Fundingcampaign_11_1Liam Fox has just confirmed on BBC1’s Politics Show that the Conservative Party will propose a cap on individual donations.  The former Tory Chairman told Jon Sopel that the cap would be lower than the £100,000pa proposed by (before the current scandals broke on 22nd February).  David Cameron is expected to announce comprehensive proposals tomorrow.  He will write to Ming Campbell and Tony Blair and urge a cross-party consensus.

Such a move would be confirmation that David Cameron is determined to ‘stand up to big business’.  It could also force the Labour Party to cut its ties with ‘big union’ donors.  The lower the cap the greater will be the incentives for the political parties to create a diverse funding base made up of mass connections.

The emphasis must be on ‘mass connections’ rather than ‘mass membership’.  The days of mass membership political parties are over.  The Conservative Party should lead the way in raising money for single-issue campaigns and individual candidates.  David Cameron could, for example, turn his campaign on climate change into a fundraising effort.  Other campaigns could be run on matters of concern to small businesses, churchgoers and sports enthusiasts. 

Liam Fox hinted that some compensation from the taxpayer might be necessary if a cap is introduced.  If such "compensation" is introduced it must be proportionate to a party’s success in raising funds from small donors.  State funding should not be decided by insiders in the interests of incumbent politicians.

1.25 UPDATE: Iain Dale is unimpressed with the idea of a cap on donations:

"Tomorrow the Conservatives will outline plans to ‘clean up’ the system. One proposal will be to limit donations to a figure probably under £100,000. I look forward to hearing where they think they money will come from to make up the shortfall… I suppose symbolically it would be quite appealing for David Cameron to stand up and say "I am announcing today that the Conservative Party will no longer accept any donation of more than £100,000." He would be cheered by the electorate and it would reinforce his ‘change’ agenda… But on the other hand, think of the message this sends to those donors who have kept the Party afloat in the past through their generosity. If Michael Ashcroft had not been around during the Hague years the Party would have gone under. It’s as simple as that."

Guido’s take on this news notes the possible gains to the conservative movement of a cap:

"The effect of this will be that non-party organisations will get funding (as with political action committees in the U.S.). Effectively political funding will be diversified and less controlled centrally by the parties, this can only be a good thing. The situation where the Labour party is funded and controlled from within No. 10 is just unhealthy."