Andrew Grice: If Barack Obama can win electionon small donations, why can't Ed?

The expenses scandal left politicians reluctant to make the case for more taxpayer support

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Why is Ed Miliband about to open hostilities against the trade unions which gave him victory over his brother, David, three months ago?

The Labour leader doesn't want to break the umbilical link between the party and its union founders. But he does want to modernise his party, and has set up a wholesale review of its structure and organisation chaired by Peter Hain. By addressing Labour's unhealthy financial dependency on the unions, Mr Miliband doubtless hopes to send a reassuring signal to Middle England – an audience his Labour critics sometimes accuse him of ignoring.

Allies are sure that he can clear the hurdle erected by the Conservatives and the newspapers which support them – that he is "Red Ed". He has criticised irresponsible strikes, will be wary about industrial action over spending cuts and in the new year will come out in favour of a cap on donations to all political parties which could be as low as £500.

The 15 unions affiliated to Labour will be suspicious, but Mr Miliband is serious about taking "big money" out of politics; if Obama's Democrats could win power with small donations, the thinking goes, why can't Labour?

There is unfinished business between the parties over much-needed reforms to the way politics is funded. They were close to a deal in the last parliament under talks chaired by Sir Hayden Phillips, a former Whitehall mandarin. But Labour rejected Tory proposals to make it easier for union members to opt out of paying the political levy to Labour. There were doubts about whether the Tories really wanted a deal; it suits them to keep the union/Labour link spotlit.

Another stumbling block is the sensitive issue of state funding for parties. They already receive £7.7m a year in grants to opposition parties and £2m for policy-making, plus benefits in kind at elections such as party political broadcasts and free delivery of literature.

Imposing a ceiling on donations is sensible but would require more public money. The MPs' expenses scandal left politicians reluctant to make the case for more taxpayer support. The nettle will probably have to be grasped. Unlike Labour and the Liberal Democrats, the Tories are not short of money. Perhaps David Cameron will offer a deal to Nick Clegg to help keep his party on board.

Mr Miliband's plan to give the public a vote in Labour leadership elections is not without risks, too. Senior figures including the shadow Chancellor, Alan Johnson, worry it would reduce the incentive to join the party – and make existing members feel that non-members were getting special treatment.

In 2011, Mr Miliband is determined to show there is more to him than his opponents think. His problem is that some of them are in his own party. But he may yet confound his critics.

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