ConservativeHome's ToryDiary

More shadow frontbench office donors revealed

The latest MPs' register of interests was published yesterday, the first since the parliamentary standards commissioner said the Conservatives must disclose who is financing their staff and research. Key findings as picked out by the Guardian are:

• George Osborne's office was revealed to be receiving funds from property investor Sir John Beckwith, and Lady Serena Rothschild. The register shows it is also receiving financial support from PriceWaterhouseCoopers, accountants Grant Thornton, the European School of Management, management company the Boston Consulting Group; and investment managers Smith and Williamson.
• Michael Gove declares fourteen donors including carpet millionaire Lord Harris (who also backed Osborne and Davis), a credit check company and derivatives trading company both based in Knightsbridge, wealthy commercial lawyer Rommie Tager, and Alan Bekhor - the man behind Standpoint magazine. He also declares thirty-four companies and individuals - including the owners of Annabel's nightclub in Berkeley Square - as donors to his Surrey Heath constituency.
• Nick Herbert is being backed by Lord Bell and by Overgoal Ltd, an acquisitions company run by Mark Scalon, which was involved in a row with the Unite union over redundancy payments following the takeover of a Reader's Digest distribution company.

The piece wrongly implies that Chris Grayling's donations are newly revealed as a result of the register, but like Liam Fox and others he had already declared them. The register also shows the extent to which Australian hedge fund billionaire Michael Hintze is a major funder of frontbench offices, and that health technology businessman Julian Schild funds Osborne, Lansley, and Stephen O'Brien, as well as a working group into the NHS IT system. Lord Ashcroft is continuing to offer the use of his jet to frontbenchers and provided a helicopter flight for Cameron from Crewe to London during last month's byelection campaign.

The taxpayer gives £1.75bn extra to politics and the politicians still want more

A report from Policy Exchange has calculated that new allowances and subsidies for politics - that have grown up over recent decades - costthe taxpayer £1.75bn over the course of a five year Parliament.

'Paying for the party' by Dr Michael Pinto-Duschinsky of Brunel University identifies three kinds of taxpayer subsidy to political parties:

• Direct financial payments from the State to the parties, not least Short money.
• Subsidies-in-kind (such as free party political broadcasts) and
• Indirect subsidies (such as MPs’ allowances).

Dr Pinto-Duschinsky lists some of the key costs:

• "By 2006-07, local councillors in Britain were receiving over £216million in salaries and allowances;
• The allowances of Members of Parliament amounted to £87.6 million;
• Allowances to of members of the House of Lords came to £17.7million;
• The cost of special advisers to the UK Government was £5.9 million in 2006-7;
• An estimated £6 million went to political assistants to party groups on local councils in England; Healthy additional sums were spent on allowances to members of the regional assemblies and of the European Parliament."

Unfortunately none of Britain's mainstream political parties want to make serious cuts in the state funding of politics although the Conservatives want to axe the much-abused Communications Allowance.  David Cameron has argued for extra direct subsidy in return for a £50,000 cap on large donations and a reduction in the number of MPs.

Related link: Douglas Carswell MP's reaction to the report

9.30am: Francis Maude has just issued this response to the PX report: "This research demolishes the Labour argument that rigid state controls should be placed on local campaigning. Given the massive increase in backdoor state funding under Labour through the likes of the Communications Allowance, there can be no case in the taxpayer having to fork out even more money purely to prevent the Labour Party going bankrupt.  Any reform of party funding must clean up politics and end the big donor culture. Given the succession of funding scandals under the Labour Government, there is a strong case for a comprehensive cap on donations - covering individuals, companies and trade unions. It is unfortunate that the Labour Party are the roadblock to reform, due to their unwillingness to end their murky funding from trade union barons."

Conservative donations almost double Labour's

The Electoral Commission reports today on party donations in the fourth quarter of 2007, a period which partly precedes Brown bottling out of the election.

The Conservatives led the way getting almost £10m, followed by Labour with £5.5m and the LibDems with just £950k. Worryingly, more than £450,000 had been declared after the legal deadline.

Lord Laidlaw tops the list of Conservative donors, having given a whopping £3m to the Party in that period. Laidlaw had been under pressure earlier in the year for not being a UK resident.

The Conservatives also paid off £3.5m of loans, whilst Labour paid off £1.4m but borrowed another £2m. The LibDems owe over £1m.

David Cameron cannot be bold enough in increasing accountability of politicians

24 hours after the Derek Conway report was published David Cameron took decisive action against the disgraced MP and he has kept up the momentum over the last week with welcome requirements for greater openness from his frontbenchers with regard to their taxpayer-funded expenses.

It's also fair to say that Mr Cameron, with considerable support from Ken Clarke and Andrew Tyrie, has been working on many other proposals that aim to restore the public standing of politicians.  At the start of last month he signalled the abolition of the new (and abused) communications allowance, the closure of the parliamentary pension scheme to new MPs and tougher investigation of breaches of the ministerial code.

Much greater boldness is still needed, however.

