Britain’s biggest union saved Labour from bankruptcy by guaranteeing its finances in a secret deal that the party is refusing to make public.
Unite, which has given £13.4 million to Labour since Gordon Brown became Prime Minister, gave formal assurances in June that it would support the debt-ridden party. Labour and Unite have confirmed its existence to The Times but refused to provide details.
The Electoral Commission suggested over the summer that guarantees should appear on its public register. Nothing appeared yesterday as the commission published its quarterly report of political donations.
Labour and the commission said that the details did not need to be disclosed because the guarantee related to future rather than past earnings. However, Unite sources suggested to The Times in June that the guarantee was more wideranging, promising that the union would never let Labour go bust.
The party admits that it was in a perilous financial predicament over the summer, with outstanding loans topping £15 million and pressure from donors to return money totalling £1.5 million.
A Labour source said that the party detailed accounts to the auditors Horwath Clark Whitehill, who approached lenders, including Unite, for “reassurance” that they would continue funding. The party said that this was “legally absolutely different” from guarantees of specific loans that must be declared to the commission.
Francis Maude, the Shadow Cabinet Office Minister, said: “The public have a right to know that, if a deal was struck between Unite and the Labour Party, what were the terms and conditions of any agreement?”
Lord Oakeshott of Seagrove Bay, the Liberal Democrat Treasury spokesman, said: “If a political party can only keep going with guarantees from outside backers those guarantees should be fully and publicly disclosed as loans or donations. Even if they are operating a millimetre within the law, Labour are clearly breaching the spirit of the law.”
The commission revealed that Labour’s finances improved between July and September, with the party receiving donations totalling £7.5 million. About £2.1 million of this came from the unions, a smaller proportion than in recent months, with £500,000 coming from Unite. In the first three months of this year, 92.6 per cent of the national Labour Party’s total funding came from the unions The Conservatives received just over £4 million, excluding public funds. Their donations came from a broader base – 260 individuals and companies compared with Labour’s 77.
The jump in Labour donations comes in stark contrast to those from the previour quarter, April to June, when they totalled £3.8 million compared with £5.6 million for the Tories.
Labour’s debts now stand at £15,762,280, compared with £12,113,165 owed by the Tories.
The Lib Dems took £599,177 over the quarter, with Sir Elton John and David Furnish, among the contributors, handing over £10,495 each.
The Electoral Commission said: “Parties must report details of any donations received or regulated transactions they enter into to the commission. Regulated transactions include any loans or credit facilities entered into, and that includes transactions connected to those loans.
“Political parties do not have to tell the commission about any future funding arrangements they have agreed unless they are entered into a regulated transaction or receiving a donation.”
The commission would not say whether it was aware of the guarantee.
Filed under: Government | Tagged: Funding, labour, Union, Unite
