Why do private donors fund Labour?

JVL introduction

In this article for JVL, John Booth, a former Labour Party chief press officer and a founder member of the Orgreave Truth and Justice Campaign, looks at Labour’s history of obscure funding arrangements.

In addition to their salaries and expenses MPs may receive sizeable sums from private donors whose motivation can be opaque. Such is the case with recent revelations about Yvette Cooper, Wes Streeting and Dan Jarvis.

Booth reveals aspects of Labour’s funding under Tony Blair which still have the power to shock. Your web editor, for one, was not aware that when Gordon Brown succeeded him Labour debts amounted to a staggering £30m – enough to deter Brown from calling an early general election.

Much of the finance Blair attracted, assembled by his new-found friend and tennis partner, Michael (later Lord) Levy, came precisely because of his enthusiasm for Israel. The millions he raised increased Blair’s financial and political independence from both the party membership and the trade unions.

Such funding, given the parameters of Britain’s political system, is entirely legitimate.

But we have to ask if there are not better ways of funding political parties – and to worry that supporters of Labour Friends of Israel or of privatised health are far more likely to attract generous financial support than those who are not.

Why do private donors fund Labour?

John Booth, 17 January 2023

The injunction to “follow the money” often takes journalists to strange places. For Sam Coates of Sky News, recently tracking the £345,000 income trail of three leading Parliamentary allies of Sir Keir Starmer, it was to a front door in suburban Hertfordshire.

As part of The Westminster Accounts investigation, the channel’s deputy political editor wanted to learn more about the donations this Parliament to Shadow Home Secretary Yvette Cooper (£184,317), Shadow Health Secretary Wes Streeting (£60,900) and former mayor of South Yorkshire Dan Jarvis (£100,000). They came from a company the Financial Times called “a corporate vehicle with no website”.

Coates didn’t gain entry to the Broxbourne address listed as the offices of MPM Connect Ltd or acquire much information from its bemused-sounding occupants.

He learned little more from the three Labour beneficiaries. In similarly worded statements they said that the donations were from businessman Peter Hearn to support the work of their offices. Cooper had received £75,000 from the same donor for her leadership bid in 2015 when she came third behind Jeremy Corbyn.

Streeting separately accepted £15,000 last year from a donor with interests in privatised health care. The Electoral Commission’s register of donations shows that he reported the donation from John Armitage, a hedge fund founder and manager who had previously given over £3 million to the Tories.

Of course most Labour MPs come nowhere near rivalling the Tories when it comes to supplementing their tax-funded salaries. But as the Socialist Health Association and Momentum were quick to point out, there are problems with Labour accepting donations, especially in the way described by Coates.

The SHA simply reminded us of the decision taken democratically and unanimously by the 2022 party conference to commit a future Labour government “to returning all privatised portions of the NHS to public control”. It also banned Labour MPs from accepting donations from private companies interested in outsourcing NHS functions.

The Westminster Accounts online tool helps us challenge those holding or seeking power by making their financing, and thus perhaps their motivation, more visible. It helps us to ask what donors want for their money. Is big-ticket shopping in Westminster any different from wanting value for money at a supermarket?

This transparency initiative should signal a warning to a cash-poor Labour party with fewer active members and declining trade union funding, and to a Starmer less than straightforward over his leadership campaign funding, who sees donors as a big part of the solution.

A little history can help tell us why

Cooper was a prominent member of the Gordon Brown government when Labour (then in its “New Labour” guise) lost in 2010. Such little reputation for trust it might have retained after the Iraq war had been weakened by money controversies.

Several Labour MPs went to jail and many more, including Cooper and husband Ed Balls, had been caught up in the damaging parliamentary expenses scandal.

The first public suspicion that Tony Blair was not the “straight sort of guy” he claimed came soon after his 1997 election with the donation allegations over health policy, tobacco advertising and Formula 1 racing (here and here).

Subsequent revelations linking party income to the controversial Dome, newspaper ownership, passport provision, peerages, job appointments and other dubious dealings led to those funding the party being unflatteringly styled “Tony’s cronies”. (10) Andrew Rawnsley at The Observer concluded in 2006 that “whiter than white” Blair had “squandered his own legacy on sleaze”.

Brown succeeded him in 2007 and considered calling an early general election based on early polling popularity over Tory leader David Cameron.

