The inconvenient truth at the heart of Miliband’s union reforms

At a special Labour conference last week, Ed Miliband pushed through his much-trumpeted reforms to the party’s relationship with the unions. But, much as he is laying claim to be the victor in this battle, in truth the war is still ongoing. The latest friendly fire has come from Lord Cashpoint, Michael Levy – Tony Blair’s chief tapper-upper of the rich – who spoke out on Monday to urge Miliband to seek more private donations from the super-wealthy, just as Blair and Levy did with so much success.

The reality, though, is that Miliband has been quietly doing his best to drum up money from private donors, notwithstanding his very public attack on the Tories as the party of hedge fund managers and property developers. After all, he hired the property tycoon Andrew Rosenfeld to help with fundraising, and he has actively courted a long line of multi-millionaires, from George Iacobescu, the Chief Executive of Canary Wharf Group (itself a Labour donor), to others like businessmen John Mills and Assem Allam, the latter of whom gave Miliband a ride in his Rolls Royce alongside a cheque for £100,000.

That’s why Levy’s suggestion will hardly be welcomed by the Labour leader, because it demonstrates the hypocrisy of Miliband’s public pronouncements in the face of his fundraising tactics. The showdown with the unions may have thrown a spotlight on the corrupt nature of Labour’s links with the unions, where cash has led to a direct influence on policymaking at the NEC and the National Policy Forum, but at least it has provided cover for Labour’s attacks on the Conservatives.

Levy’s intervention shows the inconvenient truth at the heart of Miliband’s reforms. If the changes really are to put an end to Labour’s reliance on the unions, then the money will have to be found from somewhere else. Doing nothing simply wouldn’t be an option: if Labour were a European country, the state of its accounts would place it somewhere on the financial spectrum between Italy and Greece. Its net current liabilities stand at around £6 million, and that’s before the party faces up to the challenge of trying to find £10 or £20 million to pay for an election campaign in 2015. 40% of its income comes from donations and affiliation fees, so if the union cash really does disappear, then the party could go to the wall unless that black hole is filled by other means.

So, either the private donors will have to step in, or else Miliband must be confident enough that the unions will keep on paying. Given that the party has already been trying to encourage the super-rich to cough up, the inevitable conclusion is that the unions will continue to provide the financial support that Labour desperately needs. While affiliation fees may fall, the new arrangements will provide every opportunity for Labour to make up the gap with increased direct donations from the unions. This in turn gives more power to the General-Secretaries, not less.

The truth for Ed Miliband is not, as he maintains, that his party has distanced itself from the union movement, while remaining sceptical of the rich – in fact, he will continue to rely on them both.