David Cameron rejects Ed Miliband's challenge to support £5,000 party donations limit

PM accuses opposition of being owned by unions, while Labour leader replies Tories were 'bankrolled by a few millionaires'

Labour party leader Ed Miliband speaks during Prime Minister's Questions in the House of Commons (PA Wire)

Ed Miliband challenged David Cameron to support a £5,000 cap on donations to political parties as the row over Labour's financial links to the trade unions spilled over into acrimonious Commons clashes this afternoon.

The Prime Minister accused the opposition of being owned "lock, stock and barrel" by the unions, while the Labour leader responded that the Tories were "bankrolled by a few millionaires".

The bruising exchanges followed Mr Miliband's announcement that he wants trade unionists to "opt in" to Labour membership rather than find themselves automatically enrolled into the party.

The issue was brought to a head by allegations last week that the union Unite tried to "rig" the selection of a Labour candidate in the parliamentary constituency of Falkirk.

As the two leaders traded insults, roared on by their MPs, John Bercow, the Commons Speaker, was forced to intervene repeatedly to appeal for calm.

Mr Cameron said he supported the principle of a cap on donations, but he added: "There is a problem with a £5,000 cap. It is this - it would imply a massive amount of taxpayer support for political parties. Frankly, I don't see why the result of a trade union scandal should be every taxpayer in the country paying for Labour."

The Labour leader also said he supported a ban on MPs having second jobs outside Parliament - and asked the Prime Minister whether he would agree the move.

Mr Cameron rejected the demand, saying that the important thing was for MPs to be "open about transparent" about their other sources of income.

He said: "Let's ask what has changed since yesterday. Will the unions still have the biggest vote at the conference? Yes. Will they still be able to determine the party's policy? Yes. Will they still have the decisive vote in voting for the Labour leader? Yes. That is the fact. They own you lock, stock and bloc vote."

Mr Miliband said he was proud of Labour's links with the unions, contrasting the 6p a week it receives from "ordinary people up and down the country against a party funded by a few millionaires at the top".