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Exclusive: Miliband's donation cap will be £5,000

A Labour source says the party's proposed cap on donations from all sources will be set at the lower level of £5,000, not £10,000.

Ed Miliband with Labour's PPC for Birmingham and Yardley Jess Phillips before his speech at The St Bride Foundation in London yesterday. Photograph: Getty Images.

One notable omission from Ed Miliband's speech yesterday was any indication of what level he believes a donation cap should be set at. Miliband had previously used a figure of £5,000 but yesterday a figure of £10,000 was being widely quoted. However, I'm now told by a source close to the Labour leader that the proposed cap will indeed be £5,000. 

The cap would apply to donations from individuals, businesses and, crucially, trade unions. One criticism made of Miliband's plans by the FT's Jim Pickard (and swiftly picked up by the Tories) is that they would actually hand more power and influence to the union general secretaries. While members will have to opt-in to contribute to Labour, they will still automatically pay the political levy, which funds unions' campaigning activites and large one-off donations to Labour at election time. The charge made by the Tories is that Labour could make up for the short-fall in funding caused by the introduction of an opt-in system (the party expects to lose around £5m of the £8m it currently receives in affiliation fees) by simply receiving more in large donations from union leaders. But this ignores Miliband's pledge that any cap will also affect them. 

Despite this promise, and Labour's decision to abandon its opposition to an opt-in system (a major stumbling block in previous negotiations), a deal on party funding still seems unlikely before the election. The Tories and the Lib Dems are demanding that union members should also be required to opt-in to the political levy, a reform that would require a change in the law and that Miliband has ruled out. In response, of course, he will able to frame the Tories' opposition to a low cap on donations as entirely self-interested. As he writes in today's Daily Mirror, "When we had a problem in one of our constituencies, we acted swiftly and thoroughly. A year ago David Cameron faced the dinners for donors scandal where wealthy Tory backers were given access to Downing Street in return for huge sums. He still has done nothing about this. His party still relies on getting half its money from the bankers and the City. We cannot go on like this."