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Tuesday, July 27, 1999 Published at 17:40 GMT 18:40 UK

UK Politics

Cash squeeze could transform elections

Controlling the cash flow

By Political Correspondent Nick Assinder

When Labour first proposed radical changes to the way political parties were financed they were riding the crest of a wave.

The Tories had suffered a series of funding scandals - most notably over donations from runaway head of the collapsed Poly Peck empire Azil Nadir - and were on the ropes over the issue.

Labour, on the other hand, appeared whiter than white. If trade union donations were taken out of the equation - a controversial idea in itself - there was no suggestion the party was being backed by any individuals or pressure groups pursuing their own agendas.

Combating sleaze was a major plank of New Labour's general election platform and the Tories suffered badly from their past record of secrecy over donations.

Foreign gifts were of particular concern and caused the greatest anger amongst Labour activists, who always suspected the Tories were being bankrolled by South American drug runners, or something of the sort. The Nadir case only added to that anxiety.

Tory workers, of course, believed Labour was being financed by a bunch of Communist-led trades unionists.

Labour loan

But, after the general election, things started to go horribly wrong for Tony Blair. It emerged Formula One boss Bernie Ecclestone had donated £1million to Labour's coffers just before the government was about to ban tobacco advertising at sporting events.

Blair eventually returned the cash - apparently after a gracious loan from controversial backer and Florida resident Robert Earl - but Formula One was recently exempted from the tobacco advertising ban.

At the end of the day, none of the parties emerged unscathed and so, after years of secrecy and suspicion, it has been accepted by all the political parties that the time has come to be transparent in their financial affairs.

There are still some on the Tory side who believe jack Straw's legislation is designed to fan the row surrounding party treasurer Michael Ashcroft but that does not stand up to scrutiny.

But most sensible MPs believe the new rules are fair and appropriate by demanding that big donors should be made public and foreign gifts should be banned.

Election cap

Probably the most significant change, however, is the new £20 million cap to be put on general election spending, which could radically alter the way campaigns are run in Britain.

It is estimated that in 1997 the Tories spent around £28 million and Labour £26 million on their campaign - and those figures were bound to escalate in the next election campaign.

But now, thanks to Jack Straw, they will be banned from spending more than £20 million each, and that could see an end to much of the more extravagant campaigning.

Politicians may no longer be able to afford to cover 13 counties in one day by helicopter, and massive stadium-rock style rallies may become a thing of the past.

Jack Straw's measures may just turn back the clock on election campaigning and, by doing so, bring politicians closer to their voters.

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