Union money to Labour, taxpayers' money to unions

Theresa May asked for a Parliamentary debate on back-door union funding of the Labour movement in Business Questions yesterday:

"Two of Labour's deputy leadership candidates want more taxpayers' money to go to the unions. The Solicitor-General said: “We should do more to fund the trade unions” and the Labour party chairman said: “A Labour Government can expand the Union Modernisation Fund”. Last year, unions received £3 million of taxpayers' money through that fund. In the rest of the year, those same unions gave £4.3 million to the Labour party. In the next few years, a further £7 million of taxpayers' money will be given to the unions, who will continue to fund the Labour party."

Jack Straw merely responded by harking back to the Conservative Party's "partisan attacks" on the unions in the 1980s, and saying accused May of offending millions of trade unionists.

The Department of Trade and Industry says the purpose of the UMF is to:

“provide financial assistance to independent trade unions and their federations in support of innovative projects which speed unions’ adaptation to a changing labour market and new ways of working. It is envisaged that the size of the Fund will be in the region of £5-£10 million in total, with funding spread over several years, beginning in 2005/06.”

As this dossier compiled by May shows, a majority of the members of the UMF's Supervisory Board (which decides on funding) are senior trade unionists themselves. The minister who set up the fund, Gerry Sutcliffe, is Alan Johnson's campaign manager and a union member with "two decades of unbroken commitment" to the unions.

That there is a correlation between unions donating money to the Labour Party, and the government bankrolling the unions, is clear. The Conservatives haven't committed to scrapping the UMF yet, but they surely will.

Deputy Editor

Comments

[ToMTom]

European Union money from Britain is more damaging

Blair

The data, uncovered by the think-tank Global Vision, shows that Britain's average net payments will rise sharply from £3.27bn a year over the last decade to around £6.4bn during the period from 2011 to 2014.

The Blair deal will lead to a sharp fall in rebate receipts from 2010 onwards.

[malcolm]

If the Conservative party were to rule out an increase in state funding it would lead far more potency to Mays attack.
I would expect that those members of the general public who become aware of this story will conclude as they have in the past 'politicians, they're all the same'.

[Paul D]

So, Labour are giving tax-payers' money to the unions, who then give money to the Labour Party?

Effectively the government, therefore, is syphoning public money into Labour's accounts

[Tory T]

Again Theresa May impresses. This is, effectively, state funding of Labour without the same applying to the Conservative party.

[Robert Simpson]

Could the government give us a £10million 'Conservative Party Modernisation fund' please?

[simon]

Labour has always been 'slightly dodgy' when it comes to 'democracy' etc. Not only do they use public money to give to their 'chums', they are 'beyond the pale' when it comes to political conventions. By that i mean , in certain polling stations in Scotland anti-SNP newspaper front covers were on display (oddly enough in 'safe' Labour seats). I think (newly elected) Tricia Marwick SNP MSP for Glenrothes has made a formal complaint. Whether anything comes of this is another matter....

[Traditional Tory]

Although I am generally on the right of the party, as a former 'Shop Steward' (Civil Service TU rep) I do not favour a return to the 'union bashing' agenda of yesteryear.

Personally I think the unions have too little influence these days. The pendulum has swung too far the other way.

[CDM]

How exactly do the unions have too little influence? Absurd concessions to doctors and consultants and the climbdown over public sector pensions is going to make achieving a balanced budget even more difficult.

They are just another form of vested interest that needs to be cut down to size.

[powellite]

Traditional Tory at 13:13

As someone with no inside knowledge of the TU movement, could you explain what it contributes to society? As an outside observer, it appears to me to be just another body for vested interests who don't appear to care much for the concerns of the wider public - only in securing more money for doing less for its members.

However, I'm very happy to defer to your expert opinion on this.

[Michael McGowan]

Good points by Theresa May but I agree with Malcolm: how can the Tories complain convincingly when Andrew Tyrie wants the taxpayer to bankroll them too?

[Traditional Tory]

OK Powellite. I'll answer that by asking you a question.

