Standards watchdog opens hearing on party funding

Jack Straw and Francis Maude are among MPs giving evidence later to a standards watchdog on party funding.

The "exploratory session" by the Committee on Standards in Public Life comes nearly three years after cross-party talks on the issue collapsed.

Labour said the Tories had "walked away" from an agreement - the Tories said Labour blocked reforms due to a reliance on union money.

Sir Hayden Phillips, who chaired the talks, will also give evidence.

The Committee on Standards in Public Life - chaired by Sir Christopher Kelly - last year investigated MPs' expenses and proposed a series of radical reforms, most of which was taken up by the new expenses body.

Funding controversies

But the contentious issue of party political funding also falls within its remit.

The committee has not yet decided whether to launch a full-scale inquiry into the issue and will use Thursday's session to find out more about the current state of party funding.

A spokeswoman said they would approach it with an "open mind" but were aware there might be some issues of public trust about funding arrangements.

Political parties are currently funded from a combination of membership subscriptions, donations, union money, loans, and public funds.

But there have been a series of controversies around party funding over the years - from the cash-for-honours investigation, to donations made to Labour by a property developer under other people's names and the tax status of one of the Conservatives' biggest donors - Lord Ashcroft.

Failed talks

All the main parties pledged to do something about party funding before the election and all said they agreed with moves to cap funding, as part of a reform package which could include more state funding.

Sir Hayden, who will be the first to give evidence, is likely to be asked about the talks he chaired in 2007, which eventually collapsed, and whether he feels the issue should be re-examined.

Mr Maude, who was the Conservatives' negotiator during the talks, will then give evidence followed by Jack Straw and David Heath - who spoke for Labour and the Lib Dems during the failed talks.

Sir Hayden's review of political funding was launched in 2006 in the midst of the furore over cash-for-honours allegations and the revelation that parties received large undisclosed loans in the run-up to the 2005 election.

He made a number of recommendations as a basis for consensus - but details of a final settlement were left to the parties to agree in a series of talks, which were abandoned after five sessions in October 2007.

'Paymasters'

The Tories argued trade union donations should be included within the proposed £50,000 limit on donations from individuals and organisations.

Labour wanted an end to the use of donations by Lord Ashcroft - a substantial Tory benefactor who became the party's deputy chairman - to finance campaigns in marginal seats.

Before the election, Lib Dem leader Nick Clegg repeatedly accused the Tories - now his coalition partners - of protecting Lord Ashcroft, their "paymaster in Belize", and Labour of protecting their "trade union paymasters".

Mr Clegg has also been under pressure to return £2.4m his party received from the company of a convicted fraudster.