Unions fund Labour by the back door

Tories accuse party leaders of hypocrisy over 'slush fund' which helps fund Shadow Cabinet

The Labour Party has set up a new account which will disguise the pounds 300,000 of financial support paid by unions to members of the Shadow Cabinet.

In an attempt to distance Labour from its main benefactors, the party is urging unions to place money to pay for researchers who work for the front bench in a "blind trust" which senior Tories last night denounced as a "slush fund".

By avoiding direct individual payments shadow ministers will not be obliged to reveal in the Register of Members' Interests that they receive such backing from unions. Instead they will only have to disclose that they draw on the more anonymous and arguably more voter- friendly Shadow Cabinet Research Fund.

The revelation yesterday encouraged embattled senior Tories to go on the front foot over sleaze accusations. Michael Trend, deputy chairman of the Tory party, said: "It appears the Labour leadership is trying to camouflage the true identity of the party's trade union paymasters by setting up a slush fund.

"This is a typical piece of Labour hypocrisy which must be worthy of official investigation. In spite of the sanctimonious posturing by the Labour leadership, the party's trade union friends seem to be bankrolling most of the Shadow Cabinet."

Under the old system of direct payments, by far the largest contribution - probably as much as 90 per cent - came from the Unison public service union.

While Sir Gordon Downey, Parliamentary Commissioner for Standards, has so far accepted the validity of the central fund, he said he would review his opinion if the money continued to come largely from one organisation.

In anticipation of the establishment of the fund, many shadow ministers have failed to register individual contributions from unions for research purposes during 1995-96. In most cases, however, union donations continued throughout the year.

A Unison official said last night that her union was still in talks with the party leadership, about the new arrangement. However, a spokeswoman for the Communication Workers' Union, probably the second largest contributor, said her organisation's money would now be channelled through the new account.

The money contributed by unions for research purposes to the front bench is spent on salaries, computer technology and in some cases accommodation for staff. Researchers brief shadow ministers for parliamentary speeches and on their dealings with the media.

Shadow ministers claiming they received no union contributions to research costs in the latest register of interests, are Clare Short, Harriet Harman and Jack Straw. They all received cash, however, from Unison in the year to 31 March and are hoping to benefit from the new union-financed fund. They argue that because the contributions ceased on that date - and the register is a list of contributions "as at 31 March" - they did not need to record them.

Robin Cook, shadow Foreign Secretary, was more forthcoming. He was among those who acknowledged direct union contributions in the present Register of Members' Interests. He points out in his insertion that the arrangement came to an end on 31 March.

The new rules obliging MPs to divulge which organisations are funding their activities, were toughened following the Nolan report which called for greater transparency in public life.

A Labour spokeswoman said that the charge of a slush fund was "rich" coming from the Tories. "Unlike the Labour Party they refused to reveal the identity of a single one of their donors who contributed pounds 24m and only admit their existence as in the case of Asil Nadir, when they have no option. By contrast we are completely open about the sources of our funding." She said the Labour front bench had entered into the new system voluntarily in order to make it clear that there was no link between research funding and the advocacy of a particular policy.

Alastair Campbell, Mr Blair's press spokesman, said that only pounds 20,000 had so far been paid into the new fund, some of which had been contributed by Mirror Group, major shareholders in the Independent.