Blow for Britain's Labour as trade union slashes funding

LONDON (AFP) - Britain's main opposition Labour party suffered a blow on Wednesday when one of its biggest supporters announced that it is cutting 90 per cent of its donations, 18 months ahead of a general election.

The GMB trade union said it would slash the "affiliation funds" it gives to Labour from 1.2 million pounds (S$2.4 million) to 150,000 pounds from next year. The setback comes after Labour leader Ed Miliband took a huge political gamble by announcing he was ending the process by which union members are automatically affiliated to the party, rather than choosing to fund it individually.

Labour receives the bulk of its funding from the trade unions, which founded the party in 1900, and affiliated fees reportedly net it 8 million pounds a year. The GMB, Britain's third-biggest trade union, said the funding cut reflected its estimate of the number of members who would choose to fund the party if they had the option.

Mr Miliband's reform was sparked by a row with Britain's biggest union, Unite, over the selection of a by-election candidate in Scotland. But blasting Mr Miliband for his "apparent lack of understanding" of the impact of the reform on Labour's relationship with the unions, the GMB said there would also be further cuts to its funding for Labour campaigns.

The union currently affiliates 420,000 of its 620,000 members to Labour, donating 3 pounds per member per year. But it estimates that only 50,000 would affiliate if they had the choice.

"The GMB central executive council has voted to reduce its current levels of affiliation to the Labour Party from 420,000 to 50,000 from 2014," the union said. "This will reduce the union's basic affiliation fee to Labour party by 1.1 million pounds per year."

Mr Miliband is particularly sensitive to criticism about union influence after their support helped him beat his older brother, ex-foreign minister David Miliband, to the Labour leadership in 2010. Since he took over, just months after the election brought an end to 13 years of Labour rule in Britain, the party has struggled to attract private donations.

Labour is leading Prime Minister David Cameron's Conservatives in opinion polls, although the gap has narrowed in recent months and Mr Miliband himself has struggled to make an impact with the public.