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Wednesday, June 2, 1999 Published at 11:40 GMT 12:40 UK

UK Politics

When cash means controversy

The chief executive of Formula One has been among Labour's donors

Donations from companies and individuals have always been a controversial issue for the UK's political parties.

There are no definitive rules on political donations but in recent years parties from across the political spectrum have attempted to bring more transparency to their accounts.

Upon succeeding John Major to lead the Conservative Party, William Hague pledged to publish the names of everyone who donated more than £5,000 to his party.

The Labour Party, in its annual report, already provides a list of individuals and companies who have donated over £5,000 to it.

[ image: Greg Dyke donated £50,000 to Labour]
Greg Dyke donated £50,000 to Labour
One of the key pledges in Labour's 1997 election manifesto was to put party funding on a "proper and accountable basis" including donations from individuals or companies.

The row about the £50,000 apparently donated by television executive Greg Dyke, who is a front runner to become the BBC's director-general, to Labour over five years is not the first to hit the party since it came to power.

Within months of being elected in 1997, the party was tarred with the admission by Formula One Chief Executive Bernie Ecclestone admitting he had made a pre-election donation to Labour of £1m.

Handing it back

The admission came days after Formula One motor racing was exempt from a ban ending tobacco sponsorship of sport.

Labour returned the £1m and a second donation to avoid accusations that Mr Ecclestone's donation had prompted a change in policy.

During their administration, the Tories, who were always seen to benefit most from donations, attempted to shift away from suspicions about some of their foreign benefactors.

The party received £440,000 from fugitive Polly Peck tycoon Asil Nadir whose secret donations were disclosed after the collapse of Polly Peck in 1990. Nadir fled to northern Cyprus in 1993 after he was charged with fraud.

[ image: Sean Connery is the SNP's most famous donor]
Sean Connery is the SNP's most famous donor
More recently, figures released last month showed that the Conservative Party received more money to fight the Scottish Parliament elections than all the other major parties put together.

The Tories received around £527,000 by benefactors. By contrast, Labour was given £268,425 - although it did transfer funds from London which do not show on the figures - mostly from trade unions.

The Scottish National Party received £137,791 -including a monthly donation from its most famous backer Sean Connery - and the Liberal Democrats £118,100.

Legislation promised

Home Secretary Jack Straw in October 1997 promised a bill to reform funding of political parties.

[ image: Lord Neill's committee looked into political funding]
Lord Neill's committee looked into political funding
It would require parties to declare the source of all donations above £5,000 and ban all foreign donations to political parties, said Mr Straw.

No such legislation has appeared since, but Labour commissioned the Committee on Standards in Public Life to look in to the question of political funding.

The committee, chaired by Lord Neill, set out clear rules on the full disclosure of donations to allow more openness about the sources and use of party funds.

The report was also aimed at improving public confidence that individuals and organisations were not buying influence through donations.

Its recommendations included:

  • Full public disclosure of donations (including benefits) to political parties of £5,000 or more nationally and of £1,000 or more in a constituency in any one financial year, from any one person or source
  • An end to blind trusts
  • Donations to political parties to be allowed only from a "permissible source" (defined so as effectively to ban foreign donations)
  • A ban on anonymous donations to political parties in excess of £50
  • Clear rules on the preparation and auditing of a political party's annual accounts and national expenditure on an election
  • No new state funding, but tax relief on donations up to £500, to encourage small donations to political parties
  • Wider scrutiny by an Honours Scrutiny Committee of all proposals where there might be or be perceived to be a connection between the honour and a political donation
  • Controls on the activities of organisations and individuals (other than a political party) spending more than £25,000 nationally on political activity during a general election, with a ban on foreign donations and both national and local expenditure limits
  • Shareholder consent for company donations.

The latter recommendation has been included in a consultation document issued by Trade Secretary Stephen Byers.

It proposes that company directors who give money or other gifts to political parties without consulting shareholders could face criminal penalties.

The proposals are expected to hit the Tories hardest, since they have traditionally been able to rely more than other parties on the generosity of big business.

However, research suggests donations from companies is falling and parties such as the Conservatives are depending more on individual donations anyway.

A survey by Labour Research, which is not affiliated to the party, showed the Tories received 120 company donations worth £2,883,904 in the year to the 1997 general election compared with 351 companies giving £4,859,769 in the year before the 1992 election.

That compared with Labour's 12 company donations totalling £1,248,942 prior to the election.

That could mean the future of political donations and sponsorship could well be in the hands of individuals such as Mr Dyke.

And as both Labour and Mr Dyke have been made aware, that would by no means end the controversy associated with political donations.

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