If you are a member of a graded hierarchy such as the Civil Service and it's pay rise time who acts for the Staff Side?

The union of course. Would you be happy to let the heads of department decide your wages unilaterally?

If you work for a small business it's different, but in any large organisation collective bargaining is essential.

[Man in a Shed]

Yes - now this is the sort of thing the shadow front bench should be up to.

The general public understand this as corruption that they are paying for.

It should be political dynamite.

[Denis Cooper]

Disgraceful. Possibly criminal, as well. But once a political party starts to dip
its hands into the public coffers it loses its moral authority to criticise others.

[Alex Swanson]

"Would you be happy to let the heads of department decide your wages unilaterally?

If you work for a small business it's different, but in any large organisation collective bargaining is essential"

I work for a large international company, and wage rises are indeed decided unilaterally by the management. If I don't like what I'm paid I go elsewhere. That's how capitalism works.

The IT industry is mostly not unionised but we aren't, I think, generally regarded as low paid. On the contrary, my impression is that the lowest-paid parts of it are, precisely, the parts of local govt which are unionised.

I am not anti-union myself, far from it, but you do not help your cause by claiming something demonstrably untrue, nor have you explained why, even if they are a good thing, govt should fund them.

[Traditional Tory]

I work for a large international company, and wage rises are indeed decided unilaterally by the management

Why should they be? The management are only (frequently overpaid) employees themselves and it's appalling that they should be able to decide high salaries for themselves and low wages for their colleagues.

The owners of the company, shareholders like myself, are given no say in the matter.

[powellite]

Thanks Trad Tory.

I take your point that some union activity can be useful, but judging by your comments in your 14:01 post, you seem to be saying that issues of pay should be a collective decision. From what I see, most trade unionists have very little experience of management and running a company, and show themselves to be remarkably short-sighted in how they approach the realities of business life.

Just a thought...

[tired and emotional]

Would you as a shareholder vote to raise wages for large numbers of employees with more limited skills and cut wages for the smaller number of more highly skilled managerial staff?

I would suggest that you would hammer your profits and lose quality managers, thereby destroying shareholder value and increasing the company's vulnerability to a downturn and the likelihood of major layoffs in such an event. Never mind the pension scheme.

[Watervole]

Trade unionists do not get any choice about where their money goes. See: "http://watervole.wordpress.com/2007/06/08/power-to-the-people-the-labour-leadership-election-sham/" to find out how the Musicians Union does it. As a (reluctant) member of the Musician's Union, I am not in the least offended by Theresa May's suggestion, however, I am offended by Jack Straw's hijacking of my opinion and by the MU's use of my hard-earned money.

[Traditional Tory]

most trade unionists have very little experience of management

The problem is that many managers also have very little experience of management.

A true free market (almost certainly unattainable) would beat down a lot of the ridiculous salaries paid to many senior staff these days.

I believe that it is possible to find some of those salaries deeply distasteful without being either envious of them or a raving socialist.

For every Lord Browne (who himself now turns out to be less of a demi-god than we were given to suppose) there are 999 mediocrities who work their way up through organisations by way of 'networking' and bullshit.

[George Hinton]

This was a point that i raised with the Party Funding Review under Hayden Phillips.
If a government provides the unions with monies, some will inevitably end up in the coffers of the Labour Party which the unions fund. Therefore, to avoid this conflict of interest, the old link between the two bodies should be broken and no funding made. It would then be up to individual members to bankroll Labour, making that party far more accountable and responsible to its membership. The present arrangement sees the union leadership make donations, for political favours and lets be frank, the gaining of honours at some future date, when they retire or at some suitable stage which is removed from too much scrutiny. The union membership have very little say in these grants to Labour and it is in fact, highly undemocratic. By contrast PLC's have to obtain shareholder support and are exposed to pinko activists who try to make capital out of donations, but only to the Tories.
Full marks to Theresa May for bringing this subject matter up. It is an inherently corrupt practice which deserves detailed investigation. Unions should not be given one penny or cent of taxpayers monies they are politically active and allied and should use their own financial resources to modernise. If they have insufficient then stop giving it away to a political party for favours.
This hopefully will run and run and needs to be cross-matched with the Party Funding Review.

