Ed Miliband proposes the most radical shake-up of Labour’s relations with the unions in a generation, with an end to the “machine politics” that has blighted the party’s reputation.
Mr Miliband, who rose to the head of his party off the back of union support, set out plans to end the system where individual union members are automatically affiliated to the party.
He also issued a challenge to the Conservatives by saying a Labour government would impose limits on how much MPs could earn through second jobs, as well as calling for the reopening of talks on party funding, with caps on how much businesses, unions and individuals can donate.
The changes are intended to strengthen the party’s links with individual union members, while weakening the influence on the party of trade union bosses.
What we saw in Falkirk is part of the death-throes of old politics. It is a symbol of what is wrong with politics. Ed Miliband
He also hopes his speech in London will counter the damage done by the Falkirk ballot-rigging allegations.
Labour sources said Mr Miliband always intended to deliver party reform, but did not deny that the timing of the announcement was linked to events in Falkirk.
Mr Miliband received the backing of his predecessor Tony Blair, who told Sky News he should have initiated similar reforms when he was Labour leader.
Mr Miliband said: “What we saw in Falkirk is part of the death throes of old politics. It is a symbol of what is wrong with politics. I want to build a better Labour party – and build a better politics for Britain,” Mr Miliband said.
Automatic affiliation currently raises around £8m annually for Labour, and it has been acknowledged that the reforms could lead to a financial hit for the party.
“The problem is not that these ordinary working men and women dominate the Labour party – the problem is that they are not members of local parties, they are not active in our campaigns,” Mr Miliband said.
“Trade unions should have political funds for all kinds of campaigns and activities as they choose. But I do not want any individual to be paying money to the Labour Party in affiliation fees unless they have deliberately chosen to do so.
“So we need to set a new direction in our relationship with trade union members in which they choose to join Labour through the affiliation fee.
“I believe this idea has huge potential for our party and our politics. It could grow our membership from 200,000 to a far higher number, genuinely rooting us in the life of more people of our country.”
Mr Miliband did not set out a timetable for reform, but announced that former Labour general secretary Ray Collins would begin the reform process.
Under the proposals, the three million trade unionists currently affiliated to the party through the automatic payment of affiliation fees will in future decide as individuals whether they wish to do so.
In other measures, Mr Miliband announced plans for Labour’s next candidate for mayor of London to be picked through a system of US-style primaries – with the possibility they could be extended to the selection of parliamentary candidates where the local constituency party is weak.
Under Ed Miliband’s weak proposals, including a code of conduct that already exists, it would still be the same old Labour Party. Grant Shapps
There will also be spending caps in selection contests for parliament and the European parliament covering both would-be candidates and any organisation backing them.
A new code of conduct will also be drawn up for those seeking parliamentary selection, with the prospect of disqualification if they breach the rules.
Labour sources said they did not believe that it would require a change in party rules, although they suggested they could “formalise” the new arrangements with a vote at party conference.
“We would like to work with the unions and local parties to bring it about. We want to do it in a co-operative way but there are other ways in which you can do it,” one source said.
However, Len McCluskey, the general secretary of Unite – the union at the centre of the Falkirk row – has indicated that he would oppose the plan.
Writing in The Guardian he said: “Switching to an ‘opt-in’ for the political levy wouldn’t work – it would require Labour to unite with the Tories to change the law, would debilitate unions’ ability to speak for our members and would further undermine unions’ status as voluntary, and self-governing, organisations.”
Conservative Party Chairman Grant Shapps dismissed Mr Miliband’s plans as meaningless. “Under Ed Miliband’s weak proposals, including a code of conduct that already exists, it would still be the same old Labour Party – bankrolled by the unions, policies rigged by the unions and candidates chosen by the unions,” he said.
“The reality is Ed Miliband cannot change Labour because he cannot stand up to the union barons who elected him. That means he’s too weak to stand up for hardworking people and too weak to run the country.”