Ed Miliband has been warned he could bring financial meltdown to the Labour party as North East MPs question his relationship with unions.
The GMB yesterday revealed it would be reducing its Labour party funds by around £1m after Mr Miliband said he wanted to end automatic payments to the party.
When Labour first raised the proposed changes earlier in the summer many in the North East hit out at the potentially damaging moves, which were described a political gamble which could backfire.
Now, Wansbeck’s Ian Lavery has called on Mr Miliband to head off a funding nightmare by entering into “respectful” talks with the unions.
Mr Lavery, chair of the trade union group of Labour MPs, said he expected other unions to at least consider substantially reducing their financial support, a move he says Mr Miliband will have seen coming.
He said: “We have an election to prepare for a year from now and I’m not sure we are going to be in a good position, the trade unions provide more than just money, it is support and manpower at election times.
“We need the party to work with the trade unions on an understanding of respect so that we can avoid the financial meltdown which could face us as a party.”
He added: “I know other unions will be considering this move, and losing £1m is a major loss already, and not one that can be easily replaced. If we don’t solve this we face significant financial difficulties.”
Newcastle East MP Nick Brown began his career as a GMB officer, and his constituency party is still supported by the union.
He said the move was one for the unions to decide. “How a union’s political fund is spent is entirely up to the union, there is no automatic right for the Labour party to have those funds.” In the 12 months to June, Labour had an income of £16,839,000, of which £4,848,000 (about 29%) came from membership and small donations, £4,204,000 (25%) from fundraising and commercial activities, £4,163,000 (25%) from union donations and affiliation fees and £3,624,000 (22%) from grants, including the Short Money provided to opposition parties.
A senior Labour source said the party had been given “more than a few hours’’ notice of the GMB’s decision, and was not aware of any other unions planning similar moves.
Mr Miliband will not be deterred from his plans to “mend not end“ Labour’s financial links with the unions, said the source.