Let us be absolutely frank about the origins of this crisis.

From 1994 onwards, people in the Labour Party have sought to move away from our traditional reliance on money from our members and from trade unions (money that is clean, democratic and public) to money from wealthy individuals (money that is too often dodgy, questionable - at best - and secretive).  The reason for this move has been political and ideological.  Part of the New Labour project was always to break the link with the unions, and the Blair team felt that replacing a reliance on union funding with a reliance on private funding was the future.  Becoming a party that, like the Tories, was funded by wealthy individuals, would help it distance itself from its past and its position at the heart of the labour movement, into being a new, one-nation party, friend of big business and capital. 

This caused problems for us from the outset.  Remember Bernie Ecclestone?  But in Blair's early period the memory of Tory sleaze and the Teflon Tony phenomena meant that the mud didn't stick.  It is only in the context of policy errors and disasters that this fundamental ideological funding error has begun to prove disastrous for us as a party.

As confidence and trust in the government was shaken by a series of events - Iraq and the weapons of mass destruction; the breaking of manifesto pledges (just how had we "legislated to prevent" top-up fees?); an increasing number of blunders and competence questions - the spotlight was thrown on funding and first the cash for peerages, and now the dodgy donations scandal have left the Labour government we have spent our lives working for in very serious danger.

Even if it were to be shown that people acted in good faith in this business, and nobody knowingly broke the law (something which it is actually quite hard to believe) it is the culture at the centre of the party which needs to be revolutionised if we are to prevent this sort of thing from ever happening again.

There needed to be a much more fundamental change at the end of the Blair era.  As such it was an historic mistake - one which the PLP must bear responsibility for - to avoid a leadership contest and facilitate the much-yearned-for 'dignified handover' - a process which signalled to people inside and outside the party: 'business as usual'.  That's in the past and cannot now be put right, but there are things that can be done:

A cap on spending at elections is essential.
A very low cap on individuals' donations should be examined very seriously as well.

Jon Mendelson and anybody else associated with this big money culture needs to go. 

Any undeclared issues about funding must come out now, and not be allowed to drip out over the coming weeks.  There does not have to be a general election until 2010; this situation CAN be recovered, but it is not going to be easy, and there may have to be more bloodletting before we can start the rebuilding.

As for the rebuilding - this can't just be on party funding issues.  Brown has got to put a stronger and more diverse team around him: if he continues to be the only dominant figure in government then he risks bringing the whole government down every time he opens his mouth.  We have a much greater reservoir of talent on the Labour benches than the Tories or the Liberals have, but we are currently using it very ill.  A major reshuffle is required.

We can't afford too many more weeks like the last few.