Ecclestone revelations put parties on a collision course

Party political funding began to unravel last night after it was revealed that Formula One's Bernie Ecclestone gave pounds 1m to Labour, and pounds 10m plus a pounds 4m loan to the Tories. Anthony Bevins and Kim Sengupta report on an issue at the heart of democracy.

The full consequences of the decision of Sir Patrick Neil, Chairman of the Committee on Standards in Public Life, to force the return of Labour's pounds 1m, were slowly sinking in at Westminster last night.

Not only could it reinforce an expected cap on election spending for all parties, but it could also lead to the exposure of controversial Conservative funding.

The Prime Minister's Office suggested that if Mr Ecclestone's donation was to be returned because of the decision on tobacco sponsorship of Formula One racing, Conservative government decisions, and related funding, would also require examination.

A spokesman said: "The logical conclusion is that you now have to trawl through every government policy in the past and the future. And that applies to the last Conservative government as well."

Giving a further illustration of the logical consequences of Sir Patrick's ruling, the No 10 spokesman said that trade union funding of the Labour Party might be brought into question if the Government decided on a higher- than-expected minimum wage for low-paid employees, represented by unions like Unison.

One immediate result of the ruling is that the expected legislation on party funding - separate from Sir Patrick's longer-term inquiry into the question - is to be accelerated. That Bill, currently being drafted by the Home Office, includes the registration of political parties, the identification of people who donate more than pounds 5,000 to parties, and a ban on foreign funding.

But Sir Patrick's intervention could also force the parties to declare the amounts paid by donors. As Labour's proposals stand, Mr Ecclestone's pounds 1m donation would be included in a group of those making donations of more than pounds 5,000 - giving no clue as to the scale of the gift.

As for state funding of the parties, William Hague, the Tory leader, said he did not favour it, adding: "I do not think that the taxpayer should pay for political parties. They should have their own campaigns." The Downing Street spokesman said Mr Blair also was not persuaded that it would be right.

"One of the reasons he is not persuaded," he said, "is the taxpayer might legitimately think, why should we be paying for politicians to tear lumps off each other at election time? The public don't like either of these things. They don't like it that we have to go out and get this money, likewise they are not going to be terribly keen on funding political parties."

Paddy Ashdown, who said earlier that he had rejected the offer of a pounds 1m donation before the last election - thought to have been offered by Mohamed Al Fayed - said last night that there might have to be a core of state funding but that the bulk of party money should come from private donations, which should all be itemised and identified in full.

Professor Anthony King, a member of Sir Patrick's committee, said that in his foreword to the Ministerial Code of Conduct, that the Prime Minister had said ministers should not accept gifts, hospitality or other services which might, or which might seem to, put them under an obligation.

"If that goes for individual ministers it might go for political parties ... Mere disclosure of names of the people who give donations is not going to prove adequate".

Mr Ecclestone - the man in the immediate firing line - said he would put the returned pounds 1m in the bank. A Labour spokesman said the party would have no difficulty in returning the cash, suggesting that Labour had enough of an overdraft facility to back the cheque.

Briefly interviewed on BBC Radio 4's World at One, Mr Ecclestone said his donation had nothing to do with tobacco advertising. "This was well before anybody started talking about tobacco advertising," he said.