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DE RUEHLO #0704/01 0541623
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R 231623Z FEB 07
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC 1981
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHXI/LABOR COLLECTIVE
RUEHSS/OECD POSTS COLLECTIVE
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UNCLAS SECTION 01 OF 02 LONDON 000704 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ELAB PGOV UK
SUBJECT: UK TRADE UNIONS FEAR LOSS OF POLITICAL CLOUT FROM 
ELECTION FINANCE REFORM 
 
 
¶1. Summary: UK trade unions are anxiously following the 
deliberations of a commission exploring reforms to political 
party funding.  The trade unions darkly suspect that some in 
the Labour Party would like to use the commission to break 
the unions' financial hold on Labour.   At present, a handful 
of trade unions are the principal donors to the Labour Party. 
 The Blairites hope for a two-fer from the commission.  If 
they can restrict spending by all parties, they could 
neutralize both the hold of the unions on their own party and 
the considerable fundraising advantage of the Conservatives. 
The unions fiercely oppose this, but should they? Given a 
perceived failure of unions to deliver to its rank and file 
where it matters -- in the workplace -- funding a political 
party may be an unnecessary, albeit prestigious, distraction. 
  End Summary. 
 
LABOUR WANTS OUT FROM UNION GRIP 
 
¶2. Trade unions are anxiously following the deliberations of 
a commission exploring reforms to political party funding. 
PM Blair established the commission last year and appointed 
Sir Hayden Phillips its chair, in the wake of suspicions that 
political parties promised honors, including peerages, to 
major campaign donors.  The trade unions darkly suspect that 
some in the Labour Party would like to use the commission to 
break the unions' financial hold on Labour. 
 
¶3. By US standards, the amounts needed to fund UK elections 
are minuscule.  Parties can only spend GBP 30,000 ($60k) per 
candidate, or about GBP 19m ($38m) for an entire national 
election.  The great black hole of US campaigning -- TV time 
-- is free but tightly regulated in the UK.  Most party funds 
go to get-out-the-vote efforts and to advertising of 
questionable utility, such as leaflets and billboards.  FCO 
and Trade Minister Ian McCartney told LabCouns he considered 
the GBP 6m ($12m) Labour spent on billboards in the 2005 
elections a complete waste of money.  "Who cares about a 
fe--ing billboard?" 
 
¶4. Trade unions have been Labour's primary financier since 
the unions created the party in 1906.  Today, affiliated 
unions contribute GBP 3.00 per member per year.  Only 16 of 
the more than 70 UK unions are affiliated to Labour, but they 
include all the largest: AMICUS, UNISON, GMB and T and G, 
representing over half of the 7 million unionized workers in 
the UK.   This steady cash flow buys the unions one third of 
the seats on Labour's policy-making executive council.  Under 
a time honored tradition of "No say, no pay", the unions 
insist on being heard. 
 
¶5. Their impact is considerable, but not overwhelming.  The 
Labour Government has had to roll back or soften many of its 
competitiveness initiatives to placate its union membership. 
In 2005 the government agreed to grandfather all public 
sector workers in a pension plan that pays 100% of a worker's 
final salary, adjusted for inflation, for life, at an 
(unfunded) cost to the state budget of about one billion 
pounds ($2b) per month.  Other influences are more benign, 
such as commitments to end pay discrimination based on gender 
and increased access to higher education for disadvantaged 
groups.  On the other hand, Labour has pursued an agenda 
contrary to the unions' desires on many other issues, such as 
the independence of the Central Bank, National Health Service 
reform, and the war in Iraq. 
 
¶6. Union funding of Labour was on a steady decline until the 
peerages scandal.  From a high of 90% of all party money in 
its early years, the union contribution ebbed to a still 
considerable 25-40%, according to John Lloyd, a labor 
historian with the union Community.  With wealthy donors 
running for cover after the scandal, however, estimates of 
the unions' share are back up to 70%.  In effect, a handful 
of trade unions are the principal donors to the ruling party 
of our most important ally. 
 
¶7. Blair, most union observers believe, is trying to break 
that link.  Union demands are inconsistent with the Blairite 
vision of the centrist New Labour.  Mollifying that 
constituency risks alienating the larger Labour target 
audience.   Hence the importance of the Hadley Commission on 
reform of political funding.  The Blairites hoped for a 
two-fer.  If they could restrict spending by all parties, 
they could neutralize both the strangle hold of the unions on 
their own party and the considerable fundraising advantage of 
the Conservatives. 
 
DON'T COUNT ON IT 
 
¶8. "It's not going to happen," is the blunt assessment of 
 
LONDON 00000704  002 OF 002 
 
 
Amicus Deputy Secretary General Paul Talbott.   Labour simply 
does not have the ranks of moderately wealthy supporters who 
can each contribute several thousand pounds to the party, as 
the Tories do in abundance.  The Conservatives, consequently, 
favor a cap on large donations, which they can live without, 
but not on spending. 
 
¶9. The unions oppose any attempt to unseat them from the 
policy table.  They argue that their contributions should be 
counted as millions of individual donations of three pounds, 
not a handful of million pound checks.  They note that union 
political spending is endorsed by the membership in a 
referendum once a decade.  Devotees of inside baseball will 
appreciate this nuance: unions decide what number of their 
membership will affiliate with Labour, to fine-tune their 
financial support.  It is not always 100%.  The legendary 
leader of the National Union of Mineworkers, Arthur Scargill, 
sometimes affiliated more than 100% of his rank and file, to 
increase his political clout during his years of battle with 
Margaret Thatcher. 
 
¶10. Sir Hayden Phillips, faced with the fundamental 
philosophical approaches of the two main parties, has all but 
thrown up his hands.  Andy Bagnall, a domestic policy advisor 
to Labour Party chair Hazel Blears, calculates public alarm 
at the peerages affair was great enough to create the 
Phillips Commission but is not yet sufficient to accept the 
obvious solution, public funding.  And so the impasse 
continues, waiting perhaps for the police investigation to 
result in a criminal case sufficiently sordid to compel the 
public to accept giving taxpayer money to parties for 
political ends. 
 
COMMENT: DON'T QUIT YOUR DAY JOB 
 
¶11. Comment: Should that happen, trade unions would suffer 
the most, but perhaps not fatally.  Bagnall points out that 
the most dynamic unions, those with a growing membership, are 
not affiliated with the Labour Party.  Union members appear 
more interested in bread and butter issues of pensions and 
wages than in party politics.  The most recent annual survey 
of British Social Attitudes found that only one-third of 
union members believed they were getting value from their 
union membership.  The survey also found that workers in 
unionized workplaces tended to have twice as much mistrust of 
management and no greater wages than non-union shops.  Given 
this perceived failure of unions to deliver where it matters 
-- in the workplace -- funding a political party may be an 
unnecessary, albeit prestigious, distraction.  End Comment 
 
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