Labour rejects donations cap call

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Labour's ruling national executive has rejected a call to set a cap of £50,000 on all donations to political parties.

The suggestion, by Sir Hayden Phillips, the man leading the review of political funding, would hit the financial link between Labour and the unions.

National Executive Committee chairman Mike Griffiths said the party "at all levels" had agreed its position.

Prime Minister Tony Blair had "made clear that nothing should break the historic link" with unions, he added.

No exemption

In an interim report, seen by the BBC, Sir Hayden writes: "I am conscious that the introduction of a cap on organisational donations will be difficult for the parties and so I propose that it starts at £500,000 falling to £50,000 over four years."

He adds: "I see no reason why donations from trade unions should be exempt from the cap."

At the moment 3.5 million trade union members pay a £3 annual levy, which its leaders can then use to help fund the Labour Party.

Sir Hayden is understood to be suggesting that each union member be registered as an individual donor to the Labour Party.

Mr Griffiths said: "The position of the Labour Party, at all levels, has been and remains that as set out in our submission.

"This position was reiterated by the prime minister attending the Parliamentary Labour Party Committee on Wednesday where he made clear that nothing should break the historic link between the Labour Party and the Trade Unions.

"The NEC therefore rejects those proposals from Hayden Phillips that clearly neither respect nor understand the structures and constitution of the Labour Party."

All the main parties say they want the process of funding to be more transparent, to increase people's trust in politics.

Sir Hayden had been due to publish his final report this month, but it is thought to have been postponed to next year