Your cut-out-and-keep guide to the Labour union reforms

The unions seem very angry at Ed Miliband’s proposed funding reforms. Why would Labour want to alienate its comrades?

Ed Miliband won the leadership as a direct result of the votes of union members, heavily encouraged by their general secretaries. Proving that he is not “Red Ed” is seen by some aides as a tactical necessity.

But at what cost? Chuka Umunna, shadow business secretary, said on Monday that there would be a “financial hit”.

Yes in theory. Some £8m is at stake. For complex reasons that money could still come sloshing back to Labour – albeit through a different route. But it suits everyone involved to pretend that the cash will be lost.

So how would the changes work?

The affiliation fee paid by about 3m union members would no longer automatically go to Labour. It would only be paid by those who decided to “opt in” and in effect sign up to the party. Labour would then get access to data about these individuals for the first time.

Presumably most members won’t bother to join Labour? Thus the financial calamity?

There would be a big fall in “affiliation” money, for sure. The question which most pundits haven’t asked is where the cash will go instead. Members will not stop paying the money. Instead the payment – usually around £3 out of an annual political levy of £6 or £8 – will now go to the unions’ political funds instead.

And what will the unions do with the extra cash?

They can use it for one of their generic “issue” campaigns, for example in favour of the Living Wage or against hospital closures. But they can also simply give it back to Labour in big slugs of donation. The unions will continue to give millions of pounds to Labour – aside from affiliation fees – in this way.

So how would that work in practice?

Take one high-profile example. The GMB has warned its annual affiliation fees to Labour will slump from £1.2m to £150,000 next year. In this instance the missing £1m would simply swell the coffers of the GMB political fund: and can still be donated.

 

That sounds like the unions could end up with even more financial power over Labour?

Correct. The Labour leadership would have to be even more polite to the brothers. General secretaries could threaten to follow the likes of the RMT and PCS and disaffiliate from Labour if Miliband refuses to do what he is told. The GMB, for example, is calling on him to promise to legislate against companies that prevent unionised workplaces.

What is the other complicating factor?

In theory Labour is simultaneously pushing for a £5,000 cap on donations. If this was achieved it would put an end to big union one-off payments. In reality, however, this policy will never be agreed by the Tories.

So why are the unions kicking up a fuss?

The big gripe of the general secretaries is against a potential dilution of their influence which so far has only been hinted at. Labour aides have murmured that a “logical” result of the changes is that the unions will end up with less of their current 50 per cent vote at annual conference and 33 per cent vote in leadership elections.

That sounds like a real challenge to union power by Miliband?

Supposedly. Except that Miliband has only hinted at this genuinely historic change. Cutting the union vote would lead to open warfare with Labour: “That is the point where we would all get our guns out from under the table,” says one senior union figure. In fact the Labour leader will probably avoid making these changes. (I’m told that he would do it if only, say, 50,000 members sign up to Labour….but not if 500,000 do.) Meanwhile Labour’s assertion that there was no wrongdoing in the Falkirk candidate selection – contrary to Miliband’s earlier claims – have only served to make him look weak and infuriate union leaders.

  • This post has been edited since publication