Labour loses its first million of union funding – how much more will it lose?

When Ed Miliband announced his plans to change union affiliations to the Labour Party from from “opt out” to “opt in”, there was speculation that this could cost the party millions each year if only 10% of trade unionists chose to become party members.

Today Labour has lost (more than) it’s first million pounds of funding as a result of Ed Miliband’s party reform plans, with the GMB opting to cut party affiliation fees from £1.2 million to just £150,000 from 2014. That’s the equivalent of 50,000 GMB members staying affiliated to Labour, rather than the current 450,000. It’s also 3% of the party’s annual budget – which will obviously have an impact on the ability to run a General Election campaign.

Miliband didn’t seem to have negotiated with the GMB before changing the party’s relationship with the unions, and now the GMB have acted in advance of the Collins Review being completed. This was always a distinct possibility.

The question now is how much worse the party’s financial position is going to get as a result of these reforms. Unison – one of the other large affiliates to the party – affiliated through a separate “Labour Link” fund, so the discussion around their affiliation fees is likely to be different to that of GMB. Unite – the party’s largest affiliate – currently has one million trade unionists affiliated to the party, bringing in over £3 million each year. Whilst their General Secretary Len McCluskey has been openly positive about Miliband’s proposed reforms, if only 10% of their members were to choose to opt-in and become party members, that would precipitate a decline in funding to just £300,000 a year based on the current affiliation fee level. That would mean the party losing almost £4 million a year from just GMB and Unite alone.

And that’s before we start looking at the level of affiliation from other, smaller affiliates.

What is likely to be crucial though is not just the level of affiliation, but what level the Collins Review sets the affiliation fee for union affiliated members. It’s likely to have to be higher than the current £3 a year per affiliate if the party is to avoid haemorrhaging millions in an election year. And the unions and/or Labour nationally will need to invest heavily in trying to recruit union members to the party.

I’m unconvinced that there’s the desire amongst trade unionists to become Labour Party members – nevermind the funds and the organisational capacity to run that kind of recruitment drive – for that approach to be successful.

Labour will most likely be forced to do far more, with much less, against a well resourced Tory Party machine.

There are just over 20 months to go until election day.