We've argued before that the Conservative Party should fashion itself as an anti-establishment party:  standing up for the little guy - not big government, not big business, not big charities and certainly not big political elites.  Finding ways of delivering more power to people is the fourth theme of our 'Agenda 2008'...

We recommend that the Conservative Party stands for the following pro-democracy principles at the next General Election:

No more taxpayer funding of political parties. This would require David Cameron to change position somewhat but voters don't mind politicians who change their minds after listening to the public.  Mr Cameron could quite reasonably say that there is currently such an anti-politician mood that further state funding of politics would be wrong (at least until politicians put their wider house in order).  He could make a pledge not to increase state funding of incumbent politicians for the whole of the next parliament.  We would prefer a principled rather than a pragmatic opposition to state funding of politics - based on the idea that politicians should have to raise funds by appealing to free citizens, not compelled taxpayers - but a temporary pragmatism would be a very acceptable stop-gap.

Another angle to George Osborne's £500,000

Ben Brogan notes that Labour is doing its best to big up the Osborne donations story but there really is no comparison with Peter Hain's undeclared £103,000.  George Osborne told the Electoral Commission about the money channeled via CCHQ to his Shadow Chancellor's office.  Perhaps he should also have made a declaration to Commons' authorities but he clearly wasn't trying to hide it.  The best two observations on the Hain money were made by...

1. The Mirror's Kevin Macguire who blogged that Mr Orange spent £23.32 for every vote that helped him come fifth in the Labour deputy leadership battle... and
2. Former Tory MP Neil Hamilton who, in his Sunday Express column, notes that Hain was one of his most "censorious and unforgiving critics" when he didn't declare £667 back in 1990.  Mr Christine Hamilton concludes: "If Hain thought £667 a resigning matter, he should commit hari-kari for £103,000".

But if there is nothing dodgy about the £487,000 received by George Osborne there is some real shock and anger amongst his shadow cabinet colleagues.  We have spoken to three of them tonight and they are staggered that Mr Osborne has been in receipt of such "largesse" while they have been constantly refused money by CCHQ.  One senior member of Mr Cameron's top team put it this way:

"George has the biggest job after DC and he should get the biggest share of the Treasurers' pie but there's no fairness here. I can hardly afford to undertake any long-term project. The shadow cabinet knew nothing of this.  It's further evidence that the shadow cabinet is little more than a rubber stamp for the decisions taken by Cameron's kitchen cabinet."

John Major warns against extra state funding of political parties

Interviewed on Andrew Marr this morning, former Prime Minister John Major warned against further taxpayer funding of political parties.  Politicians are already remote enough from the grassroots, he warned, and any further taxpayer funding would risk diminishing the connections that the party elites had with ordinary voters.

Other highlights of Sir John's interview:

• The loss to Britain of Gordon Brown's mis-timed gold sales is greater than the losses inflicted by Black Wednesday, he said.  In addition it will be "quite likely" that the mishandling of Northern Rock will also cost more than Black Wednesday.
• In the 1980s and 1990s there were individual misbehaviours but there was not a culture of sleaze.  New Labour's behaviour in the 1990s, he said, in trying to paint the whole Conservative Party as tainted was "almost McCarthy-ite".  People would now laugh at Labour if they repeated their promise to be "whiter than white".
• He said that Labour would find it difficult to attack Team Cameron as inexperienced because of the inexperienced nature of its own team.  When he was Prime Minister there were plenty of people of PM calibre - Ken Clarke, Michael Heseltine, Douglas Hurd, Malcolm Rifkind - only Jack Straw is experienced enough to take over today.
• We went into Iraq on a false premise.  Saddam has gone but everything else looks pretty "bleak".  Unemployment is 50%.  Death rates remain very high.  The whole episode cannot be looked upon with pride.

PS Also on Marr this morning was Rory Bremner.  His amusing review of the year including impersonations of Gordon Brown, Ming Campbell and George W Bush but he didn't attempt a David Cameron voice.  He actually performed a PMQs-style exchange on the EU Treaty between Gordon Brown and William Hague.  For the perfect William Hague impersonation ConservativeHome recommends Conor Burns or Jonathan Isaby!

Cameron says it would be "unrealistic" to believe that small donors could replace large donors

Just back from David Cameron's latest press conference and I asked him a question about state funding of political parties.  I quoted ConservativeHome research that said that four-fifths of party members would be prepared to give more to central funds if the party could no longer rely on big donors like Lord Ashcroft.

David Cameron replied that he thought that it "unrealistic" to impose a £50,000 limit on private donations and say "no additional state funding."

