Page last updated at 18:46 GMT, Tuesday, 30 March 2010 19:46 UK

Labour and Tories blame each other for funding deadlock

Cheque book
Sir Hayden Phillips chaired the cross-party talks.

Labour and the Tories have blamed each other for the failure to agree reforms to party funding, after details emerged of how negotiations broke down.

Talks on overhauling funding rules for political parties became deadlocked in October 2007 after 18 months of effort.

After minutes of crucial meetings held at the time were published on Tuesday, Labour said they showed the Tories had "walked away" from an agreement.

The Tories said Labour blocked reforms due to its reliance on union money.

The talks - in which the Lib Dems also took part - were instigated by Tony Blair after Labour became embroiled in a "cash for honours" row and amid concerns about a growing "arms race" in party spending.

However, the negotiations foundered over the inability to agree limits for campaign spending and donations.

Sticking points

The Tories argued trade union donations should be included within the proposed £50,000 limit on donations from individuals and organisations.

Labour wanted an end to the use of donations by Lord Ashcroft - a substantial Tory benefactor who became the party's deputy chairman - to finance campaigns in marginal seats.

Details of five meetings between party negotiators held between May and October 2007 - overseen by senior civil servant Sir Hayden Philips - have now been published by the government.

Labour moved a long way on trade union funding
Jack Straw

A draft agreement put forward in September 2007 would have paved the way for state funding for parties but also would have allowed union affiliation fees to be regarded as a collection of small donations by members, thus avoiding the cap, as long as an individual could opt out.

The BBC's political correspondent, Reeta Chakrabarti, said the minutes showed that, by the last session at the end of October, trust between the parties had broken down completely.

At this meeting, the Conservatives pushed for trade union members to be free to donate money to any party of their choosing, resisted by Labour as it would have broken the historic financial link between affiliated unions and the party.

At the same time, the Tories argued there was no "necessity for further controls on party spending" - a view opposed by the other parties.

'Cash addiction'

Labour accuse the Tories of dismissing the draft agreement before the parties could discuss it and effectively sabotaging the entire process.

A Conservative government will seek an agreed long-term settlement that would introduce an across-the-board cap on donations to end the big donor culture
Francis Maude, shadow cabinet office minister

"These papers reveal that the Conservative Party walked away from an agreement on fundamental reform of party funding and out of the talks that produced it," Justice Secretary Jack Straw, Labour's representative at the talks, said.

"Labour moved a long way on trade union funding. The Tories accepted this at first but their approach suddenly changed in the summer of 2007 with the arrival in their headquarters of Lord Ashcroft."

Francis Maude, the Tories' negotiator at the time, said the documents showed Labour's "addiction to union cash" and the power of union bosses at the expense of individual members.

"Gordon Brown wrecked the opportunity to clean up politics because he wanted the unions' votes to become Labour Party leader," he said.

"A Conservative government will seek an agreed long-term settlement that would introduce an across-the-board cap on donations to end the big donor culture."

The Lib Dems criticised the Conservatives' position on union donations, saying the draft agreement offered a "clear step forward" in making payments discretionary and transparent.

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