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Last Updated: Sunday, 18 June 2006, 11:21 GMT 12:21 UK
Straw backs cap on party spending
Ballot box
The extent of the secret election loans emerged earlier this year
Commons leader Jack Straw has called for a permanent cap on the amount political parties are allowed to spend.

Rules imposing spending limits only apply currently to election campaigns.

Mr Straw also backed state funding for political parties to offset a dive in party membership which halved over the past 25 years while spending doubled.

A review is currently being carried out into party funding by Sir Hayden Phillips. It was set up in the wake of the cash-for-peerages row.

Earlier this year it emerged that both the main parties had secretly borrowed large amounts to fund their 2005 campaigns.

Some of the lenders were then nominated for peerages which were subsequently blocked.

Police are investigating whether or not honours were offered in exchange for cash.

One of the things I am obviously looking at is whether you should cap the overall level of party
Jack Straw

Last week elections watchdog the Electoral Commission said using secret loans to get around funding rules breaches the spirit of the law.

Mr Straw said: "There was no 'cash for peerages' - certainly on the evidence that I have seen."

Strong case?

He went on: "Just as it should not be a qualification for people getting into the House of Lords that people have given money to a political party, it should certainly not be a disqualification either."

"The current arrangements have been pretty effective in filtering this. Sometimes they may fall down a bit. We have got to improve those.

"The other point about this is the overall issue of party funding and one of the things I am obviously looking at is whether you should cap the overall level of party funding more than it is capped today."

He said there was a "strong argument" to have caps on spending both nationally and locally the whole time.

The Conservatives and Liberal Democrats have proposed an upper limit of about 50,000.

'No crisis'

Tory leader David Cameron wants it introduced only on condition it would also be applied to unions - an idea resisted by Labour.

Labour chairman Hazel Blears last week defended trade union backing for the party.

"There is a view that trade union donations include affiliation. I think there is a very strong argument that affiliation fees are actually the aggregate membership of millions of people who want their trade unions to be collecting for us in the way they have been for over a hundred years."

She added: "There is a lack of understanding about the way in which certainly our party is a federal organisation of different kinds of membership and that organisations are members in themselves."

Ms Blears denied Labour faced financial crisis after a report that backers want loans worth millions returned.

She said: "We certainly don't have a crisis. Money's always tight in political parties, it's always tight the year after an election.

"We need to raise funds. Doing politics in a democracy costs money for campaigning and getting our message across and that's what we intend to do."

Conservative constitutional affairs spokesman Oliver Heald meanwhile said his party was not bust insisting it had an excellent credit rating.


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