Labour to adopt Barack Obama's blueprint for fundraising

General secretary says party will try to wean itself off union cash

IAIN MCNICOL: The general secretary says it’s a ‘great myth’ that the Labour Party lives on large union donations (Susannah Ireland)

Labour bosses are working on a strategy to lessen the party's dependence on trade union support. Flushed with last week's election success, they hope to copy methods used by Live Aid and Barack Obama's 2008 presidential campaign to generate income from hundreds of thousands of small donations.

One of the "great myths" about the Labour Party is that it lives almost exclusively on large union donations, Iain McNicol, the man who runs the party machine, claimed.

Giving his first interview since he was appointed general secretary of the Labour Party last September, Mr McNicol told The Independent that – despite reports that it is in dire financial straits – the party is generating the income it needs to balance the budget in the current financial year, and to start reducing its £16m overdraft.

Under Tony Blair's leadership, Labour attracted a handful of rich backers who gave £1m or more each, but there have been no similarly-sized donations since Ed Miliband became leader. One set of returns from the Electoral Commission last year showed that the biggest individual for that quarter was Mr Blair's former spin doctor, Alastair Campbell, who gave £10,000, while "almost 90 per cent" of Labour's income appeared to come from the unions.

"That is because the Electoral Commission only record donations in excess of £7,500, so when you have an Electoral Commission report that the Labour Party is funded 80 or 90 per cent by the trade unions, it is just factually incorrect," Mr McNicol said.

"It may well be true for donations in that quarter over £7,500, but we bring in as much money from our members and supporters as we bring in from trade union affiliation fees. Nearly £8m comes from our supporters in the form of their membership fees and low level donations. If we look across at the model Obama built in America, there is a huge opportunity to build on those £5, £10 and £20 donations. That's where I'll be focusing a lot of our resources."

The reason Labour wants more small donations is not just because they need the money. Mr Miliband's advisers do not believe the strategy that produced Labour's landslide victory in 1997 will work in 2015. Then, Labour concentrated heavily on getting a sufficient number of Tory voters to switch allegiance in marginal constituencies. But with turnout at elections falling drastically, and after the shock Labour received in the Bradford West by-election, they may have to put aside the "key seats" strategy.

Soon after his appointment, Mr McNicol overhauled the party machine, upsetting members of staff who complained that it was an exercise in centralising control. But Mr McNicol said its purpose was to unify disparate parts of the organisations.

While the Blairites went to great lengths to isolate the ultra left, whom they blamed for the catastrophic drop in Labour's support in the early 1980s, Mr McNicol said they cannot now afford to treat party members as "leaflet fodder".