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New party funding plans proposed Party funding views 'divergent'
(about 3 hours later)
Spending by political parties would be capped at £15m a year under new proposals drawn up by Sir Hayden Phillips, the BBC has learned. The main political parties' views on future funding rules remain "divergent" according to the man seeking to find agreement on changes to the system.
Sir Hayden, who is leading an inquiry into party funding, would also cap donations to local party branches. Sir Hayden Phillips has put Labour's proposal, of a £15m a year spending cap, to the other parties.
But he would allow parties to set their own donations policy - protecting Labour's links with the trade unions. The Conservatives' position has also been put to other parties.
The BBC understands the plan has been backed by Labour but has so far been rejected by the Conservatives. Sir Hayden's spokesman said they were seeking "an agreement, if possible by the end of January, in a situation where views remain divergent".
The Tories have repeatedly called for Labour's historic links with the trade unions - who continue to provide the bulk of the party's funding - to be severed. The spokesman said: "His own judgment on this issue will be made clear in the final report."
Under Sir Hayden's proposals, the cap on donations would be fixed for at least five years. The Labour plan would allow parties to set their own rules for donations - allowing its links with unions to remain.
Blair meeting Prime Minister Tony Blair and Commons leader Jack Straw met Sir Hayden on Tuesday to discuss the plan, the BBC understands.
It would be policed by a beefed-up Electoral Commission - which would have powers to fine parties or otherwise punish transgressions. Limits
Any proposed changes to the donation policy would have to be notified at least six months in advance.
The proposed level caps on donations at a local level have yet to be decided.
Prime Minister Tony Blair and Commons leader Jack Straw met Sir Hayden on Tuesday to agree the plan, the BBC understands.
But the proposals have so far been rejected by the Conservatives.But the proposals have so far been rejected by the Conservatives.
Sir Hayden is expected to produce his final report at the end of January. The Tories have called for a large increase in state funding for all parties with more than two Commons seats, a cap of £50,000 on all donations, the phasing out of corporate donations - including from trade unions, and tax relief for donations.
Sir Hayden Phillips was asked by Tony Blair to examine whether agreement could be reached over changes to party funding.
It followed allegations, denied by all concerned, that honours have been given to people in return for people lending money to political parties.
An earlier memorandum from Sir Hayden, seen by the BBC last month, suggested a £500,000 limit on donations from organisations - including trade unions - falling to £50,000 in four years.
That plan got an angry reception within the Labour Party because of its impact on funding from unions.
Political parties spend much less than £15m in an average year but spending shoots up far beyond that during election years.Political parties spend much less than £15m in an average year but spending shoots up far beyond that during election years.
But there is pressure to reform the system of party funding following cash-for-honours allegations.