Union bankrolling of the Labour Party gives business the jitters

Trade unions now contribute three-quarters of Labour Party funding, but does this really spell doom and gloom for business?

The statistic makes for scary reading for those in the business community concerned about undue influence in government. Trade unions now give the Labour Party nearly 75p out of every £1 it receives in donations.

Figures from the Electoral Commission show that the Labour Party received £3.4m in donations between April and June, and that £2.5m came from trade unions.

Yet despite having what looks like a financial stranglehold on Labour, the union movement is heading for an all-time membership low. The latest figures show the percentage of the working population who are union members stands at just 29%.

The Trade Union Membership 2005 report, published by the Department of Trade and Industry, shows that fewer than one in five (17.2%) employees in the private sector were union members in autumn 2005. It seems Labour is now at the mercy of a favoured few.

Conservative claims

But is this scaremongering? Is the government allowing the unions to “undermine democracy” as the Conservatives claim?

Tory party chairman Francis Maude said that, in return for funding, unions were getting “pet policies and bungs” with taxpayers’ money. “This sort of cronyism undermines our entire democratic process,” he said.

At a cursory glance, it does look like the message to business is: be afraid, be very afraid. In July 2004, Labour upped the ante on union involvement to help make sure it won the 2005 general election. The Warwick Agreement made between the party and the unions set out a list of 67 promises and 24 additional commitments. One such promise resulted in the £10m fund to modernise the trade unions.

Not long after, the government backtracked in the face of industrial unrest over public sector pensions and allowed current civil servants to retire at 60. The Institute of Economic Affairs estimates this could add £11bn a year to public expenses.

Extending Warwick

But of greater concern is what the unions are after now, according to David Yeandle, deputy director of employment policy at the manufacturers’ group, EEF.

“There is no doubt the evidence is that trade unions have an important influence on government policy,” he said. “We should be concerned that the trade unions are pressing for a further extension of [the Warwick] agenda. Employers need to be aware of what is going on.”

One union campaign that is a big worry for business is the drive to have pensions, training and equality added as standard to collective bargaining agreements, alongside holiday and pay. This would include the right to request an equality audit of employers’ practices.

The government claims negotiations on occupational pensions are becoming the norm, but Yeandle said this was not the case and that collective bargaining could drive employers away from offering pensions. This in turn would undermine the drive to sort out the UK’s looming pensions crisis, he added.

The final agenda of the 2006 Trade Union Congress, which starts next week, makes clear the unions will not be resting on their laurels. It includes such calls as the end to “the archaic form of dictatorship, under the guise of management prerogative, which often prevails in workplaces”.

This is followed by numerous other motions, including a Trade Union Freedom Bill to extend strike rights, and for agency workers to be granted the same rights as full-time staff.

Yet there is evidence that things might not be as bad for business as they seem. On the 2006 conference agenda, the TUC laments that, in the area of agency workers, “Congress is disappointed that the government preferred the views of employers instead of the broad consensus among unions”.

Just say “no”

The government has repeatedly blocked union calls on such matters as the removal of the opt-out to the Working Time Directive. Even in the new Corporate Manslaughter Bill (a Warwick promise), it refused to include provisions that would hold individual directors to account, despite much pressure from the unions.

Anne Mitchell, spokeswoman for public sector union Unison, which is among the biggest Labour Party donors, rubbished claims that the unions exert too much influence. “If this was the case there would be no privatisation in the NHS or public services,” she said. “We have a number of issues where we are in direct conflict with the government.”

A spokesman for the Public and Commercial Services union pointed out that it has never paid any political levy to a party, and yet it managed to exert enough influence to persuade the government to back down on the public sector retirement age.

At the moment, both business and unions have cause for complaint about how they have been treated by the government. However, looking to the future, business needs to be particularly vigilant. The Labour Party is in increasing financial trouble. It owes £22m in loans from banks and supporters, and has announced it will cut one in five party jobs.

In this environment, it becomes increasingly likely that he who pays the piper will call the tune.

Comments are closed.