I believe it’s a mistake because a Conservative government will face allegations over where it gets its money. I know this, because it happens to every party and politician who has to raise large amounts of money. These allegations will reduce the standing of the Conservatives but – more significantly – lead to a further dislocation between citizens and politicians.

One of the interesting things that I’ve observed from Labour’s time in office is that the big decisions which it put off or got wrong at the start, usually came back to haunt them: fox hunting, Lords reform, structures in education, welfare reform.

I welcome his consideration of tax relief for small donations. David Cameron was the first person I discussed this with, in preparation of the ippr research report. However, if this isn’t taken as part of a wider package of reform, it will not win public confidence. One of the consistent messages of our research was that party funding needed to be a tripartite arrangement: caps on spending, caps on donations, proportionate assistance from the state.

However, what’s most disasppointing is Cameron’s suggestion that state funding “can’t be afforded” given the economic climate. This is just posturing. The total amount it should cost the state is likely to  be around £50m a year – or at least is highly unlikely to be near £100m. Let’s be honest, that’s a lot of money. But it’s insignificant in the context of government spending. And it’s a small price to pay for a system of party funding which helps restore a bit of trust in our political system.

UPDATE: Iain Dale has now published some extracts from the interview on his blog.

Related posts:

1. Labour mustn’t falter on party funding
2. David Cameron is a hypocrite
3. Labour Party reform isn’t about GCs

There are three essential components for a party funding system to command the respect of citizens:

1. Transparency
2. Caps on spending so that parties act prudently
3. Caps on donations so that no individual can be thought to have undue influence over a politician

Transparency is now a well established principle in British public life. Even if it isn’t always applied that’s still tremendous progress on where we were in 1997 when no one knew how parties were financed.

Caps on spending were well established locally. However, national spending increased considerably through the 1980s and 1990s, partly due to changes in the way that party’s campaigned but also (I suspect) because of the restrictions on local spending. National spending caps were introduced in the 1998 Political Parties, Elections and Referendums Act. However, the last election saw the return of unregulated local spending on a significant level with Michael Ashcroft’s help to Tory candidates in marginal seats. I’ve never understood why there isn’t an annual cap on all spending: far easier to enforce, for the public to understand and the party machines to plan for. Obviously that cap would rise in an election year but it would remove some of the loopholes that exist currently.

There’s little point capping spending if donations aren’t capped. Effectively, a single person or organisation can give a political party all the money it needs to exist. That’s a disaster for democracy and public trust. It isn’t a competitive issue at the ballot box (as some try to claim), rather it erodes wider trust in all politicians.

I understand concerns from Labour MPs about how a donations cap would change Labour’s relationships with its affiliated trade unions. But it needn’t lead to breaking the link. Instead, if individual union members choose to donate money to the party, it could strengthen the link considerably.

A system of party funding which provides incentives to parties to raise large numbers of small donations would reinvigorate local parties and ensure that campaigning and fundraising were indivisible. Now, too much fundraising takes part in posh hotels amongst rich businessmen and lobbyists.

If Labour falters on party funding the price it will pay is:

• being outspent by the Tories at the next election
• not being able to compete in fundraising after the next election
• being solely reliant on trade union general secretaries, (with the accompanying hopes that anti-Labour candidates don’t prosper in those internal elections)
• being part of decreasing trust in politicians and increasing questioning of the motivations of politicians

Related posts:

1. Cameron mistaken on party funding reform
2. The Christian Party: lying or misleading?
3. Labour Party reform isn’t about GCs