Was Walter Osborne right after all?

The funding of political parties has naturally been a hugely contentious history for centuries – from the days of the pre-reformed Parliaments with their tiny franchises and ‘rotten boroughs’ in the gift of the aristocracy and nobility. Yet the funding of the reformed Parliament parties after 1832, Whig/Liberal and Conservative\Unionist by the railway companies and other industrial and newspaper barons, rarely attracted great attention. It seems that it is only since the trade unions came into the political arena from the late 19th century, that their funding of politicians and the Labour Party, has again aroused concern. 
In 1907 a Walthamstow Liberal trade unionist started a legal action against his union, the Amalgamated Society of Railway Servant’s decision to levy a compulsory contribution (1shilling a year) to the union’s political fund. What made it so controversial for Osborne, was that the proceeds were being donated to the infant Labour Party, in pursuance of the union’s political objectives, which he regarded as extreme socialistic.  He had the sympathy of the entire establishment, especially the judiciary, and in a famous 1909 ‘Osborne Judgement’, the House of Lords held that the levy was unlawful.  
This sparked a huge campaign by the unions and the Labour Party to overturn that judgement and in 1913, a Liberal government, [in which Labour and the Irish Nationalist Party held the balance of power], did so with the Trade Union Act. However, this Act limited the unions’ freedom, requiring them to ballot all their members for a majority to approve the levy and political fund. It also required them to allow any individual member to ‘opt out’ of paying the levy by signing a form. 
[see my paper, 'The Osborne Judgement 1909: trade union funding of political parties in historical perspective' H&P TUF Dec 2009] 
That Act remains the bedrock of union political funding and individual membership rights to this day, but it always remained controversial for the other parties. In 1927, after the General Strike, the Conservative government under Stanley Baldwin, significantly reversed the onus of individual ‘opt out’ to a positive decision to ‘opt in’.  This resulted in a serious drop in the numbers of unionists paying the political levy and a corresponding drop in union funds to the Labour Party. Nonetheless, Labour was returned as the largest party to government in 1929. 
 This reversal remained a major bone of contention for the unions and Labour, throughout the 1930s, but it was not until Labour secured a majority in the 1945-51 Parliament, that they were able to repeal and go back to ‘opt out’ in 1946. That has remained the position up to today, with the further requirement by Baroness Thatcher’s government in 1984, that the individual ballots to validate the union political fund, should take place every 10 years.  She did consider, but decided against reverting to the 1927 ‘opt in’ formula. All the ballots which have since occurred under her 1984 Trade Union Act, have given the unions massive majorities for their levy and fund. It is seen by most members as giving force to the unions’ political representation, rather than as expressions of individual union members’ political preferences. 
So, the parallel with 1927 of Miliband’s proposal seems valid. However, closer reading of the Labour Leader’s speech at the London St Bride’s Foundation, suggests that what he is proposing is not the ending of the ‘opt-out’ principle of the 1913 Act. Rather, he seems to be moving to change Labour Party rules. This would require unions to affiliate only those members who positively opt to be a member of the Labour Party. They would still be able to make a levy and use the balance of the fund for separate political donation purposes!  But, as ‘the devil is in the detail’ , all parties will study this microscopically, when a fuller report is received. And of course, the unions who still hold 50% of the Labour Conference vote, have to agree any changes. That ‘block vote’ and the ‘electoral college arrangements’ under which Ed Miliband was elected look now also to be changed.  
So, Miliband’s decision to take on the unions (his equivalent of Tony Blair’s ‘Clause IV moment’?) seems less significant than his declaration might suggest. Nevertheless, it could be momentous in the context of the now stalled all-party talks on future political funding.  The coalition government still has the power to propose legislation to change the 1913 Act to ‘opt in’. Nick Clegg has indicated his intention to bring forward proposals. Miliband seems to be signalling that Labour would not oppose such  a legislative change provided they get a lower ‘cap’ on individual donations to all parties? 
Times have changed with just a dozen or so major unions today, (and just four mega-unions), as compared with over a hundred in 1913. But in correcting the tendency to abuse this power, Miliband must be extremely careful that he is not simply removing the last union protective power of working people, at a time of rampant individualism and weak unions.
Do you agree with Jim? Add your comment below…


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