[powellite]

"A true free market (almost certainly unattainable) would beat down a lot of the ridiculous salaries paid to many senior staff these days."

That much may be true, but I doubt that union negotiators would be unwilling to secure enormous salaries for their members if they could. What seems to me most puzzling is the notion that union negotiators are after a more equitable balance of wages than management - all they want, from what I can see, is simply more money. If union negotiators, or indeed members, were offered city-size bonuses, would they turn them down?

[Richard]

"For every Lord Browne (who himself now turns out to be less of a demi-god than we were given to suppose) there are 999 mediocrities who work their way up through organisations by way of 'networking' and bullshit."

Maybe so but if those who own the company are happy (shareholders) then one can't really claim that "something must be done".

[malcolm]

Do you really think so George? I suspect this will get buried. I can't find any reference to in any national newspaper today or the BBC website. Unless we operate from the moral high ground I fear Theresa Mays initiative will come to nought.

[malcolm]

Do you really think so George? I suspect this will get buried. I can't find any reference to in any national newspaper today or the BBC website. Unless we operate from the moral high ground I fear Theresa Mays initiative will come to nought.

[Deborah]

I hope that Teresa May does get some more publicity for this. This is an important addition to the catalogue of sleaze.

[Traditional Tory]

If union negotiators, or indeed members, were offered city-size bonuses, would they turn them down?

Of course not, but it's not going to happen - and because of the sheer numbers involved it would obviously bankrupt the organisations in question.

High salaries for the few are sucessfully sneaked past the shareholders because they represent a drop in the ocean compared with the overally turnover of an organisation. However such blatant inequalities cannot be justified from any dispassionate standpoint.

Unfortunately, I know from personal experience that many Tories regard this as heresy.

The misguided view that 'they receive high pay because they're worth it', held by many party members whose income is almost certainly considerably lower than my own, is one of those oddities that really does make some Tories seem like visitors from the Planet Tharg.

I'm beginning to sound like a Cameroon.

[George Hinton]

Well Malcolm @14:45/6, it is up to the party, its activists, and the blogosphere to ensure that this subject does not get buried by the sychopants in the BeeB and Media.
One of the points why the old media and dinosaur politicoes would like to "regulate" the blogosphere.

[tired and emotional]

Tradional Tory, I salute your knowledge of 2000 AD however I think your view that tories are odd to support paying high salaries to people who work vastly harder and bear significantly higher levels of responsibility and stress than 99% of the population despite not earning those salaries themselves is wrong.

Inequality is largely a matter of choices made - some entered into willingly, some unwitting.

[tired and emotional]

Sorry about the length of that sentence... not one of my best

[Traditional Tory]

your view that tories are odd to support paying high salaries to people who work vastly harder and bear significantly higher levels of responsibility and stress than 99% of the population

Having known a few of these guys and seen how they operate, T&E, I'm afraid I can't share your optimism.

I'm not talking about high-delivering captains of industry who, I suppose, must be regarded as ultra-expensive but necessary company assets. I'm talking about elements further down the line who are quite happy to protect their own privileges while trashing the ordinary Joe on the factory floor.

As a professional 'doer' who has been both an employee and an employer, as well as a civil servant, I must confess I have little time for managers. Many of them couldn't manage an orgy in a knocking-shop.

[Mark Wallace]

I think there's also an interesting point to be made about Unions funding the Labour Party and corresponding Peerages for Union bosses.

Sir Bill Morris, it will be remembered, was General Secretary of the TGWU between 1991 and 2003, during which time his Union gave the Labour Party millions of pounds towards general costs and election campaigns. A cursory look at the Electoral Commission website reveals almost £2 million donated by TGWU in 2001-3 alone.

If it had been a company under his stewardship that had provided this huge series of donations, there would have been outrage at his appointment in 2006 as a Peer. Why should it be any more acceptable for the money to come from Unions?

[Alex Swanson]

"Why should they be? The management are only (frequently overpaid) employees themselves and it's appalling that they should be able to decide high salaries for themselves and low wages for their colleagues."

