Party funding: Reasons to be miserable

This scandal won't trigger a sudden revolution in the way our political system funds itself. But it would be wrong to say it won't make a difference.

By Alex Stevenson

There remain many reasons to be miserable. For, unlike the expenses scandal, it is not obvious to politicians that a cross-party cultural failure is taking place.

Instead parties are constantly being political about the way they're funded because their sources of money are so different. Labour relies on the trade unions for 90% of its funding, while the Tories lean on wealthy big-ticket donors – as this weekend has shown.

The result is the kind of partisan sniping I saw in the Commons chamber last week, when Labour backbencher Diana Johnson suggested to deputy PM Nick Clegg that "political donations arising from the proceeds of crime" ought to be given back. She was, of course, attacking the vast amounts of cash the Lib Dems had gained from convicted conman Michael Brown. Then came Tory MP Charlie Elphicke, who wanted to see "tax-avoiders and non-domiciles… dealt with". As Clegg was happy to point out, it was "gutsy" of Johnson to have raised the issue when Labour's London mayoral candidate, Ken Livingstone, has some "very exotic tax arrangements" of his own.

It is always "gutsy" of any politician to criticise party funding arrangements, because each party has its own very embarrassing, suspicious-looking arrangements. Yet that party warfare is preventing a consensus towards reform.

Last November a genuine attempt to solve the issue, from the committee on standards in public life, proposed the introduction of a £10,000 cap on donations. This would lose the Tories three-quarters of their income, so they argued for a £50,000 cap instead. Labour would lose even more, unless the unions were somehow treated differently. The Lib Dems would lose the least, and therefore gain in relative terms – but Nick Clegg had already ruled out his support, on the basis that the public wouldn't like the system of state funding which would have to subsidise all three parties in the future. "Dead on arrival", my headline read after I attended the report launch last year.

The situation is not entirely bleak. For in five years' time the situation is likely to be much improved. Small-scale accounting changes also proposed last November, on which the parties do agree, could see improvements in transparency which could pave the way for more meaningful reform. A new set of draft accounting standards has been agreed by the parties. It is the implementing of these which is likely to be the subject of fresh negotiations between the parties set to begin shortly.

The way out of this mess is via small steps. Many will feel disappointed that the system doesn't change rapidly after this latest scandal – but it could help put a little more pressure on an agonisingly slow process. When you're stuck in traffic, it's better to be rolling forward at 5mph than it is to be completely stationary. Satisfactory? Far from it. But that, I'm afraid, is just the way it is.