ALL donors to a political party could be forced to list their financial and commercial interests in a register, under proposals being put before the main political parties.

Corporate or individual donors with senior company positions could also be required to declare any government contracts that their company has or is seeking, as part of a package to clean up politics.

An interim report by Sir Hayden Phillips, who is conducting a review of party funding, shows that progress has been slow on the key issues — caps on individual donations and limits on spending over the cycle of a Parliament.

The report indicates that Labour stands to lose dramatically if a cap were imposed on individual donations. Under Sir Hayden’s analysis, a cap of £100,000 would reduce donations to Labour by £6.9 million, while they would drop £3.1 million for the Conservative Party.

In an apparent challenge to the Tory-linked Midlands Industrial Council, he proposes that donations from unincorporated associations — organisations not registered as companies — could be made more transparent, and required to disclose their sources of income and the identity of their directors.

He also challenges the basis of Labour’s funding, with suggestions that trade unions be required to publish a breakdown of how their “political funds” are spent. This would be coupled with rules requiring companies to show in their annual accounts any donations or loans to political parties.

“[These proposals] concentrate on the root cause of concern over party funding, that is the perception that donors are trying to buy influence. Rather than relying on the media to investigate possible conflicts of interest, more information would be available for all to come to their own conclusions,” Sir Hayden says.

He concedes that his proposals could scare off businessmen from donating. Requiring companies to declare that they are bidding for a contract could affect them commercially, the report says. He also admits that it would be difficult to enforce a register of donors’ interests or companies involved in government contracts, as the information would be difficult to verify independently.

The report suggests that state funding could be used to boost local parties or “activities [on a national level] which are clearly in the public interest”. These might include research, training and educational activity, leaving the parties to find other sources for general administration and campaigning.

Hazel Blears, the Labour Party chairman, called on Sir Hayden to close funding loopholes. “Given the reports surrounding the secretive Midlands Industrial Council, the Tory use of loans from foreign sources and the funding of their Coleshill Manor Campaign centre, which David Cameron has said is part of the Conservative Party, and the investigations into these matters being undertaken by the Electoral Commission, it could not come sooner,” she said.

Francis Maude, the Conservative Party chairman, said: “It’s clear that, if public funding for political parties is to increase, political parties must tackle the perception that donations can buy influence or favours. That’s why we support a cap on donations.”

Sam Younger, chairman of the Electoral Commission democracy watchdog, called on Sir Hayden to encourage smaller donations from more people and to ensure that no single funding source exerts undue influence.

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