A gamble to take big money out of politics – but does Miliband mean it?

Labour leader says his party would lose millions; Tories say he is stacking the cards in his favour

Ed Miliband has called for a strict £5,000-a-year limit on individual donations to political parties, in a move which he said could cost Labour millions of pounds in lost money from the trade unions.

But his proposal was immediately ridiculed by the Conservatives as "virtually meaningless" because Labour would retain the cash it received from the levy on trade-union members.

Mr Miliband sought to seize the initiative on the long-deadlocked issue of party funding and to exploit the Tories' difficulties over boasts by a former fundraiser that he could secure access to David Cameron in return for large donations.

The episode led to the resignation of Peter Cruddas after he was caught on tape making the claims, and to the re-establishment by Nick Clegg, the Deputy Prime Minister, of all-party talks on funding.

Previous efforts to strike a deal have foundered after Labour defended its financial reliance on the big unions while the Tories strongly opposed any suggestion of a cap below £50,000. The funding talks resumed last week but have been given fresh impetus by Mr Miliband's intervention.

The Labour leader wrote on his website: "At a time when politics is seen as being disconnected from most people's lives, the public need to know that their elected leaders are not just listening to those who can pay. So I believe it is time now for real change: it is time to take the big money out of politics. I am determined this opportunity to bring about that change is not wasted."

Mr Miliband said the £5,000 ceiling should be combined with a much lower limit on the amount parties are allowed to spend on campaigning, as well as a fresh look at how public money is allocated to the parties.

He acknowledged that his proposal would mean Labour forfeiting large donations, mainly from trade unions, in the run-up to an election. But he made clear he supported the retention of the political levy, under which union members automatically pay £3 a year to Labour unless they choose to opt out of the system.

His insistence will prove a key sticking point in negotiations with the Tories and Liberal Democrats, who protest that he is stacking the cards heavily in his party's favour.

A Conservative spokesman said Mr Miliband's move was "virtually meaningless" as it would apply only to donations to Labour from unions' central funds and would exempt income from members' subs.

The Housing minister, Grant Shapps, said Labour would lose only 1 per cent of its funding, apart from in an election year. He added: "We are very, very keen to reform party funding. It's the unions that have been blocking it and, of course, funding the Labour leader."

A senior Labour source disputed the Tory accusation, saying Labour would have forfeited more than £14m over the past three years, including £9m in the election year of 2010, under the plan.

A spokesman for the Unite union said it backed Mr Miliband's effort to "restore faith in politics, and is pleased that the vital link between Labour and millions of working people is valued and will be retained".

What's on the table

Size of donations

The Tories favour a £50,000 annual limit on individual donations. Nick Clegg backs £10,000. Ed Miliband has now proposed £5,000.

 

Union subs

Union members have to "opt out" if they do not want £3 a year going to Labour. Both the Liberal Democrats and the Tories support an "opt-in" system.

 

Spending limits

Parties can spend £19m in an election campaign. Mr Miliband wants a lower limit. Mr Clegg is sympathetic.

 

Public money

Last year, the Kelly Report suggested giving the parties £23m more per year to compensate for lost income. The parties would love that, but fear it is impossible in austere times. Other subsidies could be reallocated: free postage at elections is worth £28m alone. Mr Clegg and Mr Miliband are open to this.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Class 2 Drivers

£31700 per annum: Recruitment Genius: This specialist wholesaler owned and man...

Recruitment Genius: Laser and Router Operative

£18000 - £22000 per annum: Recruitment Genius: A Laser and Router Operative is...

Recruitment Genius: IT Support Technician - 1st Line

£15000 - £20000 per annum: Recruitment Genius: They have been providing local ...

Recruitment Genius: Field Sales Executive / Trainee Managers

£6000 - £50000 per annum: Recruitment Genius: They are looking for smart, orga...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones