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Brown to act on party funding

The PM will move unilaterally to close the ‘Ashcroft loophole’, says our Westminster insider

Cross-party talks on the controversial issue of party funding collapsed tonight in acrimony. The talks, held under the chairmanship of Sir Hayden Phillips, were intended to find a solution to the present system under which the Conservatives pour money into marginal seats outside of election time - deemed unfair by Labour MPs - while Labour takes millions from the trade unions - similarly unfair in the eyes of Conservatives.

Gordon Brown is now likely to act unilaterally. Expect a short Bill in the next session limiting the amount that the parties or individuals can spend in between elections on constituencies. This will close the so-called 'Ashcroft loophole' - named after Tory grandee Lord Ashcroft - in the Political Parties, Elections and Referendums Act 2000.

The Act limits the two main parties to spending around £19m at election time, but does not limit the amount they can spend between elections. Lord Ashcroft has used it

to pour hundreds of thousands of pounds into Tory target seats via a company called Bearwood Corporate Services.

He bypassed Tory party HQ and gave cheques to 23 of the 100 Tory target seats before the 2005 election and has now set up his own unit that has had old-time Tory MPs complaining that their party is being 'privatised' by Ashcroft.

David Cameron offered a deal: he would surrender Ashcroft and the target seats strategy in return for a £50,000 cap on the amount the unions could give to Labour. Needless to say, Brown said 'no deal'. And that is where the talks broke down.

If Brown acts, the Tories will cry foul. They say Ashcroft is a counter-balance to the £10,000 sitting MPs have for 'communications' with their constituents. Cameron has announced he would scrap that money.

Labour MPs are warning Brown that unless he acts fast, Ashcroft will be able to continue pouring money into the Tory target seats for the next two years and Brown can kiss goodbye to an election victory in 2009.

FIRST POSTED OCTOBER 30, 2007

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