Splitting the Bill: Lords to look again at big donors

The Trade Union Bill’s one-sided changes to party funding are finally getting some of the scrutiny they need. On Wednesday, the House of Lords struck a small blow by voting to set up a cross-party Select Committee to consider the Bill’s impact and what other reforms are needed to clean up party funding in the UK.

The Trade Union Bill will dramatically shift the balance of party funding by cutting Labour’s funding from the trade unions. Labour would lose an estimated £6m a year from the switch to an opt-in system of political funds. The Conservatives, who receive most of their funding from big individual and corporate donations, would be unaffected. We have long supported changes to make trade union donations to political parties more transparent, but real reform means looking at both sides of the party funding equation - not just trade unions, but wealthy donors too.

Free and fair elections require a level playing field for all political parties. If party funding rules mean that one party always outspends their opposition, that makes elections less competitive and less fair. New figures show that the Conservatives spent £15m during the 2015 election campaign - 25% more than Labour (perhaps more, if like Michael Crick you don't believe the official figures). If the Trade Union Bill goes ahead without looking at big donors across the political spectrum, that gap will open wider at the next election.


The government has also announced cuts to Short money, which is public money that opposition parties receive to support their work in Parliament. Labour stands to lose an additional £1m a year. Effective government requires effective opposition. Taken together, these changes will weaken scrutiny of the government and competition at the ballot box.

Until now, the government’s response to these criticisms has been simply to pretend that the Trade Union Bill has nothing to do with party funding - an argument that even some Conservative peers found unconvincing. After Wednesday’s defeat in the Lords, the government will no longer be able to ignore the wider issue of party funding. They should not be allowed to rewrite party funding rules unilaterally for political gain.

In 2011, the independent Committee for Standards in Public Life recommended an opt-in system for union donations, but only as part of a wider package of reforms to party funding, including a £10,000 cap on individual and corporate donations and a 15% reduction in party spending limits. The cross-party committee, which will report at the end of February, will take these recommendations as the basis of its discussions.