Trade Union Bill: Labour Party fears £6m income fall

The Labour Party fears its annual income could fall by £6m as a result of legal changes to the way it gets funds from the unions, documents suggest.

The Trade Union Bill, being debated in the Lords on Monday, would require Labour-affiliated union members to "opt in" to paying a levy to the party.

Labour believes three million fewer members of the biggest unions would agree, impacting on its structure.

Internal party changes are already set to cut union members' contributions.

Labour is also set to lose out by about £1.3m a year when state funding for opposition parties - known as Short money - is cut. Ministers have said political parties should make their contribution to tackling the deficit.

'Partisan and unfair'

A Labour Party document shared with the Guardian newspaper makes clear the scale of the potential threat from the new bill to Labour's finances.

Unions are said to currently provide 20% of Labour's core funding and according to the Guardian, the estimated fall in funding will make it impossible for Labour to maintain its current structure, staffing or offices.

"With an annual salary cost in excess of over 50% of total costs, it is clear that current staffing levels could not be sustained," the party document is reported to say.

"In addition to a staffing review, all contracts would need to be challenged to remove any discretionary costs and offices considered for sale or sublet."

Members of the 14 Labour-affiliated unions, which includes Unite, the GMB, Unison, the Communication Workers Union and the Usdaw, currently contribute automatically, but can opt out if they wish.

The legislation going through Parliament would see union members having to "opt in" every five years to pay a political levy as part of their fees.

BBC political correspondent Ross Hawkins says Labour is facing a considerable financial challenge and it is in the party's interest to highlight the impact the new law would have.

Lord Collins, a former Labour general secretary, tells the Guardian: "These changes are entirely partisan, unfair and going to hit the income of the party and union political funds very hard.

"No balancing measure is being taken to cap the donations of the Conservative Party."

Business Secretary Sajid Javid has said the new bill, which also proposes tighter rules on strike ballots, was "about democracy and accountability" and "not a declaration of war" against unions.