LABOUR'S link with the trade unions is under grave threat, according to leaked proposals from Hayden Phillips' report into the funding of political parties. The proposals appear to have been endorsed by Downing Street.
Following the loans for peerages scandal, Sir Hayden was asked by the Prime Minister to investigate ways to make party funding more transparent. His interim report proposes a radical alteration to the way unions fund Labour.
Sir Hayden advocates a double check-off system. Under this, when an individual joins a union affiliated to Labour, they would be asked whether they wished to opt into both the union's political fund and paying an affiliation to Labour. Currently, union members can choose to opt out of a political fund.
Trade unionists paying Labour affiliation fees would effectively become individual members of the party. Every year Labour would have to contact each individual, detail its campaigning work and ask whether they wished to continue their funding. Likewise, unions would have to ask members on an annual basis if they wish to continue contributing to the political fund. A donation cap of £50,000 would apply to both unions and individuals.
The individual union affiliation fee to the Labour Party is currently only £3 a year. It would cost the Labour Party a similar amount to contact each person. It is feared that individual relationships with affiliated members would destroy the federal nature of the party. Unions give the Labour Party roughly £8 million a year in affiliations.
Sir Hayden's proposals are at odds with Labour Party policy, agreed at this year's conference. Delegates opposed a cap on donations but supported yearly caps on national and local spending. They also backed a voluntary code requiring each party to state publicly how they collect donations.
Sir Hayden had previously said that he intended to make progress through political consensus.
One senior Cabinet minister involved in direct negotiations with Sir Hayden has told MPs that John McTernan, the Prime Minister's political secretary, had been negotiating behind the scenes. The latest proposals had received Downing Street's endorsement. Mr McTernan did not return Tribune's calls.
All Labour's deputy leadership candidates have condemned Sir Hayden's plans.
Education Secretary Alan Johnson has written to the trade union group of MPs underlining his support for the union link. He said: "Given the current debate on party funding, we need to take steps to protect and enhance the link and make sure it continues to give working people a say in the agenda and priorities of the Labour Party."
Party chair Hazel Blears described the union link as a "red line" she would not cross. International Development Secretary Hilary Benn said: "I have always supported the link between Labour and the unions and will continue to do so."
Dagenham MP Jon Cruddas, who has worked closely with the unions in their response to the report, said: "If Hayden Phillips' proposals stay as they are, they will put a coach and horses through the internal constitution of the Labour Party. The proposals must be rejected."
Northern Ireland Secretary Peter Hain said:  "The union link is non-negotiable. To break it would be catastrophic for Labour. Labour members - including myself - will fight strongly to preserve it. We will not accept any caps on donations from our union partners, and breaking the link is not up for
discussion."
Harriet Harman, the constitutional affairs minister, said: "I am a strong supporter of the link between unions and the Labour Party. There is all the difference in the world between one millionaire and 800,000 members of the Transport and General Workers' Union."
A packed meeting of the trade union group of Labour MPs on Monday (December 11) was described as being like "a riot" when MPs learned of the report's details. The normally ultra-loyal John Spellar angrily demanded that the Downing Street official involved "should be named".
Lindsay Hoyle said: "Whoever is in the dark cellar at Number 10 needs sorting out."
Dave Anderson, a parliamentary private secretary, added: "Someone at Number 10 is doing the Tories' dirty work for them."
Union leaders have reacted angrily to the plans. UNISON general secretary Dave Prentis said: "It is totally unfair that the unions should bear the brunt of the damage caused by the cash-for-peerages scandal. We have been open and transparent about affiliation fees and donations. These proposals were not even discussed within the party."
A spokesperson for the T&G added: "We are rock solid against any proposals by Hayden Phillips which would damage or destroy the union link."
An emergency meeting of Labour's National Executive Committee was due to take place yesterday (December 14), to discuss the party's response.
Sir Hayden's proposals would also affect non-affiliated unions with political funds.
They, too, would have to ask their members annually if they wished to continue with their contributions.