Leading article: Miliband's reforms will improve British politics

The financing of political parties in Britain has long been in need for reform. The idea that everyone should have the right to contribute whatever they want to the party of their choice sounds fine in principle. In practice, it leads to monstrous distortions, with both Labour and the Conservatives benefiting almost exclusively from their cosy connections to unions and big business, respectively.

Labour under Ed Miliband proposes to end this unhealthy political culture by introducing a cap on donations far lower than anything that the Tories have tabled. With Mr Miliband's support, Ray Collins, Labour's general-secretary, has told Parliament's Committee on Standards in Public Life that the party would support a cap as low as £500.

This might sound like a counter-intuitive suggestion, coming from Ed, as opposed to David, Miliband. The unions were decisive in securing Mr Miliband the party leadership, and unions remain Labour's biggest donors by far. A financial cap of this kind would at a stroke significantly reduce their influence over policy. At the very least, therefore, the latest proposal shows that Mr Miliband sees beyond these parochial considerations and understands that it is undemocratic for his, or any, party to be so wholly dependent on a single financial source.

In Labour's case, it is not simply that reliance on a drip-feed of money from the unions skews the internal debate on important questions such as strikes. Just as dangerous is the sense of apathy it encourages about recruiting new members, without which any party is bound to fossilise.

Mr Miliband's other proposed reform is to change the Labour leadership elections rules, again reducing union influence, freeing up space for non-party members to have a voice. Instead of an electoral college composed equally of three elements – the unions, MPs and party members – there would now be four, an extra 25 per cent of votes going to interested outsiders.

This would introduce into British party politics an element of the US primary system in which non-party members have a say in who becomes the Republican or Democrat presidential candidate. Clearly, Labour has no interest in letting Tory supporters help decide who becomes the next Labour leader, so those entitled to vote as members of this fourth pillar of the electoral college could not be just anybody. They would have to belong to a new category: people willing to register as Labour sympathisers but not willing to commit to full membership.

The problem with both these proposed reforms is that neither much suits the party machines, which thrive on block votes and block grants. Then again, neither big party is likely to agree to a cap on contributions without prior agreement on compensation for the loss in the form of state financing for parties, which is likely to meet opposition from another corner: the public.

It is hard to remember a time when politicians as a class were as unpopular as they are now, and with memories still fresh of MPs' expenses scandals, it will be hard-going trying to persuade the country of the desirability of funding parties from the public purse, or even of helping them in other ways, such as extending to parties some form of tax relief. Of course, MPs fiddling their expenses and state financing for parties have nothing to do with one another, but it is easy to see how the two could become conflated under the umbrella headline of parties helping themselves to "our" money.

Those who support the status quo will be happy about such a hue and cry. This would be a pity. Mr Miliband's planned reforms would benefit politics as a whole, not just his own party, and deserve support.