Straw: changes to Labour's funding 'undemocratic'

The former Justice Secretary Jack Straw yesterday raised Labour fears that the coalition Government may follow the trail blazed by Margaret Thatcher, and use its majority in Parliament to force through contentious legislation on union funding of the Labour Party.

Labour and the Tories have held discussions on whether to limit individual donations to political parties, probably to £50,000. Labour says this should not apply to union affiliation fees, claiming that they are made up of thousands of small individual contributions.

But Francis Maude, the Cabinet Office minister, claimed that the affiliation scheme is operating in a "completely bogus" way. Giving evidence to the Committee on Standards in Public Life, Mr Maude claimed that members of some unions are not told how they can opt out of contributing to a political fund, or even that the fund existed.

He suggested that union members should be clearly told that they do not have to make a contribution, and given the right to specify which party they wanted the money to go to.

But Mr Straw said it would be a "constitutional monstrosity" for unions with institutional links to his party to be required to act as "collecting agents" for parties they oppose. Union financing of the Labour Party was "more transparent and more highly regulated than any other area of donations", while major gifts to the Conservatives from wealthy backers like Lord Ashcroft were "not properly regulated", he told the Committee.

He added that it would be "totally undemocratic and completely unacceptable" for the Tory/Liberal Democrat coalition to use the "battering ram" of its Commons majority to force through changes to Labour's arrangements.

Figures released by the Electoral Commission show that David Miliband is running the best-funded campaign for the Labour Party leadership, having attracted donations totalling more than £200,000, including £31,000 from Lord Sainsbury, of the family which owns the supermarket chain, and £50,000 from the media mogul, Lord Alli. His rival Ed Balls received £15,000 from the novelist Ken Follett and £13,000 from the MP John Spellar. No other candidate has declared a donation of more than £5,000.

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