It follows shadow chancellor Ed Balls’ decision to support government curbs on public sector pay.
GMB general secretary Paul Kenny said Mr Balls’ position was “misguided and wrong” and promised to continue witholding funding for the party.
The government announced in November that public sector pay would rise by only 1% in the two years to 2015.
Mr Balls was heckled during his speech to the union’s annual congress in Brighton, as he acknowledged it had been a frustrating time for ordinary workers struggling in tough economic times.
The GMB gives Labour around £1.4m a year in affiliation fees but has cut back on more than £500,000 in other donations since Mr Balls said he supported limits on public sector pay.
The shadow chancellor drew criticism from several union leaders earlier in the year when he said he could not make a commitment to reverse any of the government’s cuts.
Mr Kenny, speaking at the congress, said Mr Balls should have condemned the government, not public sector workers.
He said: “The failure to wholeheartedly support public sector workers taking their lawful rights to stop work to oppose a tax on their pensions… was misguided and wrong”.
“And since that time, when the comments made by Ed Balls, the GMB have actually shut the money box, apart from our affiliation fees and funding for elections and fighting the Tories and the BNP at local level. And that money box is going to stay shut until we see major changes.”
Mr Kenny told delegates the GMB wanted a greater say in Labour’s policy making process and to have the Labour leader report back to the union’s executive at least once a year.
He said Labour was “born out of, belongs to and should serve working people” and the union’s task was to return the party to regular people.
Posted: 12th June 2012