Leading article: A chance, at last, to take the big money out of politics

A great many cynical reasons might be advanced for the proposal made by the Labour Party leader, Ed Miliband, to advance the reform of party funding.

Interviewed on the BBC's Andrew Marr Show yesterday, he called for a £5,000 cap on all individual donations to political parties. That is half the maximum proposed by Sir Christopher Kelly, the Parliamentary Standards Commissioner late last year, and a tenth of the £50,000 maximum on individual gifts favoured by the Conservatives. It is, on the face of it, an audacious and radical move.

In timing and in substance, however, it also serves Mr Miliband well. He has not been having an easy time of it as Labour leader and often struggles to make the headlines, let alone to attract positive reviews when he gets there. To trump Sir Christopher's proposed limit on individual donations cannot help but catch the eye. Then there is Mr Miliband's supposed dependency on the trade unions for beating his elder brother to the party leadership. "In hock to the unions" is a charge that continues to dog him, despite his reluctance to support trade union protests against public sector spending cuts.

The Labour Party is also strapped for cash, so slashing contributions for everyone would suit its purposes. It is also true that the effects of such a low cap would be lopsided, even if – as Mr Miliband says – it would also apply to trade unions. But that is part of the point. Big individual Labour donors, outside the unions, are relatively few and far between. A low cap on gifts would affect Labour far less than the Conservatives – which is, of course, why their preferred cap is so much higher. A further criticism would be that the levy which trade union members pay to the Labour Party would remain, and remain as an opt-out, rather than, as funding reformers have advocated, an opt-in. Again, this would leave Labour with its trade union advantage.

For all these reasons it could be claimed – as a Conservative party spokesman did yesterday – that Mr Miliband's proposal is "virtually meaningless". His proposed cap is so low as to invite rejection from the other parties out of hand.

Yet such a response would be too hasty. In bringing trade union contributions to party funding into play at all, Mr Miliband is offering a concession that could open up new territory for discussion. He is also tackling something of a Labour taboo. Both are welcome. So is his decision to broach the vexed question of party funding at all. Low-key talks between representatives of the three main parties opened last week, with the Liberal Democrat leader, Nick Clegg, confirming that they would explore the six-month old recommendations made by Sir Christopher Kelly. If this review is being given a second look, that is also positive.

Few believe that current arrangements for funding Britain's political parties are at all satisfactory. The whole system has long been dogged by scandal, from cash for peerages to cash for access, with the latest claiming the scalp of the Conservative Party co-treasurer, Peter Cruddas, after he was recorded apparently offering access to the Prime Minister for a price. Clearly, the earmarking of taxpayers' money for the running of political parties is difficult in the present climate, what with the squeeze on public spending generally and the widespread unpopularity of politicians.

This unpopularity, though, is partly a consequence of the difficulties that all political parties face in raising funds and the unsavoury relationships that can result. Public funding is the only realistic, transparent and equitable alternative to a system that is both unfair and deeply discredited. It is hard to be optimistic that all parties will easily find a compromise, but Ed Miliband's proposal is a modest move in the right direction.