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Labour's row over reinstating Jeremy Corbyn as an MP now threatens the party's war chest for upcoming council elections in 2021, the Mirror understands.
Senior figures in three left-wing unions – Unite, the FBU and the CWU – told the Mirror they would push to slash the amount of funding given to the party to fight the elections next May, unless Mr Corbyn had the whip reinstated.
The massive elections next year will see seats up for grabs in 151 councils, alongside 13 directly elected mayors, 40 police and crime commissioners in England and Wales.
It will also see voters go to the polls for the Scottish Parliament, the Senedd, London Assembly and London Mayoral race.
They are seen as Mr Starmer's first major test in rebuilding Labour's electoral fortunes.
Labour leader Keir Starmer said on Wednesday morning that he would not restore the whip after Mr Corbyn's membership was reinstated by members of Labour's ruling NEC.
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The ex-Labour leader was suspended for comments he made in the wake of a report by the EHRC about antisemitism in the party.
He said: “The scale of the problem was also dramatically overstated for political reasons by our opponents inside and outside the party, as well as by much of the media.”
In a second statement this week he said that concerns around anti-Semitism in Labour were not “exaggerated”.
He said: “I regret the pain this issue has caused the Jewish community and would wish to do nothing that would exacerbate or prolong it.
“To be clear, concerns about anti-Semitism are neither ‘exaggerated’ nor ‘overstated’."
Shadow Chancellor Anneliese Dodd's on Thursday slammed the system that reversed his suspension as "politicised”.
Ms Dodds said the decision to readmit Corbyn under the previous system “indicates that that process is not the right one, it’s not the one that we need.
Unite's Len McCluskey was very critical of Mr Starmer's decision
Mr Starmer has said he won't reinstate the whip to Mr Corbyn
(Image: JESSICA TAYLOR/UK PARLIAMENT HANDOUT/EPA-EFE/REX/Shutterstock)
"We have six weeks to respond to that report and a large element of the response is going to be around setting up a new process, which is completely independent, which everyone can have confidence in including the Jewish community”.
Former Labour MP Thelma Walker, who was an aide to ex-Shadow Chancellor John McDonnell, said on Wednesday she had resigned from the party because of Mr Starmer’s treatment of Mr Corbyn.
But party grandees backed the Labour leader, with Gordon Brown demanding Mr Corbyn make a "full apology" in order to be readmitted as a Labour MP.
Mr Brown said: "He's got to make a full apology and it's got to be clear there are no ifs, no buts, no qualifications about his opposition to antisemitism.
"Keir Starmer will, I think, insist on that and that's the right thing to do.
"I'm sure mistakes have been made along the way, I'm sure he hasn't intended these consequences – Jeremy Corbyn himself.
"But you can't allow any impression that even one case of antisemitism in the Labour Party is acceptable.
"None are acceptable, no forms of racism, no forms of discrimination, we've got to root it out once and for all."
But there was no apology in sight yesterday as the row continued to spread – with those on the party's left responding to the suspension by launching a series of bids to pressure Mr Starmer into reinstating Mr Corbyn.
Momentum, the campaign group that evolved from Mr Corbyn's two leadership campaigns, launched a campaign to fill Mr Starmer's inbox with demands.
While many Labour MPs have supported Mr Starmer's decision, 28 MPs and four peers have signed a statement calling for a "swift reversal".
And high-profile former allies, including Diane Abbott, have shared a petition calling for Mr Corbyn to have the Labour whip reinstated.
At the time of writing it had just over 39,000 signatures.
The pair spoke the night before the report was published
(Image: PRU/AFP via Getty Images)
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And senior figures in a number of key unions have indicated that will push to choke off funds form Mr Starmer's party if he doesn't reinstate Mr Corbyn.
Len McCluskey, general secretary of Unite – Labour’s biggest donor – said the refusal to restore the whip to Mr Corbyn was “a witch hunt.
He urged Mr Starmer to “pull back from the brink” on Wednesday.
Unite slashed its cash to the party by 10% in October citing concerns over the party's direction under Mr Starmer.
A senior figure inside Unite told the Mirror: "We've been very clear, we want a Labour government Westminster and Labour in power in town halls across the country – but not at any price.
"This row demonstrates that too many people around Keir Starmer are just not listening – they are pursuing a damaging factional fight at the expense of winning elections.
"Members will ask why are we spending so much money on this?"
A series of party insiders told the Mirror that the party's election war chest severely depleted after the cost of the 2019 election and the heavy cost of settling defamation cases brought against them by seven former employees in the wake of a Panorama investigation into its handling of antisemitism.