This week, it appears that Ed Milliband has finally succeeded in doing what he has clearly been desperate to do for months—seize the political agenda. He did this by proposing something daring and radical and which must therefore run against all his training as a pure product of the UK political hothouse: that political parties have their funding capped at £5,000 per donor.

Initially, I was deeply skeptical, assuming this would not apply to trade unions (whence most Labour funding comes). But having been swiftly rapped over the knuckles by several Labour MPs for such cynicism, it appears that it does apply to them too. At first glance, a limit to anyone’s ability to buy political influence is desirable. Yet, every political system from Babylon to the Kremlin has suffered from this problem. While cutting back on political money may seem ipse facto a positive move, what about the old saying that when you pay nuts, you get monkeys?

Do we really want 3rd-rate people in charge of £1,000,000,000,000+ of our money?

Current party funding is something of a minefield and other countries offer much in the way of moral lessons from which we could learn. Quarterly donations to the two main UK parties have zigged between £2m and £12m each quarter for the last decade, as shown in chart 1 below. Note that the first (and only) time the SNP registers is in Q3 of last year.

Chart 1: Quarterly donations (in £millions) to UK Parties (source: Electoral Commission)

The scale of disparity between the main UK parties and those either trying to break through to UK level (e.g. Lib-Dems of UKIP) or those with limited geographic aims (e.g. Plaid or SNP) is particularly pronounced when this is looked at on an annualised basis, as shown in Chart 2.

Chart 2: Annual Donations to UK Parties (source: Electoral Commission)

What this effectively means is that two parties can outspend all other parties put together by several factors, which results in the kind of expenditure on general elections looking as shown in Chart 3.

Chart 3: Expenditure (in £millions) by UK Party on General Election Campaigns (source: Electoral Commission)

Note the disparity between the white sliver which represents mostly SNP and Plaid and roughly £1m between them, versus the £25m spent by Tories + Labour in 2010 (down from the £35m in 2005, largely because Labour was going broke). Even allowing for the under 10% of UK population that Scotland represents, they outspent the SNP by a factor of five AND had ‘national’ BBC coverage going for them.

But more interesting is to bore down deeper into the sources of funding, as the Hootsmon, to its credit, did yesterday. They looked at the four main parties in Scotland—and quite a contrast their funding sources made too. These are shown in Charts 4a to 4d.

Figure 4a Distribution of Labour Funding Sources (source The Scotsman April 16th)

Figure 4b Distribution of Tory Funding Sources (source The Scotsman April 16th)

Figure 4c Distribution of SNP Funding Sources (source The Scotsman April 16th)

Figure 4d Distribution of Lib-Dem Funding Sources (source The Scotsman April 16th)

The differences among the above four charts are quite striking. As long as the SNP was broke and receiving very little funding, the big UK parties seemed quite happy to hoover up funds from whatever source suited them. In the last quarter of 2011, the Tory Party received:

• £600,000 from the National Conservative Draws Society
• £150,500 from Mark J.C. Bamford
• £136,180 from Lycamobile UK Ltd
• £125,452 from Peter (I-can-get-you-dinner-with-the-PM-for £125k) Cruddas

Meantime, the Labour party was doing very nicely in the same period with its biggest donations being:

• £649,092 from the GMB union
• £427,774 from the Unison union
• £304,588 from the Union of Shop, Distributive & Allied Workers
• £194,210 from the Communications Workers union

And, lest we think the Lib-Dems were missed from all this ‘civic giving’, they received £329,352 from the Methuen Liberal Trust Fund and a cool £153,267 from the Ministry of Sound (NOT, we should add, a Whitehall department. Yet).

The SNP has come under considerable criticism from its opponents that it received money from Shir Shean and that Brian Souter’s recent £500k in matching funds and ~£1m each from the estate of the great makkar Edwin Morgan and lottery-winner members who shared their windfall with the party. With the exception of Soutar, it is clear that no self-serving influence could be attached to the ‘generosity’. But with hefty union and business donations sustaining both Labour and Tory and Cruddas recent ‘access-for-sale’ exposure coming on top of expense scandals, cash-for-honours and egotistical nonsense like Derry Irvine’s wallpaper, that distinction is palpably naive.

How Ed and his boys would survive had they only received 4 x £5k = £20k instead of the over £1.5m the unions slipped them is unclear. Noble though the principle of his initiative may seem, with his party deep in debt and elections getting no cheaper, Miliband needs to explain how he can square that particular circle without dipping into public funds. With the mood the people are in just now, advocating more public money for politicians would be political suicide.

Is Ed that daft?