David Blunkett has emerged as a refreshingly blunt figure in recent weeks. After first admitting that Labour had to be careful to avoid bankruptcy after the election, he declared that it would be a "miracle" if Gordon Brown beat David Cameron (it would be, but senior MPs aren't meant to say this sort of thing).

Now he's revealed that Labour needs to raise £10m in just three months to give it a chance of competing with the Conservatives' £18m war chest. As I reported earlier this month, donations from the rich individuals who bankrolled election campaigns in the past have all but dried up, leaving the party increasingly dependent on the trade unions for money.

By contrast, in the 2005 election, Labour spent a record £17,939,617 -- £87,000 more than the Tories' £17,852,240. The Conservatives outspent Labour in 1997 and 2001, but only by about £2m. Data on election spending since 1910 suggests there has never been a funding gap this large between the two main parties (see graph below).

As I've argued before, Labour should run a John Major-style soapbox campaign in response to this disadvantage, resurrecting the effective slogan "Not flash, just Gordon".

In the longer term, however, there is now an indisputable case for state funding. The situation may not be as troubling as the US, where Michael Bloomberg spent $100m of his personal fortune to win a third term as mayor of New York, but it's still unsustainable.

It is unhealthy for Labour to be so dependent on a few big unions (Unite accounted for 25 per cent of all the party's donations in 2009), but it's also unacceptable for the Tories to rely on a figure as dubious as Lord Ashcroft.

Unfortunately, in the wake of the expenses scandal, almost no politician is willing or able to make an effective case for state funding.

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