Party funding needs reform, says watchdog

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Party funding must be reformed urgently to avoid repeating the damaging Deripaska saga, Britain's sleaze watchdog warned today.

Sir Christopher Kelly said the episode showed it was "critically important" for politicians to show "courage" and strike a deal.

He also hit out at MPs for continually "shooting themselves in the foot" over their expenses, blaming a "sense of entitlement" among some parliamentarians.

The chairman of the Committee for Standards in Public Life was speaking as he unveiled research indicating people's trust in politicians had slumped.

A poll carried out for the committee found that just 22 per cent thought all or most Government ministers told the truth - compared to 27 per cent two years ago.

The proportion who believed the majority of ministers used their power for the greater good rather than personal gain had also dropped to 38 per cent from from 49 per cent in 2006.

According to the survey by BRMB Social Research, the biggest issue infuriating the British public was MPs using taxpayers' money to employ family members.

Some 14 per cent directly linked their low opinion to that factor - possibly because they were quizzed between January and May this year, at the height of the scandal over Derek Conway paying his son for allegedly doing no work.

The lack of transparency on allowances was cited as the main complaint by 8 per cent, while 3 per cent mentioned the cash-for-honours case, and the same proportion referred to "bribery" of politicians in general.

Overall, more than two-fifths said standards of behaviour among office-holders in the UK had fallen recently.

Sir Christopher said that he did not want to comment on the details of the furore surrounding contacts between Business Secretary Lord Mandelson, shadow chancellor George Osborne and Russian billionaire Oleg Deripaska.

However, he added: "What I would say about Peter Mandelson and Osborne and everyone else is what these episodes demonstrate in my mind is the fairly critical importance of sorting out the issue of party political funding."

Sir Christopher insisted that until parties had the "courage" to strike a deal "people will continue to make allegations of cash being exchanged in some form for influence".

Talks on reforming party funding stalled last October, with Labour unwilling to accept limits on trade union donations and the Tories keen to keep using cash from Lord Ashcroft in marginal seats.

Sir Christopher also said he would be meeting Commons leader Harriet Harman to discuss progress on reforming MPs' expenses.

Asked why the subject remained so controversial, he replied: "Why do MPs keep on shooting themselves in the foot? Well, that's an interesting question...

"During one of the several debates in the House I think Ann Widdecombe (Maidstone and the Weald) said, 'The Press will criticise us whatever we do so we might as well have allowances that make sense from our point of view.'

"There is an element of truth in that.

"There is also, I think it is fair to say, a sense of entitlement among some more established MPs. There was a time in the past when allowances were whether it is right or wrong, set at quite a generous level in order to make up for the fact that it was easier to grant MPs higher allowances than to give them increases in pay.

"Although to some extent that is now a matter of the past, I think there are still some people who remember that time and feel a sense of entitlement."

Sir Christopher also announced that the watchdog would be carrying out an inquiry into the London mayoralty.

The probe comes after criticism of the use of public funds by former mayor Ken Livingstone's administration.

The chairman stressed the investigation was not related to any "specific allegations", but would focus on how the institutions were working after eight years.

It will also examine how other directly elected mayors and town hall chiefs are held to account.

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