Labour calls for £5k donor cap

ED MILIBAND yesterday called for a £5,000 cap on donations to political parties and tougher limits on election spending as he sought to seize the initiative in negotiations over the future of party funding.

The Labour leader said the cap, which is significantly lower than the £50,000 limit being proposed by the Prime Minister, would also apply to direct donations from the trade unions, costing his party “millions of pounds”.

The Tories were quick to dismiss the proposals as a “complete wheeze” because Labour gets a significant amount of its union funding from so-called affiliates – trade union members who automatically pay £3 a month unless they opt out. These donations would be unaffected by the cap.

Grant Shapps, the housing minister, accused Miliband of being “disingenuous”, arguing that Labour accepted £10m of trade union funds last year and would only have lost around £100,000 of this if the proposed cap had been in place.

However, if the cap had been in place in 2010 – the most recent election year – then Labour would have missed out on the vast majority of the £9m or so it accepted in large donations, £4m of which came from the trade unions.

Most large donations are given to political parties in election years, meaning they are a better yard stick for comparing party funding.

The Tories are highly unlikely to support a £5,000 cap unless Labour agrees for its trade union members to opt in rather than opt out of paying their £3 charge.

Last year, an analysis by Sir Christopher Kelly, the commissioner on standards in public life, showed the Tory party would lose 70 per cent of its income even if a £10,000 cap were introduced.

Miliband also said the limit on how much political parties spend fighting elections should be “substantially less” than the current cap of around £20m.

Political funding has returned to the political agenda following the cash-for-Cameron scandal, which saw ex-Tory treasurer Peter Cruddas offering big donors the chance to influence government policy.