McCluskey shows how Miliband's reforms will increase his bargaining power

With Labour more reliant on large one-off donations from unions, the Unite general secretary is in a stronger position to push for policy changes.

Ed Miliband's decision to introduce a new opt-in system for donations to Labour from members of affiliated trade unions was spun as a move to reduce the power of union general secretaries but in his interview in today's Guardian, Len McCluskey shows why it could achieve the reverse. 

With the party likely to lose around 90% of the £8m it currently receives in affiliation fees (Miliband aims to recruit 300,000 of the 3 million political levy payers to Labour), it will likely fall to unions like Unite to make up the shortfall through separate donations from their political funds (which are unaffected by Miliband's plan). And this, as McCluskey signals, has increased his bargaining power. He tells the Guardian that he is not "looking to bankrupt the party" but adds that future funding will depend on "the policies Labour themselves are adopting, and in the context of whether we would give donations that would be determined by my executive and my political committees. It is a collective decision". His wishlist includes the repeal of the bedroom tax, a rejection of the benefit cap, a break with "austerity spending", 1m extra homes and a £1.50 increase in the minimum wage.

Depending on your political persuasion, McCluskey's increased power may be viewed as no bad thing (all of the policies I listed above are ones Labour should support) but it leaves Miliband vulnerable to the Conservative charge that his party is more dependent on the "union barons" than ever and undermines his pledge to take big money out of politics.

It's for this reason that the Labour leader desperately needs a deal on party funding reform. His proposed donation cap of £5,000 would apply to unions as well as individuals, eliminating any danger that McCluskey and others could hold the party to ransom. But while Miliband has removed one obstacle to a deal by promising to introduce an opt-in system, the Tories and the Lib Dems want him to go much further. As Nick Clegg outlined following Miliband's speech, he would like the political levy to be reformed so that union members are given the choice to donate to other parties. After all, as McCluskey concedes in the interview, Unite's own internal polling demonstrates that "a large chunk" of his members vote for parties other than Labour (the union's June 2013 political report stated "We can estimate that around 35-40% of our members voted Labour at the last election, with around 50-55% voting.")

Whether Miliband is prepared to go this far, at least without significant concessions from the coalition parties, remains unclear, but without a deal he could face an unpalatable choice between "bankruptcy" or another trade union bail-out. 

Unite general secretary Len McCluskey. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Scottish Labour's defeat to the Tories confirms a political transformation

The defining divide is no longer between left and right but between unionist and nationalist.

It was Scotland where Labour's recovery was supposed to begin. Jeremy Corbyn's allies predicted that his brand of left-wing, anti-austerity politics would dent the SNP's hegemony. After becoming leader, Corbyn pledged that winning north of the border would be one of his greatest priorities. 

But in the first major elections of his leadership, it has proved to be Labour's greatest failure. A result that was long thought unthinkable has come to pass: the Conservatives have finished second (winning 31 seats). For the first time since the 1910 election, Labour has finished third (winning 24). Scottish Labour leader Kezia Dugdale stood on a left-wing platform, outflanking the SNP on tax (pledging to raise the top rate to 50p and increase the basic rate by 1p), promising to spend more on public services and opposing the renewal of Trident. But rather than advancing, the party merely retreated.

Its fate confirms how Scottish politics has been realigned. The defining divide is no longer between left and right but between unionist and nationalist. With the SNP as the only major pro-independence party, the Tories, led by the pugnacious Ruth Davidson, framed themselves as the pro-UK alternative - and prospered. In contrast, Dugdale refused to rule out supporting a second referendum and suggested that MPs and MSPs would be free to campaign for secession. The result was that Scottish Labour was left looking dangerously irrelevant. "Identity politics. Labour doesn't get it," a shadow minister told me. Its socialist pitch counted for little in a country that remains ideologically closer to England than thought. The SNP has lost its majority (denying it a mandate for a second referendum) - an outcome that the electoral system was always designed to make impossible. But its rule remains unthreatened. 

Corbyn's critics will seek to pin the baleful result on him. "We turned left and followed Jeremy's politics in Scotland, which far from solving our problems, pushed us into third," a senior opponent told me. But others will contend that a still more left-wing leader, such as Neil Findlay, is needed. Dugdale is personally supportive of Trident and was critical of Corbyn before his election. Should she be displaced, the party will be forced to elect its sixth leader in less than five years. But no one is so short-sighted as to believe that one person can revive the party's fortunes. Some Corbyn critics believe that a UK-wide recovery is a precondition of recovery north of the border. At this juncture, they say, SNP defectors would look anew at the party as they contemplate the role that Scottish MPs could play in a Westminster government. But under Corbyn, having become the first opposition to lose local election seats since 1985, it is yet further from power. 

In Scotland, the question now haunting Labour is not merely how it recovers - but whether it ever can. 

George Eaton is political editor of the New Statesman.