However, here's how they report it:
Now this claim is based on the idea that, because Labour gets 85% of it's funding from the unions, such a cap would hit them disproportionately. It would also hit the tories hard as well as they would apparently lose 50% of their income.
However, this is all nonsense. The idea of a £50k cap is to take big money out of politics, regardless of where it comes from. Whether it's a businessman donating a million pounds or a union donating a million pounds, it still buys the donor unfair influence.
However, this hardly means it's going to bankrupt Labour. The money they get from the unions is the aggregate lump sum of the political subscriptions from the trade unions' members. If all those hundreds of thousands of trade unionists want to they can still donate the money individually. I'm sure it's not beyond the wit of the unions to include a donation form with their annual membership renewal. So as long as these trade union members genuinely want to support the Labour party then they'll continue to do so and Labour won't lose any money.
By contrast, such a move is, in reality, more likely to hit the Conservatives. This is because most of their income comes from large donations from individual businessmen. Now, a union can easily divide its donation up amongst its individual members but a businessmen can't as he's the only one capable of making the donation. So it just goes to show that this piece in the Observer is just hysterical whining from a party that has an institutionalised sense of paranoia.
If you want any confirmation of that, just read the quotation at the bottom of the article:
"We have already seen the Conservatives and Lib Dems team up to force through gerrymandering plans for constituency boundaries which were designed to damage the Labour party."And what is this gerrymandering he is referring to? Well, that would be the equalisation of constituency sizes to ensure that all votes are equal - something which just so happens to remove a bias in favour of Labour caused by unequal seat sizes.