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Trade unions reported to Office of Fair Trading


21st December 2007

New concerns today were raised about the legality of the funding of the Labour Party, as it was revealed that millions of trade union members could be paying over the odds for their membership subscriptions.

New concerns today were raised about the legality of the funding of the Labour Party, as it was revealed that millions of trade union members could be paying over the odds for their membership subscriptions, with Labour pocketing the extra cash - potentially in breach of the law. This comes as the Labour Party is investigated by the police over breaking election law, and follows the suspension of the Inter-Party Talks on party funding due to the Labour Party's refusal to consider reform of union funding.

Conservatives have submitted a dossier of evidence to the Office of Fair Trading, and called for an investigation by the consumer watchdog into apparent breaches of Consumer Protection law by trade unions. British workers are being systematically misled and over-charged by the very institutions that are supposed to be protecting their interests.

  • Union misselling scandal: Labour's cash from the unions comes via 'political funds' that each union must set up. Trade union members have a right to opt out of the political fund and pay a reduced trade union levy. Yet an investigation by Conservatives have found that most trade unions (a) systematically keep their members in the dark about the right to opt out and (b) many do not give members a refund on the political levy if they do opt out.
  • Duping consumers: Irrespective of election or trade union law, this is potentially in breach of consumer protection law - just as if a retailer had duped a consumer into paying for an optional warranty or insurance protection by not giving them full information on its voluntary nature.
  • Breaches of consumer protection rights: In a formal complaint to the watchdog, Conservatives have highlighted the activities of 20 trade unions, the majority of which bankroll Labour. A request has been made to investigate apparent breaches of the Unfair Terms in Consumer Contracts Regulations 1999, the Consumer Protection (Distance Selling) Regulations 2000 and the Consumer Protection Act 1987. A request is also made for a 'market study' of this potential misselling under the Enterprise Act 2002. New rules from April 2008 further tighten consumer law.
  • Most union members don't support Labour: The majority of trade union members did not vote for the Labour Party in the 2005 general election, yet they are effectively forced to bankroll the Labour Party thanks to the union barons and their shoddy sales practices.

Jonathan Djanogly MP, Shadow Minister for Business, Enterprise and Regulatory Reform, said:

"There is strong evidence that trade union members are being over-charged, and the Labour Party is cashing in from shoddy fundraising practices. Conservatives will stand up for the consumer rights of British workers, who are effectively being duped by union barons and Labour.

"Labour Ministers are unwilling to tackle yet another example of 'rip-off Britain' because of their partisan self-interest. It is now time for an independent consumer watchdog to investigate. Any reform of party funding must tackle the corrosive effect of trade union barons, and a cap on donations needs to apply across the board if it is to restore the public trust."

Related Links:

Labour and the Trade Unions - an analysis of a symbiotic relationship

Jonathan's letter to the OFT."



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