Will union plan get Miliband off the hook?

Ed Miliband is planning an important speech with a mighty big claim: he will try to sell his plan to reform the way his party works as the biggest in a generation.

The question is whether his proposals - which have yet to be finalised, let alone spelt out in public - will live up to the billing.

The idea that has the potential to have the most dramatic impact concerns the relationship between the trade unions and the party they founded.

It could, in theory, lead to a dramatic fall in the number of trade unionists affiliated to the party, a big drop in the amount the unions give Labour and, in the long run, a decline in the power of general secretaries at party conference and in the election of the next Labour leader.

The key word in that sentence is potential - without more detail it is impossible to know how radical this will be.

The Labour leader is proposing that in future no trade unionist should be automatically signed up to supporting the party without their consent - in the jargon, they should "opt in" to giving their money to Labour.

Currently, trade unions can affiliate their entire membership to Labour en bloc. Although they have to give members the chance to "opt out" and have to stage ballots every 10 years about whether to have a so-called "political fund", very few members appear to know about their rights, let alone exercise them.

The result is that many Tory, Lib Dem, Green or Nationalist-supporting trade unionists unwittingly fund Labour and give their general secretary significant power in the party in the process.

Mr Miliband has always previously opposed "opting in" instead of "opting out." The man who chaired the last talks on reforming party funding said it was the key block to making progress. It allowed the Tories to argue that it was unjust to ask them to put a cap on donations from wealthy individuals when Labour could carry on receiving them from unions (who claimed that they were, in reality, the aggregation of thousands of individual affiliation fees).

So far we do not know the how or when of this proposal. Mr Miliband's aides say it will not require a change in the party's rules. In the past they have always resisted a change in the law to force unions to alter their rule book.

They now suggest that individual unions can and will choose to reform.

This speech is designed to get Mr Miliband off the hook of a row that has caused him real damage. What he is likely to do next is claim that he is now signing up to the last package of party funding reforms proposed by the Committee on Standards in Public Life chaired by Sir Christopher Kelly.

In other words he wants to be able at this Wednesday's Prime Minister's Questions to say: "I'm dealing with my party's problems whilst you are doing nothing about yours."

The Tories will, of course, claim it's a distraction from the row over selections in Falkirk and many other seats and questions which Labour refuses to answer.

One intriguing possibility occurs. If Mr Miliband does mean to be as radical as the pre-speech briefing suggests, he might be able to do a deal on party funding with the Liberal Democrats and leave the Tories looking isolated.

This blog has been edited after its publication. First reports suggested that Lord Whitty would be appointed by Labour to investigate reform ideas, but this has been denied.