POLITICS
20/08/2012 08:43 BST | Updated 20/08/2012 09:24 BST

Union Donations To Labour Plummet But Tory Funding Unscathed By Cash-For-Access Row

Donations to political parties plummeted by almost £1m in the second quarter of 2012, the same period as the cash-for-access scandal, according to figures published on Monday.

But surprisingly most of the drop was attributable to a drop in donations to Labour party, not the Tories.

Contributions to Labour from all the major unions fell by about half a million pounds quarter-on-quarter - most of the money comes from affiliatied members' subscriptions. The substantial drop in income will be taken as a sign of a rift between unions and the Labour leadership, at a time when at least one union plans to use its annual conference to debate its continuing links with the party.

Tensions between Labour and the unions rose earlier this year when Ed Balls made a keynote speech in which he refused to rule out further pay-freezes and austerity if Labour were elected in 2015. The GMB union was particularly annoyed and has threatened to consider its link with Labour.

By contrast the Tories' income fell by around £250,000 because of a big drop in donations from registered companies, although individual offerings were stable. The drop in company donations can be attributed to the beginning of the financial year; firms are likely to make their donations at the end of a tax year, not the start of it.

But the figures for the Tory party are somewhat surprising - it might have been expected that individual donations might have fallen in the wake of the Peter Cruddas affair, during which the Tory co-treasurer had to quit in the wake of a sting by a Sunday newspaper. In fact, individual donations to the Conservative party rose in the second quarter of this year.

Earlier this year Downing Street was forced to reveal all the major Tory party donors who had attended either Number 10 or the PM's Buckinghamshire residence, Chequers. The revelations followed claims by Peter Cruddas, the former Tory party treasurer, who suggested to undercover reporters that donations in excess of £250,000 could buy access to senior politicians.

The Lib Dems' party finances improved somewhat as their total donations rose by £100,000 to stand at £0.7m, fueled in part by a rise in corporate donations.

The British National Party received a comparatively large individual donation of £100,000. It is the second significant donation the party has received from an individual over the past year.

Among the Tories their largest donor was once again Michael Farmer, the city financier who has was appointed as co-Treasurer of the party in February and who's been known to donate in excess of £2m to the party each year. He donated in excess of £500,000 between April and June this year. Farmer is worth over £100m and is a committed Christian who favours an emphasis on traditional family values

Ed Miliband's adviser Andrew Rosenfeld is once again Labour's largest individual donor after the unions. The property tycoon handed over £150,000 during the period covered in the latest figures.

Despite this Labour remains just under £10m in debt, a situation which hasn't really changed since the last general election.

Ed Miliband has suggested a cap of donations to political parties of £5,000, in a long-running debate on how to reform political party funding. All parties agree that the taxpayer is unwilling to accept state-funded parties, but negotiations on how to change the system to reduce allegations of sleaze remain at an impasse.