No one in Labour has ever disputed that Ed Miliband's plan to reform trade union funding so that members are required to opt-in to joining the party, rather than being automatically affiliated by general secretaries, will cost it millions. But few anticipated that it would do so even before the changes have been introduced.
The GMB, the UK's third largest union, announced this morning that it plans to reduce its affiliation fees to Labour from £1.2m to £150,000, depriving the party of 3% of its 2012 income. The union, which backed Miliband's leadership bid, currently affiliates 420,000 of its members to the party but will reduce this number to 50,000 from January. In a statement it said:
The GMB central executive council (CEC) has voted to reduce its current levels of affiliation to the Labour party from 420,000 to 50,000 from 2014.
This will reduce the union's basic affiliation fee to Labour party by £1.1m per year. It is expected that there will further reductions in spending on Labour party campaigns and initiatives.
GMB CEC expressed considerable regret about the apparent lack of understanding the proposal mooted by Ed Miliband will have on the collective nature of trade union engagement with the Labour Party.
A further source of considerable regret to the CEC is that the party that had been formed to represent the interest of working people in this country intends to end collective engagement of trade unions in the party they helped to form.
The CEC also decided to scale down by one third the level of its national political fund.
It's likely that Labour would have suffered a similar loss had the GMB waited until the reforms were introduced. The union will now affiliate 12% of its members to the party, in line with the private estimate made by Labour and union officials of how many will opt-in (and the same as the number that Lord Ashcroft's Unite poll suggested would join). But the GMB's decision to slash its funding in advance, rather than seek to recruit members to the party, is a damaging vote of no confidence in Miliband's reforms and Labour's policy stance.
The statement also suggests that the union intends to cut back on separate donations from its political fund, promising "further reductions in spending on Labour party campaigns and initiatives."
The move does, however, make it harder for the Tories to claim that the unions are seeking to "buy influence" in Labour, although I'd expect them to point out that it increases the influence of Unite.