Miliband shocks Westminster with MPs’ second jobs announcement

By Alex Stevenson and Ian Dunt

Ed Miliband caused major ripples in Westminster this lunchtime, with a speech on Labour's union funding which raised the prospect of new restrictions on MPs' second jobs.

The tradition of MPs taking on extra work, often for much higher salaries than their parliamentary income, has long been criticised by political reformers.

"We should question the rules," Miliband said during a speech in central London.

"The British people expect their MPs to be representing them and the country not anyone else," he added.

"Being an MP should not be a sideline. It's a privilege and a duty and the rules must reflect that."

Miliband urged other party leaders to "respond to this call for changing the system", in a move which puts the ball firmly on their side of the court over reforms of MPs' earnings.

The Labour leader then made the same move with caps on party donations, reiterating his call for David Cameron to come back to the negotiating table to set a limit on individual donations, probably around the £5,000 mark.

The Conservatives may be reluctant to accept that limit because of their reliance on a small group of wealthy donors. But a deal seems more likely than before, because a very low donation cap of below £10,000 means Labour and the Tories are hit roughly proportionately.

Miliband is proposing to overhaul his party's union funding system by swapping the current opt-out option for an active opt-in arrangement. This would bypass the 15 trade unions affiliated to Labour and undermine their influence on policy issues as a result.

The reform would force the party to be much more pro-active in seeking out the support of individual union members and could bring in thousands of new members.

But it could also strip the party of a major source of funding when it is still heavily in debt and drastically worsen relations with union leaders.

The speech is Miliband's attempt to move on from the Falkirk selection row, which Labour claims saw the Unite union attempt to force its own preferred candidate on the constituency.

Unite has denied breaking any rules and has warned Miliband to step back from the brink of what is set to be an explosive confrontation.

In a package of moves hailed by Miliband's team as the most significant since John Smith's 'one member one vote' shakeup in the early 1990s, the Labour party is set to introduce a code of conduct for prospective parliamentary candidates, strict spending limits and standard constituency agreements with trade unions.

"What we saw in Falkirk is part of the death-throes of the old politics," Miliband said.

"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."

Only one of the 15 affiliated unions, Unison, currently offers its members an opt-out option. Miliband believes that by offering new members the chance to do so it could actually increase his party membership from the present 200,000.

"Moving to this system has implications for both the trade unions and the Labour party which need to be worked through," Miliband added.

"But I am clear about the direction in which we must go."

Tory party chairman Grant Shapps was unimpressed.

"Even after he has been pushed into giving this speech – nothing has changed," he commented.

"Under Ed Miliband’s proposals, [Unite general secretary] Len McCluskey would still bankroll the Labour party, pick Labour’s candidates, and still elect Labour’s leader.

"It's still the same old Labour party: a weak leader in the pocket of the union bosses who’s unable to stand up for hardworking people."

Miliband was also struggling to persuade the unions his reforms are worthwhile, although McClusky backed the proposals in a tour of media studios followin the speech.

"This is all about dog whistles," the Communication Workers' Union's general secretary Billy Hayes told the Today programme earlier.

"It's about signalling to people that somehow there's a problem with the relationship with the trade unions."

He said Conservative prime minister Stanley Baldwin had introduced disaffiliation and an opt-out in 1927 "to weaken the trade unions" – and that it had been restored by Clement Attlee's government in 1945.

Section 4 of the Trade Disputes and Trade Unions Act, introduced after the General Strike, forced trade union members to 'contract in' to any political levy raised by the unions. It resulted in an 18% fall in Labour's income.

"It's a link with ordinary people," Hayes added, defending the current arrangement.

"If it's just left to the political class in this country, we'll have more and more people moving away from active politics.

"Ordinary people don't have a say with what's going on in political parties.

"The one thing trade unions do through their activities is give Labour that focus on what's happening in the workplace, when we're listened to, on things like the minimum wage.

Some of the biggest changes in this country have been the result of the direct link between Labour and the trade unions."

The reforms will also see Labour embracing primaries, most notably in the 2016 London mayoral election.

There are question-marks over Miliband's commitment to them, however. While they could be used in some constituencies where the existing MP is standing down, such a move would only be triggered "where the local party has few members or is in urgent need of renewal".

"They have them in the States," Hayes said today.

"What happens in the States? Lots of rich people dominate the political process."

The Labour leader won his biggest endorsement yet from former prime minister Tony Blair, however. The man whose 'Clause Four moment' would be overshadowed by Miliband's ploy told Sky News this morning he wished he had made the move during his time in charge.

"I think it's important not only in its own terms, because he's carrying through a process of reform in the Labour party that is long overdue and, frankly, probably I should have done it when I was leader," Blair said.

"But at the same time what he's doing, and I think this is also very important for the country, is that he's sending a very strong message to the country that in the end he will do what's right, he'll govern for all the country and not simply for one section of it. This is big stuff and it takes a real act of leadership to do it."