26/03/2012 05:18 BST | Updated 26/03/2012 06:10 BST

Party Donor Row Threatens To Overshadow Politics For Months

The story is moving quickly and snowballing. First there are still questions surrounding Peter Cruddas himself, someone who has been dismissed as "rogue" by Tory high command yet who had a full eight months of shadowing the role of chief Tory fundraiser before starting it proper about a month ago.

Could one of the City's most successful businessmen fail to understand the rules of engagement when dealing with potential donors and lobbyists, after months of working within the party as co-treasurer? Even if that were true, it'll be a struggle to convince people to believe it, so disillusioned is the public when it comes to sleaze allegations.

It's not the stuff of conspiracy theories to notice that whoever appears to be occupying Number 10 is having their premiership blighted by allegations of improper connections with their party's key donors. Blair had it with cash-for-honours, now Cameron has similar problems with allegations of cash-for-access.

The main focus has shifted to who has been entertained in the Downing Street flat which belongs to whoever is Prime Minister. All kinds of people will have had dinner or suchlike there, paid for by David Cameron and not us. Most of them are reasonably entitled to a private life and not have their names published because they haven't given any money to the Tories.

Publishing a full list seems unfair to those people, possibly even illegal under Human Rights legislation - they have a right to privacy enshrined in law.

The suggestion is that the list of those who have explicitly donated large amounts to the Tories and who have been entertained in the flat should be published. But why, some might argue, are these less entitled to a private life, particularly to have that taken away retrospectively?

The government seems reluctant to even go this far, but they might end up coming under overwhelming pressure from their own party to do so. Mark Field, the Tory MP for Cities of London and Westminster, told Radio 4 on Sunday night he thought the list of donors who'd been to the top floor of Number 10 should be published.

Others will probably follow suit in the coming days, because let's not forget we're six weeks out from a high-profile Mayoral election in London, alongside those for council seats across the country.

Unless something is done to shut down this scandal in the next few days then it threatens to overshadow that election campaign, particularly when the Budget appears to have bombed so badly. And what of the 100 Tory MPs with marginal seats, who feel they are going to have enough of a battle to hang on at the next election without this sort of bother making things worse?

In terms of reforming party funding, there is no silver bullet. We could opt for a cap on donations, but this doesn't stop the wealthy from giving lots of money. America has donation caps, and there all that happens is the rich farm their money out to friends and relatives to give to parties on their behalf. There is no obvious way of stopping that.

Similarly there is no guarantee that state funding of the parties would eliminate corruption entirely - Germany runs a state-funding model and that didn't stop Helmut Kohl diverting massive amounts of money into a private slush fund. So history shows that such systems can still be abused, although its costs are fairly low - forecast to be just 50p a year for every taxpayer in the land.

Then there is the obvious reluctance by both Tories and Labour to make any changes at all. David Cameron was asked on Sunday what the Cruddas revelations meant for party funding and dodged the question, saying he'd already reformed his own party's funding. But the experts - including the Committee on Standards in Public Life, simply disagree, and predict there will be more of these allegations of sleaze so long as the current model remains in place.

In addition to the options for party funding reform, we will possibly also end up with something similar to IPSA to regulate the system. But the MPs expenses watchdog is loathed by backbenchers and has ended up costing the taxpayer a fortune. But if the parties can't be trusted by the public to keep - and show to be keeping - their fundraising distinct from government activity, the pressure for an independent eye to intervene will only grow.

This will come alongside the register of lobbyists the government is already consulting on. Initially the terms of what a "lobbyist" was left quite narrow by ministers. They had planned for third party agencies who can represent any client to be on the list, but for in-house public affairs officials - including those working for charities - to be left off it. The Peter Cruddas affair will probably lead for calls for the scope of the lobbyist register to be broader.

It'll cost a lot of money, and almost everyone involved will hate it.