LONDON LETTER:IN THE years before and after Labour's 1997 victory, Tony Blair managed to attract dozens of wealthy donors who, once wooed by dazzle and power, contributed millions to the party's coffers, writes MARK HENNESSY
Today, however, the flow of funds from many of them has slowed significantly, frightened off by the cash-for-honours scandal and doubts about Blair’s successor Gordon Brown’s ability to win a fourth term.
Conservative leader David Cameron will bring thousands of his party’s delegates to the Metropole Hotel in Brighton late next month for a spring conference that will probably serve as the party’s opening shot in the election campaign.
Labour had hoped to do something similar by holding a national policy forum, where members were, notionally at least, to enjoy influence over the drafting of the manifesto, but a shortage of money has forced that plan to be scrapped.
It is not the first cutback that has had to be made, and it will not be the last. Labour now has little more than half the party staff it had in 2005. Last week, former home secretary David Blunkett said it may have just £8 million (€9.2 million) to fight the election.
Labour, he said, faces greater financial pressures this year than at any other time since 1983, when the party went down in flames under Michael Foot against Margaret Thatcher, buoyed up as she then was by victory in the Falklands War.
Indeed, Blunkett clearly indicated that those tasked with keeping Labour solvent are already looking beyond the election and defeat: “We are trying to be careful so we don’t end up bankrupt after the election if this all goes pear-shaped,” he said.
The Conservatives, on the other hand, will have £18 million in the party’s central war chest – the maximum possible that can be spent during the official campaign under British election rules. Not all of this has so far been raised, but few doubt that Cameron will have difficulty.
Besides the £18 million, the Conservatives will spend another £40,000 in each of the constituencies on their most-wanted list, funded separately by party treasurer Lord Michael Ashcroft, whose own contributions remain shrouded in mystery.
Furthermore, the Conservatives have already started spending before the official off in the campaign is declared, putting up 1,000 billboards bearing Cameron’s air-brushed image.
Now Labour is trying to “do an Obama” by raising significant sums from grass-roots members and the public, though Gordon Brown’s lack of popularity means that only the optimistic are expecting a flood.
Just a few major donors are left. JK Rowling, who made a billion out of her Harry Potter series of books, has remained loyal, giving a million. So, too, has Labour peer David Sainsbury.
So bad is the situation that Labour has had to deny persistent rumours that it came within a whisker last year of being unable to pay some of its backroom staff in its Victoria Street headquarters near Westminster.
In 2008, Labour took in £34 million, but nearly £5 million of that was a VAT rebate and £2.5 million more was accounted for by the conversion of a loan from Sainsbury into a donation.
The only group increasing funding are the trade unions, which gave £11.4 million in total in the year up to the end of March 2009 – twice as much as came from party members and 60 per cent of the party’s total income for the year.
With money comes influence. Already, one major union, Unison, has flexed its muscle by cutting off £100,000 from its £1.5 million donation in protest at plans by the government to privatise parts of the Royal Mail. The lesson was clear, and it was heeded.
The influence does not just extend to policy, which is significant, but also to the line-up of candidates that will be put before the public at the polls.
Brown’s former press secretary and enforcer during his time in the treasury, Charlie Whelan, who now acts as political director of trade union Unite, has taken control of many of the selection contests choosing runners.
Already the grumbling has started within the party. Favoured sons and daughters are being selected, and the early lists indicate that Labour’s benches in the next parliament, though reduced, will be significantly more to the left than has been the case over the last decade.
If such candidates are elected, then Labour is at risk of repeating the errors that kept it out of power in the 1980s, the same error that the Conservatives made on the other side of the political spectrum a decade later. Elections are won in the centre.
Labour cabinet ministers, meanwhile, are already having to ingratiate themselves with the Charlie Whelans of this world. Unions will control three out of every 10 votes that will decide the party’s next leadership battle.
Given Labour’s poll ratings, it may not be long in coming.