Labour faced renewed pressure from its union backers on Monday as Unite general secretary Sharon Graham warned the party not to slow or dilute a flagship Employment Rights Bill, reiterating a threat to withdraw millions of pounds in union funding if the legislation is watered down.
Graham’s comments followed the resignation of deputy prime minister Angela Rayner, who had been leading efforts to steer the bill through Parliament before she stepped down over her personal tax affairs. Ministers have said they will continue to push the measure, which would give workers new rights from their first day in a new job and make it easier to take industrial action, despite opposition from business groups that say it could hinder management and economic growth.
Speaking to The Mirror, Graham said there was a growing sense among her members that Labour was moving away from what she called "Project Labour" and warned affiliation could become hard to justify if the party retreated from the bill. She told BBC Radio 4’s Today programme that elements of the legislation, including measures on so-called "fire and rehire" and a proposed ban on zero-hours contracts, had already been softened in recent weeks and urged ministers not to scrap or slow parts of the bill.
The warning came as London Underground workers began a five-day strike on Monday over pay, bringing the transport network to a near standstill and underscoring tensions between unions and the government over workplace conditions and remuneration. The Trades Union Congress general secretary Paul Nowak was due to use a separate conference appearance to urge delivery of the Employment Rights Bill in full and to renew calls for new taxes on bank profits, gambling companies and wealth.
The Labour reshuffle last week that followed Rayner’s resignation also included the return of employment rights minister Justin Madders to the backbenches and the appointment of business secretary Jonathan Reynolds as chief whip. Those moves have fuelled union concern that ministers who had been closely associated with the bill’s passage are being sidelined.
Andy Burnham, the influential Greater Manchester mayor, has lent his support to a new centre-left grouping within the party, known as Mainstream, which advocates policies including the removal of the two-child benefit cap and a new wealth tax. Burnham told The Guardian that Labour had grown unusually factional and urged a broader approach to party unity.
Tory critics said the bill was ill-timed. Shadow business secretary Andrew Griffith told BBC Breakfast that the measure contained "hard left" changes that would give unions more power and was the last thing the country needed amid rising unemployment and low business confidence. Business groups have raised concerns that the proposed changes could make it harder to remove underperforming staff and deter investment.
Labour ministers have defended the legislation, saying it is intended to strengthen protections for workers and modernise employment law. Supporters within unions and the party argue the bill would address long-standing workplace issues and deliver rights to more people sooner in their employment.
Unite is one of Labour’s largest financial backers, and union funding has historically been a significant resource for the party. Graham’s public threat to withdraw support follows a period of fractious debate inside Labour over policy direction, personnel changes and the balance between appealing to traditional union constituencies and broader electoral concerns.
Rachael Maskell, a former Labour MP who lost the whip earlier this year after rebelling on welfare reform, is among those backing the new Mainstream grouping. Party figures caution that continued discord between the leadership and unions could complicate passage of the bill through Parliament at a time when ministers are also preparing for an upcoming Budget.
Labour has said it remains committed to its legislative agenda, while acknowledging the need to manage internal divisions. The coming days are likely to test the party’s ability to reconcile union demands with broader political strategy as both sides warn of consequences should core elements of the Employment Rights Bill be altered or abandoned.