There are times when smokescreens deserve as much attention as the scandals they are put up to obscure. Spokesmen for all parties in both Houses of Parliament strapped on rhetorical gasmasks to denounce secret loans and propose alternative means of keeping those parties solvent during and between elections. One solution, suddenly, warmly and misguidedly embraced on both sides of the aisle, is increased state funding.

Lord Falconer of Thoroton’s immediate aim in announcing a package of last-minute additions to the Electoral Administration Bill was to deflect parliamentary attention from the loans-for-peerages affair, and its devastating impact on his former flatmate, Tony Blair. Uniquely in Mr Blair’s nine-year tenure, this episode has visibly drained him of conviction because he knows that he has practised the very opposite of what he preached in opposition. He is morally dishevelled. As The Times reveals today, his fundraiser, Lord Levy, phoned a key lender to the Labour Party to assure him that a six-figure loan need not be made public because of a loophole in rules drawn up by Mr Blair himself in an effort to end the “sleaze” against which he campaigned so successfully in 1997. Yesterday’s publication of the full list of Labour’s lenders will do little to repair the damage, following as it does a fortnight of mounting public pressure that Mr Blair should have pre-empted months ago.

His only consolation is the tacit sympathy of his rivals. The apparent abuses of the honours system are merely a symptom of a deep-seated weakness of all advanced democracies: their parties need ever-increasing sums to fight elections, and political fundraising necessarily distorts people and policies.

There is no such thing as political donations — or loans — that come without strings attached. But to outlaw them and make up the shortfall with increased public grants is no solution. Are taxpayers being asked to fund a scheme to cover up the Prime Minister’s latest embarrassment? Funding confers control. Increased public funding of political parties would mean increased control of them by bureaucrats assigned the pointless and corrosive tasks of judging who deserves the funds and how they should be spent. That control properly belongs to party activists and leaders, and it is earned by crafting and articulating policies that attract financial backing as well as votes.

Arbitrary ceilings to such financial contributions — such as those proposed yesterday by the Conservatives — may have a place in future reforms but cannot be a basis for them. The US experience shows that large donations can always be disguised as multiple small contributions. Every law has its loopholes. Nor can David Cameron seriously hope, with a single policy review, to “clean up politics by ending the suspicion that money buys honours or influence over policy”.

That suspicion will always exist. What voters deserve is full and immediate knowledge of the sources of that money: in mature democracies, only ballots can be secret.