LABOUR could lose up to £40 million between every election if the Trade Union Bill becomes law, GMB general secretary Paul Kenny warned yesterday.

Labour bosses are braced for a £6m fall in trade union funding when an opt-in system to the political levy is imposed on unions by the Tories.

The knock-on effect to Labour funding would force the party to reduce its number of staff and relocate to cheaper offices, according to an internal document leaked to the Guardian.

Mr Kenny insisted yesterday it was “no exaggeration” to expect Labour could lose between £30-40m every five years.

“This is a direct attack on Labour Party funding and a direct attack on unions’ ability to organise politically,” he told BBC Radio.

Speaking on the BBC Daily Politics, shadow Treasury minister Richard Burgon also raised concerns the Bill will see Britain’s six million trade union members “taken out of the political process.”

He said: “I want more working-class people involved in politics — that’s not an anachronism. That’s a modern thing.”

With the Bill in the Lords, Labour hopes it can convince cross-bench peers to block changes which could effect party funding.

Shadow justice secretary Lord Falconer argued that introducing an opt-in system was “unnecessarily bureaucratic” and “motivated by an attempt to reduce the amount of union funding coming to Labour.”

And there were signs Labour would win cross party support yesterday, with Lib Dem Lord Tyler branding the changes “naked political opportunism.”