The Trade and Industry Secretary, Patricia Hewitt, has warned trade unions they will not be able to "blackmail" ministers during a review of union power in the workplace.
Ms Hewitt will announce a government review of industrial relations legislation today. She will also issue a discussion document about a European Union directive on how companies should consult workers. She will risk widening the rift between unions and the Government by making clear that any changes to the law will be limited, and has said that unions threatening to cut their cash contributions to Labour will not put her off the task.
In an interview with The Independent, Ms Hewitt said: "We will make decisions on these matters in the national interest. We are not going to be dictated to by interest groups and we are certainly not going to be blackmailed by statements made in relation to the Labour Party. It would be quite wrong for us to take those into account."
Ms Hewitt condemned the RMT transport union's decision to switch funding from Labour MPs, including John Prescott, to left-wingers prepared to campaign on its policies. She said: "The RMT has made utterly unacceptable demands upon MPs. I think John Prescott made absolutely the right decision [to resign from the union]. For John, it was a very painful decision, given the length and staunchness of his involvement in the RMT. It is a great pity to see that kind of political agenda being played out within the union."
Although the row has sparked a new debate over whether Labour and the unions should divorce, Ms Hewitt said she did not want the link to be broken and opposed the idea, favoured by some Labour modernisers, for union members to join the party individually instead of en bloc.
During her review of the Employment Relations Act, some unions will press for reforms introduced by Margaret Thatcher to be repealed. The TUC will try to help unions to win recognition rights by asking for the abolition of the requirement for a 40 per cent turn-out when staff ballot.
In an attempt to reassure business leaders, Ms Hewitt said: "This is not, as some people have feared, opening up the entire gamut of employment legislation and individual rights to yet another review. There are some colleagues in the trade union movement who would like to revisit what I would regard as some very old debates."
She also said companies would not be forced to set up works councils under the EU directive. "There will not be a one-size-fits-all policy," she said. "We will go on making this country a very good place in which to do business."
Ms Hewitt admitted that many employers were "not happy" with the increase in national insurance contributions announced in the Budget in April, but believed they supported the Government's decision to boost the health budget.
The Foreign Office minister Denis MacShane told the ISTC steel union yesterday that relations between Labour and the unions were at a turning point. "We either rebuild our relationship or we limp towards separation and divorce," he said.
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