The row over the funding of political parties flared again yesterday as Commons Leader Jack Straw blasted Conservatives over their bankrolling by the Midlands Industrial Council.

Mr Straw accused Tories of exploiting a legal loophole to maintain the anonymity of donors and to spend large amounts on campaigning before the strict rules applied during elections kicked in.

Political parties have been required since 2001 to identify their backers to enable public scrutiny of those who may be able to influence policy.

However, while the MIC is thought to have donated millions of pounds to the Tories, it had maintained secrecy over its membership for years.

As reported in the Birmingham Post yesterday the group of wealthy business leaders finally identified themselves in a bid to quell criticism of their links to the party.

A list of 22 members included some of the country's richest people, including tycoons Tony Gallagher and Sir Anthony Bamford of the JCB empire.

The Electoral Commission's register of donations shows that the MIC donated almost #1 million directly to the Conservative Party between April 2003 and March 2006.

A review of party funding is being conducted by Sir Hayden Phillips, with an interim assessment due on Thursday.

Conservatives have proposed a #50,000 cap on all donations, including those from unions, which Labour is fiercely resisting.

At question time, Tory Mark Pritchard, (The Wrekin), said any capping of funds must apply equally to all donors - including the trade unions.

Mr Straw hit back that the unions were the most regulated of all donors.

He told Mr Pritchard: "I note that while you spent just #11,000 during the four week election period of the 2005 election, you received a total of #55,000 in the eight months before the election was called from Lord Leonard Steinberg and the MIC.

"I assume that you spent that as well.

"What that shows is a glaring loophole continuously exploited by the Conservative Party to spend very large sums of money and not account for them before the election period kicks in."

>> The Tories' money men (Post, October 16) - click here