Will they do it again isn’t the question, I promise you. They will. The only unanswered query is how will they do it. Well, settle down and listen to my tale, because I think I’ve stumbled across the answer.

Last week the chairman of the House of Lords Appointments Commission appeared before MPs and told them he was shocked. Shocked, I tell you. The use of loans to circumvent the rules governing party finance had not been illegal, he admitted, but that didn’t make it right. “It was a bit like tax avoidance,” declared Lord Stevenson of Coddenham.

The whole loans episode remains a bit puzzling: why take a loan from someone quite happy to give a donation and declare it? But one thing is perfectly clear. Whatever regulations you create to control party finances, political and financial interests will seek to find a way round it. It will happen. A bit like, well, a bit like tax avoidance, really.

A clue about the next avoidance scheme came in the run-up to Gordon Brown’s recent general election (and Ed Ball’s election, credit where credit’s due) when the word was sent out to Labour supporters in the unions and sympathetic organisations. Don’t worry about donations, just send your staff down to Labour headquarters. Of course, I thought, the next loans scheme won’t be money. It will be goods in kind.

And so it will. Here’s how it will work. At the moment, organisations established to pursue political purposes cannot be charities. Charities are allowed to engage in limited political activity but only to support their genuinely charitable, non-political objectives and only if they are careful not to allow these activities to dominate their work, becoming the main way of achieving their objectives.

Already, as a paper from the think-tank Civitas argues, charities such as the Children’s Society, the NSPCC and the RSPCA spend a fair chunk of their time and resources on campaigning to influence opinion. But the rules exercise some degree of control on how much they do.

Until now. Now Ed Miliband, the Charities Minister and close to the throne, has made changing the rule governing the political role of charities something of a mission. And he’s been working with the Labour peer Helena Kennedy to put pressure on the Charity Commission, which now has to decide whether to amend rules it last reviewed as recently as 2004.

The Miliband idea is to allow charities to be established for an explicitly political purpose and without any limit on the proportion of their funds and time spent politicking. Imagine what that would mean.

First, it would mean the Charities Commission being asked to decide which political campaigns should be regarded as charitable and which not. Should a campaign to give welfare benefits to asylum-seekers be regarded as charitable? What about a neo-Nazi-inspired campaign in favour of compulsory repatriation?

Secondly, it would undermine the charity brand. The distinction between a pressure group and one directly carrying out good works would be removed. Donors will no longer be able to rely on charity registration as a sort of quality assurance mark.

Then there is the impact on the existing big charities, already well stocked with people whose primary interest is politics and campaigning rather than service provision. With a rule change, there will be further politicisation of these great bodies and a deterioration in the quality of their other work. Civitas thinks we should be going in the opposite direction, making these charities less political, and I think they’re right.

So if these are the consequences, why would one want to make such a change? Charities enjoy a number of important financial advantages. They can claim relief from tax on most of their income: they do not normally have to pay corporation tax, capital gains tax or stamp duty and the vast majority of their business rates bill. They can also raise funds from the public, grant-making trusts and local government more easily than noncharitable bodies. With new rules these advantages would be extended to explicitly political bodies.

And even if political parties were excluded, it wouldn’t be hard to establish organisations that advanced the agenda of a party without being an explicit part of it.

How about, say, a body to promote the virtues of the tax credit system? Or organisations to promote those causes that have been close to Gordon Brown’s heart since he was a nipper – like cutting inheritance tax or recognising marriage in the tax system? Lord Stevenson used the term “tax avoidance” as a metaphor when attacking the loans dodge. The charities rule change actually is a tax avoidance scheme, allowing political donations from a variety of sources to be undeclared and given favourable tax treatment.

The motivation for the proposed new rules is neatly illuminated by a little inconsistency spotted by Greg Clark, the Shadow Charities Minister Poring over the documents as he seeks to stop this “reform”, Mr Clark noticed that Helena Kennedy and the pressure groups working with her were quoting Ed Miliband in support. “It is massively in the interest of politicians to champion your campaigning role,” read the minister’s quote in Kennedy’s report. But this wasn’t what Mr Miliband said. What he actually said was: “It is massively in the interest of progressive politicians to champion your campaigning role.”

Mr Miliband is being, as he generally is, intellectually honest. Creating large numbers of new, well-funded “charities” that lobby the State to help people rather than taking direct action to help people themselves is in tune with a long-held left view of the respective roles of State and civil society.

But Lady Kennedy and her supporters are right to be embarrassed to include the full quote, because what is in the interests of progressive politicians is not in the interest of everyone else. This is an attack on the very idea of a charity for reasons of low politics. The Charities Commission should not treat the idea charitably.

daniel.finkelstein@thetimes.co.uk

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