Labour was prepared to act unilaterally to name donors of more than pounds 5,000 or pounds 10,000, Larry Whitty, general secretary of the party, told the Commons Select Committee on Home Affairs, which is investigating party funding.
He said he hoped the committee would recommend that all parties should be required by law to declare substantial individual donors. However, he said Labour would not be prepared to disclose names of past donors.
In practice, the rule would hit the Tories harder than Labour, which has had only 12 donors of more than pounds 10,000 since 1987. The largest single contribution was about pounds 40,000. Robert Maxwell gave the controversial pounds 31,000 donation before that time.
Mr Whitty - facing hostile questioning from Tory MPs - presented Labour as the party of the small donors: nearly 250,000 donors paid less than pounds 50 and 20,000 paid pounds 50- pounds 500. But the Labour Party relies heavily on the trade unions through the political levy. They also sponsor 165 MPs at up to pounds 750 a year each, pay regional affiliation fees which do not appear in the national accounts, and make direct donations. Tory MPs yesterday protested that Nalgo had paid for pro-Labour general election advertisements.
There is a dispute over published figures for both parties. Figures given to the committee yesterday by Mr Whitty for 1991 showed the main sources of funds: Labour - trade unions pounds 4.4m; constituency parties/members pounds 800,000; fund-raising pounds 1.2m; commercial fund-raising pounds 300,000; donations pounds 400,000. Total income: pounds 7.1m.
The Conservative Charter Movement estimates the Tory income for 1991 to be: donations pounds 19m; constituencies pounds 1.28m; affiliation fees pounds 1.6m. Total income: pounds 22m.
The Tory party does not disclose details of donations, but a former official said pounds 7m was received from overseas donors, and Labour researchers found only pounds 3.5m in donations in company accounts.
Both sides raised special fighting funds for the 1992 general election. It is estimated Labour spent pounds 10.6m compared to the Tories' pounds 11.2m. Mr Whitty, who called for a limit on party spending on elections, including a pounds 5m ceiling on poster sites, said the gap was wider over the year, with the Tories spending pounds 27m and Labour pounds 14m. Labour had an overdraft of pounds 2.5m, now reduced to pounds 1.5m.
The Tories emerged with a pounds 19m deficit, which Sir Norman Fowler, the party chairman, tackled with a shake-up of Central Office and redundancies. The cost of the election was the main cause of the deficit, but there was evidence of falling corporate support for the Tory party. This fell by half in 1989, to pounds 6.7m.
Pressure on the Conservatives to raise more from donations became acute after a spending spree in the early 1990s under Kenneth Baker, then party chairman.
A major cost was the modernisation of Central Office in Smith Square, London, where computers were purchased and rooms refurbished. It is estimated that the party spent pounds 32m in 1990-91.
Labour does not receive backing from abroad, but is demanding a ban on foreign donations. A Labour dossier, handed to the committee by Mr Whitty, said: 'Bermuda is one possible area of secret financing for the Conservative Party.'
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