Ed Miliband looks at reducing power of union leaders in Labour affairs

Open selection primaries, direct access to trade union levy payers by the party, and caps on spending by candidates seeking Labour nominations. These are among the changes Ed Miliband is considering in an attempt to mend, rather than end, the union-party link following alleged malpractice by the Unite union.

Miliband will be canvassing party opinion before a speech this week setting out how the relationship can be reformed following alleged abuse of party rules by Unite supporters in Falkirk. The row led to the suspension of Unite's favoured candidate for Falkirk, Karie Murphy, and the resignation of MP Tom Watson as the party's general election co-ordinator.

Miliband's advisers said he favoured a cap on all spending in Labour contests for parliamentary selections, possibly including European elections. At present candidates for parliamentary seats cannot issue more than three leaflets, but there is no limit on spending by the candidate or third parties. The Labour leader is also to rewrite a code of conduct for candidates.

The purpose of the reforms would be to strengthen the relationship between the party and trade unionists who pay a political levy, and to leave less power in the hands of union leaders. Advisers stressed that the package of changes was not intended to break the link between the unions and the party or to set in train such a process.

There is still a dispute within the party over whether the alleged abuse in Falkirk was an isolated act of misconduct in a selection battle, or a wider failing in union conduct that requires broader reform.

Changes being canvassed by shadow cabinet members include: introducing open primaries for parliamentary contests so the public chooses candidates from a list drawn up by the local party; ensuring Labour locally and nationally has access to the addresses of individual union political levy payers, something unions have often denied the party for a variety of administrative and data protection reasons; shortening the length of parliamentary selection contests, so reducing the potential campaigning advantage to candidates already working for the party or with the support of union machines; and switching to a contracting-in method of paying the political levy, as opposed to the current system of opting out. Labour opposed the move during the cross-party talks on political funding that ended last Thursday. The party and unions feared the change would reduce the party coffers. The unions were responsible for just over 20% of Labour's income in the last quarter.

There is real irritation across the shadow cabinet about the way in which Len McCluskey, the Unite general secretary, has handled the issue.

Former Labour cabinet minister Lord Reid told the BBC on Sunday: "I am in no doubt that the leader of Unite wants to impose an ideological direction on the Labour party that would lead us into political oblivion, as it did in the 1970s and 1980s.

"Ed Miliband didn't particularly go looking for this fight. This fight came to him. But I think he understands, as everyone else in the Labour party does, that a struggle of this nature … is a determining struggle about the direction of the Labour party."

Harriet Harman, the Labour deputy leader, stressed there was no plan to break the link with the unions, and indicated that the controversy in Falkirk was a one-off. She said wider reforms would be introduced and that McCluskey "should be supporting Ed to support the integrity of the rules of the party, [and] not simply saying, 'Oh these allegations, I'm going to sweep them aside'". She backed a cap on the amount candidates can spend to win Labour nominations.

Harman said: "Things like a cap on spending will be a significant change for the right reasons. It is very important that people cannot be ruled out of a contest because they can't get the backing of a union or have their own independent funds."

She said she had been forced to take out a second mortgage on her home to fund her campaign to become deputy leader because she was not backed by a union. "Most people are not in a position where they can actually do that," she said.

But she defended Labour's link with the unions, saying it kept the party in touch with working-class people: "Those of us who are in the Labour party all want to see the voice of ordinary working people heard in the corridors of power.

"That is absolutely fundamental. But the way to do that is not to have abuse of the membership system or indeed to have a membership system which leaves itself open to abuse."