A Labour MP has warned his party could face a debt crisis as a result of Ed Miliband’s union reforms.
Wansbeck’s Ian Lavery, a former president of the National Union of Mineworkers, has said changing the link with union members is the “biggest political gamble” in the history of the party amid growing concerns about the impact on its finances.
Mr Lavery, who chairs the trade union group of Labour MPs, said he believed fewer than 15% of union members would opt to join Labour under changes proposed by party leader Ed Miliband.
The potential financial crisis comes after Mr Miliband announced he wanted to end union funds automatically coming to the party, saying members should decide if they want to pay in.
Across the North East, many Labour figures accused Mr Miliband of blundering, with some saying he rushed into a move which damages rather than reforms links with the unions.
Mr Lavery has warned that the current plans would mean Labour losing at least £9m from affiliation fees. He questioned how the party could fill the gap to pay back loans.
“It is possible that loans financed by Unity and the Co-op might not be able to be paid back. If that’s the case, what happens to the party? If affiliation fees fall by millions of pounds, there will be a huge shortfall. I am not convinced this has been thought through,” he said.
Mr Lavery said he had been trying for years to review the historic link between unions and the party because it needed to be “refreshed”, adding: “The link wasn’t working, but I am concerned that the proposed change has been ill thought through.
“This is the biggest political gamble in the history of the Labour Party. It has been described as a challenge – it’s not. It’s a gamble. People are not queuing up to join Labour – quite the opposite. They are waiting to see what the party will bring to the table in its manifesto. I am convinced there will be less than 15% take-up of union members wanting to affiliate. If that is the case, it will create mayhem for the party’s finances.
“We should have avoided that at all costs. I am extremely worried about the future finances of the party.
“The party is professional and well organised, but in order to continue it has to be well financed.”
Mr Lavery said the link with unions was a “strong point” for Labour, connecting it to millions of working people. Unions are also voicing concern about Labour’s finances if, as widely expected, fewer members opt to affiliate to the party. A special conference will be held next spring to finalise the details of the changes, which were announced following controversy over the selection of a Labour candidate in Falkirk.
Unite was accused of signing up members so it could influence the selection of a candidate, although the union insisted it did nothing wrong.
I am convinced there will be less than 15% take-up of union members wanting to affiliate