Other highlights of the press conference:

• Conservatives would only accept a deal on extra state funding of political parties if the £50,000 cap was imposed across the board and if there was an overall reduction in the cost of politics.  He specifically highlighted the abolition of regional assembly structures and the end to the new MPs' communications allowance.
• £30m had been raised by the party since he became leader.
• There were now 120 donors giving £50,000.
• Lord Ashcroft gives less to the Conservative Party than Mittal and Sainsbury give to Labour and only 4% of total Tory income.
• He refused to be drawn on questions about Lord Ashcroft's income tax status from Newsnight's Michael Crick.  Only saying that he had complied with the undertakings given when he became a peer.
• The Conservative Party wasn't perfect but had good systems and good people for its fundraising.
• He opposes controls on political spending between elections because it (1) wouldn't be fair - opposition parties need to be able to combat the advantages enjoyed by incumbent MPs and by governments with "thousands of press officers" and (2) it would nationalise politics - activists would be driven out of politics by the need to record what was raised at every cheese and wine evening and spent on every leaflet drop.
• He opposed a ban on billboard advertising - "That would be more Stalin than Bean".

Conservatives should be on the side of the little guy - not big political parties, big government, big business or big charities

David Cameron has just been interviewed by Andrew Marr.  He said that it "beggared belief" that Gordon Brown really knew nothing about the events that have unfolded over the last week.  He accused Mr Brown of being a bigger spinner than even Mr Blair - noting that a statement by John Mendelsohn was only released three minutes before last Wednesday's PMQs.

He said that he would still welcome a £50,000 cap on political donations but it must include the trade unions.  He said that Labour's relationship with the unions was the last corrupt relationship in British politics with the unions getting policy changes in response to their giving.

A £50,000 cap on donations would hurt the Conservatives he said and some extra state funding of political parties would be necessary.  He would only accept extra state funding if the cost of politics was cut in other ways.  Previously he has spoken about a reduction in the number of MPs.  That deal has been called more taxation for less representation by the Daily Mail.

Editor's comment: "Mr Cameron is missing an opportunity here.  The public mood towards politicians has soured considerably since he proposed extra state funding for political parties in return for a cap on donations and fewer politicians.  He needs to show that he understands that mood change.  Voters do not want more of their taxes going to political parties.  Conservatives should be the anti-establishment party at a time when the establishment appears rotten.  We shouldn't look like we want to prop it up.  Moulding ourselves as the anti-establishment party could be a much bigger theme for our whole approach.  In addition to encouraging political parties to use the internet to fundraise and therefore become much closer to the concerns of voters we should be promising to diversify and localise the processes by which peoples' lives are affected.  There should be less power in the hands of big clunking government departments and their capacity to lose 25 million peoples' records and more power to local schools, local hospitals and the grassroots poverty-fighting organisations that the Conservative leader has done so much to champion.  Conservatives should be on the side of the little guy - not big business, not big charities, not big government and not big political parties."

Grayling attacks Brown's attempts to switch attention from donations scandal

I agree with Fraser Nelson.  Francis Elliott's piece in this morning's Times, is a perfect summary of the last week's donor scandals that have engulfed Gordon Brown.  I particularly enjoyed this section:

"Behind the scene No 10 aides are furious at the Harman camp’s attempts to pass the blame on to Mr Brown for her involvement in Labour’s donations scandal. Mr Brown had his competence and integrity called into question by David Cameron at Prime Minister’s Questions over his admission that a controversial property developer used proxies to channel money to Labour. Now, as the cracks begin to show after six days of pummelling over the David Abrahams affair, the Tories can claim that Mr Brown’s administration is not only bungling and sleazy, but divided to boot."

Mr Brown wants to move on from his troubles by proposing reforms to the whole system of political funding.  He wants to use this opportunity to increase state funding of political parties.  The Labour machine is already trying to embroil the Tories in its mess by launching attacks on how the Conservatives receive money.  Lord Ashcroft inevitably and the Midlands Industrial Council are in Labour's mind.

Chris Grayling is having none of it.  He's just issued this statement:

“This morning’s speech is a pretty opportunistic attempt by Gordon Brown to erect a smokescreen around events of the past two days.  David Cameron wrote to him in October urging major reforms to party funding and a cap on donations, Gordon Brown refused because he didn’t want to give up on the multi-million pound financing from the trade unions.  His decision to pick up the issue again today must be more than an attempt to divert attention away from party problems.  The other real concern about this morning’s comments is that it looks like he’s trying to find ways of giving himself greater political advantage.  He wants to cut campaigning by his opponents in marginal seats whilst continuing to use tax payers’ money to give his MPs a communication allowance to spend in those same marginal seats.  It also looks as if he’s set on protecting big trade union donations whilst putting limits on everyone else."

Even if Labour did reform the laws governing party funding, does anyone believe that they are competent or honest enough to abide by them?

Editor's comment: "This is dangerous for Labour.  If the Conservatives choose to oppose extra state funding of political parties (as they should), Labour's attempt to extract even more money from the taxpayer will cause new public fury.  The Tories should be doing much in the meantime to increase the proportion of funding they receive from individuals.  The Canadian Conservatives would be a good example to learn from."

Live blog of PMQs from noon: Cameron questions the integrity of the man Vince Cable calls Mr Bean

5.15pm: Two minute video clip of Cameron blasting Brown is now on PlayPolitical.  ToryRadio has the full audio.

