Labour backs limited public funding for political parties

Labour called yesterday for Britain's political parties to receive millions of pounds of state funding but tried to reassure the trade unions that the plan would not weaken their historic links with the party.

Labour called yesterday for Britain's political parties to receive millions of pounds of state funding but tried to reassure the trade unions that the plan would not weaken their historic links with the party.

Labour was giving evidence to an inquiry into political funding being held by the Electoral Commission, which will issue a report on the issue this summer. Tony Blair has been converted to the idea of taxpayer funding for parties but fears it will be unpopular. He hopes the commission will provide cover for the move, which would make Labour less dependent on big donations from millionaire backers.

Labour is expected to include the proposal in a "pre-manifesto" policy document to be approved by its annual conference in October, and then its election manifesto. Legislation would be introduced immediately if the party won a third term.

Chris Lennie, Labour's deputy general secretary, told the commission that the party opposed "wholesale state funding" but said there was a case for further public support on top of existing aid such as free postage at elections and political broadcasts. The money could be used for education and training for candidates, policy development, complying with new legislation and communicating with party supporters. It would not fund advertising campaigns.

Labour believed there was a case for support for the operations in parliament of the governing party, along the lines of the "Short money" given to the opposition parties, he said. Labour is not proposing a figure, but it could run to several million pounds.

Labour would oppose changes that threatened its historic relationship with the unions, such as a "cap" on donations, which the commission is considering, Mr Lennie said. "They are constitutionally written into the party rules at all levels," he said.

The unions, which contribute about a third of Labour's income, are worried that taxpayer funding could be used by Blairite modernisers to dilute their influence on the party. Some, including the Transport and General Workers, have opposed the move in an internal Labour consultation exercise and Peter Hain, the Leader of the Commons, has met union leaders in an attempt to reassure them. In a Fabian Society pamphlet next week he will deny that state funding would be a "Trojan horse" for weakening the party-union link.

Gavin Barwell, Tory director of operations, told the commission that public funding would be a "retrograde step". "There is no support for an extension of state funding," he said.

Stuart Wheeler, founder of the IG spread betting group, a major donor to the Tories, opposed a cap on gifts to parties but called for big donors to make a public declaration on a register similar to the one that records MPs' interests.

Lord Rennard, the Liberal Democrats' chief executive, argued that donations should be capped to prevent wealthy donors buying influence. "It is wrong that millions of pounds can buy millions of votes." His party wants to see state funding financed by a 10 per cent cut in the Government's £200m-a- year advertising budget.