Labour’s general secretary at the time, Peter Watt, recounts that he was called to a Cabinet room meeting with Brown and advisers that included current Shadow Work and Pensions Secretary Jonathan Ashworth:

“I didn’t pull any punches at the meeting, telling them that for the last ten years, we had in every year bar one spent more money than we had raised. Year on year our debts had soared, to a staggering £30 million. I took them through how much a general election would cost, showing them … that to run a general election on two thirds the scale of previous polls we’d need to raise more money, pound for pound, than at any time in our history.” (Inside Out: My story of betrayal and cowardice at the heart of New Labour, Biteback 2010)

Watt lost his job after being forced by the party leadership to take the blame for a convoluted arrangement by which David Abrahams, a wealthy and well-connected Labour supporter, had arranged donations to the party through other people (here and here).

No prosecution followed that inquiry nor the earlier one into “cash for honours” in which several New Labour figures, including Blair and his main fundraiser, Lord Levy, were interviewed by the police.

The question why some wealthy people had at the time decided to fund New Labour can now be seen having a clear answer – support for Israel.

Here’s Paul Vallely profiling Levy in The Independent on 18 March 2006:

“It was in 1994 that Tony Blair, then the shadow Home Secretary, met Levy at a dinner in the Israeli embassy. Attracted by Levy’s traditional emphasis on family and religion, the pair became friendly and the Blairs soon became regulars at the Levys’ Friday night dinner parties. Before long, the pair became tennis partners, sometimes playing twice a week.

“Levy began to support Blair’s private office from his own pocket and was asked to set up a Labour Leader’s Office Fund. Levy applied himself with his customary vigour and soon had set up a blind trust into which his contacts including Alex Bernstein, former head of Granada Television, and the printing millionaire Bob Gavron both contributed. Both later received peerages.”

Vallely added:

“Levy’s blind trust raised around £2m and increased Blair’s financial and political independence from both the party membership and the trade unions. (Labour’s reliance on trade union funding has declined from two thirds of the total in 1992 to around a quarter now.) It enabled him to run the biggest opposition leader’s office ever, with 20 full-time people including his press strategist Alastair Campbell and chief of staff Jonathan Powell.”

Levy was ennobled soon after Labour came to power and was appointed “Special Envoy on the Middle East in 1998.

Jack Straw, who became Blair’s Foreign Secretary in 2001, writes in his Last Man Standing (Macmillan 2012):

“If you wanted to be Tony’s Foreign Secretary Michael was part of the package… He was an effective fund-raiser for the Labour Party, especially with the UK’s Jewish community. He had a home in Israel, as well as in London. Of Michael’s loyalty to Tony I was never in any doubt. But when Michael was given this position the Israelis must have thought they’d won the lottery.”

New Statesman associate editor John Lloyd had written in 1998 about Levy’s activities:

“A group of businessmen involved in Jewish charities whose decisions to give to Labour have been crucially influenced by the party’s strong pro-Israeli stance under both Tony Blair and his predecessor John Smith……[Michael] Levy brought the world of North London Jewish business into the Labour Party…some of the names whom Levy persuaded to donate include Sir Emmanuel Kaye of Kaye Enterprises, Sir Trevor Chinn of Lex Garages, Maurice Hatter of IMO Precision Control and David Goldman of the Sage software group…….it is clear, however, that for this group Blair’s (and Smith’s before him) strong support for Israel is an important factor, especially with those such as Kaye, Chinn and Levy himself, who raise large sums for Israeli causes.”

Some listed by Lloyd had previously given to the Conservatives under Margaret Thatcher. So their support for Blair, perhaps like that of Rupert Murdoch, was less to do with loyalty to the Labour cause than it was to backing a leader likely to win.

A big Blair backer in New Labour days was Sir Trevor Chinn who has continued to fund Labour supporters of Israel ever since. He contributed £50,000 to Starmer’s leadership campaign and has also donated £25,000 each to deputy leader Angela Rayner and Shadow Chancellor Rachel Reeves and £10,000 to Wes Streeting. Lesser sums have gone to Bridget Phillipson, Liam Byrne and Steve Reed.

We are right to ask if the big donors sought by Starmer are as similarly motivated as those who helped New Labour into government.

Clearly there are long-standing Labour supporters rich enough to make substantial donations to the party. They are legitimately putting their money where their mouth is just as those of us with little cash to spare put our shoulders to the party wheel as activists.

But don’t all of us in the party, especially those who have suffered at the hands of the Israel lobby, deserve to know the motivation of those who support the offices of favoured MPs. Can anyone not listed as a parliamentary Labour Friend of Israel find their way to a generous donor’s door?

John Booth is an associate member of Jewish Voice for Labour