4pm: A great line from Fraser Nelson (my emphasis): "Brown told Peter Tapsell that "this job is an important job and I will continue to do it to the best of my ability". Yes, Prime Minister, that's what we're all worried about."

Editor's verdict: "Vince Cable steals the show today with his Mr Bean line.  As the FT's George Parker has just said on Radio Five - Mr Brown thinks himself a serious, weighty figure and hates to be ridiculed.  Well done, Mr Cable!  Another good performance from Mr Cameron.  He provided plenty of good clips for the rest of the day's broadcasts.  Also good to hear John Gummer and Michael Ancram joining the attack so successfully."

Not verbatim highlights:

12.26pm: 'What does the PM want for Christmas?', Sir Patrick Cormack asks.  A day off, the PM replies.  [He can have as many days off as he likes if he goes to see The Queen tomorrow!]

12.24pm: Another good question, this time from John Gummer: The PM said his decision to call off the election had nothing to do with the polls and his inheritance tax cut had nothing to do with what the Conservatives had done.  How can we believe him now when he says he knew nothing about the dodgy donations?

12.17pm: Excellent question from Michael Ancram: Why are all his party colleagues so intent on keeping him in the dark?

12.11pm: Vince Cable highlights the underfunding of the armed forces.  The Prime Minister replies by saying that Britain has the second best funded armed services in the world.  [Fraser Nelson dealt with that claim last week: Des Browne's Defence Funding Fiddle].

12.11pm: Best line of the day from Vince Cable: In a few short weeks the Prime Minister has gone from Stalin to Mr Bean.

12.07pm: This goes to the heart of Prime Minister's integrity, says Cameron.  His explanations beggar belief.  We've had disaster after disaster since he became Prime Minister.  A run on the bank.  Half the country's personal details lost in the post.  Now this.  The Prime Minister is looking less and less cut out for the job.  Enthusiastic Tory cheers.

12.04pm: Has the PM invited the police to investigate? [Ben Brogan thinks that a police investigation is inevitable].  If, as he said yesterday, unlawful acts have been committed, he should call in the police.  The public will see the Prime Minister wriggling.  John Mendelsohn, Labour fund manager, knew about this unlawful behaviour a month ago.  Why is he still in place?  [Guido has the background on Mendelsohn].  Mr Brown replies by saying that Mr Mendelsohn had been led to believe that the donations had been cleared by the Electoral Commission.

12.02pm: David Cameron invites the Prime Minister to say if he believes he still is delivering competence and trust to British politics.  The Prime Minister responds by saying that he has set up enquiries and is determined to ensure that party political funding is all above board.

11.59am: I'm listening to Radio Five Live: Commentator says 'goal gets wider for David Cameron every week'.  Indeed!

Cameron: Labour has become indifferent to the law

David Cameron has been addressing the CBI Conference and has launched a stinging attack on Labour:

"What we have learnt over the last few days is that when it comes to regulation and legislation there’s one law for government – and another one for everyone else.  These people, they set up these quangos, they pass these laws, they introduce these regulations, they insist on this bit of scrutiny, that bit of compliance – and whether it’s their own government debts or their own party machine they just don’t obey it.  There is a time in the life of every government when they’ve been in power for so long that complacency tips over into arrogance, and arrogance even becomes indifference to the law. They’ve passed that point and change, real change, is needed now in Britain."

On this morning's Today programme Francis Maude accused Labour of "institutionalised cheating":

"It frankly defies credibility that Peter Watt didn't know that this most basic of compliance rules was in place... If that is the case, we wonder what else has been going on there... This kind of looks like institutionalised cheating in the system and adds to this general sense there now is of this whiff of decay and, frankly, greed.  These are rules that Labour themselves brought in, with our support, and we think it is really important they should be followed. It does look like institutionalised evasion of the rules going on here.

Large sums of money don't come spontaneously. You don't get a random cheque through the post. They come about through conversations and discussions, persuading people that supporting your party is a good thing to do.  These are not obscure technical breaches.  This is the most basic thing. The whole point of the Act was to require disclosure and transparency over substantial amounts, so people would know who was paying it.  If the money was being disguised and laundered in this way, you do just wonder what lay behind it."

On the blogs: Guido is at his best at the moment.  If you want to follow the twists'n'turns of Labour's donations crisis I suggest you bookmark order-order.com.  Ben Brogan wonders if Harriet Harman could be in trouble for accepting £5,000 from Abrahams for her Deputy Leadership bid.  Nick Robinson notes that Brown did not give her backing at his press conference.  In a must-read post, Danny Finkelstein finds Labour's explanations "ridiculous".  And Dan Hannan worries that taxpayer-funding of political parties will be presented as the answer to the problem of big private donations. 

Labour MPs in marginal seats abused their parliamentary allowances

ConservativeHome can reveal that MPs re-standing in Labour’s fifty most marginal seats increased their spending on taxpayer-funded postage by 35% in the year before the 2005 election only to reduce it by 22% in the year after. On average they spent £6,091 each – the equivalent of 25,380 letters sent by second class mail.

