Union cuts cash to Labour by £1m over 'privatisation'

One of Labour's biggest financial backers has voted to cut up to £1m from its donations to the party over the next four years in protest at Tony Blair's insistence on the "privatisation" of public services.

One of Labour's biggest financial backers has voted to cut up to £1m from its donations to the party over the next four years in protest at Tony Blair's insistence on the "privatisation" of public services.

The day after an uncompromising speech by the Prime Minister warning unions that the Government would make increasing use of the private sector to deliver state services, the GMB general union became the first major Labour affiliate to slash payments to the party.

The union's executive had been proposing simply to cut £250,000 from this year's £650,000 donation but, after Tony Blair's hardline comments, the governing body's 70 members voted unanimously to cut the same amount annually for four years.

Money saved by the union will now be used to oppose government policies. It launched an advertising campaign yesterday depicting a nurse and a "fat-cat" businessman under the slogan: "Who do you trust to run public services?"

The union's leadership also voted to review its financial backing for individual constituencies. That could mean withdrawing funding from Labour candidates who back the Government's policies on public services.

Senior GMB officials said they had been taken aback by the degree of anger on the executive over Mr Blair's "reform or bust" speech in which the Prime Minister declared that no "vested interests" would have a veto over reform.

In his address at the Royal Free Hospital in north London on Monday, the Prime Minister warned the union movement that he would not "flinch" from necessary changes to public services "no matter how much opposition".

A GMB official said: "A number of people in the union had expressed doubts about the wisdom of campaigning directly against the Government, but after hearing Tony Blair's speech yesterday, they came to realise that he was intent on pushing ahead with his privatisation of public services. We therefore have no option but to oppose him on behalf of the public and our members.

"You have to question Downing Street's timing on this. If Tony Blair had delayed his speech for 24 hours until after the GMB executive had met, perhaps the decision would not have been taken."

John Edmonds, general secretary of the GMB, said the decision had been taken with regret. "We believed the funding we provided was in support of a party and a government which would protect our public services from privatisation, but as the Prime Minister made clear yesterday, that is no longer the case," he said.

"If Tony Blair's comments were designed to cool the temperature, then he has made a serious blunder."

The annual GMB conference, which took place just before the general election, voted to maintain its traditional links with the Labour Party. The GMB official said: "At that time we were exercising discipline to ensure a Labour victory. Our members' commitment to the party has been repaid by the Government privatising their jobs."

The 1.3 million-strong public-service union Unison voted at its annual conference also to review its financial backing for the Labour Party, while the Fire Brigades Union, with 50,000 members, voted to withdraw support.