Labour hit as GMB slashes funding from £1.2m to £150,000

The UK's third largest trade union expresses "considerable regret" at Miliband's planned reforms and warns of "further reductions in spending".

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. 

GMB general secretary Paul Kenny. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
Show Hide image

Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.