Union rebellion against Ed Miliband grows

GMB chief Paul Kenny says Ed Miliband's backing of a 1% public sector pay cap could have a profound impact on the union’s relationship with Labour. Photograph: Martin Argles for the Guardian

Britain's third largest trade union has raised the spectre of disafilliation from the Labour party as the backlash against Ed Miliband grows.

The Labour leader is facing a growing trade union rebellion after the GMB and Public Commercial Services unions, key players in the 30 November national strike, joined the condemnation of the party's support for a public sector pay squeeze.

The GMB general secretary, Paul Kenny, warned that backing a 1% pay cap could have a "profound impact" on the union's relationship with Labour . In a letter to union officials, Kenny said a weekend speech by Ed Balls, the shadow chancellor, could have negative consequences for the union's affiliation to Labour.

"I have spoken to Ed Milliband and Ed Balls to ensure they were aware of how wrong I think the policy they are now following is. 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."

Len McCluskey, the leader of Britain's largest union, led the outbreak of union disquiet on Monday in a Guardian article in which he warned that Miliband was setting Labour on course for electoral disaster and undermining his own leadership by accepting government cuts and the cap on public sector pay.

Kenny said: "I will update everyone as events unfold but I have to say this is the most serious mistake they could have made and the Tories must be rubbing their hands with glee."

GMB is Britain's third-largest union, with 620,000 members compared with Unite's 1.4m. Unison, the second largest, has not commented.

Mark Serwotka, the leader of the largest civil service union, the PCS, told the Guardian that Labour would lose the next general election if it did not reverse its policy shift.

Union opposition to Miliband's position is significant because, as well as being the party's biggest source of funding, the union vote was crucial to securing his victory in the 2010 leadership contest.

Serwotka, whose union is not affiliated to the party, said: "This guarantees, probably, that Labour will lose [in 2015] and lose badly. And that is a disaster for everyone because we will have the Tories coming in and doing the same thing [cutting public spending], except even further."

"It is a massive strategic mistake to tack rightwards because it means that no one is now arguing the alternative economic view, other than the trade unions. A lot of core Labour voters who are looking for something different will ask themselves where they go now."

Serwotka said supporting spending cuts and a pay cap could benefit the nationalist vote in Wales and Scotland if Labour voters abandoned the party in its heartlands. A key figure in the 30 November strikes, Serwotka said the diminution of opposition to cuts within Westminster would encourage strike action as people turned to unions to show their discontent over government policies.

"The only other route to stop it is unfortunately industrial action and campaigning outside Westminster."

The leftwing Labour MP John McDonnell said McCluskey's article "sums up the general feeling amongst Labour party supporters of overwhelming disappointment".

McDonnell said: "Most people are reacting more in sorrow than in anger to what they see as Ed Miliband and Ed Balls' capitulation to Cameron's economic analysis.

"The economic crisis is a game-changer and for Labour leaders to react to it with the same old failed policies that mean ordinary people will pay for the crisis is such a crushing disappointment."