Biggest backer of Labour Party warns it could cut funding

By William James LONDON (Reuters) - The biggest financial backer of Labour Party said on Tuesday it could withdraw its support and funding unless the left-leaning party came up with a credible alternative to austerity that wins next year's election. Len McCluskey, General Secretary of the Unite trade union, said Labour would lose the next election if it continued to only offer voters "a pale shade of austerity", and that a loss would force the union to discuss breaking its links with the party. "I believe the Labour Party is at a crossroads," McCluskey told reporters, saying Ed Miliband, Labour's leader, had to come up with a new message for voters. "Can I ever envisage a rules conference (where the union can vote to change its internal rules) voting to disaffiliate from Labour? I can." Unite could opt to finance other parties in future, he said. Labour, a party born out of the trade union movement, has a 3 percentage-point lead in opinion polls over Prime Minister David Cameron's Conservatives ahead of a May 2015 election. But that gap has narrowed in recent weeks after a well-received budget boosted support for the Conservatives' economic plan and blunted Miliband's charge that the government has failed to help voters hit by spending cuts and stagnant wages. Miliband has personally suffered criticism in local media and from within his own party for failing to adequately respond to the budget. Last week, one poll showed less than one in five voters saw him as a future prime minister. "People are getting slightly uneasy that there isn't a cohesive vision emerging," McCluskey said, citing reports of divisions over policy among lawmakers in the Labour Party. "I'm confident that what will emerge is a platform to take to the British electorate. I hope of course it will be an alternative. If it's a pale shade of austerity then I believe Labour will be defeated at the next election". In 2013, Labour received 3.1 million pounds from Unite, which has 1.42 million members. However the party recently opted to loosen ties with the unions after criticism that union leaders had too much influence over policymaking. As a result, Unite last month said they would halve the number of fee-paying members affiliated to the party and scale back its affiliation over the next five years. Labour has committed to eliminating Britain's budget deficit by the end of the next decade, but has set itself a more flexible timetable than both the Conservatives and their junior coalition partners, the Lib Dems. McCluskey said that unless Labour offered up a more radical change to inspire the electorate, voters would end up sticking with the Conservative party at the polls in 2015. "Ed's challenge ... and I hope he'll pick this up sooner rather than later, is to simply demonstrate that he's on the side of ordinary people," McCluskey said. "Miliband's got to give hope to people. He's got to demonstrate to people that we're going to do something different in power." (Editing by Andrew Osborn and Andrew Roche)