Jonathan Djanogly MP: It's time to shine a light into the murky world of union funding

Jonathan Djanogly, MP for Huntingdon and Shadow Solicitor General, on the need to tackle trade union barons.

The debate on how political parties are financed has reignited in recent months following the ‘cash for honours’ scandal, the admission of law-breaking by Labour Party through dodgy donations and ongoing irregularities over cash accepted during Labour’s internal elections.

Within months of becoming leader, David Cameron backed a comprehensive set of radical proposals to clean up the way that parties fund themselves. The fact that these bold ideas did not get greater coverage in the media was largely due to the fact that its launch was trumped by Labour’s Lord Levy and the cash for honours scandal. It was that scandal which forced Tony Blair into creating inter-party talks, chaired by Sir Hayden Phillips.

These talks broke down in October 2007 because Labour were unable or unwilling to countenance any meaningful reform of the trade unions’ control of Labour’s finances. In the Conservative Party’s view, there is no point in any reform which leaves the unions running the Labour Party by pulling their financial strings. Labour have sought to prevent the public from focusing on this by suggesting that the Conservative commitment to reform had weakened. This is nonsense.

As the unpublished minutes show, the talks were scuppered by the refusal of the Labour representatives, Peter Watt and Jack Straw, to discuss a cap on donations which would fully include the trade unions. (It is worth noting that Peter Watt showed a detailed and extensive knowledge of party funding law during the talks, which strangely has now left him).

Whilst those Talks have ended, a great deal of work was undertaken behind the scenes by Ministry of Justice civil servants seconded to Sir Hayden. For the first time since the 1980s, there was a thorough analysis of how trade unions bankroll the Labour Party - in return for policy favours and taxpayer funding from the Labour Government. It is no surprise that Ministers have again and again refused to make this evidence public.

Labour maintain the pretence there is no irregularity with trade union funding. Yet Sir Hayden’s work and detailed research by Conservatives has revealed that the union funding rules introduced in the 1980s and consolidated in the 1990s are now being systematically sidestepped by the unions and the Labour Party.

Labour’s union cash comes via ring-fenced ‘political funds’ that each union must set up. Trade union members have a right to opt out of the political fund and pay a reduced union levy. Yet most trade unions systematically keep their members in the dark about the right to opt out, few give members details on how they could obtain a discounted membership rate if they do manage to opt out.

For example, the union Prospect sends its potential members a three page application form. It asks for their home phone number, their ethnicity, their union recruiter, as well as their bank account details. Yet the right to opt out of the political levy and save money is not mentioned in the slightest. This is a con, just as if a salesman in a shop sold you a television with a costly add-on warranty – without mentioning the warranty was optional.

In the context of a potential cap on donations, given the lack of clear consent to donate, in no sense can these political levies be considered individual donations by each union member. The aggregated cash given from union political funds should clearly be treated as one lump sum donation, in the same way as a high-value donation from a company or individual.

In 2006, the unions gave £9 million to the Labour Party, yet opinion polling shows that the majority of union members in the 2005 general election didn’t even vote Labour. If an individual isn’t even prepared to vote for a political party, it’s a safe bet that they won’t want to donate their hard cash to the same politicians either.

Just 1 in 15 union members actually manage to opt out. Hence the majority are effectively forced to bankroll Labour thanks to shoddy sales practices of union barons and Labour.

Quite apart from the fact that denying people choice is unethical, I also believe such practices are in breach of consumer protection law. Ironically, much of these laws have been introduced in recent years as a consequence of the implementation of EU directives by Labour.

I have recently submitted a dossier of evidence to the Office of Fair Trading, and called for an official investigation by the consumer watchdog into these apparent breaches of the law. It outlines how British workers are being systematically misled and over-charged by the very institutions that are supposed to be protecting their interests.

I have highlighted the activities of 20 trade unions, the majority of which bankroll Labour. A request has been made to investigate potential breaches of the Unfair Terms in Consumer Contracts Regulations 1999, the Consumer Protection (Distance Selling) Regulations 2000 and the Consumer Protection Act 1987. A request is also made for a ‘market study’ into potential misselling under the Enterprise Act 2002. Indeed, new rules from April 2008 further tighten consumer law.

There is strong evidence that trade union members are being over-charged, and the Labour Party is cashing in from shoddy fundraising practices. Labour Ministers are unwilling to tackle this example of ‘rip-off Britain’ because of their partisan self-interest. 

Conservatives will stand up for the rights of individual British workers, just as Margaret Thatcher did when she smashed the intimidation of the closed shop, banned the bullying of secondary picketing and gave union members the secret ballot.

Two decades on from the union battles of the 1980s, the unions are still wielding unacceptable influence behind the scenes. They have this influence because they write the cheques for Labour. It was Tony Blair’s attempt to weaken this union influence which led to his dependence on Lord Levy and in turn the ‘cash for honours’ scandal.

It is time to shine a light again into the murky world of union funding. Any reform of party funding must tackle the corrosive effect of these trade union barons if we are to restore the public trust.

Related link: For further reading about the trade unions, read the CPS pamphlet on Labour and the Trade Unions by Jonathan Djanogly MP and Alan Duncan MP.