Select Committee on European Scrutiny Second Report


COM(00) 898

Unofficial Presidency text of draft Council Regulation on the statute and financing of European political parties.

Legal base: Article 308 EC; unanimity
Department: Foreign and Commonwealth Office
Basis of consideration: Minister's letter of 15 October 2001
Previous Committee Report: HC 28-x (2000-01), paragraph 7 (28 March 2001) and HC 152-i (2001-02), paragraph 52 (18 July 2001)
To be discussed in Council: 29 October 2001 General Affairs Council
Committee's assessment: Politically important
Committee's decision: Cleared (decision reported 18 July 2001)


19.1 The European Court of Auditors, in Special Report No.13/2000 on expenditure by the European Parliament's political groups, was critical of current practices and called for measures to regulate the funding of these groups. We recommended the Report for debate in European Standing Committee B.[46]

19.2 Anticipating a proposal from the Commission, the Treaty of Nice amends Article 191 of the Treaty by the addition of a second paragraph to read:

    "The Council, acting in accordance with the procedure referred to in Article 251, shall lay down the regulations governing political parties at European level and in particular the rules regarding their funding".

19.3 At the time of the debate, on 29 January 2001, the European Commission had not adopted their draft of the proposal, although it was referred to in the debate. We considered it for the first time on 28 March and did not clear it, but asked the Government to inform us if it decided to challenge the legal base. The Minister responded in a letter dated 17 July, in which he also commented on a new unofficial Presidency text. We cleared that text on 18 July. The House of Lords European Union Committee has kept the document under scrutiny.

The Minister's letter

19.4 In a letter dated 15 October, the Minister for Europe at the Foreign and Commonwealth Office (Mr Peter Hain) sketches out the background to the proposal. He comments that there has been broad agreement among EU Member States that the measures called for by the Court of Auditors for the funding of the European political parties to be put on a sound and transparent basis should:

    "— allow any European political party or alliance of political parties to register a statute with the European Parliament, provided it intends to compete in European elections, and respects the fundamental principles of democracy and the rule of law;

    "— provide official EC funding for such European political parties, the bulk of which would be distributed in proportion to each party's representation in the EP;

    "— prohibit the transfer of those funds to national parties or to the corresponding political groups of the European Parliament; and ensure that the funds are subject to independent audit; and should

    "— ensure equal treatment of European political parties regardless of their position on European integration."

19.5 Since the debate on the proposal in European Standing Committee B on 29 January, the proposal has been amended in negotiations. It has been amended again since we cleared a text on 18 July. According to the Minister, the Presidency is aiming for political agreement on the latest text at the 29 October General Affairs Council. He says that its main provisions are:

    (i) Registration (Articles 1 and 2). Qualifications for the registration of a Statute by a European Political Party (EPP) or alliance of political parties are: being present in at least 3 Member States; participation or intended participation in EP elections; clear political objectives; and respect for the principles of freedom, democracy, human rights and fundamental freedoms, and the rule of law. The Statute shall also set out the bodies responsible for political and financial management and those holding the power of legal representation;

    (ii) Financing (Article 6). Eligibility depends on having elected representatives from the EP or national or regional Parliaments in at least 3 Member States or having received at least 5% of votes at the last EP elections in at least 3 Member States; full and transparent annual publication of finances; and prohibition of donations from EP Political Groups or state-owned companies. The Presidency intends to make donations from individuals, companies and unions subject to a ceiling (the level of which has not yet been agreed);

    (iii) Verification (Article 3). The EP will verify the qualifications set out in Article 2 if requested to do so by a quarter of its members from at least 3 Political Groups and after consultation with a Committee of Independent Persons (composed of 3 members nominated respectively by the EP, the Council and the Commission) and the party concerned;

    (iv) Expenses (Article 8). Funds can be used for administration, technical support, meetings, studies, information and publications. But the text prohibits their use for direct or indirect funding of national political parties or for campaigning;

    (v) Control (Articles 7 and 9). Money must be accounted for in accordance with the rules applicable to the general budget of the EC and the financial regulation on the basis of an annual certificate by an external and independent auditor to be transmitted to the EP and the European Court of Auditors;

    (vi) Distribution (Article 10). 15% of the financing will be divided between the eligible EPPs on a flat-rate basis, and 85% will be distributed in ratio to the number of their MEPs. The text states that Community funding cannot be more than 75% of the budget of an EPP; and

    (vii) Expiry (Article 13). The regulation will expire at the end of the second financial year after entry into force."

19.6 The Minister adds that the recitals, which are not in the latest draft, will make clear that there will be no discrimination against any EPP on grounds of its position on European integration. He emphasises that, as his predecessor, Mr Vaz, explained in earlier correspondence, the Government has three main objectives in the negotiations:

    "(1) to reform thoroughly the funding of European political parties, as recommended by the European Court of Auditors;

     (2) to prevent any EC funding for national political parties; and

     (3) to avoid any bias against EPPs on the basis of their views on European integration, either for or against."

The Minister says that he is confident that this text meets these objectives.


19.7 We note in particular the inclusion in this latest text of a new qualification for registration, that of being present in at least three Member States. In the draft we considered in March, access to funding would only be granted to those European political parties which have representatives in, or received at least 5% of the vote in the most recent European Parliament elections in, at least one third of the Member States. This hurdle has, therefore, been lowered.

19.8 We also note the Minister's assurances that he is confident that the text meets the Government's objectives, including that of avoiding bias against European political parties on the basis of their views on European integration. We understand that the recital covering this point is likely to follow closely the wording in the fourth bullet point in paragraph 19.4 above. We would prefer to have seen the text, but it is not yet available and we shall not withhold clearance as there will not be an opportunity for us to consider the proposal again before 29 October, when political agreement is expected to be reached on it.

19.9 We therefore now clear the document.

46  (21396) 9560/00; see HC 23-xxvii (1999-2000), paragraph 2 (25 October 2000) and HC 23-xxix (1999-2000), paragraph 1 (15 November 2000). See also Official Report, European Standing Committee B, 29 January 2001.  Back

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Prepared 2 November 2001