The generous spending cap will benefit bigger parties, and Mr Livingstone would have a clear disadvantage if he decided to run as an independent. But Frank Dobson, the Government's preferred choice of Labour candidate, would benefit hugely, because his party would most likely be able to raise the maximum of pounds 990,000 for his campaign.
Government insiders fear that Mr Livingstone will run as an independent candidate if he is not elected by the London Labour Party, on the grounds that the selection process has been unfair to him and because he still enjoys massive popular support.
In a letter leaked to The Independent, Keith Hill, the minister for London, said the proposals were in line with the Neill Committee's report on funding of political parties. "We have set the mayoral limit at a level that takes account of the size of the electorate," he said.
Mr Hill has also decided that candidates will not be allowed to use Freepost, another setback for any campaign by an independent candidate or any of the smaller parties.
Susan Kramer, the Liberal Democrat candidate for London mayor, said Labour had put a "For Sale sign" on next May's election.
"Only buyers with pounds 1m need apply. The combination of no Freepost ... and permission to spend up to pounds 1m threatens democracy in this election," she said.Reuse content