LABOUR will lose almost a third of its entire budget if “partisan” curbs on union funding are “smuggled” through Parliament, its general secretary Iain McNicol warned yesterday.

He told the first session of a special Lords committee set up to consider party funding changes within the Trade Union Bill that they would have “significant consequences” for Labour and British democracy.

Plans to make union members opt-in to trade union political funds — by post — would lead to a 90 per cent drop in the number of workers affiliated to Labour, he predicted.

The consequence would be an £8 million cut in the amount of cash given to Labour by affiliated trade unions.

“Nobody should be under any doubt that the Trade Union Bill will seriously and immediately undermine the Labour Party’s finances,” Mr McNicol told peers.

“Our own estimate is that a change to trade union political funds as proposed could reduce the Labour Party’s income by up to £8m a year.

“That will have significant consequences.”

Labour’s general secretary disclosed that the party pulled in around £30m a year in a non-election year.

Some £8.6 million — around 30 per cent — comes from affiliation fees from trade unions and separate one-off donations. 

In 2014, unions raised £22 million through the political levy — less than half of which went to Labour in donations. 

The government’s own impact assessment of the Bill claimed there would be no change to the number of union members contributing to their union’s political fund under the proposed reforms. 

But Mr McNicol mocked the suggestion as “so inaccurate as to be palpably absurd.” 

Currently around 11 per cent of trade union members make a written request to opt-out of the political levy. 

Labour believes that a similar number would make the effort to formally opt-in if the roles were reversed. 

The committee was established in humiliating circumstances for the Tories last month as Lib Dem and cross-bench peers united with Labour Lords to pass a motion demanding an independent review of the Tories’ plans.

Pots calling the kettle black

A look at the interests of the four Tory peers lecturing trade unions and Labour on political funding

Andrew Robathan, Baron Robathan
An MP between 1992 and 2015, he voted against the introduction of the minimum wage and against increased maternity pay.
He had one of the highest expenses claims for his second home, including £4,500 for energy bills in 2013. For four years in a row, he also used taxpayers’ cash to purchase the £130 reference book Who’s Who.
Yesterday he disclosed that he donates “not a modest sum” to the Conservative Party.
Rupert Charles Ponsonby, 7th Baron de Mauley
A descendent of the third Earl of Bessborough and a hereditary peer. After studying at Eton, Mr Ponsonby held a senior role in the army before becoming a banker.
As an environment minister during the Con-Dem coalition, the blue-blooded Tory launched a scheme to “cut back on waste” that was widely interpreted as an instruction to the poor to “make do and mend.”
Martin Callanan, Baron Callanan
Gifted a peerage by David Cameron in 2014 months after losing his seat in the European Parliament, where he was the leader of the Tory group.
He was criticised for his cosy relationship with the big business lobby during his time as an MEP and has since offered his services as a consultant.
He was among the Tory politicians caught trying to vote in last year’s Labour leadership election.
Stephen Sherbourne, Baron Sherbourne of Didsbury
A former political secretary to union-hating former PM Margaret Thatcher. Insisted he gives an “extremely modest” donation to the Conservative Party.