Labour set to repeal law on union funding

A Thatcher-era law giving trade unionists the right to vote on whether their union should maintain a political fund may be scrapped by the Government in a desperate attempt to protect the Labour Party's financial lifeline.

The Trade Union Act of 1984 requires that unions must ballot their members every 10 years to maintain their political funds. Ministers are deeply concerned that disaffection and the increasing unpopularity of the Prime Minister among grassroots members will lead some unions to vote against, cutting off a critical source of revenue.

Conservatives, however, will argue that repeal of the legislation would constitute a fundamental denial of democratic rights.

The ruling council of the Trades Union Congress – made up largely of unions affiliated to Labour – is calling for the repeal of the Act in a submission to ministers that is expected to be approved by delegates at the TUC's annual congress in Blackpool next week.

In a document, Modern Rights for Modern Workplaces, TUC leaders contend that the law on political fund ballots, which requires votes every 10 years, is "superfluous" and "burdensome".

The paper points out that it is possible for union members to opt out of the political levy if they do not want to contribute. It argues that the vote must be carried out under the same strict conditions as those applying to union elections and leads to "considerable cost, both financially and in terms of resources".

Both the Government and Labour's high command are taking the submission seriously. Several organisations are due to vote in the next few years, including Unison, Amicus, the GMB general union and the Transport and General Workers' Union, which pour millions into Labour's coffers.

Unions still constitute the biggest single source of party income, although recently some of the biggest Labour affiliates such as the GMB and the RMT rail union have cut their donations. Unions have reduced by some £3m their contribution for the next few years at a time when the party is about £10m in debt. However, unions recently agreed a £100,000 emergency donation to help the party to pay its staff and meet other running costs.

Senior Labour Party figures argue that state-funding is the only long-term answer. The party's general secretary, David Triesman, believes the Government should use its Commons majority to override Tory objections.

Ironically, all unions that held political funds found that they were overwhelmingly reaffirmed in the two rounds of ballots held so far. Some unions held successful votes on setting up funds for the first time.