A prominent Liberal Democrat peer has urged Nick Clegg not to bottle out on the issue of party funding reform and to try to forge a deal with the Labour and Tory leaders that will prevent the next election being fought with "dirty money".

Lord Oakeshott said Clegg should show his leadership and be prepared to override a Conservative veto if necessary to introduce reform.

Meandering all-party talks were abandoned by Clegg a month ago after his senior aide David Laws said he could not find sufficient common ground between the parties. The issue has gained renewed urgency after the outcry over the three party leaders giving peerages to major party donors this week.

Oakeshott said his party was not prepared to put up with the corruption any longer. He said Clegg now had a better chance of breaking the deadlock because of Ed Miliband's willingness to change the Labour party's relationship with the unions.

He praised Miliband, telling BBC Radio 4's Today programme: "He is being quite brave about this."

Oakeshott said there was a Commons majority in favour of party funding reform even if the Tories opposed it. Traditionally, party leaders have not wanted to move on funding without all-party agreement.

Oakeshott backed proposals set out two years ago by the committee on standards in public life.

Oakeshott pointed out that Clegg had frequently argued that the whole system of personal patronage and appointments was corrupt.

"I am now saying to Nick: 'You are in charge. Show some leadership. Don't bottle out. You, Nick, are in charge of party funding and, frankly, we do not need agreement of all three parties to do this.'"

Clegg should seize the opportunity, he said.

"There has been a long history of this – we have been quite close to agreement and the Conservatives have vetoed it. The reason is the Conservatives have the big money," he told the programme. "Now Labour at last is facing up to it. Ed Miliband is actually being brave in taking on the unions. There is a majority in the Commons, I am sure, for party funding reform, but we cannot afford to give the Conservatives a veto on this as we did on House of Lords reform."

Oakeshott indicated that he favoured a £5,000 cap on individual donations, tighter caps on election spending, and the right on the election ballot paper to say whether the voter was willing to give a small sum, in the region of £3 to £5, to the party they were backing.



Captcha image