This comes after they voted themselves an extra £10,000 for "communicating with their constituents", further strengthening the incumbency factor. Theresa May commented on the figures, uncovered by Party researchers:

"Gordon Brown wants to legislate to prevent other parties from campaigning in marginal seats, but leave his own MPs to their own devices.  Not content with trade union donations and their new £10,000 Communications Allowance, Labour’s marginal MPs have been spending a small fortune of taxpayers’ money on free postage. Instead of trying to fix the rules to gerrymander the next election, Gordon Brown should reform the system of allowances so that the public have faith that MPs are spending taxpayers’ money appropriately."

Notable examples include Home Secretary Jacqui Smith who increased her spending by 69% in election year, Schools Minister Jim Knight who defended Labour’s most marginal seat by increasing his spending by 50%, and Linda Perham, the MP for Ilford North, who increased her spending by a whopping 338%.

Deputy Editor

CCHQ highlights widespread abuse of parliamentary communications allowance by Labour MPs

Ruth Kelly has issued an overnight apology for spending part of her parliamentary communications allowance on a constituency newsletter that, in clear breaches of guidance, boasts of Labour Government achievements.  The guidelines state that "no party political or campaigning material is allowable in any part of a publication funded, in whole or in part, from the allowances."

Mrs Kelly told the newspaper that broke the story - The Mail on Sunday - that she apologised unreservedly.  Her autumn newsletter includes the following sentences:

• “This reaffirms Labour’s commitment to investing in the NHS”
• “The Labour Government has invested so much in improving early years’ services"
• It boasts of “the difference made by Labour’s commitment to investing in and modernising our NHS"
• It includes the slogan from her website “Your NHS. Better with Labour”
• It also promotes the work of Bolton West Labour Party.

David Davies MP has written to the Serjeant at Arms to complain of these abuses.

Mrs Kelly is not the only offender.  CCHQ has identified other leaflets - paid for by taxpayers - but which appear to be in breach of parliamentary guidelines:

• "Bridget Prentice, a Minister for Justice, has the Labour Party logo on every page of her newsletter – and even includes a photo of her local Labour Party HQ.
• Gisela Stuart, majority 2,349, also uses the Labour Party’s colours across the entire leaflet, including photographs with Gordon Brown and claims Gordon Brown is ‘delivering a fair deal for pensioners today’.
• Julie Morgan includes a section in her leaflet celebrating the arrival of ‘a new Prime Minister’ who has seen ‘many testing occasions’ as well as pointing out she supported Harriet Harman for Labour’s Deputy Leadership."

There are also problems with Labour MPs' websites.  Andrew Mackinlay publishes press releases attacking the Conservative Party – linked from his main news page.   Janet Anderson's website boldly displays Labour party logos and does not acknowledge that the site is taxpayer-funded.

Commenting Francis Maude said:

“The Communications Allowance was deliberately created to enable sitting Labour MPs to protect themselves against their democratic opponents. This is further evidence of how Labour voted through taxpayers’ cash to bankroll their political campaigning in marginal seats. If Gordon Brown is serious about restoring trust in politics, he should scrap this unfair Allowance now”.

Lord Ashcroft and his beneficiaries have contended that his and others' financing of Conservative candidates in marginal seats is a necessary counterweight to the huge advantage enjoyed by incumbent MPs - at taxpayers' expense.  Even without the abuses identified by CCHQ, these leaflets give a huge boost to incumbents and thus produce a very unlevel playing field.

Ruth Kelly's offending newsletter - please click on the graphic to enlarge.

Cross-party talks on party funding have broken down

Francis Maude is blaming Labour's unwillingness to end their dependence on union money for the breakdown in talks:

“We are disappointed that the trade unions still hold Labour over a barrel.  The unions are running the Labour Party from the back seat, giving them control over Government policy.  Labour has rejected a comprehensive cap on donations and clearly do not want to end the big donor culture which has cause the ‘cash for honours’ scandal.  Labour just want a backroom deal that gives them taxpayers’ cash without proper reform. This would do nothing to restore public trust in our democracy.”

The First Post is now predicting that Brown will act unilaterally to close what Labour MPs in marginal seats regard as the "Ashcroft loophole".  Expect new curbs on the amount of money that can be spent between elections and not just at elections.  Ashcroft has defended his support for target seats by pointing to the huge advantages enjoyed by incumbent MPs from significant parliamentary allowances.

Related link: Union money to Labour, taxpayers' money to unions

David Cameron: No extra state funding of political parties without cap on union donations

Francis Maude made it clear in March...

David Cameron has made it clear again tonight...

The Conservative Party will not agree to any increase in state funding for political parties unless Labour agrees to a cap on the donations it receives from trade unions.

