End the poison of party funding

Money from millionaires can buy slicker advertising but its source must offset some of its persuasive power
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It is possible that David Ross, the co-founder of Carphone Warehouse, would make a good chair of Ofsted, the schools inspection service. His trust sponsors 20 academies, and no doubt he cares deeply about the power of excellent state schools to give all children the chance to be liberated by knowledge. His qualifications for the job must be subject to a more stringent test, however, because he is a Conservative Party donor and a friend of the Prime Minister and the Education Secretary.

We should be clear what it is that sets the bar higher in his case than for other possible candidates. That he has been a successful business person, or that he has had a colourful private life, is neither here nor there. It is Mr Ross's financial support for the Tory party, and his social connections with Tory politicians, for which he has to account.

Some Tories have objected that Sally Morgan, the outgoing chair of Ofsted, is a political person. She was Tony Blair's political secretary and is a Labour peer. But she is not a Tory donor. Her politics were relevant only in that, when Michael Gove appointed her in 2011, he made much of his admiration for Mr Blair's academies policy. True, she is also an adviser to Ark, a charity that sponsors many academies. She has to avoid involvement in any Ofsted inspections of Ark schools, so Mr Ross would be entitled to the same dispensation.

Mr Ross would have to work harder than Baroness Morgan, however, to show that his consideration for the job was not influenced by his donations or his personal connections. Once again, the partially reformed system of political funding in this country threatens to poison good government.

Similar problems arise in another case, which we report exclusively today, namely the public funding of an innovation investment vehicle run by Adrian Beecroft, another Tory donor who has also been an adviser to the Business Department. No doubt the taxpayers' money has been usefully invested in technology businesses worthy of support – although The Independent on Sunday is sceptical about government grants for business – but Mr Beecroft's political connections make it all the more important to make sure that there is no conflict of interest. Stella Creasy, the shadow Business minister, is quite right to ask for these assurances.

British government will continue to be plagued by such questions for as long as our funding of political parties remains dominated by the generosity of rich individuals, most of whom have active business interests.

In the broader view, it is in the Conservative Party's own interest to bring in limits on the amount that any one can donate to a political party. Given that one of the Tories' greatest weaknesses is that they are seen as the party of the rich, the scale of its funding by the rich is an embarrassment. Money from millionaires can buy slicker advertising than Labour or the Liberal Democrats can afford, but its source must offset some of its persuasive power.

The need for further reform of party funding is only going to become more urgent. If Labour wins the election next year, it is likely to legislate for an annual limit on political donations lower than the Conservatives would want – such as £5,000.

In any case, Ed Miliband's reforms to Labour's link with the trade unions mean that union members' money will soon come to Labour in the form of millions of small donations rather than as a lump sum signed by a general secretary. For their own sake as much as for the health of British democracy, the Conservatives should clean up party funding before it is forced upon them.

In the meantime, in the matter of Mr Ross's application for Lady Morgan's job, our view is that his case is not yet made.