McCluskey's warning to Miliband: if you want Unite's money, change your policies

The Unite general secretary signalled that he would no longer tolerate those who "welcome our money but don't want our policy input".

Those who watched the webcast of Len McCluskey's speech to Unite's executive and rank and file members this lunchtime were not left disappointed. The Unite general secretary turned his guns back on Labour over the Falkirk selection row, declaring that the union had "done nothing wrong", that the party's report into the contest was a "shoddy farce" and that he would ensure that "the truth" came out. He went on to denounce the "unelected millionaires" (in this case, Lord Sainsbury) who wanted to "stuff the Parliamentary Labour Party with Oxbridge Blairites" and "the Tory media and New Labour spin doctors" who would "never understand the solidarity of working people". 

But far more significant was the clear signal that he intends to use Ed Miliband's planned reforms to the Labour-union link to maximise Unite's influence over policy and shift Labour to the left. The introduction of a new opt-in system for trade union members will cost the party millions in individual affiliation fees, leaving it even more dependent on one-off donations from unions' political funds. But rather than casually doling out the cash as in the past, McCluskey intends to extract a price. He will longer tolerate those who "welcome our money but don't want our policy input" and expects "enhanced" influence under the new system because "our voice and our votes are looked as legitimate". 

This would not mean a party "that is a pinkish shadow of the present coalition" and that "embraces the austerity agenda" but one that "offers real hope, that stands up for the poor and vulnerable, that puts growth at the heart of its agenda, that confronts privilege." McCluskey's speech was short on specifics but his wishlist has previously included a break with "austerity spending" (defined as no further cuts in public spending), the repeal of the benefit cap, a million extra houses and a £1.50 increase in the minimum wage. 

The question now is how far Miliband will go to appease McCluskey's demands (most of which are worthy of support) and how the Unite head will respond if the party falls short. It's important to remember that Miliband has called for a cap of £5,000 on all political donations precisely so trade unions and others can no longer buy influence. But with no sign of a cross-party deal in sight, he will be forced to go cap in hand to the unions unless he wants to gift the Tories an ever bigger advantage in the funding race. 

For Miliband, whose planned reforms to the Labour-union link have been spun as a move to reduce the power of the general secretaries, it is a perilous situation. If he does shift policy in line with McCluskey's wishes, he will be accused by the Tories of caving in to the Unite "baron" and of undermining his own pledge to take big money out of politics (regardless of the the obvious hypocrisy of this charge). If he doesn't, the danger is that Unite, by far Labour's biggest financial backer, will respond by curtailing its funding.

In this game of chicken, who will blink first? 

Unite general secretary Len McCluskey. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Budget 2017: What announcements will Philip Hammond make?

What will the first budget after Brexit hold for the economy?

This spring’s Budget - set to be announced on Wednesday 8 March 2017 - will be forced to confront the implications of last June's Brexit vote, along with dealing with issues of reliance on consumer spending, business rates and government borrowing. The government also (quietly) announced on Monday night that it will be asking ministerial departments to outline cuts up to 6 per cent, a potential nod for what’s to come next week.

All these things, along with the fact the Chancellor Philip Hammond is scrapping the spring Budget, meaning this announcement should be an interesting one.

The big story at the moment focuses on borrowing. The Resolution Foundation has predicted that healthier-than-expected tax revenues and the lack of a Brexit effect so far will lower Budget borrowing forecasts by £29bn between 2015-16 and 2020-21. 

The FT reports a possible £3bn reduction in borrowing, to £67bn. They also pin this optimistic prediction to higher-than-average self-assessment tax receipts, after changes in the taxation of dividends.

The Chancellor will potentially stick to the three key changes he made from George Osborne’s former financial commitments, according to The Sun. These consist of not predicting a surplus in 2019/20, slightly relieving the cap on welfare spending and no longer committing to reducing debt. The paper also predicts he’ll announce a change to the controversial business rates that were recently released, that could leave “shopkeepers and publicans clobbered with tax hikes of up to 400 per cent".

What do we know for sure?

The government has announced a few key changes in in advance of the Budget.

  1. The Spring Budget 2017 will be the final Budget held during springtime
  2. Finance Bill will follow the Budget, as it does now
  3. From 2018 "Legislation day" will move to the summer
  4. An Autumn Budget means tax changes will be announced well in advance of the start of the tax year
  5. 2018 will see the first Spring Statement