FOR the past month Westminster has been dominated by one issue - Tory party funding and all those Eastern and Far Eastern donations into its coffers. But political pendulums reverse and now it is Labour's turn to feel the pinch. Party leader John Smith faces an enormous problem, if he is to reform the party as he has promised, and make it electable after what will have been around 17 years in the wilderness. By the time of the next election he has to reform its own power structure, to turn to his own paymasters, the unions, and explain why their money should no longer buy block votes. The unions do not like it. With John Major's standing at the lowest recorded level since polls began - only 14 per cent of Britons think he is doing a good job, it is an issue on which the Tories would love to turn up the pressure, but for some reason they are failing to do so effectively. We have had a few contrary words from Sir Norman Fowler, the party chairman, so far, but nothing to make Labour shake in its boots. The problem of funding is in reality worse for Labour than for the Tories. While the Tories can (one hopes) turn and say that whatever the size of the donation from Asil Nadir or some Hongkong Taipan, it does not buy power and influence in the way the British Government operates, Labour cannot make the same claim in any way. It is beholden to the unions. They pay the piper and they expect to name the tune. The unions select party candidates who the public are then free to vote for or not. The Labour Party is embarrassed by the fact that it is not very democratic at all. The problem is that the unions have 40 per cent of the votes in elections for the leadership and the selection of parliamentary candidates. This is exercised not by individual members but by block votes. The rest of the votes go to Parliamentary and Euro-MPs and, in candidate selection, to constituency members. In years gone by Labour could argue that a large proportion of the manual working class was unionised and formed Labour's backbone of support. With union membership now a fraction of what it was, that is no longer the case. Arguably John Smith might have done better in his quest for one member one vote immediately after he took over the leadership after the last election when party morale was at its lowest ebb and everything seemed to have been lost. There are those around today within the Labour Party who take the view that the Tories are committing collective hara-kiri anyway, so Labour therefore need not change. John Smith said publicly last month that he was confident of winning on one member one vote when the issue is next debated at Labour's annual conference in September, but he has since suffered a series of setbacks at the hands of leading unions unwillingto weaken their links with the party. This was John Smith to the Transport and General Workers Union conference at Bournemouth on Wednesday: ''We both need each other. And that is why there there is no question - there can be no questions - of breaking the historic links between us, links ofwhich, like you, I am proud.'' Smith looks like having a rough ride over the next few months as he is battered from pillar to post at the various union conferences. Typically there will be some kind of compromise at the end of the day - but it will be dangerous. It risks eroding his authority - an authority which will be vital if he is to control the disparate degrees of leftness within the party over the next few years. In the long run Mr Smith's party would be much stronger if he took his stand. Voters will continue to be disillusioned by a party which continues to look backwards.
