`Middle class' costs Labour pounds 250,000

One of Labour's biggest financial backers among the trades- union movement has decided to withhold pounds 250,000 permanently in protest at middle- class domination of the party.

The Amalgamated Engineering and Electrical Union originally intended to keep the money back temporarily, as reported in the Independent, but has since decided to use it to increase its own political influence. The party is understood to have run up debts of pounds 3.5m on top of its pounds 4.75m overdraft, so that the pounds 250,000 from the union, earmarked for the election campaign, would have helped to address a mounting financial problem

Ken Jackson, general secretary of the union, is particularly angry at the party's alleged predisposition to "parachuting in" middle-class people to stand as parliamentary candidates at the expense of local trade unionists. Mr Jackson, a traditional right-winger in the labour movement, said the selection process overseen by the party's national executive committee had favoured the "white-collar" element in the party. "We feel that people with working backgrounds were not being supported so that policies of the union could be fully represented. There were quite a number of constituencies where people were simply parachuted in".

Ironically, the union has appointed Tom Watson, one of Labour's senior election co-ordinators, to spend the money originally intended for the election, to strengthen the AEEU's political profile. Mr Watson will tour the regions setting up training courses for union members who wish to progress within Labour and encouraging membership and activism within the party.

The union took high-court action against Labour last year over the imposition in Swindon North of Michael Wills, a television producer, as a candidate instead of Jim D'Avila, an AEEU convenor. The union's candidates were also allegedly "bounced" in Dudley North and Kilmarnock and Loudoun.

The union insists that the withdrawal of the pounds 250,000 was not sour grapes, because AEEU members had been elbowed aside, it was a protest against a "wider malaise" in the party.

In a recent submission to Labour on the party's decision-making process the AEEU denounced some senior figures as "right-wing Trotskyists" allegedly seeking a permanent revolution within the organisation. The union, once ultra-loyalist, has been become increasingly disenchanted with "New Labour". The decision to hold on to its donation comes ahead of a speech to next week's TUC congress by the Prime Minister, who may feel the need to temper the party's growing independence from unions with a gesture towards its main financial backers.