Gordon Brown used to make the Westminster weather. Now the prime minister is buffeted by political storms. In a week when he was supposed to be regaining the initiative, a scandal about Labour party funding has instead left him apologising and setting up inquiries. A number of mistakes, culminating last week in the loss of personal data on 25m people, has battered his reputation for competence. He has gone from ruthless to hapless in a few short weeks.

This latest squall arose from the actions of David Abrahams, a north-eastern property developer who used four associates as agents for making donations of more than £600,000 to Labour. Once the role of intermediaries had been made public, Mr Brown ordered the money to be repaid, saying it was “not lawfully declared”. Meanwhile, the Electoral Commission has launched its own investigation, and opposition MPs are calling for the police to be involved.

Whatever the outcomes of the various inquiries, one point is already clear: Labour has not grasped the overriding need for transparency and openness in its financial affairs. This goes beyond meeting legal requirements, though that is important enough. It is crucial to understanding that voters want to be sure no one is acquiring influence secretly or unfairly. The failure to comprehend this is deeply disquieting, especially in a party that not only passed a law improving the party funding disclosure regime but still bears the scars of the cash-for-honours affair.

Opposition parties should not revel too much in the government’s discomfiture. They will suffer as well if public cynicism about politicians becomes more entrenched. One reason Westminster looks so bereft of ideas on paying for our politics is that neither Labour nor the Tory party is prepared to compromise enough to reform political funding on a cross-party basis.

All parties should resume discussions, committed to finding a solution based on consistent spending limits and caps on donations from organisations as well as individuals.

Any increase in state funds for parties should be designed to encourage public participation. It should also be the last element in a comprehensive package on party finances, to avoid the risk that greater access to funding blunts enthusiasm for reform. After all, forcing taxpayers to contribute to parties because those same organisations have failed to elicit enough donations voluntarily is a bizarre way to restore public trust in a political funding system that so often produces shabby behaviour.

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