In a letter to Mr Brown, the Tory leader has requested an urgent clarification on Labour's intentions:

"There is no case for additional state funding for political parties without fundamental reform. The package currently proposed in these talks does not amount to the fundamental reform that is needed. In these circumstances I cannot and will not support any increase in state funding for political parties... A comprehensive cap on donations to political parties is essential. All common sense requires that to win public trust, no individual or body can remain exempt.  The cap must apply to trade union donations, whether directly or through affiliation fees."

Mr Cameron has agreed that there could be an extended transitional period to allow Labour to adjust to a world without union funding, but he is now hardening the Conservative position.  This will be a popular stance amongst the Conservative rank-and-file.  A ConservativeHome survey from May last year found that 81% opposed the idea that "a major proportion of funding for political parties should come from the state."

Mr Brown meanwhile is considering new legislation that would control spending between elections.  Labour MPs in marginal seats are anxious about the effect of Lord Ashcroft's target seats fund which is helping the Tory candidates attempting to oust them.

Earlier this week, in an article for The Telegraph, Michael Ashcroft  defended his position:

1. He said that he was not the only financial contributor to the 'target seats fund' but that "most of the money is given by others";
2. That decisions about which target seats receive help are taken by a committee that he chairs but also includes "the party chairman, Caroline Spelman, professional party staff and senior volunteers";
3. The fund was necessary to provide some counterbalance to the huge advantage afforded to incumbent MPs by a myriad of parliamentary allowances - a point made by Robert Halfon just over a week ago.  Ashcroft wrote: "At the 2005 election, Labour MPs coming to the end of their first term in parliament achieved an average vote share 3.3% lower than when they were elected in 2001. In Labour constituencies where the MP was standing down, the new candidate saw a drop in support almost three times as big. In other words, sitting MPs at general elections have a clear advantage over other candidates."  Sitting Labour MPs in the 100 most marginal seats have, he concludes, a £4 million-a-year head start.  The Tory target seats fund currently costs £2m.

11am, 21 October: The Observer on Geoff Hoon's support for caps on Lord Ashcroft's donations.

Party told it can't keep £8.2m donation

Shortly after Cameron became leader the Party heard that Belgrade-born businessman Branislav Kostic had left his entire estate to it in a will drawn up in the Thatcher years. The money is said to have been invested in a trust and could be worth over £10m now.

Kostic made his money in Britain trading in pharmaceuticals and precious metals. He was known to be an avid supporter of Thatcher but became paranoid about an international conspiracy of sexually perverted pharmaceutical company executives. This is one of the things he said to her when in power:

"I am sending a cheque for £5,000 to fight the evil and wicked demons and satans and I am fully at your disposal."

This morning the High Court decided that the donation should be recalled and given to his family on the grounds that he wasn't of sound mind. The Party now has to decide whether to appeal. There's an awful lot at stake but it will have to be careful to not be perceived as seeking to exploit a vulnerable man.

Deputy Editor

'Lord Ashcroft merely levels the playing field'

ConservativeHome has long believed that political parties should not be dependent upon the state or a few big donors for their income.  We support David Cameron's belief in something like a £50,000 cap on donations.  We'd like to see the Conservative Party fund itself from lots of small donations - ideally backed up with some sort of tax relief.  The Canadian Conservatives have been forced to pursue a retail fundraising strategy and it has helped to make them a party that is much more in tune with real voters' concerns.  Ideally, the money being pumped into the Conservative Party by Lord Ashcroft would be part of a strategy to diversify the party's funding base.

Putting all of this on one side for the moment, however, it's clear that Michael Ashcroft's generosity is an essential weapon for Conservative candidates in marginal seats who face very well-funded incumbents.

Robert Halfon, our candidate in Harlow, makes the point very well in a letter he sent to The Guardian:

"Dear Sir

Complaints about Lord Ashcroft funding of marginal seats is really just a Labour red herring.

As a Prospective Parliamentary Candidate fighting to overturn a Labour majority of just 97, I am faced with a huge inbuilt disadvantage.

Not only does the MP have £18,000 of taxpayer funds annually to 'communicate' with the electorate (not forgetting the £10,000 bonus recently added), he also has £7,000 postal expenses and a fully staffed office also paid for by the taxpayer. My MP regularly writes unsolicited letters to members of the public. Indeed, he has the third highest postage bill in the country.

So, with a £28,000 annual communications allowance, a huge postage allowance and Trade Union funds, Labour MPs have an automatic head start over any challenger. Support from Lord Ashcroft and others to Conservative Parliamentary Candidates merely levels the playing field.

Yours sincerely

Robert Halfon
Harlow Conservative Prospective MP"

The Guardian have not (yet) published the letter.

PS Today's World at One discusses Lord Ashcroft's target seats funding.  Click here and listen from 23 minutes in.

CPS clears Conservatives over cash for honours

"The Crown Prosecution Service has today advised the Metropolitan Police Service that there is insufficient evidence to charge any individuals after an investigation into allegations under the Honours (Prevention of Abuses) Act 1925 in relation to the Conservative Party.

