Labour rift over party funding

Tony Blair's Cabinet is at odds today over the call by Labour chairman Charles Clarke to consider boosting the state funding of political parties.

As the Cabinet gathers for its weekly meeting in Downing Street, the row threatens to dominate debate in the House too as Commons Leader Robin Cook faces questions from MPs over his denunciation of the "culture of spin" and his praise for Mr Blair's plain-speaking predecessor as Labour leader, John Smith.

But the party's whips face fresh charges of using "control freak" tactics to quell dissent. They are reported to be planning to pack the all-party Commons Transport Committee with Blairite loyalists to neuter its chairman Gwyneth Dunwoody, one of the Government's sternest critics.

Mr Clarke revealed that moves to reduce the reliance by political parties on big donors are likely to be brought forward by the Government before the next election. Ideas include more public money for the main political parties, a cap on spending during election campaigns, a ban on certain kinds of advertising such as billboards, and the establishment of a cross-party foundation through which donors could fund all the parties.

State funding could help Labour to overcome the wave of sleaze charges which has hit the party over alleged links between Labour donors and Government policy decisions.

The rows over gifts from steel magnate Lakshmi Mittal, vaccines tycoon Paul Drayson and publisher Richard Desmond have thrown the Government off course and hit poll ratings.

But Mr Blair has said he would not want to go ahead with the idea until there was a cross-party consensus and evidence of public support. The Tories still oppose the plan, and there is little sign that voters want taxes channeled into political campaigning.

In his outburst on spin, Mr Cook told journalists at Westminster yesterday: "The bottom line is that we have failed if we allow presentation to become more important than the substance.

"Government needs to get the content right and not hide the content beneath too much packaging."

Meanwhile Mr Blair is considering plans for a shake-up of No 10 and Whitehall in a bid to improve the delivery of Labour's manifesto promises.