Cameron must act quickly and introduce strict new caps on donations to political parties

By Tim Montgomerie
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• Sunday update: Peter Cruddas has now resigned.

The Conservative Party has always run donor clubs and members of the more expensive donor clubs get better access to leading Tories than people who belong to cheaper donor clubs. Rightly or wrongly this is how political funding has worked for a long time and we all kind of knew it. What the Sunday Times story and video has done is to pull back the curtain on the relationship between donations and access any no prizes for predicting that the public will be disgusted.

The matter of accessing Downing Street: There will be particular concern that Peter Cruddas (the already outgoing Tory Treasurer who will now need to go more quickly) is appearing to sell access to Number 10 Downing Street and the Downing Street Policy Unit. It is one thing to offer access to the Tory leader in Tory HQ and to be able to influence the Tory policy unit but it is quite another to offer paid access to Government property and employees. There is no evidence or allegation that any individual business or donor has profited from their connections with Tory ministers but the buying of access will still cause upset.

The new nature of Tory donors: David Cameron has succeeded in diversifying the party's funding base but many of the newest donors to the party are driven by a desire to be close to power rather than by ideological factors. At the height of New Labour's power the people who gave to the Conservative Party tended to do so for genuinely ideological reasons but many of these have drifted away in recent years (in protest at party policy drift on, for example, climate change, Europe and attitudes to Israel). They've been replaced with more power-seeking donors. I have to add, however, that in all of my experience every long-term donor to the Tory Party that I've ever met has had an interest in the Conservative Party's success as an ideological project and not as a vehicle for their narrow interests. Donors in this sense play a great public service and support for politics should be respected, not suspected.

Cameron has supported donor reform in past: It's not wrong for politicians to meet business leaders, trade union barons or NGOs to help them make better policy but is it wrong for people to get more access to party leaders in return for giving big sums? David Cameron clearly thought the answer to this question was "yes" when he was in opposition because he proposed a £50,000 cap on the amount of money that any one business or individual should be able to donate. This was opposed by Lord Ashcroft (owner of this website who believes there should be no limits as long as there is transparency).

Caps on donations must not lead to parties becoming dependent upon direct state funding: I, personally, favour much lower donation caps. Something of the order of £10,000. If Labour are forbidden in law from getting 80% to 90% of its money from the unions (as is the case now) - and the Tories are banned from receiving such a large share of their funding from financial and corporate interests - we'll end up with political parties that are more in tune with a broader cross-section of society. The internet gives political parties huge opportunities to replace large gifts from a small number of people with small gifts from a large number of people. These gifts could be encouraged by some form of tax relief. Tax relief for voluntary donations is a much better solution than direct state funding. If we move to a system of direct state funding the existing political parties will become further removed from ordinary voters and it will be harder for new parties and independent candidates to break into politics.

Out of this ugly moment David Cameron should seize the moment and reform political funding once-and-for-all.