Mr Blair should find a new and cleaner way of paying for his party

In the series of West Wing currently showing on Channel 4, the President, played by Martin Sheen, makes himself a pain in the neck to his staff by refusing to make party fund-raising calls from the Oval Office, insisting inconveniently instead on repairing to his private quarters before picking up the telephone. It's a powerful symbolic gesture designed by the President to remind himself and those who work for him of the dividing line separating party from national interest.

Powerful, and, in modern politics, necessary. In the current row over party funding there is much that can be said in defence of the Government. There are astonishingly few examples of British politicians personally enriching themselves for favours. There is quite a lot in the well-worn mantra that the Government is the victim of its own policy of transparency; having pledged to reveal the names of its donors, it now exposes them to a scrutiny that would never have been available under the old, pre-Blair order.

There are also some serious holes in the credibility of some of the charges exciting the Government's opponents: the fact, for example, that Lakshmi Mittal's company was backed by the board of the European Bank of Reconstruction and Development is barely, if at all, attributable to the UK government, donation or no donation. And even in the case of BAE Systems – which donated £5,000 to Labour and £12m to the Dome – it isn't clear that its munificence played much part in the the Prime Minister championing its cause on his recent visit to Prague. Mr Blair's fervour in promoting the cause of BAE owes more to his view of its importance for British jobs than it does to its generosity towards party funds. It may even be that on the current cause célèbre, Powderject, the Government is guiltier of keeping its smallpox vaccine contract quiet than giving it preferential treatment for a donation. And so on.

But the fact that some critics, the Liberal Democrat MP Norman Baker among them, would see a conspiracy in a darts match, doesn't mean that they – or he – is always wrong. The current system of funding isn't working. There are at least four areas in which the Government could act, not least to make life easier for itself.

The first is to establish an ethics commissioner and a Civil Service Act, partly to protect officials unhappy that a decision may not be taken entirely in the national interest. At the risk of tedious repetition, the second is to look urgently at ways of increasing state funding.

Mr Blair continues to be adamant that this step can only be taken if there is a political consensus, and that at the moment the Tories won't support it. As it happens some influential Tories are in favour. But why does the consensus argument necessarily apply? There wasn't a consensus behind the minimum wage or the decision to make the Bank of England independent. But that didn't stop the Conservatives, in time, accepting both of them. A fortiori, it would do so with state funding. Even as they oppose it, would they not be deeply vulnerable to the question: "So you'll refuse to take state money then?"

And if the argument is that state funding wouldn't be popular, I have yet to see the persuasive polling evidence that the public prefers the present assortment of rich individuals and companies. Mr Blair believes – no doubt with some reason – that the unions are much pushier than businesses in trying to secure policy bang for their bucks. But even if it's true that businesses give money for altruistic reasons, or because they like the cut of a party's gib – a doubtful proposition – state funding is at least as good a protection from the indefensible use by unions of their money to make a democratic government do what they want. Ah, the opponents say, wasn't there a funding scandal in state-funded German politics? To which the answer is: you can't stop people breaking the rules, but at least it's a scandal if they are caught breaking them.

The third is for Gordon Brown to stop the dodge of "non-domicile" residents – including, as it happens, Lakshmi Mittal – avoiding tax altogether. The forces of the City are already marshalling their arguments against this, with the usual dire warnings that London will collapse as a financial centre if such a regime is imposed. Well, the opponents should be aware that the proposal has an excellent pedigree. The Treasury, in response to its instinctive and highly commendable dislike of people who don't pay taxes, polished up a perfectly credible proposal to do just that during the previous, Tory, administration. It had the firm approval of (Tory) Treasury ministers. And then it was blocked after the intervention of Downing Street, not because of the imagined effect on the City but because it would dry up the flow of donations to Tory funds from businessmen. The danger of the regime's current laxity is the perception, if not reality, that businessmen are giving money to the governing party to avoid paying much larger sums to the state.

And the fourth concerns the curious and deeply unaccountable role of Labour's principal fundraiser. In more senses than one Lord Levy is becoming notably high maintenance. OK, it isn't true that he does not pay much tax himself because his wholly owned consulting company, Wiseart, pays around £350,000 a year. Maybe, as he maintains, there is no link whatsoever to the fact that he was a paid consultant to Westfield, the Australian property company that has been busily building shopping centres here, and that company's evident access to government departments. (Though the response of the company to the disclosures casts some doubt on this).

Maybe Lord Levy is as good at putting Chinese walls between his four roles, that of commercial consultant, charity fundraiser, Labour fundraiser and special envoy to the Middle East, as he says he is. But is it tenable that someone doing paid work of this kind, and who by all accounts pressed not only (successfully) for an office in the Foreign Office but (unsuccessfully) for a Privy Counsellorship, can continue to act in a government role without a shred of the accountability that would be automatic with a minister?

That isn't to say that he hasn't played an important role in the Middle East or that he is less than scrupulous about fund-raising. But it is to say that he is protected from the kind of scrutiny that his mixture of roles cries out for. There has been a hint that some of his responsibilities as an envoy have been curtailed. But how would you tell? He doesn't have to answer questions in the Lords and is rarely interviewed.

Even if every individual decision is pure, the present regime depends too much on trust for anyone's good. That the trust is dissipating is bad for politics. It's time for Mr Blair to do a President Jed Bartlett and remind everyone of that dividing line.

d.macintyre@independent.co.uk