Leading article: The overwhelming case for state party funding

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The funding of politics is something that no multi-party democracy, however established or efficient, has managed to solve to everyone's satisfaction.

The chief division is between those who believe there should be no state involvement whatsoever, on the grounds that the state has no business poking its nose into party politics, and those who believe that only state funding, strictly limited and defined, will prevent distortions and abuses. Most systems fall somewhere in between, and that includes our own.

As we disclose today, the Committee on Standards in Public Life, which has been considering the matter of party funding for the past year, was set to recommend measures that would push this country quite a bit further towards the state-funding model. Its proposals were to include provisions for individual parties to receive more public money, and donations from individuals and organisations to be capped at £10,000.

This would have been useful so far as it went – which is nothing like far enough. But it seems these proposals may not even see the light of day. It appears that David Cameron has written to oppose the £10,000 cap, arguing for £50,000 instead. It would be regrettable if this intervention delayed, or even derailed the report. In our view, even a limit of £10,000 per person is too high. It would still make for huge influence-wielding sums if, as would doubtless happen, individuals persuaded family, friends and associates to contribute on their behalf.

Even if the proposals are published as intended, they look unlikely to remove the biggest and longest-standing obstacle to party funding reform in Britain: the Labour Party's financial reliance on the trade unions. The Conservatives will naturally insist that any cap on private donations should be matched by curbs on the unions' funding of Labour. And if, as it seems, they are already refusing to budge on a £50,000 cap, it is difficult to see how any agreement can be reached.

Which is where the last efforts to update party funding foundered, too. Conducted by Sir Hayden Phillips, that review was instituted after the 2005 election, when it transpired that both Labour and the Conservatives had funded their campaigns with borrowings to the tune of millions of pounds. It recommended a cap on individual donations of £50,000 and an increase in state funding to offset money that Labour might lose under the new system. No agreement could be reached.

The latest review has acquired new topicality – and the need for reform a new urgency – with the disclosures about the money washing around the former Defence Secretary, Liam Fox, and his friend, Adam Werritty. Even if no further violations of rules or codes are uncovered, the arcane details of companies and not-for-profit organisations that have emerged do not inspire confidence in the way politics is financed in this country. The lack of transparency and accountability is disturbing.

Political fundraising, along with professional lobbying, has burgeoned in recent years. And while – mercifully – it still falls far short of US dimensions, the extent to which access, if not influence, can be bought, must prompt concern. But strict rules carry their own dangers. Statutory restrictions that exist in parts of Continental Europe have spawned a particular brand of corruption that has caught some of the most senior French and German politicians in its net. State funding, coupled with a zero-tolerance attitude to the stratagems that will inevitably be devised to get around the rules, is the only fair and reasonable answer.

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