Cut party spending - and ditch the donors

You know how it is. You think you can handle a few millionaires. You're responsible, you'll consume with care, you won't be as much of a sucker as certain prime ministers we could name. But one thing leads to another, and you wake up in the street feeling sick and ashamed.

I've no doubt that most rich donors fund Labour because they sincerely believe in it. But for others, many in David Abrahams's property industry, it's all rather more practical. They are using their wealth to further their wealth: buying at least an entrée, a priority hearing over other citizens. At worst, potentially, they are buying a decision in their favour.

For a recent Channel 4 Dispatches programme, I found a dozen cases where property developers had donated to parties, locally or nationally, just before the local council controlled by that party was due to decide on a lucrative planning application by that same developer. Sometimes the developer concerned was actually on record as an opponent of the party he'd just given to.

Abrahams, who had a planning application in too, might say his cash bought nothing because no one knew he'd donated it. But the ever-growing number of Labour people who actually did know, from a claimed one on Monday to at least four today, may give the lie to that.

So this might not just be incompetence. It could be about integrity, too. Forget the subversion of the honours system: what could be happening here is the subversion of the political system, and of the democratic principle that all are heard equally.

What's new, you ask? What's new is that our hollowed-out political parties have become ever more dependent on wealthy donors. How, just months after cash-for-honours, can there be yet another scandal involving rich men? The reason it keeps on happening is because the parties need rich men, desperately.

Parties' main election-fighting resource used to be impeccably civic, democratic, and above all free: the unpaid labour of their own members. In 1951, Labour had more than a million of them. The Tories claimed nearly three million.

Fifty years on, the atrophy of the two major parties is stunning. Their membership has plunged by four-fifths; their grassroots have often ceased to exist. No matter, thought the Millbank high command. Members only cause trouble - who needs them? Just get some millionaires on board, and buy all the campaigning you need.

So paid call centres are replacing doorstep canvassers. Costly direct mail is taking over from pensioners delivering leaflets. Expensive poster ads are supplanting the old loudspeaker cars.

There's nothing wrong with new technology, of course. But it is enabling parties to turn from genuine mass movements, embracing their communities, into isolated clubs of the politically ambitious, financed - and unduly influenced - by a handful of rich men. We are going down a road we have never travelled before, an American road, where the money power in politics talks too loud.

Yet state funding of the parties is categorically not the answer: as well as being unpopular, it risks making them even less rooted in society, and imposes even more barriers on new parties trying to break through.

Labour - and, above all, the Tories - do need to agree new party funding laws, dramatically reducing the amount of money that they can spend at and between elections (and abolishing the disgraceful publicly funded campaigning allowance paid to MPs.)

But that will not be enough. As Abrahams already shows, the competition between the parties is so fierce, and their need for money so great, that they will always find ways round any rules we can frame.

Some, like requesting loans instead of gifts, or taking donations under a false name, will be illegal. But others will be impossible to ban - US politics has sprouted "parallel" organisations, such as MoveOn.org, which aren't parties, nor subject to the same rules, but which essentially campaign on behalf of particular parties anyway.

As with the "war on drugs", measures to tackle the supply of political money are bound to fail. The only hope is to approach it from other end - to reduce the parties' demand for money.

What do parties need money for?

Elections. And what do they spend it on in elections? Moronic billboard and newspaper ads, mainly - the kind of things that move very few votes, just increase voters' disgust with politics.

If the ads were banned, along with paid-for telephone canvassing - and if the only direct mail allowed was the one free item which every candidate gets - it would reduce the parties' demand for money by about 80 per cent overnight.

It would level the playing field between rich and poor parties. It would improve the tone of campaigns. And it would force parties to tend to their grassroots, because leafleting, canvassing and volunteer phone banks would be the main tools they had left. In short, it would be a massive blow for civic engagement and democracy.

It'll never happen, of course. The parties would loathe having to rely on the hated media as the main vehicles for their message. It would be very hard to regulate political communications on the web.

But we could realistically go towards it, maybe by banning ads. And what I know is that we cannot go on like this. Deep down, the politicians know it, too. Deep down, they know the stroking of rich donors verges on the corrupt. Deep down, they hate and are ashamed of it. It's not what they came into politics for. All that, no doubt, is why we see so many attempts to conceal it and fudge it.

For Gordon Brown to regain the initiative, a patsy enquiry by three handpicked Labour peers simply will not do. Mr Bean needs to take on the party bean-counters.