Len McCluskey speaks at the Labour conference in Brighton last year. Photograph: Getty Images.
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Unite's £1.5m funding cut means Labour will need to bargain with McCluskey

The union is prepared to reduce the shortfall but will expect policy concessions in return.

It looks like Labour might be needing that "large donation" from Tony Blair (which I revealed speculation about yesterday). After Ed Miliband's party reforms were passed at the weekend, Unite's executive has announced that it is reducing its annual affiliation fee from £3m to £1.5m. The cut is the automatic result of its decision to reduce the number of members it affiliates to Labour from one million to 500,000 (each contributes £3 a year). With the party now requiring all union levy payers to opt into donating, Len McCluskey rightly felt that it was "untenable" to continue to affiliate one million members when polls suggest no more than half of Unite members support Labour.  Following the GMB's earlier decision to cut its funding from £1.2m to £150,000, the total financial hit from Miliband's reforms now stands at £2.55m.

But significantly, Unite makes clear in its statement that it is prepared to reduce the shortfall through one-off donations from its enlarged political fund. It said: "The Executive Council is, however, also aware that we are now just a year from a General Election, in which it is vital that the British people are offered a clear political alternative to the ruinous economic and social policies of the Coalition government. It is not in the interests of democracy itself for Labour – the only Party which can offer such an alternative – to contest the election without the resources required to make the contest a “fair fight” against the parties of global capital and the super-rich.

"Bearing in mind the tight timescales in which decisions may need to be made over this next period, it therefore authorises the General Secretary to respond to any requests for additional financial assistance, beyond the affiliation fee, which may be made by the Labour Party, after first consulting the Executive Council or the Finance & General Purposes Committee."

The two key questions are how much Unite will provide in discretionary donations and what it will demand in return (although it is worth noting that the unions have always had the power to reduce the number of members they affiliate). As McCluskey said in his speech following Miliband's announcement of the changes last summer, he will (perfectly reasonably) no longer tolerate those who "welcome our money but don't want our policy input" and expects the union to have "enhanced" influence under the new system because "our voice and our votes are looked at as legitimate". On another occasion, he told the Guardian that while he was not "looking to bankrupt the party", future funding would 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".

McCluskey's policy wishlist includes an end to public spending cuts, the repeal of the benefit cap, and the building of a million extra homes. The challenge for Miliband will be adopting measures radical enough to satisfy the unions while also ensuring Labour sticks to its tough deficit reduction targets.

Alongside this, the party will obviously seek to attract more private donations - and that means welcoming money from Blair and other wealthy Labour supporters. The left of the party might complain (although it is worth remembering Miliband's pledge to introduce a cap of £5,000 on all donations), but when you're preparing to fight a general election against a well-funded Conservative machine, you can't be choosy. Until party funding reform is finally achieved, Labour can't afford to unilaterally disarm.

Here's Unite's statement in full:

"The decision of the Labour Party Special Conference on March 1 to adopt the proposals of the Collins review sets the collective relationship of Unite and other affiliated unions with the Party on a new course.

"The union will rapidly prepare a plan to ensure that we maximise the number of our political levy paying members who express support for our continuing collective affiliation, and who take advantage of the possibility of becoming associated members of the Party. Our representative on the Implementation Committee which will oversee the introduction of the agreed reforms will, among other things, work to ensure that the interests of our members are protected in the forthcoming selection process for Labour candidate for London Mayor and in any leadership election that may occur before 2020.

"When the Leader of the Party announced his intention to seek changes in the Labour-union relationship in summer 2013, he made it clear that he did not think it appropriate that the Party continue to accept affiliation fees from those who had not actively assented to such payments. Unite accepted that principle at the time.

"By the conclusion of the transitional period in 2020, it will be clear how many members of Unite and other unions actively support their political levy being used to affiliate to the Labour Party. Unite will work to make that number as large as possible. It is inevitable, however, that the final total will be considerably less than the present one million members affiliated. Opinion polling evidence suggests that, while Labour is by some way the most popular choice for Unite members at the ballot box, no more than half the membership in Britain vote Labour at present (many of the others not voting at all).

"The Executive Council therefore agrees that Unite’s affiliation will need to be reduced over the five-year period to 2020 to reflect this reality. It will therefore affiliate 500,000 members to the Party for 2014, and will review this number annually.

"The Executive Council is, however, also aware that we are now just a year from a General Election, in which it is vital that the British people are offered a clear political alternative to the ruinous economic and social policies of the Coalition government. It is not in the interests of democracy itself for Labour – the only Party which can offer such an alternative – to contest the election without the resources required to make the contest a “fair fight” against the parties of global capital and the super-rich.

"Bearing in mind the tight timescales in which decisions may need to be made over this next period, it therefore authorises the General Secretary to respond to any requests for additional financial assistance, beyond the affiliation fee, which may be made by the Labour Party, after first consulting the Executive Council or the Finance & General Purposes Committee."

George Eaton is political editor of the New Statesman.

Photo: Getty
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PMQs review: Jeremy Corbyn prompts Tory outrage as he blames Grenfell Tower fire on austerity

To Conservative cries of "shame on you!", the Labour leader warned that "we all pay a price in public safety" for spending cuts.

A fortnight after the Grenfell Tower fire erupted, the tragedy continues to cast a shadow over British politics. Rather than probing Theresa May on the DUP deal, Jeremy Corbyn asked a series of forensic questions on the incident, in which at least 79 people are confirmed to have died.

In the first PMQs of the new parliament, May revealed that the number of buildings that had failed fire safety tests had risen to 120 (a 100 per cent failure rate) and that the cladding used on Grenfell Tower was "non-compliant" with building regulations (Corbyn had asked whether it was "legal").

After several factual questions, the Labour leader rose to his political argument. To cries of "shame on you!" from Tory MPs, he warned that local authority cuts of 40 per cent meant "we all pay a price in public safety". Corbyn added: “What the tragedy of Grenfell Tower has exposed is the disastrous effects of austerity. The disregard for working-class communities, the terrible consequences of deregulation and cutting corners." Corbyn noted that 11,000 firefighters had been cut and that the public sector pay cap (which Labour has tabled a Queen's Speech amendment against) was hindering recruitment. "This disaster must be a wake-up call," he concluded.

But May, who fared better than many expected, had a ready retort. "The cladding of tower blocks did not start under this government, it did not start under the previous coalition governments, the cladding of tower blocks began under the Blair government," she said. “In 2005 it was a Labour government that introduced the regulatory reform fire safety order which changed the requirements to inspect a building on fire safety from the local fire authority to a 'responsible person'." In this regard, however, Corbyn's lack of frontbench experience is a virtue – no action by the last Labour government can be pinned on him. 

Whether or not the Conservatives accept the link between Grenfell and austerity, their reluctance to defend continued cuts shows an awareness of how politically vulnerable they have become (No10 has announced that the public sector pay cap is under review).

Though Tory MP Philip Davies accused May of having an "aversion" to policies "that might be popular with the public" (he demanded the abolition of the 0.7 per cent foreign aid target), there was little dissent from the backbenches – reflecting the new consensus that the Prime Minister is safe (in the absence of an attractive alternative).

And May, whose jokes sometimes fall painfully flat, was able to accuse Corbyn of saying "one thing to the many and another thing to the few" in reference to his alleged Trident comments to Glastonbury festival founder Michael Eavis. But the Labour leader, no longer looking fearfully over his shoulder, displayed his increased authority today. Though the Conservatives may jeer him, the lingering fear in Tory minds is that they and the country are on divergent paths. 

George Eaton is political editor of the New Statesman.

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