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Unions spurn Labour plea for cash

ON THE DAY it elected a new leader committed to reducing the trade unions' influence, the Labour Party faced a financial crisis last night after union leaders rejected a long-term plan to increase their contributions to the party by a third.

Representatives of 30 unions affiliated to the party said they would agree to a 6.25 per cent increase at the annual conference in October, to help Labour cope with its seven-figure overdraft.

But they turned down plans by Larry Whitty, the party general secretary, for further increases to be implemented automatically.

The party was told bluntly by union leaders that, instead of relying on them, it must find new ways of raising money. They added that union finances are in too parlous a state to allow them to agree automatic increases.

Mr Whitty suggested a 10p increase to pounds 1.70 this year in affiliation fees for each of the 4.5 million union members paying the political levy.

This would be followed by staged increases to pounds 2.15 in four years' time. He said Labour needed funds to fight next year's local elections and the 1994 European elections.

Even if the fee is increased this year, there is no guarantee that there will be a proportional increase in total contributions because of declining union membership. At a private meeting at the headquarters of the Transport and General Workers' Union in London, Mr Whitty acknowledged that there had already been an increase in financial contributions from other sources and this would need to be encouraged.

While commercial fund-raising has improved, so that union contributions make up only 55 per cent of the general fund, against 75 per cent in 1986, declining union membership has seen the real value of affiliation fees drop 30 per cent since 1987.

Mr Whitty also laid out plans to cut about 60-70 Labour Party jobs out of 200.

The unions' refusal to guarantee long-term aid comes against a background of warnings by Larry Whitty that the party's financial position is 'bleak'.

In a paper circulated recently he warned that the party made a loss of pounds 800,000 in 1991, with a shortfall in this year's income of pounds 500,000.

The party's overdraft stands at pounds 2.5m. In order to repay it, pounds 400,000 has to be found this year and pounds 680,000 in 1993, with further instalments due to be paid in 1994 and 1995.

Before yesterday's decision, Mr Whitty was warning that total income was likely to be 25

per cent or pounds 2m lower in real terms over the next few years.