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State aid = state of emergency

Peter Kenyon reports on the latest Blairite plot to milk the taxpayer and smash the Labour-TU link

A deadline has been set. Labour’s dwindling membership has until 31 July to wake from its stupor. That’s the date set by its National Executive Committee for views on party funding. In reality the choice is stark – do members want a say? Or are they going to succumb to the latest attempt by the Blairites to wreck the Labour Party as we know it and condemn members to crowd scenes only? The results will be set out in the Labour Party’s formal response to the Hayden Phillips Inquiry on Party Funding after Annual Conference in September.

The Project’s architects Peter Mandelson and former Social Democrat Party founder member Roger Liddle in ‘The Blair Revolution – Can New Labour deliver?” writing in 1996 were crystal clear about their ambitions to smash the historic Labour – Trade Union link.

“The best way for the concerns of trade-unionists to be addressed is by more and more of them becoming individual members of the party. Far from this being the breaking of a link, it is actually the establishment of thousands of individual unbreakable links. In branch meetings, on campaign committees, in council chambers and in Parliament, trade-unionists will be able to participate fully in Labour’s affairs, for themselves.” (p226)

Ten years on the goal remained elusive. That was until the ‘loans for lordships’ scandal earlier this year. Rocked by revelations that the 2005 Labour Party general election campaign had been funded by secret multi-million pound loans, the No.10 strategists seized the moment. On 16 March 2006, Prime Minister Tony Blair announced an Inquiry into the funding of political parties to be conducted by former top civil servant, Sir Hayden Phillips.

Writing in Chartist #212 on the Electoral Commission report on the funding of political parties published in December 2004, I said:

“This report effectively buries the subject of increased state-funding of political parties, and leaves the role of trade unions in British politics untouched. In less than 30 months, the Blairites ambitions for reshaping the Labour party irrevocably have been shattered, possibly irreversibly.”

How wrong I was. Less than 15-months later, the Blairites launched another sortie to destroy collectivism, and a century of Labour Party history. Why? Opportunity, dear reader, opportunity. How can they be so brazen? Firstly, there was a desperate need for a diversionary tactic to take the spotlight off the role of the Prime Minister himself in the loans affair. Secondly, the Electoral Commission report was never cemented in the public domain. (Its publication was buried without trace by sensational headlines heralding the first David Blunkett resignation (as Home Secretary) and the Law Lords landmark ruling on the Belmarsh detainees.) Thirdly, all three mainstream political party leaders are having problems funding their parties, recruiting and retaining members and keeping them under control. (The media has yet to put Parliament’s own failure, to debate the Electoral Commission report on the funding of political parties, under the public spotlight.)

In the absence of effective public scrutiny, what better opportunity to try again to make the case for state-funding of political parties, and, by the way, smash the Labour – Trade Union link? The Labour Party National Executive Committee meeting the following week was bounced into endorsing the Hayden Phillips’ Inquiry. A week later in a letter written by then un-elected Party chair, Ian McCartney MP set out Labour’s initial response to the Inquiry. He described “eight key pillars” for discussion: 1. Greater investment in our democracy, 2. An overall cap on Party expenditure, 3. A lower limit on individual donations, 4. Respect for the internal membership structures of political parties, 5. Transparency on spending, 6. Foundation for Democracy 7. Charitable status 8. Devolved institutions. Who could argue with any of this? Nobody except, Save the Labour Party. It issued a press release the day after Blair announced the Inquiry, calling on the Labour Leader to concentrate on rebuilding party membership and stop trying to milk the taxpayer.

Hayden Phillips job is to forge a consensus to do just that. To help him, Blair reshuffled his ministerial pack immediately after the local government elections on 4 May 2006. McCartney was bundled out of his un-elected post as ‘party chair’ – too close to the unions – into a middle-ranking ministerial post, with permission to continue to sit in at Cabinet meetings. Ultra-Blairite loyalist, Hazel Blears MP was ushered in to fix the Party’s position. The task of forging a cross-party consensus in the Houses of Parliament was assigned to former Foreign Secretary, Jack Straw, in his new role as Leader of the House of Commons.

In the meantime, parliamentary bodies woke up to the opportunity to dig and delve. The Constitutional Affairs committee of the House of Commons, chaired by former Liberal Democrat deputy leader Alan Beith, MP has taken a particular interest in the party funding issue. Among the committee’s members is Andrew Tyrie MP, the Conservative Party’s acknowledged expert on party funding. He is using his position on the committee to press a blatantly partisan plan for an individual donation cap of £50,000 that would wreck the Labour Party, and benefit the Tories. His opportunism was spotted by the Trade Union and Labour Party Liaison Organisation (TULO), which commissioned Keith Ewing, professor of public law at King’s College, London to write its own submission to the Constitutional Affairs committee. Ewing exposes how the Conservatives are using the opportunity created by Labour’s Prime Minister to damage Labour and the Labour – Trade Union link. TULO’s choice of Ewing was no coincidence. He authored a Catalyst pamphlet in 2002 that paved the way two years later for the Electoral Commission report on funding political parties backing the status quo. More recently, he has jointly edited an important book on party funding and campaigning from an international perspective. The editors caution using party funding in a partisan way or as a means of discouraging political participation by individuals and groups with the community.

By the time of the May National Executive Committee the implications were beginning to filter through. Questions were asked about the position the Labour Party had adopted towards the Hayden Phillips Inquiry. The idea of political parties having charitable status (pillar number 7) in the McCartney scenario came in for particular criticism.

A membership-wide consultation was launched. Then it was the turn of the Party spin-miesters to rig the agenda. Pillar number 6 – the Foundation for Democracy was placed number 1 on the Labour Party website consultation. Who could possibly disagree with the idea of promoting democracy? For any beleaguered Labour Party branch or constituency treasurer the idea of state-funding could come as a great relief - no more thankless hours spent fund-raising.

A principled approach is vital to stop this venture in its track. Is the Labour Party a federated body of individual and affiliated members from trades unions and socialist societies? Or is it a virtual supporters’ network for careerist politicians and their advisors?

Alarmed by signs of growing unrest in Labour’s ranks, the Blairites have ventured what could be their last ditch assault on the Labour-Trade Union link by suggesting that to access tax-payers money to fund political parties, the trade unions would have to accept opt-in legislation governing political donations. This highly controversial proposal surfaced at a private meeting in Jack Straw’s office on 21 June. It may have been one step too far even for the ministers present.

An ad hoc group of Labour Party members including MPs, MSPs, trade union leaders, former party officials and grassroots activists have published a leaflet for circulation to party members to widen the debate. The authors’ aim is to block the latest attempt by the Blairites to wreck the party and lay foundations for rebuilding by getting in touch with every constituency party in the country.

We have (yes, I am one of them) until 31 July to demonstrate our capacity to organise. We have to make it impossible for the Blairites to wreck the Labour Party as a federated body, in which collectivism is seen as a vital part not just of our history, but our political future. Then the process of rebuilding the Party can start in earnest.

Peter Kenyon is Clerk to the LabOUR Commission - www.labourcommission.org.uk