Following the decision by the Metropolitan Police to commence an investigation into allegations of so-called 'Cash for Honours' a further complaint was made regarding nominations, by the Conservative Party, of individuals for working peerages. This investigation culminated in a separate file from the police to CPS.

The file of evidence centred on two separate matters. These were the nomination of a donor as a working peer and an approach made to the Conservative Party by a party donor.

In relation to both of these matters the CPS has decided that there is insufficient evidence for a realistic prospect of conviction of any individuals for any offence under the Honours (Prevention of Abuses) Act 1925 or for any other offence."

The unions give the Labour Party money and the Labour Government gives the unions money and the unions give the Labour Party...

Sometimes you learn something and you wonder why more people aren't outraged by it.

Yesterday Gordon Brown announced that another £2.8m of taxpayers' money will go to the unions as part of the 'Union Modernisation Fund'.  This is on top of approximately £7m already given.  According to CCHQ, one-third of the Fund has been used by unions like the Public and Commercial Services Union to improve internal communications.  The PCSU is currently communicating with members about taking strike action.  The unions don't just get cash from the Labour Government.  There has also been a softening of laws governing industrial action.

All this is certainly keeping the unions sweet.  The heavily-indebted Labour Party received £9m in direct donations from 'the brothers' last year plus a further £8m in affiliation fees.  In addition there is the indirect campaigning against the Tories that the unions fund.

Alan Duncan is unimpressed:

“This is a classic Gordon Brown con trick. One day he’s standing before the Unions spinning that he’s going to be tough. The next day the small print shows he has sneaked out another £2.8 million of taxpayers’ cash to keep the Unions sweet.  With Labour receiving over £17 million a year from the Unions in return, this is verging on money laundering. If Gordon Brown is serious about standing up to the Unions, he should cut the spin and scrap this subsidy before any more taxpayers’ cash is wasted”.

CCHQ's "coup d'etat"

ConservativeHome columnist Louise Bagshawe was on Any Questions? last night (following Tim who was on last week) and gave a very assured performance. Sat next to her was Peter Oborne who had a rough time from the heckling Liverpudlian audience, of which I was a member.

He bravely bashed on though, and today he has put his head above the parapet again by writing a comprehensive account of how he believes "billionaire tycoon" Lord Ashcroft has taken over CCHQ. In his article he claims that:

• Ashcroft is building a private, permanent office in open-plan CCHQ complete with his own designer furniture.
• His closeness to Davis in 2005 and his continuing ambitions for Hague mean an "inbuilt structural conflict" between him and his personal staff in Millbank, and the party leadership based in Parliament.
• His in-house role is much more co-Chairman than non-executive, he "calls the tune" by having personal control of the important areas of marginal seats, research, opinion polling and focus groups.
• George Bridges' resignation was more of a push from Lord Ashcroft, due to a long-standing "vendetta".

A friend of Ashcroft is quoted saying that he is only concerned with efficiency and not in altering policy, but it is hard to disagree with Oborne's conclusion:

"His arrival at the heart of the Tory campaign is part of a troubling modern trend for rich men to use their huge financial resources to secure positions of influence in British public life."

Lord Ashcroft's money has been sorely needed by the party in its opposition years, but democrats have to hope that in the long run David Cameron will be able to overcome the man's predictable opposition to caps on donations.

Deputy Editor

"The man Labour most fears is not Cameron but Michael Ashcroft"

The title of this post comes from a piece in today's Guardian by New Statesman Editor John Kampfner.  He writes:

"In April, the New Statesman reported figures that should send a chill down Labour spines. Of the 36 Tory gains last time around, 24 had been targeted by a consortium of high-value donors coordinated by Ashcroft, who is not only chief fundraiser but also party deputy chairman with special responsibility for target seats. And, as every election observer knows, elections are won and lost by a democratically unrepresentative number of floating voters in a small number of constituencies. It would not take a large swing for many of these seats to change hands.  The Conservatives have quietly been pouring money into them. Much of their work is below the radar - telephone and online canvassing."

Martin Bright, the New Statesman's Political Editor, wrote the original New Statesman article on the back of research by ousted Labour MP Peter Bradley: "Of the 36 [Tory] gains, 24 had been targeted by the [Ashcroft] consortium. In some seats, such as Bradley's own, the Conservatives outspent Labour tenfold."  Mr Bradley and Michael Ashcroft go back some way.  Using parliamentary privilege Bradley made cowardly allegations against the Tory Treasurer in 1999 but was unwilling to repeat them outside of the Commons.

Saturday's Independent reported that Harriet Harman, Deputy Labour leader, wants changes to electoral law to stop Lord Ashcroft providing uncapped funding for candidates in between elections.  Lord Ascroft's marginal seats team were recently brought inside CCHQ after operating independently in the run up to the last General election.  His strategy of funding activity well before election times undoubtedly helps candidates build up their local standing but some have complained to ConservativeHome that the conditions attached to his funding restrict their ability to campaign on, for example, core vote issues.

