Ed Miliband Moves to Shut Down Funding Row with Unions and Turn Fire on Tories

Labour leader Ed Miliband is hoping a fresh attack on fat-cat bonuses and a pledge to ban zero-hours contracts will deflect some of the missiles being thrown at him by union bosses angered by his plans to reform their links with the party.

His keynote speech to the TUC conference in Bournemouth on Tuesday comes against a background of headlines predicting a terminal rift between Labour and the unions and a funding meltdown for the party as unions pre-empt the reforms by slashing their donations.

Not surprisingly, Miliband is looking for a way out of the row that doesn't also look like a retreat. He is prepared to "take a financial hit", as one aide declared, in order to end the old taunt that he is in the pocket of the unions, which the Tories are set to deploy throughout the election campaign. If he can get it right, he will be able to turn the tables onto the Conservatives' "big donor" funding.

And, despite all the harsh words coming from the union leaders, he will be relieved that a poll by YouGov for the Independent newspaper suggests a significant majority of ordinary workers and union members support pretty wide-ranging reforms of the Labour-unions relationship.

But, while he is determined to press ahead with reforms, he also wants to move attention away from his relationship with the unions and get back to attacking the government over the economy, particularly when Chancellor George Osborne is claiming his "Plan A" has seen the UK "turning the corner".

Step one was the shutting down of the row that prompted the crisis, alleged union vote-fixing in the Falkirk party's election candidate selection. That was made possible by the result of an internal inquiry which found there had been no wrongdoing. It only came, however, after key allegations were withdrawn, a move which immediately led to Tory claims of a cover-up.

Miliband can live with the short-term embarrassment of appearing to have acted too quickly over the allegations and even unfairly criticising those accused, if the outcome is an end to the negative headlines.

Step two will come on Tuesday when he attempts to move on from the wider rift with the unions. He is expected to tell TUC delegates that city bonuses are back, to the tune of an 82% rise this April.

"After over three years of this government, with our economy still smaller than it was before the financial crisis, the rewards in our economy are going only to the few at the top. And that's not just unfair, it's bad for our country," he will say. He will also pledge to tackle zero hours working contracts which "exploit" workers.

What he hopes is that the speech will mark a cooling of this particular storm and that the process of finding reforms which might suit both the party and the unions, who increasingly feel sidelined by the Labour leadership, can go ahead away from the media spotlight.