A spending cap fits, so make the parties wear it: Curbs on election campaign budgets would lift political fundraising from the gutter, argues Colin Brown

SOME of the stench of corruption which has hung around Westminster for the past fortnight could be blown away today when Labour's national executive endorses a document by Larry Whitty, the party's general secretary, on cleaning up party funding.

Mr Whitty's report recommends putting a legal limit on national expenditure for election campaigns. No single measure could do more to clean up the gutters into which party fundraisers have sunk than to cap the money they can spend at general elections.

The sums involved are colossal. The Labour party admits to having spent pounds 7.6m on its last general election campaign, the Conservatives, pounds 11.2m. According to new research, Tory spending in real terms rose in each election since 1979, peaking in 1987. The same survey puts Labour's 1992 figure at pounds 10.6m. It is to fund their war chests that the party treasurers go in search of donations, wherever they can obtain them.

No doubt the Conservative Party is already planning its fundraising for the next election, with more tours by senior ministers to the colonies. But if a cap was applied to what the parties could spend at elections, there would be no need for the unseemly procession of Cabinet members to host fundraising dinners for Hong Kong businessmen, who, according to Lord McAlpine, the former party treasurer, pay the Tories not for favours, such as knighthoods, but because they 'hate Labour'.

Labour, too, is on the treadmill which has led to its taking money from dubious sources. The NEC is expected to agree today to hand back pounds 11,000 it received from Charilos Costa, the Greek Cypriot clothes merchant.

The idea of capping election expenditure is not new. In Britain, all parliamentary candidates must already stay within a fixed limit for their local campaign expenses or risk breaking election laws, and forfeiting their seats if they win. A complicated formula provides for pounds 6,000 per candidate, according to the Hansard Society Commission.

Labour and the Liberal Democrats believe that state funding would lift British politics out of the mud. But that is not the answer. There would be no incentive for parties to limit their spending, so the public would be faced with paying ever more for having their ears and eyes assaulted by grotesque claims at election time.

Mr Whitty, giving evidence to the Commons Select Committee on Home Affairs, told how Labour had attempted to buy up poster sites during the 1992 campaign, but the Tories had blocked them all through their friends, either in the advertising industry or the tobacco industry. Labour only managed to get some sites when Benetton was made to withdraw one of its advertising campaigns on grounds of taste.

A maximum on national party spending would not be without legal and practical difficulties. For instance, the Conservatives are not, strictly speaking, a corporate body. Central Office, the party headquarters, is still the leader's private office. To that extent, it is the Prime Minister who is now pounds 19m in the red.

Conservative MPs on the Home Affairs select committee were also quick to point out that Labour's last campaign was tacitly supported by expensive advertising by the unions, such as Nalgo. That would have to be counted in with any capping procedure.

The committee has not yet found other countries where there is a cap on national campaign expenditure, although French presidential candidates are limited to a maximum of Fr120m ( pounds 15m) in the first round and Fr140m ( pounds 17m) in the second.

In America, which the select committee has visited during its investigations, the pressures to raise funds are even greater, because the parties are allowed to advertise on television. Heaven forbid that our election rules banning political advertising on television and radio should be relaxed, but it is inevitable that with satellite broadcasting and the import of political razzmatazz from the US (witness Labour's disastrous Sheffield 'Mao' rally), the boundaries between advertising and publicity will become blurred unless a clearly defined cap is applied.

Some form of national agency would have to be established to monitor the expenditure of the parties, and supporters, to prevent the limits being flouted by unions or companies buying advertising on their party's behalf. But it would be worthwhile having the bureaucracy if it would end the frantic search by party treasurers for ever larger amounts of shady donors' gold to pour down the drain. The Labour NEC could do us all a favour today.