David Triesman: The Blairite trade unionist determined to square the funding circle

They are known at Labour headquarters as "Chas 'n' Dave". Charles Clarke, the burly party chairman who, according to his cabinet colleagues, could start a fight in an empty room. The lesser known half of Labour's double act is David Triesman, who has been the party's general secretary for a year and oversaw its symbolic move over the weekend from Millbank Tower to a townhouse overlooking St James's Park.

Mr Triesman, 58, plays soft cop to Mr Clarke's bruiser. As a former trade union leader, he is well qualified for his current task of smoothing the feathers of the unions, which have been so ruffled by Mr Clarke that some union bosses are urging Tony Blair to remove him as party chairman.

As Labour prepares for a potentially fractious annual conference in Blackpool next month, relations between the party and its founders have reached a crossroads. The speculation was always that New Labour would seek a divorce from the unions; in fact, it is the unions who have moved towards separation by cutting the money they give the party by some £3m over the next few years.

The unions feel neglected by Mr Blair since last year's general election and bruised by what they see as his obsession with private-sector solutions to the public sector's problems.

Mr Triesman's task is to hold the line, and he is undoubtedly well qualified for the job, as a Blair loyalist who is none the less sympathetic to the unions – a rare breed. After 17 years as a senior union official, and general secretary of the Association of University Teachers until last year, he is known and trusted by the unions. In turn, he supports the union campaign against two-tier workforces when staff transfer from the public to the private sector.

"I want to see powerful trade unions, absolutely committed to and passionate about their members' interests. It is completely legitimate to come along, argue your corner and say the government of the day is wrong," he says.

He feels that the RMT crossed the Rubicon when the transport union withdrew financial support from the constituency parties of 12 MPs, including John Prescott, because they would not back its policy demands. "I don't think you can say, either to a party or individual MPs, that your support is conditional on them breaking the commitment in the party manifesto which was put to the country, or that you can dictate from outside the political process," Mr Triesman says.

"It cannot lead to [people] believing that a government, individual MPs or constituency parties can be bought. The RMT overstepped that mark. It was a real tragedy for a great historic movement that trade unionists such as John Prescott and Robin Cook could not stay members of their union. I can understand the wrench; if it had been me, I would have been aghast, and would have had sleepless nights."

Despite the recent heated rows with the unions, Mr Triesman believes the temperature has now cooled. "Maybe we were sleepwalking towards much more fundamental breaches without thinking what the road ahead really looked like," he admits. "My sense is that in the last month or six weeks, most people in the party and unions have taken a deep breath and started to think about that."

Under the new settlement he is offering the unions, the party would accept their right to advance their members' interests, while the unions would acknowledge that their financial support does not allow them to make stand-and-deliver demands. "If money is given, it must be given because of shared basic values and not in return for any suggestion about favours. If everyone understands those terms, I am not squeamish about it," he says.

Of course, he admits, there will still be arguments, including public disagreements at the forthcoming conference. "But I think there is a significantly better climate for understanding the values that are still there in the link and trying to make sure we work on how to secure it."

The unions' muscle-flexing has compounded Mr Triesman's problems in balancing Labour's books. In his first year, he got the party's spending under control – the number of staff at headquarters has halved since last year's election – only to see its income drop drastically. Union money can no longer be taken for granted, and big donations from individuals slumped after a string of cash-for-favours allegations about donors including the Indian steel magnate Lakshmi Mittal and Paul Drayson, the boss of Powderject Pharmaceuticals.

Labour has debts of £5m plus a £5.5m mortgage on its new headquarters in Old Queen Street, which opens for business on Wednesday. Mr Triesman admits some painful options are being considered to make further savings. He has begun a review of Labour's offices in the regions, which could lead to some mergers, but promises that Scotland and Wales will be ring-fenced because of devolution. He cannot rule out job cuts, though he will do his best to avoid compulsory redundancies.

Mr Triesman had forecast the income drop in the second quarter of this year, when donations plummeted from £3.3m in the previous three months to £591,000. A fund-raising committee, on which he sits, was set up in May to vet controversial donations but has not turned any down yet – partly because so few have come in.

Would he accept another £100,000 donation from Richard Desmond, the Daily Express and soft porn publisher? Mr Triesman is keeping his views to himself, saying he would discuss such an offer with the committee and support its decision. But, he reveals, he is far from happy at the way Margaret McDonagh, his predecessor as Labour general secretary, accepted Mr Desmond's money.

"The last time a donation was made, it was known to one person [Ms McDonagh] and the person who banked the cheque," he says. "I don't want to go back to that highly personalised style of working. Michael Levy [Labour's chief fund-raiser] knew nothing about it. Whatever the rights and wrongs, the idea of the general secretary of a party that lives its life in the public light simply making decisions [on donations] without any collective process is not sensible or proper."

Mr Triesman is also critical of the McDonagh regime for artificially boosting Labour's membership figures by counting people as members even if they had arrears of up to 15 months. The cut-off has been reduced to six months, a move that has contributed to a fall in membership from 405,000 in 1997 to 288,000.

The current membership figure, to be published before next month's conference, will be "less than 300,000". But he denies the fall is due to members walking away in protest at the Government's policies, saying Labour loses only a "tiny fraction" of those who pay their subscriptions by standing order or direct debit and that many drift away simply because no one calls to collect their cheque.

Mr Triesman has also spent the past year trying to convince members that they can influence Labour's policies for the next election. He accepts that, after the 1997 landslide, a lot of members felt taken for granted and did not receive enough feedback from the party. With Mr Clarke, he is trying to revive debate inside a party that has seemed to thrive on control freakery and stamping out internal dissent. "It may be that people took the issue of maintaining party discipline rather more seriously and went about it with rather more enthusiasm than historically was the case," he says.

He insists debate is back in the party: he receives 300 e-mails each day from members, many on policy, while Labour's call centre gets 1,400 similar messages a week. To prove things have changed, a tricky debate on Iraq at the Blackpool conference looks inevitable, whereas the old regime would probably have prevented one. "There is no desire to suppress debate," he says. "Politics is about ideas and having a good argument. We have moved on. We are a government in our second term with a large majority. We need to be confident and unafraid of debate."

Mr Triesman has urged Tony Blair to use that majority to introduce state funding for political parties despite Tory objections. His call will fuel the cabinet debate on the issue and increase the pressure on election. Supporters of taxpayer-funding include John Prescott, the Deputy Prime Minister, David Blunkett, the Home Secretary and Robin Cook, Leader of the Commons.

Mr Blair has said he does not want to bring in state funding without cross-party consensus, in effect allowing the Tories a veto. But some cabinet ministers privately share Mr Triesman's view and are urging Mr Blair to use the party's huge Commons majority to change the law.

Mr Triesman suggests state funds be channelled to parties for purposes the public would support, including securing more female and black MPs and councillors and finding new policy ideas and research.

The CV: From communist to Blair loyalist

David Maxim Triesman

Born: 30 October 1943

Educated: Stationers' Company School, London; University of Essex; King's College, Cambridge.

Career: Research officer in addiction, Institute of Psychiatry, 1970-74; senior lecturer, Polytechnic of South Bank, 1975-84; deputy general secretary, National Association of Teachers in Further and Higher Education 1984-93; general secretary, Association of University Teachers, 1993-2001. Author of books on drugs; college administration; managing change; unions and football mania.

Politics: Member of Communist Party before joining Labour. Became Labour's general secretary last September.

Clubs: Reform, Middlesex County Cricket.