The Labour party is in a panic following Unite's decision to consider a £1.5m cut in its annual affiliation fees to the party, Len McCluskey, the general secretary of Unite, told the Guardian.

He confirmed his executive would consider the cut next week and added that he personally found it impossible to morally justify the continued affiliation of a million members to the party when the union's own polls showed that as many as 400,000 Unite members did not vote Labour at the last election.

He also disclosed that his union is raising objections to proposals that any party leadership election held immediately after the 2015 general election would in effect exclude hundreds of thousands of union members from the franchise. He said the proposals were under review.

Any Unite plan to cut its affiliation to the party – currently being considered by his senior officers prior to a meeting of the union's executive next week – should be no surprise to anybody he said. The union has to pay £3 annually for each union member affiliated to the party.

The move threatens to cast a pall over the Labour special conference this weekend in London, convened to endorse the radical proposals for party reform, including changing the electoral college for the Labour leadership election, and introducing a new class of union-affiliated supporter who has made a positive individual decision to support the party.

He said: "I know there are some people internally in the Labour party that are beginning to panic because of what we are considering. I am not sure why because it was self-evident from last summer when Ed Miliband made his proposals that there would be consequences. I said that having been challenged by Ed to consider the status quo, I suddenly felt it was untenable. We have one million members paying into the political fund and affiliate the full one million members to the party.

"In terms of size the unions closest to us are GMB, Unison and Usdaw – all of which affiliate just 400,000. Looking at it, I thought it was difficult to justify even from a moral standpoint".

The GMB has already cut its annual affiliation by £1m annually, so the two union decisions could mean a £10m cut in regular annual income over a five year parliament. Labour officials said they were confident that the party's finances would be stable, saying that "our greatest source of funding is our members, and these reforms will allow us to talk directly to affiliated supporters for the first time, and ask them to contribute to the party".

The officials added the cut in affiliation was at this stage speculation.

"As soon as Ed made his proposals it put me in an awkward situation that I knew I would need to front up.

"If I am asked on the television how come you affiliate 1m of your members when you know 400,00 of them don't vote Labour, I would not be able to look the interviewer in the eye, and give them an honest answer".

McCluskey stressed it was for his union executive to make a democratic decision, but said he would not be surprised if the executive cut the level of affiliation.

He added: "You can imagine the Labour party is hoping that for the five year period before the new system comes fully into play that nothing changes in terms of affiliation. We have to weigh that in the balance. We don't want to bankrupt the party or place the party in financial difficulties".

Labour is proposing a five-year transition before the new system is full operational, including the requirement for union members to make a positive decision to affiliate to the party.

McCluskey added: "Even if we reduce our affiliations we can still give direct donations to the national Labour party".

He said the union had a rules revision conference next year at which it could consider whether the union wished to donate to other political parties apart from Labour.

The party has said that in future leadership elections only full party members, and affiliated supporters, drawn from the trade unions would be entitled to vote on a one person one vote basis.

But McCluskey is concerned that by next summer the affiliated supporters scheme will not be fully set up, and this would mean unions would be effectively frozen out if there was a leadership election.

He said: The question that is being asked what hapens if there is a leadership election in the summer of 2015 by which time unions will not have been given much of a chance. That would be very wrong, and has been flagged up"

He stressed at the moment the union was trying to concentrate on securing Milioband's election as Prime Minister, and said he would be trying very quickly to persaude existing levy payers to become affiliated supporters . "We are going to engage in Ed's vision to have 200,000 to 400.000 trade unionists active in the party"

He also said the whole package of proposals will need constant review to see how many union members wish to become affiliated supporters . The key to the scheme success will be whether we can give our members something to enthuse them about Labour.