Labour Party activists have reacted in anger after the latest draft version of the report of the Hayden Phillips inquiry into political party funding was leaked last week. The original rumoured cap on donations of £250,000 has been dropped in favour of a new £50,000 figure. However the main target of this cap seems to be not big business but the trade unions.

Incredibly, under the terms of these draft proposals, any unions who have political funds and donate to the Labour Party will be required to register the names of all their individual members and then contact them each year to ask if they wish to continue to have that percentage of their union dues marked down as a political levy payment paid over to the party. With over three million workers potentially involved this would represent a major operation each and every year. Also, however big or small the union is, the total amount they can give will not be able to exceed £50,000. This is clearly aimed at breaking the power of the four big unions. Similar restrictions would exist with regards to affiliation payments to local parties.

The intention is clear: to try and break the Labour/union link and indeed work to limit all union financial involvement in politics. The draft has, so we are given to understand, the full backing of Blair as he attempts to once again leave his mark on the party and complete the so-called ‘project.'

Some will say that this is fair since the cap applies to rich individuals and other groups as well as the unions. It does appear that donations from anonymous front organisations will be stopped which would hit the Tories who are heavily reliant on payments from such bodies to fund their work. However rich donors will still be able to get around the cap by simply spreading the cash out amongst various go-betweens and getting them to pay it in. In practice nothing will change. Trade unions will have no such loopholes.

John McDonnell MP in response to this new attack has tabled an Early Day Motion in parliament (EDM 487) on Party funding and the Labour Party, and has been quoted on the LRC website as follows:

"I have today tabled an Early Day Motion in the House of Commons in opposition to the Hayden Phillips proposals on party funding.

"These proposals are a threat not only to the historic link between the Labour Party and the trade unions but to the very existence of the Labour Party as the voice for working people in this country.

"I am calling upon all Labour leadership and deputy leadership candidates to demonstrate their opposition to these damaging proposals by signing a statement declaring their commitment to oppose the Hayden Phillips recommendations.

"It is understood that these proposals have the backing and are being promoted by the Prime Minister, with implicit support from the Chancellor of the Exchequer. There is no doubt that this move represents one of the last acts of the Prime Minister's legacy agenda to turn the Labour Party into merely a Democrat or Republican convention, unaccountable to and separated from the very members of the trade union movement who founded our Party.

"I take this issue so seriously that I am placing it at the very centre of the debate for the future of our party in this way. I will not stand by and watch Blair destroy our Party. To quote a past Labour leader, I will fight, fight and fight again to save the Party I love."