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Last Updated: Tuesday, 19 December 2006, 13:59 GMT
MPs urge political donation cap
The MPs are backing more state funding
Political donations - and the amount parties are allowed to spend - should be limited, a committee of MPs says.

The Constitutional Affairs Committee say the current system was "unstable" and had a "negative impact" on voters.

If parties agreed to such voluntary measures then state funding should be "substantially increased," it said.

Meanwhile Sir Hayden Phillips said his review into party funding would publish its recommendations in January - a month later than expected.

The committee of MPs said the current party funding system damaged public confidence in politics.

If the parties did not agree to the voluntary limits but still expected more state funding "voters will conclude that the parties are voting to give themselves more money without removing dependence on other paymasters", it said.

I have felt for years that the current free-for-all, in which a small number of trade unions and big donors are the parties' paymasters, should not be allowed to continue
Andrew Tyrie, MP

The committee report outlined a two-stage approach as it "recognises that such radical changes cannot be achieved overnight".

Ahead of the "substantial" state funding increase, a "modest" increase would accompany a lower national cap on spending and a "voluntarily agreed binding framework for limited donations".

There should also be tax relief and matched funding "to encourage small donations".

And only loans from UK financial bodies at commercial rates should be allowed.

It called for reform of the Electoral Commission, such as appointing a minority of board members with experience in politics.

Committee chairman Alan Beith said change would be difficult but was vital.

"If the taxpayer is to provide more of the money, it will need to be clear that state funding is used to achieve cleaner and healthier politics, without the fear that influence can be bought by big donations."

There was an angry reaction last week within the Labour Party to a draft proposal by Sir Hayden Phillips that there be a 50,000 cap on all donations as it would endanger their funding - and historic links with - trade unions.

Public confidence

Labour wants a small increase in state funding, stringent caps on spending and voluntary caps to be placed on donations by each party, which can reflect historic links.

The Tories have called for a large increase in state funding for all parties with more than two Commons seats, a cap of 50,000 on all donations, the phasing out of corporate donations - including from trade unions, and tax relief for donations.

Conservative MP Andrew Tyrie, a committee member, called the report a "breath of fresh air".

Reaching a consensus has not been and will not be easy
Sir Hayden Phillips
Party funding review

"I have felt for years that the current free-for-all, in which a small number of trade unions and big donors are the parties' paymasters, should not be allowed to continue." The Lib Dems want limited state funding for parties, national caps on annual donations and a lower cap on general election spending.

Sir Hayden's review was prompted by the cash-for-honours row, which followed revelations that the three main parties had received large loans ahead of the 2005 General Election.

Sir Hayden said that after consulting with various groups, including the Electoral Commission, he had delayed his report until late January "in the interest of reaching an agreement".

Tory chairman Francis Maude
Francis Maude accused Labour infighting of delaying the report

He said of the parties he had consulted, all but the UK Independence Party favoured a cap on donations, with the majority favouring a cap on organisations and individuals at a level which has yet to be negotiated.

Labour chairman Hazel Blears welcomed the committee's report suggesting "an all-party consensus is now emerging around voluntary donation limits and continuous spending caps".

She said it was "right that Sir Hayden should have more time to debate the issues" including "Labour's suggestion for a voluntary scheme that would respect diversity of party structure".

The Conservatives said feuding in the Labour Party had led to Sir Hayden's failure to reach agreement so far.

The Green party's principal speaker Sian Berry, said: "What's really important is to break the link between big business and potential influence over government policy. It's only fair that state funding should be based on vote share - as it is in Canada, where it has finally given the Greens the voice the public believes they deserve."

Labour anger over funding plans
13 Dec 06 |  Politics
Party funding options published
19 Oct 06 |  Politics
'Public get say on party funds'
16 May 06 |  Politics
Q&A: Political party funding
19 Oct 06 |  Politics

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