Plans to impose a £50,000 cap on political donations were dropped before the last election when cross-party talks hit an impasse. Now the Tories and Liberal Democrats have reopened the debate in evidence to a Commons committee investigating options for reform.
Labour general secretary Ray Collins has warned the proposal would bankrupt Labour by depriving it of millions of pounds of funding through trade union affiliation dues.
In the last inquiry into party funding Labour argued that affiliation fees were based on actual union members and that the process was transparent and open to scrutiny, in contrast to donations from individuals or big business on which the Tories rely.
The Tories and Lib Dems have told the Commons Committee on Standards in Public Life that the coalition wants to make a genuine attempt to eliminate the taint of big money from politics and that the £50,000 cap would hit the Tories too.
Lord Feldman, the Tory co-chairman, has told the committee that the cap would deliver a “substantial reduction in our income for an interim period…it would have a short to medium-term impact on our ability to run the party”.
Labour, however, would lose an estimated 85 per cent of its income with the effective breaking of the historical supportive link between the unions and party which described the move as “another cynical attempt to do deep and lasting damage to Labour”.
