Andrew Grice: After the 'rich man's Budget', this scandal will hurt Tories

Nick Clegg is well placed to act as an honest broker and to bang heads together

The timing of yesterday's revelations that the Conservatives' co-treasurer offered potential party donors access to David Cameron could hardly have been worse for the Prime Minister. A Budget which cut the 50p top tax rate and froze the tax allowances for pensioners was already being mocked as a Downton Abbey package. Mr Cameron and George Osborne have always been nervous about projecting an image of a party led by "two posh boys". Now the cash-for-access allegations may reinforce it. Fittingly, one of the venues suggested for a donors' party was Highclere Castle, the setting for Downton Abbey. With Labour attacking the Tories as the "party of the rich", the danger is that the public see Mr Cameron as heading a Downton Abbey Government.

The PM could prevent this by extending his Tory modernisation project to the two areas exposed yesterday as in urgent need of reform – the lobbying industry and the way political parties are funded. After months of deliberations over lobbyists, the Government gave birth to a mouse in January, ignoring the scale of a problem exposed by The Independent and the Bureau of Investigative Journalism, which secretly recorded conversations with senior executives at Bell Pottinger boasting about their access to Government.

Similar claims emerged yesterday. Cabinet Office proposals for a statutory register of lobbyists look even weaker now and need to be beefed up, not least to prevent lobbying firms playing any role in raising party funds. Political funding is a difficult issue that all parties hope will go away. A sensible blueprint was published last November by the independent Committee on Standards in Public Life: a £10,000 cap on individual donations with parties sharing £23m a year of state funding to make up for the lost income. Predictably, the report has been gathering dust. The Tories want a £50,000 limit because they have more big donors and would lose three-quarters of their income from donations if the ceiling were £10,000. Politically, it suits them to leave Labour dependent on its drip-feed from the unions, which provide about half its income and 80 per cent of its donations.

Nick Clegg will soon chair cross-party talks on the committee's report. With both the Tories and Labour apparently motivated by self-interest, the Deputy Prime Minister is well placed to act as an honest broker and to bang heads together. He is reluctant to propose more taxpayers' funding in an age of austerity. But it could be based on matching pound-for-pound public funding for small donations to give parties an incentive to attract new members and supporters. More state funding is the only way to sweep the stables clean; it is time to bite the bullet.

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