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Capital’s B Team

As the Labour leadership drives members out of the party and damages ties to trade unions, they have turned to wealthy donors to fill the funding gap – but so far the rich seem quite happy with the Tories.

Keir Starmer recently received a lesson – not that it ought to have been necessary – in the dangers of courting rich donors. Property developer, prominent New Labour donor and former councillor David Abrahams, welcomed back into the Labour fold under Starmer, was the focus of unwanted attention last week after a series of crass and offensive tweets from Abrahams’ now-deleted personal Twitter account re-emerged. 

They were promptly condemned as Islamophobic by the Muslim Council of Britain and Mish Rahman, recently elected to the National Executive Committee and himself a Muslim. Among other ignorant and bigoted remarks, Abrahams had stated that British Muslims had “mixed loyalties”, claimed that Palestinians “invented suicide bombers” and implied that Black South Africans were happier under the white supremacist tyranny of apartheid than under democratic majority rule.

This isn’t the first time that Abrahams has been the subject of controversy. In 2007, it was revealed that he had donated £650,000 to the Labour Party through proxies including his builder and secretary. A police investigation was carried out and although Abrahams was not charged, Labour’s then-general secretary Peter Watt resigned from his post. Watt subsequently served as chief executive of The Campaign Company, a communications consultancy firm founded by Labour’s current general secretary, David Evans.

Of course, the Abrahams row was just one of many funding scandals under New Labour, which ultimately made it synonymous with sleaze. Others included Tony Blair’s personal intervention to exempt Formula 1 from the ban on tobacco advertising in sport after meeting with Bernie Ecclestone – then a major Labour donor – and his controversial relationship with steel tycoon Lakshmi Mittal, who donated £125,000 to Labour and then received Blair’s support in taking over Romania’s state-owned steel manufacturer, Sidex.

Then there was the ‘cash for honours’ scandal, where Labour was accused of handing out peerages in return for loans to the then cash-strapped party. Again no charges were brought as it couldn’t be proved that the peerages were awarded as a quid pro quo, but the row further battered Blair’s already wrecked reputation as “a pretty straight sort of guy”. The MPs’ expenses row of 2009, though a cross-party affair, saw Labour bear the brunt of public anger – the consequences of which still haunt British political life.

Since winning the Labour leadership, Keir Starmer and his allies have apparently been content to run the risk of more such scandals if it means they can reduce their reliance on trade union donations and membership subscriptions. The Observer triumphantly proclaimed back in August that rich donors were flocking back to Labour, with more to follow. Starmer’s own campaign for the party leadership, despite pledging fealty to most Corbynite policies, was itself boosted by generous contributions from individual donors.

Certainly, Starmer and company seem to be doing a grand job of alienating both left-led trade unions and many individual party members. According to Labour’s own records, there were 50,000 fewer people eligible to vote in the recent set of NEC elections, with fewer than half a million entitled to a say. This would imply a drop of nearly 57,000 members since the last leadership election – a figure likely to be considerably higher since the episode surrounding Jeremy Corbyn’s suspension and factoring in members in arrears.

Meanwhile, Unite – Labour’s biggest financial supporter and its largest affiliate – has refused to dutifully cough up cash while being treated with contempt. Having already cut its affiliation to Labour by 10 percent in October, it was reported last Thursday that Unite had made no donations to the party since Starmer’s election as leader. Len McCluskey has stated that Unite will continue to pay affiliation fees, but as the union provided around £7m to Labour between January 2019 and March this year, these ongoing tensions risk leaving a financial black hole for Starmer to fill.

Nor does Starmer’s latter-day prawn cocktail offensive appear to be delivering the goods. Donations from private individuals since April have totalled only £199,000, suggesting that Britain’s captains of industry are as yet unconvinced by whatever Labour is offering. Surely this isn’t for want of trying on Starmer’s part: the ongoing war against the Labour left, the ritual humiliation of Jeremy Corbyn, and threats by deputy leader Angela Rayner to suspend “thousands of members” must be intended to send out a certain message.

But what can Starmer’s Labour offer to rich potential donors? The Tories, after all, were powered to their landslide victory last December by an eye-watering £37m in large donations in the fourth quarter of 2019 alone. While Labour has closed the gap in the opinion polls and now stands neck-and-neck with the Tories (again), the prospect of a Labour government is still distant (not least as the next general election isn’t due for another four years). Nor can Starmer plausibly outflank Boris Johnson with a more ‘pro-business’ offering – though he may try.

One of the reasons New Labour was able to court support from the world of business so assiduously is that it could offer access to the inner sanctum of power – access which it was more than willing to grant. It’s quite possible that Labour could end up leading a government after the next election, but until that looks a surer bet, it’s unlikely that too many rich donors will switch their allegiances. And even if they did, they wouldn’t be doing it out of the goodness of their hearts: they’d want to extract serious concessions on party policy.

This makes it all the more reckless that Starmer has charged headlong into confrontation with Labour’s left-wing trade union affiliates while at the same time shedding party members in their tens of thousands. With next May’s local elections – the first big test of Starmer’s progress – looming ever larger, and the party’s ‘war chest’ emptying, many in the party would have cause to feel nervous.