Income support: The latest controversies over donations to political parties underline the need for a new system

At a time when spending on public services faces yet further cuts, almost irrespective of whoever wins the next election, the idea of doling out millions to our political parties seems ludicrous, even nauseating.

The apparently bizarre behaviour of the Tory candidate Afzal Amin, seeking to act as agent provocateur in concert with the English Defence League, will not have boosted the public’s esteem for our politicians. The prospect of receiving a parliamentary salary in return for a fabricated row over a mega-mosque in Dudley, in which he would emerge as a hero, almost beggars belief. Isn’t giving hard-earned taxpayers’ money to this bunch pretty offensive?

In many ways it is. It would be a particularly perverse outcome to the latest spate of party-donor controversies, including the allegations aimed at the Liberal Democrat peer Lord Strasburger, who is accused of making a £10,000 donation against the rules. Then there is the case of the Labour donor and hedge fund manager Martin Taylor, as revealed by The Independent on Saturday. Although there is no rule-breaking involved, when Ed Miliband castigates the Conservatives as the “political wing of offshore hedge funds”, it smacks of hypocrisy for the Labour leader to accept a donation of nearly £600,000 from a hedge fund manager.

It doesn’t seem right that, simply because the major parties have failed to make the current system work honestly, we now have to give them yet more taxpayers’ money. But, as with so many issues in the greasy engine room of British politics, an element of state funding may be the least bad way of helping to fund our democracy.

For there is a terrible inevitability in the news cycle of political funding, stretching back to the sale of honours in Lloyd George’s time (and the centuries of royal “patronage” before that). First, there emerges some scandal or other, usually exposed by the press. Then there is an outbreak of public moral outrage – sometimes deeply felt and justified, as with MPs’ expenses. Then a prominent civil servant launches an inquiry and makes recommendations. In watered-down form, these are adopted as legislation by the parties, which all solemnly promise, “Never again”. And then those same parties go looking for loopholes in the very laws they just passed.

The way in which donors “lent” rather than donated money to parties for some years was perhaps the most cynical of these many scams. Now, if we believe the latest revelations about the Liberal Democrats, currently under investigation, the fashion is for large gifts to be broken into smaller parcels and offered via proxy friends and “cousins”, maybe with a backdated cheque to add that little extra element of confusion to a supposedly transparent process.

The funding formulae and purposes of public party funding will be tortuous to negotiate, but other countries, notably the US, manage a system of tax breaks for donations perfectly well. The system of Short money for parliamentary research, recently extended to the devolved parliaments, has been widely judged an outstanding success.

Party funding is no panacea. Corrupt MPs, MEPs and members of devolved parliaments will still have plenty of opportunities to fiddle and defraud for personal gain. Yet some of the parties’ more egregious abuses should diminish. At a stroke, it would make Labour more independent of the unions and the Conservatives less cosy with big business. Politics would take a welcome step away from its class obsessions, and we would all have a stake in monitoring politics that bit more closely. It is sad that today it is the English Defence League that is able to claim it is “not for sale, not ever”. It is worth mentioning, too, that the evidence of a VIP paedophile group active in the past, and perhaps the recent past, has the potential to do vast damage to the political system, and is further corroding faith in democracy.

Many MPs and party workers go into public life to serve communities and the nation, but too many are prone to material and other temptations; little wonder the electorate is wary of engaging with them as a class. State funding might just help.