VZCZCXRO6391
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHHM RUEHIK RUEHJO
RUEHKW RUEHLA RUEHLN RUEHLZ RUEHRN RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHLO #0704/01 0541623
ZNR UUUUU ZZH
R 231623Z FEB 07
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC 1981
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHXI/LABOR COLLECTIVE
RUEHSS/OECD POSTS COLLECTIVE
RUEHC/DEPT OF LABOR WASHDC
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
Visit London's Classified Website:
http://www.state.sgov.gov/p/eur/london/index. cfm
Tuttle