Funding merry-go-round shows no sign of stopping

As several MPs remarked, yesterday's noisy, fractious and ultimately rather pointless Commons statement on the Sunday Times revelations about Conservative fundraising, showed the House at its worst.

It was a party political slugfest with each side pointing the finger at the other and squawking that whatever they'd done, the other lot were worse.

Part of the accusation-trading revolved around the last attempt to cut a deal on party funding, which, the former justice secretary Jack Straw told MPs, had come so close to success that the parties "almost initialled the agreement, in June 2007".

So will the government's current embarrassment now push them legislate to reform party funding? Mr Maude reminded MPs that the Deputy Prime Minister Nick Clegg plans to convene a new round of all-party talks; Ed Miliband retorted that he had put forward names to represent Labour, but hadn't heard anything for weeks. Getting those talks going may just have become more urgent, and I suspect that the parties will now jog unenthusiastically around the course, if only to staunch the chronic embarrassment on all sides.

But in the end, no bill will emerge, because it will not prove possible to bridge the gap between them, and legislation in this area normally requires consensus.

There's a reason agreement eluded even such skilled negotiators as Mr Straw, Francis Maude and David Heath in those 2007 talks. Each of the parties wants to strike at the others' funding. Labour wants curbs on Lord Ashcoft-style mega donors; the Conservatives want curbs on union donations to the Labour party.

These are not symmetrical demands: a donations limit of £50,000 per person would hurt the Conservatives, but probably not fatally. But apply that limit to the organisations donating to Labour (mainly unions) and the party would be out of cash by the following Tuesday. Which is why Labour is so determined to resist limits on union donations which could seriously weaken them, while arguing for tighter controls on individual and corporate donations.

Meanwhile, the Lib Dems, who have few big donors, want a tight donation cap of £10,000 and more state funding for parties - an option the Conservatives reject, as Mr Maude did several times yesterday. He argued that a £50,000 cap would avoid the need for the state to pipe taxpayers' money into party coffers.

The parties don't run on widows mites and the takings from tombola stalls; they all depend on big injections of dosh from big backers, both to sustain their day-to-day operations and to build up a big enough war chest to fight elections. Both of these are now much more expensive. There's a lot more legislation controlling internal party processes, elections, selections and and of course registering donations. And that means far more bureaucratic compliance processes to be observed.

There are also more elections. This year will see the usual round of local elections in May, followed by elections in England and Wales for the new police commissioners and big city mayors in November (not to mention any Commons by-elections which result from MPs quitting to become mayors or police bosses). Selecting the candidates and campaigning to elect them are both expensive exercises.

Is the solution to cap the cost of campaigning? To end the arms race between the parties? If yesterday's exchanges are anything to go by, debates on any such legislation could turn very nasty - not least because all MPs have direct sharp-end experience of how important the small print of the regulations can be.

The fact that we now have fixed-term parliaments with general election dates specified years in advance does make it simpler to limit how much can be spent by the parties. But as the experience of funding restraints in the United States has demonstrated, people or organisations who want to put their money behind a particular political cause will find a way. In the US, political action committees (PACS) which are at arms length from the parties and candidates, are right in the thick of campaigning. So are issues-based campaign groups. And if funding was capped for the parties, the chances are that the same would happen here - arguably it already has, to an extent.

A bill to try and clean up party funding would have to grapple with those problems… and could end up imposing new regulations to little effect. Of course, what all the parties would really like is the promise of state funding, so they didn't have to grub around for donations from people who might want something in return. But in the age of austerity that is an even harder sell.

So my bet is that the main outcome of the current kerfuffle will be to hand a stick to Labour (and to a lesser extent the Lib Dems) to beat the Conservatives with, and make it much harder for them to legislate in a way Labour doesn't like.

And it might lead to a tougher bill to register lobbyists, as a kind of displacement activity.