Abi Wilkinson: Labour should not have to rely on big business cash

Written by Abi Wilkinson on 29 April 2016 in Opinion
Opinion

Billionaire retail magnate Philip Green is a perfect demonstration of the kind of support politicians are desperate to attract.

People who have a lot of money and companies which make large profits often have certain shared interests. Minimising their tax bill, for example. Or avoiding legislation that will increase the cost of employing people. To a significant extent, these interests might be considered diametrically opposed from the interests of a large proportion of the population.

Not perfectly, sure. A minimum wage rise large enough to significantly increase unemployment would be, at best, a mixed blessing for lower income groups. The desire of the super rich to decrease their tax contributions, however, is unambiguously harmful for people relying on the healthcare, education and other services that money funds. If political parties are forced to rely on donations from corporations and wealthy individuals, therefore, they need to appeal to interests that aren’t entirely aligned with the majority population they’re supposed to represent.

This becomes particularly apparent when you consider who some of the top party donors actually are. Nearly three quarters of the 20 most generous Conservative supporters are linked to companies based in tax havens. Many more names popped up in the recent Panama Papers leak. It’s hard to avoid wondering whether this might be a motivation in David Cameron’s continued opposition to offshore trust transparency, even in the face of significant pressure to crack down on tax avoidance and evasion.

Billionaire retail magnate Philip Green is a perfect demonstration of the kind of support politicians are desperate to attract. In 2006, Tony Blair bestowed him with a knighthood for “services to the retail industry”. Two years earlier, legal ownership of BHS and Arcadia was transferred from Green to his wife. Because she is a Monaco resident no UK income tax was due on this £1.2 billion payout.

In 2010, David Cameron gave Sir Philip the job of reviewing government spending and procurement, apparently believing he was a trusted voice on financial matters. It’s unclear whether he regrets this decision now that Green is facing calls to repay £400 million in BHS dividends following the collapse of the high street retailer into administration — leaving 11,000 jobs at risk and forcing the state to bailout the company’s pension scheme.

The Conservative party has always been particularly dependent on donations from the super rich. Because of this, it’s perhaps unsurprising that many of its largest donors have saved more through tax cuts under the current government than they initially donated to the party. Though, in recent decades, Labour has desperately sought the approval of wealthy business owners in an attempt to drop its “anti-enterprise” image, the party is somewhat protected from these financial pressures by its links with the trade union movement.

Of course, this is a connection that the Conservative government is currently doing its best to undermine through the trade union bill. If it is passed in its current form, Labour predicts the legislation will cut the party’s funding by £8 million a year. Tory ministers recently accepted a Lords amendment on delaying changes to union political funds, however new rules forcing trade unionists to switch to an “opt-in” system will still be introduced over a 12-month period.

All of which may help explain why Labour’s rejection of McDonald’s request to purchase a £30,000 exhibition stand at its upcoming conference — on the basis the fast food giant is refusing to recognise Labour-affiliated trade union the BFAWU — was so controversial.

Partly, certain MPs seemed to seize upon the issue in a strategic attempt to undermine current leader Jeremy Corbyn. This is particularly true in the case of Wes Streeting, who gave a statement to the Sun suggesting the ban was motivated by a “snobby attitude towards fast-food restaurants and people who work or eat at them”. However, the conflict is also representative of a deeper split over the identity of the party.

On one side are those who believe Labour should stay true to its roots and back members of the labour movement in battles against big business. On the other, people who believe that maintaining a friendly relationship with large corporations is the only way to ensure the future of the party.

If the trade union bill passes, it’s certainly likely that Labour will struggle to rely so heavily on the financial backing of trade unions. However, without offering the kind of tax cuts touted by the Conservatives it’s difficult to see how it might attract sufficient support from wealthy donors to make up the shortfall. If the party does attempt to compete on this basis, a Labour government might find it difficult to reverse Tory spending cuts.

Effectively, the choice seems to be between becoming the Conservatives and electoral irrelevancy — neither of which are particular promising prospects for anyone dependent on an adequately funded welfare state.

 

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