This week, Unite the union announced that it would be cutting its funding to the Labour Party by 10%, representing a loss to the party of about £150,000 a year. Sources in Unite spoke of their frustration that Keir Starmer was “just not listening” to their demands, as well as their concern that the labour movement and party members were being “taken for granted.”

The funding cut is not an existential threat to Labour, but it should be a source of concern. Unite will continue to provide around a million pounds of support to Labour each year, and Starmer has already made clear that he will attempt to woo back wealthy donors who left the party under Corbyn. Whether or not this attempt will be successful (and what impact it will have on policymaking) remains to be seen; but in the context of reports that many members are leaving Labour, the funding cut means that the party is likely to be somewhat financially constrained in the years to come.

The bigger issue, however, is the strength of the link between the Labour Party and the labour movement. Labour was founded to be the political wing of the British labour movement and has always retained a strong link with the UK’s largest unions. As Colin Leys and Leo Panitch chart in their recent book Searching for Socialism, this relationship has often been marked by tension, but it has never disappeared altogether – despite successive Labour governments failing to repeal anti-union legislation implemented by Margaret Thatcher.

It is clear that many Labour MPs consider the party’s link with the labour movement to be a millstone around their necks. This has been the case over recent years even for many MPs on the ‘soft left’ of the party. Indeed, part of the reason for the transformative events of the past five years was Ed Miliband’s decision to introduce a one member, one vote (OMOV) system for electing the leader of the party in a bid to erode the influence of the unions.

Nor has the relationship between the labour movement and the Labour left always been so cosy. At last year’s party conference, there were significant differences on the question of whether the party should continue to support jobs in polluting sectors as part of the Green New Deal – though it is notable that most involved managed to come to an agreement over the motion put to conference, albeit after hours of wrangling.

At a time when the fractures in the Labour Party are at risk of widening, we shouldn’t forget the importance of a strong labour movement to achieving the stated aims of even more moderate Labour MPs. In the UK, after peaking at 67 per cent of GDP in 1975, the labour share of national income fell to just 52.1 per cent of GDP in 1996. During that same period, union density – the number of union members as a proportion of those in employment – fell from around half to around a third.

This is not a coincidence. A paper from the New Economics Foundation found that the fall in union density is responsible for a 4.4% decline in the labour share of national income, and Andy Haldane, the chief economist of the Bank of England, has argued that falling union membership “subtracted one per cent from wages since 2000”.

Falling union membership has also led to an increase in inequality within the labour share – i.e. inequality between workers themselves, as well as between labour and capital. Research from the International Monetary Fund – hardly a bastion of progressive thinking – has shown that “less prevalent collective bargaining and trade unions are associated with higher… inequality.”

In short, declining union membership should be of concern to all sections of the coalition that makes up the Labour Party – from liberals to democratic socialists. The former should be concerned about how the fall in union density has led to a decline in the wage share of national income and a rise in inequality – both because these trends negatively impact Labour’s core coalition, and because they are associated with falling levels of demand and investment, and therefore an increased risk of economic crises.

Those on the left, however, should be even more concerned about the declining power of the labour movement. A falling wage share and rising inequality don’t simply represent threats to the stability of capitalism; they reflect the falling power of labour relative to capital – of workers relative to their bosses. And historically, powerful, well-organised workers’ movements have been central to victories like the extension of the welfare state, the expansion of public ownership and the imposition of limits on working time. Indeed, it is hard to imagine how any socialist coalition could achieve any of these things without the support of the labour movement.

The changing nature of work does, of course, present challenges to the more traditional models of organising pursued in many of the UK’s larger unions. Many have been slow to adapt to the precaritisation of work and the shift towards self-employment, or can be unresponsive to the demands of their own rank and file. They face an enormous demographic challenge as well, with the proportion of young workers joining trade unions far too low to sustain the movement in the long-term.

But only greater cross-fertilisation between the labour movement, the Labour Party and the wider left will solve any of these problems. If the new leadership of the Labour Party fails to realise the importance of the historic link with the unions, then the wider left should take this opportunity to strengthen its bonds. Unite has announced that the £150,000 it is withdrawing from the Labour Party will be redirected towards grassroots campaigns. It’s not hard to see how productive this could be – from supporting the emerging tenants’ movement to climate action, campaigns against local government or welfare cuts and efforts to reach younger people.

With a looming unemployment crisis on a scale not seen since the 1980s, the labour movement will be on the front line when it comes to both protecting workers and resisting the government. They’ll need to work closely with the rest of the left to organise precarious and unemployed workers, tenants, and hyper-exploited migrant workers who often fall through the net of traditional organising. If it can unite behind this effort, the left has a much greater chance of persuading the Labour Party to put up resistance to this oligarchic government.