Party Treasurer Ashcroft saved the Conservative Party from financial disaster in the 1997 to 2001 period and many candidates are grateful for his funding of marginal seats but there must be anxiety that any one individual can enjoy such power in our party.  In addition to oversight of marginal seats he also has responsibilities for youth, polling and 'Campaign North'.  He has something of his own political agenda as set out in Smell The Coffee, his post-2005 election diagnosis of the Tory problem.  David Cameron has rightly advocated a cap on individual donations - a position publicly opposed by Ashcroft.  Only a cap on donations (and on state funding of politics) will encourage the sort of retail fundraising that reconnects a party with real voters.

What do you think of Iain Duncan Smith's social justice report?

Earlier this week Iain Duncan Smith offered 188 policy ideas to the Conservative Party that would help tackle social injustice.  In a special survey we are seeking your opinion on 12 of those ideas.  ConservativeHome intends to undertake similar surveys after each of the policy group reports.

Click here to have your say.

Union money to Labour, taxpayers' money to unions

Theresa May asked for a Parliamentary debate on back-door union funding of the Labour movement in Business Questions yesterday:

"Two of Labour's deputy leadership candidates want more taxpayers' money to go to the unions. The Solicitor-General said: “We should do more to fund the trade unions” and the Labour party chairman said: “A Labour Government can expand the Union Modernisation Fund”. Last year, unions received £3 million of taxpayers' money through that fund. In the rest of the year, those same unions gave £4.3 million to the Labour party. In the next few years, a further £7 million of taxpayers' money will be given to the unions, who will continue to fund the Labour party."

Jack Straw merely responded by harking back to the Conservative Party's "partisan attacks" on the unions in the 1980s, and saying accused May of offending millions of trade unionists.

The Department of Trade and Industry says the purpose of the UMF is to:

“provide financial assistance to independent trade unions and their federations in support of innovative projects which speed unions’ adaptation to a changing labour market and new ways of working. It is envisaged that the size of the Fund will be in the region of £5-£10 million in total, with funding spread over several years, beginning in 2005/06.”

As this dossier compiled by May shows, a majority of the members of the UMF's Supervisory Board (which decides on funding) are senior trade unionists themselves. The minister who set up the fund, Gerry Sutcliffe, is Alan Johnson's campaign manager and a union member with "two decades of unbroken commitment" to the unions.

That there is a correlation between unions donating money to the Labour Party, and the government bankrolling the unions, is clear. The Conservatives haven't committed to scrapping the UMF yet, but they surely will.

Deputy Editor

Are the Conservatives about to reject more state funding?

"There should be not a penny more state funding without a single, comprehensive cap on donations - including companies, the unions and individuals.  The public will be highly cynical if political parties award themselves lump-sum handouts without fundamental reform.  Any additional state funding should be there to assist and encourage parties to re-engage with the electorate, for example, through tax relief on small donations and a matched funding scheme for those who do not pay tax.  State funding must not reduce the dependence of parties upon their own activists for fundraising.  Nor must it be allowed to increase the distance between the parties and the electorate."

That is what Francis Maude will say about state funding of political parties in a speech to Politeia later today.  The "there should not be a penny more state funding..." line implies that the Tories would walk away from a deal that didn't include a cap on union funding.  That would be news that would be welcomed by the vast majority of Tory members and the right-leaning press.  Let's hope the Chairman really means what the says.  He goes on to explain the unacceptability of the current Labour-union link:

"Both the Liberal Democrats and the Conservatives have proposed a cap of £50,000 a year.  We think this is a level at which no one will seriously fear that a party is subject to undue influence.  This would cause us some financial pain, but we are willing to undergo that in order to win back the public's trust in the political process.  Labour by contrast have entered a resounding veto on any such cap.  They maintain that the trade unions are a special case.  Well, in one sense they are.  The proportion of Labour's funding provided by a handful of trade union leaders is around 70%.  And there is nothing remotely covert about what is given in return.  It is all there to be seen.  To pay for the 2005 election campaign, Labour reached a deal with the unions called the Warwick Agreement.  The unions stumped up £12 million to fund Labour's election campaign.  And in return, there was £10 million of taxpayers' money for the Union Modernisation Fund, extra rights for strikers, and a deal which means civil servants still get to retire earlier than those in the private sector.  This has all the hallmarks of a straightforward commercial transaction.  It is precisely this kind of trade - cash for policy, or in the case of the Union Modernisation Fund union cash in return for taxpayers' cash - that has eroded public confidence in the integrity of the political process.  Reform of party funding that failed to remedy this would be shockingly cynical and a terrible wasted opportunity."

18DoughtyStreet.com's ad against state funding of political parties can be watched below.

Party received £5.29m from October to December

Donations to the Party in the last quarter of 2006 amounted to a healthy £5.3m - more than Labour's £2.64m and the LibDems' relatively impressive £2.32m, combined. The parties also paid back around £300k of the £60.8m they have borrowed.

Andrew Pierce revealed last week that the Party is still in debt to the tune of £8million despite selling off Smith Sq.

The Blah Party apparently received £168k!

Deputy Editor