Erm, they don't. Salaries are decided by the next people up the hierarchy, and are based on market values. I and my colleagues do not earn "low wages", we get paid what the market says we are worth. Any management team that tried to save money by not doing so would quickly start haemorrhaging skilled staff.

Whilst not wanting to disparage your experience, have you considered that it might not be entirely typical of modern industry?

[Richard]

"The misguided view that 'they receive high pay because they're worth it', held by many party members whose income is almost certainly considerably lower than my own, is one of those oddities that really does make some Tories seem like visitors from the Planet Tharg."

They may not be worth it but if the owners of the company have no objection (and shareholders can vote to remove directors if they want) then what business is it of a government which doesn't even own the company. The reason many Tories defend this seemingly unfair arrangement is on the basis of private property rights and freedom of contract.

[Traditional Tory]

then what business is it of a government which doesn't even own the company.

I agree you probably can't do anything about it. It's more a matter of 'mood music'

A Tory who makes it clear he despises 'fatcats' is likely to be more popular than one who proclaims 'greed is good'

[TomTom]

They may not be worth it but if the owners of the company have no objection (and shareholders can vote to remove directors if they want)

Since most shareholders are institutional funds whose managers have high salaries they tend not to vote their shares but simply collect dividends using equities in place of bonds, but readily exchanging equities for bonds whenever an LBO is undertaken by private equity.

Corporate Governance is shoddy - bureaucratic but shoddy. Those who spout on about private property should recall we have Companies Acts, we aso have laws on patents. Without legislation there would be no public or limited companies just unlimited liability partnerships

[Alexander Drake]

Trade Union power is a sectional economic interest, and afflicts the public sector more than the private. Surely the greatest strength of the Conservative Party lies in the fact that it is a genuine nationally-based party that transcends these sorts of sectional interests.

Any effort the Party makes to promote the dependence of the Labour Party on these sorts of sectional interests goes to the heart of showing that Labour cannot credibly govern in the national interest.

[Traditional Tory]

Surely the greatest strength of the Conservative Party lies in the fact that it is a genuine nationally-based party that transcends these sorts of sectional interests

Is it? Has it ever been? And with great respect how would you, as an Australian, know anyway?

When I joined the Tories in 1970 they were known as the 'union bashing' party, and for all the protestations of more senior figures, that was indeed the general attitude of the grassroots.

Years later Maggie's actions against the miners, in my opinion justified, tended to confirm this image.

For years I was a member of CTU, which now appears to have died a death.

The general public view of the party - whether or not justified - has always been that it enshrines privilege and does not care about the working man. The recent elevation of a clique of upper class public schoolboys is hardly likely to change this perception.

[Alexander Drake]

Traditional Tory I am amused that you find my nationality so fascinating, as ever.

I am also delighted that you have been a member of the Party since 1970. Long may you remain so.

If you think the Party has been regarded as "union-bashing", then surely it's been precisely because when in Government it has rejected the sectional union interest in making economic decisions in the national interest, and the usual suspects on the Left have used tedious, emotive language to describe us.

[Traditional Tory]

Traditional Tory I am amused that you find my nationality so fascinating, as ever.

The only thing I find fascinating about your nationality is that you are a citizen of another sovereign state, you don't pay taxes here, and yet you think it appropriate to weigh in on behalf of a narrow and controversial political faction in somebody else's country.

I would never in a million years dream of offering 'free political advice' to your compatriots.

Having said that, I think most Conservatives would agree that your comments are among the most intelligent and polite of those posted by the 'Roons.

[Watervole]

The union membership have very little say in these grants to Labour and it is in fact, highly undemocratic.

George Hinton is absolutely right. It is taxation without representation, and there is no opportunity for union members who do not support Labour to have any say in how money is spent, or indeed, to have any say!

We are getting away from Theresa May's original point in this discussion. Well done to her for picking up this additional Labour sleaze.

The MU leadership is insisting that for votes to count, those who have voting power must be of labour persuasion. Cronyism indeed.