Time to think outside the box on party funding

A bit of creative thinking could unlock the party funding impasse, a senior participant in last year's party funding negotiations has told me.

After yesterday's Commons carnage helped lower the public opinion of MPs even further it looked as if we'd reached something of a new low. As I wrote yesterday, such is the partisan nature of the clashes that any meaningful progress is – at best – many years away.

The sense was that the minority of worthy MPs calling for the slate to be wiped clean are simply living in fantasy land. "The banter from those on both benches has been shameful for the whole of democracy," David Morris said in the chamber yesterday. He asked for a "commission to iron out party funding once and for all".

That is probably pushing it a bit. Instead deputy prime minister Nick Clegg, talking time out from clashing with the Argentines in Seoul, has brought forward the latest round of cross-party talks to this week. David Laws, John Denham and Francis Maude will be the main negotiators, taking over the baton in this never-ending relay race.

They are expected to rehearse the same old lines that Margaret Beckett and Oliver Heald went over last year. They were the Labour and Tory representatives on the committee on standards in public life which, last November, proposed spending £23 million in state funding. This is all that was needed to finance the introduction of a donation cap of £10,000, they argued.

So far state funding has been the biggest obstacle to reform. In any form, Clegg argued last November, paying politicians extra cash to carry on doing politics is going to go down like a lead balloon with the hypercynical British public.

But there may be a way round this problem. It's just possible a bit of creative thinking could unlock the party funding impasse, I've been told.

One option worthy of consideration is simply finding the £23 million from elsewhere in the state funding budget. Diverting money which is already spent on helping out politics means taxpayers wouldn't have to stump up any more than they already are.

Where could this come from? There are one or two options. One is to look at the cash spent on general elections, giving each candidate the option of three leaflets mailed out to voters. If the cost of this was halved – perhaps just one leaflet per candidate, for example – that would raise around £24 million, it's been suggested.

Such a move is possible because the sum talked about is, actually, not especially big at all. As the committee pointed out last year: "The additional amount involved annually of around £23 million is the equivalent of only about 50p per elector per year – little more than the current cost of a first class stamp. Much larger sums are already spent in supporting democracy."

Breaking the state funding impasse would not guarantee agreement. But it would be a start.

The next hurdle becomes the level of the cap. This is always going to be difficult, even if Labour keep their trade union affiliation fees, because there is unlikely to be a cap below around £125,000 at which the two parties are losing roughly the same proportion of their funding. That would only be around 30%, anyway, undermining the effectiveness of any reform.

Again, though, my source tells me that while there is no scope for a "big bang", year zero style solution, there is "room for discussions of a process" towards change. Making donations gift aid and offering other forms of tax relief are one option to be considered.

One thing is definitely worth noting: the £50,000 proposed by the Tories is a negotiating position, not their final offer. Labour could be prepared to budge, too, but only if that elusive middle ground can be found. There are no obvious answers – but nor should hopes of real progress being made be abandoned, either.