few thousand, and there were only 17 unions affiliated to Labour, against hundreds of Tory-supporting companies.  And I pointed out that general secretaries no longer wield block votes in electing party leaders but must ballot their levy-payers, giving them a democratic voice.

There will now be more discussions, but Hayden Phillips intends to conclude by the end of January.  The NEC were still worried that he did not fully understand the party’s federal structure, and rejected any outside attempt to rewrite our rulebook.  Members hoped he would not wish to appear as a Tory patsy and would listen again to our proposal for voluntary systems of donations appropriate to each party’s traditions and statutorily enforced.  All agreed that the party must speak with one voice.

However, dangers remain.  Party negotiators are keen for speedy curbs on local expenditure, with Tory millions already pouring into key marginals.  They would also prefer cross-party consensus, because without it we risk ending up on the wrong side of the argument and bogged down in the Lords.  My view is that there are even worse options than the status quo, and conceding too much would make spending limits irrelevant because we would have no income.  Tony Blair once paid tribute to those who stuck with the party during the years of opposition, when business didn’t want to know, and our high- value donors were backing the SDP.  Without the unions there would have been no Labour victory in 1997, and it is sheer arrogance to think that we may never need that solidarity again.  Some members still suspected Blairites of using Hayden Phillips to pursue their original project of breaking the union link.  That may have seemed a viable alternative when individual membership was 400,000 and rising, and the world was at our feet.  Now it looks like political suicide.  The survival of our party, and of a healthy democracy, are at stake.
 
Questions and comments are welcome, and I am happy for this to be circulated to members – and supporters - as a personal account, not an official record.  Past reports are at: www.annblack.com
 
 
Statement from Mike Griffiths, Chair of the NEC on behalf of the full NEC:

The  Labour  Party has led the way in introducing transparency into British politics culminating in the Political Parties Elections and Referendums Act (2000).   We  therefore welcome the Hayden Phillips enquiry into the future of political funding.

The time has come to end the "arms race" on election expenditure, with a cap on what parties can spend, nationally and locally and for the lifetime of a parliament.  The Labour Party National Executive Committee (NEC) is therefore encouraged by the proposals from Sir Hayden regarding the principle of reducing the spending of political parties.

After consulting with Party members, the Labour Party Conference in 2006 unanimously approved  the Labour Party's detailed submission to the Review on the Future of Party Funding currently being conducted by Sir Hayden Phillips.

The position of the Labour Party, at all levels, has been and remains that as set out in our submission. This position was reiterated by the Prime Minister attending the Parliamentary Labour Party Committee on Wednesday where he made clear that nothing should break the historic link between the Labour Party and the Trade Unions.  The NEC therefore rejects those proposals from Hayden Phillips that clearly neither respect nor understand the structures and constitution of the Labour Party.

In the Labour Party submission to the review we express the view that any changes need to be workable, respect differing party structures and constitutions and should not reduce fairness and equality by giving one party a funding advantage over another.  For that reason, in our submission we made it clear that the Labour Party cannot accept a statutory uniform donation cap as proposed by the Conservative Party.
 
This form of donation cap would quickly become unworkable logistically and diminish the political voice of hundreds of thousands of trade unionists at a time when all parties are concerned with widening political engagement. It would also undermine the Labour Party federal structure and seek to amend a system of Trade Union contributions that is already highly transparent and heavily regulated.
 
Officers and officials of the NEC will continue to vigorously pursue the Labour Party's position in all discussions with Sir Hayden Phillips.