MPs to lose union cash

One of Labour's most hallowed traditions is set to end today with a decision by the ruling national executive committee to scrap trade union sponsorship of individual MPs.

The abandonment of the so-called "Hastings Agreement",under which unions help fund researchers and constituency workers for about 165 MPs, comes ahead of the start on 31 March of the new Nolan committee rules on registration and disclosure of outside financial interests.

The key element of the new rules, the product of months of consultation, is that while unions will still be able to choose which constituencies they support this must not depend on the identity of a particular candidate.

Labour believes that cash paid to constituencies under the new arrangement will not have to be registered and declared - although it may well recommend MPs and unions to do so. Tory MPs are likely to argue that the scheme falls within the new Nolan rules as Labour MPs would still be receiving indirect benefits from unions.

Labour hopes that under its rules, unions will choose to divert funding to marginal constituencies where the need for funding is far greater than in the safe Labour seats they have traditionally supported.

Under the Hastings agreement, cash is paid to MPs' constituencies rather than their own pockets and is used to pay for staff and other constituency expenses. Unions are allowed to give pounds 750 a year and contribute up to 80 per cent of MPs' election expenses.

The move will be welcomed as another step in Tony Blair's modernisation of the Labour party, but union sources stressed yesterday that it was the Transport & General Workers' Union and the GMB that first proposed the idea. All 29 affiliated unions have endorsed the plan.