Millions of trade union members will have to agree to pay a contribution to the British Labour Party rather than being automatically signed up, under key reforms that could cost the party a large share of its income.
The changes proposed by Labour leader Ed Miliband follow allegations that the Unite union, one of the party's biggest backers, has won too much influence over the choice of Commons candidates for the 2015 election.
Under reforms described as the biggest in a generation, unions would have to ask members if they want to affiliate to Labour; spending on constituency selections would be capped; and Commons candidates could be chosen by open primaries rather than by branch votes.
Currently, three million members of Labour-affiliated unions pay contributions, though just 200,000 tick a box to indicate they support Labour – while Unite privately admits that less than half its membership voted Labour in 2010.
Since 2010, Unite alone has given £8 million to the party, and there are fears that Mr Miliband's move could leave him unable to battle it out with the Conservatives in two years' time, unless he can replace the lost funds.
The controversy about union influence was sparked by allegations that Unite had fraudulently signed up 150 people – some without their knowledge – to take control of the Falkirk branch before it decided who would run for the Commons in 2015.
Condemning the Falkirk conduct, Mr Miliband said it was "a politics that was closed, a politics of the machine, a politics that is rightly hated. What we saw in Falkirk is part of the death-throes of the old politics."
Labour’s problem is not that ordinary trade unionists “dominate”, but, rather, that they are “not properly part of all that we do”, that “the vast majority are not members of local parties” and not “active in our campaigns”, he said.
Comparisons were immediately made with Tony Blair’s decision in 1994 to abandon Clause IV – Labour’s decades-old backing for industry nationalisation, a move that first helped to define New Labour for a generation of voters 20 years ago.
Saying Mr Miliband had shown “real leadership”, Mr Blair said: “He’s carrying through a process of reform in the Labour Party that’s long overdue, and frankly, probably, I should have done it when I was leader.”
Unite’s Len McCluskey yesterday seemed ready to seek common ground, though he emphasised that the detail of the party leader’s plans would have to be carefully studied.
“Ed Miliband has never been pushed around by me or any other trade union leaders. In fact, if you historically look at the role of the trade unions in the Labour party, we’ve always been the anchor,” he said.