By G.A.Ponsonby 
The Labour party are facing a financial crisis today after their biggest backer threatened to withdraw its funding after the party publicly backed the Tory’s party public sector cuts.
Now Unite, which is the party’s biggest backer, has publicly threatened to withdraw its support after Labour Shadow Chancellor Ed Balls announced on Saturday that the party would not reverse David Cameron’s public sector pay cap and spending cuts.
By G.A.Ponsonby
The Labour party are facing a financial crisis today after their biggest backer threatened to withdraw its funding after the party publicly backed the Tory’s party public sector cuts.
Now Unite, which is the party’s biggest backer, has publicly threatened to withdraw its support after Labour Shadow Chancellor Ed Balls announced on Saturday that the party would not reverse David Cameron’s public sector pay cap and spending cuts.
Unite leader Len McCluskey has claimed the party are now on a course that will end in electoral “disaster”.
Writing in the Morning Star, Mr McCluskey said: “Capitulation to the politics of austerity and despair is not fairness. It is an admission that the government in this country sees its job as one of stitching together capitalism, however broken it may be.
“Blairite reheats do not serve working people, and will not serve our country either.”
He said Labour has a duty to provide an alternative to the coalition-imposed misery, not fall into its embrace
“Acceptance of Osborne’s public-sector wage freeze and now doubt over what cuts Labour will actually oppose is not clever positioning but in fact boxing itself into a corner.
“And for anyone hit in some way by welfare job or wage cuts, where can they go for an alternative?”
Mr McCluskey added: “It seems we will now be fighting a Labour front bench as well as the government.”
GMB Secretary Paul Kenny has joined Mr McLuskey in condemning Labour’s stance and warned that Mr Balls’ speech would have a “profound” impact on Labour’s relationship with his union.
“I have spoken to Ed Miliband and Ed Balls to ensure they were aware of how wrong I think the policy they are now following is,” wrote Mr Kenny.
“It is now time for careful consideration and thought before the wider discussions begin on the long-term implications this new stance by the party has on GMB affiliation.”
RMT general secretary Bob Crow said: “At the weekend Ed Balls and Ed Miliband doomed the Labour Party to electoral defeat by lining up with the Tory-led coalition’s cuts and their attacks on public-sector workers and that view is widely held across the trade union movement.
“They could have sided with the millions of people at the sharp end of this government’s policies and they have blown it, and the price they pay will be political oblivion.”
Between July 2010 and last September, Unite gave £5m to Labour and the GMB provided £1.9m. This represented 43.2% of all donations made to the party during the period.
Yesterday Mr Miliband confirmed Labour’s new public sector stance: “Absolutely. We’re talking actually about a pay increase limited to 1%, but absolutely.
“Look, the priority now has to be to preserve jobs. I think that’s a recognition that everybody would see around the country. We have got to do everything we can to preserve employment and as I say, this Labour Party is going to face up to those difficult choices we have to make.”
Mr Miliband also repeated his criticisms of last year’s public sector day of action over the coalition’s pension contribution increases.
Left leaning Labour MP Jeremy Corbyn protested that “we are now apparently supporting the ludicrous debt repayment policies of the Tories, which are hitting the poorest and most vulnerable in this country.”
Another Labour MP, John McDonnell also accused his leader of “capitulation to Cameron’s economic analysis”, adding: “Len McCluskey’s article sums up the general feeling among Labour Party supporters of overwhelming disappointment.”
However Mr Miliband was backed by Scottish Labour deputy leader Anas Sarwar who called his decision to accept the coalition’s cuts as “right and responsible”.
Defending the Labour leader Mr Sarwar said: “What we cannot do is make a promise that we will reverse every negative decision or cut post the 2015 general election, that’s the right and responsible thing to do.”
Fellow Scottish Labour MP Willie Bain said Mr Miliband had “shown a huge amount of courage since he became the leader” and that he was “showing a fortitude and strength”.
The signs of a split within Labour come at a time when Mr Miliband’s leadership is coming under increasing pressure and there has already been talk of moves to replace him.
Two names already being suggested are Shadow Home Secretary Yvette Cooper and former Chancellor Alistair Darling.
[In a recent article Newsnet Scotland attributed a quote (relating to the new sectarianism legislation) to Labour MSP Neil Findlay that should have instead have been attributed to Labour MSP Michael McMahon. We have since corrected the error and would like to offer our apology to Mr Findlay for this mistake.]
