Politicians can never win on money. Whether it is party funding, or their own pay, the story is the same. Most people believe that politicians are feathering their own nests, and the abuse of allowances by some MPs and MEPs has hardly helped to counter this. Fear of a public reaction against extra money has constrained those in government, especially hair-shirted leaders such as Gordon Brown.

Mr Brown’s justified his decision to freeze ministerial pay this year and reject proposals from the independent reviewer for a catch-up payment for MPs by emphasising “the importance of public sector pay restraint at a time of economic uncertainty”. Exactly the same happened under previous prime ministers, from Harold Wilson, via Margaret Thatcher, to Tony Blair (although Cherie was pretty hostile). Gestures matter, but Mr Brown has dodged the question of how we should pay our politicians. There is now general agreement that these decisions should be made by independent bodies, avoiding the annual or semi-annual rows about MPs approving their own pay.

Sir John Baker proposes a sensible mechanism to establish “a sound and enduring basis for MPs’ remuneration”, setting a new starting level and a formula for subsequent rises. He emphasises the “fundamental principle” that “if MPs are prepared to relinquish control over their salaries, then the Government also has to forgo any possibility of directly seeking to intervene in the process”. But ministers have intervened to reject the initial catch-up adjustment and the uprating formula.

Similar factors affected the party funding plans that the Government announced on Monday. Despite numerous reviews, there is not sufficient agreement to push ahead with caps on donations or additional state funding. Indeed, there is much acrimony between the parties about the breakdown of talks. These are matters for after the next general election.

Jack Straw’s main proposals are to strengthen the Electoral Commission (via more effective investigatory powers and a new range of sanctions), plus greater transparency on the source of donations and tightening the national campaign spending limit.

The most contentious proposal would control spending at a local level by reintroducing what is called the “trigger”. This provision, abandoned in 2000, regulates spending by local parliamentary candidates on electioneering. The Tories argue that this is partisan and discriminates against candidates in marginal seats, not least by favouring incumbent MPs, who receive a communications allowance. Mr Straw was also criticised by the Liberal Democrats and reformers for being too timid, although it is hard to see how he could have gone farther at present.

Any new system of financing politics will involve unpopular decisions, such as offsetting a cut in MPs’ allowances by higher pay. Instead, understandable but short-sighted economic constraints have put off longer-term solutions.

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