Appendix
LETTER FOR
THE ATTENTION
OF SIR
HAYDEN PHILLIPS,
CHAIR OF
THE REVIEW
ON PARTY
FINANCES
On behalf of the Labour Party I am writing to
welcome the review on the future funding of political parties
which you are to lead. The Labour Party welcomes this debate,
it is a debate that has been live in our Party for some time,
and is already the subject of an ongoing discussion in our Home
Affairs policy commission. Full proposals will go to our annual
conference in September 2006.
The Labour Party will of course be happy to
respond to you and your team in full on a number of detailed issues
over the coming months. However I thought it might be useful if
I were to set out to you how we see the context for this discussion,
and what we believe to be the key pillars of this debate as we
move forward.
CONTEXT
The Labour Party believes it is right that as
a country we continue to invest in our democracy, by supporting
strong links between citizens and their democracy. Commentators
often declare that political parties are moribund. The Labour
Party believes this belittles the essential role that parties
play in sustaining our political institutions, without which you
cannot have a healthy, participatory democracy.
As power is devolved at every level new institutions
are being created at a local, regional and European levels. These
institutions need relationships with politicians. There has to
be investment at all these levels to ensure healthy democracy.
It is important that the review respects the
membership and constitution of political parties. We believe for
example that all our affiliates—be they socialist societies,
trade unions, Constituency Labour Parties or the relationship
we have with the Co-op Party—must remain an integral part
of the Labour party.
KEY PILLARS
FOR THE
DEBATE
The Labour Party has identified eight key pillars
for future discussions on the funding of political parties. We
are not at this stage advocating policy solutions, we are however
setting out the key questions we and all political parties need
to consider:
1. IT IS
TIME TO
LOOK AT
GREATER INVESTMENT
IN OUR
DEMOCRACY
The Labour Party believes it is now time to
invest further in our democracy. The Review will want to examine
whether increased funding should be based on seats won at a national
and local level, or based on a simple tally of votes won. The
Labour Party will respond to this issue in full at a later date.
Greater investment in democracy would allow
political parties to recruit, retain and train members through
a number of measures:
— investing in the skills of citizens
so they can become active within their democracy as councillors,
MPs, JPs and members of the boards of public bodies.
— investment in the skills and
capacity within political parties so that staff and activists
are able to play full role in this kind of engagement.
— investing in policy development.
— investing in technology which
allows parties to communicate with voters and members.
There is already money provided to political
partiers by the state, covering some election costs, and including
money given directly to the political parties—"Short
money". Over the past three years, the Conservatives have
received nearly £14 million, the Liberal Democrats nearly
£6 million and the Labour Party £1.3 million.
All political parties need to renew themselves,
make policy, train members and fulfil their democratic duties.
Rightly, parties of government are precluded from using government
machinery to party political ends. Given this, the Review may
wish to consider whether all political parties with elected representatives
in Parliament, the Scottish Parliament, the Welsh Assembly, the
Northern Ireland Assembly and the European Parliament should receive
Short money. It is important that the review also examines the
case for thresholds so that state funding does not reach the tiny
minority of people who support extremists.
2. AN OVERALL
CAP ON
PARTY EXPENDITURE
The Labour Party agrees that we should consider
a cap on the expenditure of political parties. Given that all
political parties tailor their campaigns over a four year period,
not just a four week period, we believe it is vital that this
discussion looks at year-round expenditure by parties as well
as election time expenditure.
We also propose that we should examine expenditure
at a local level. The majority of activity by political parties
is carried out by volunteers, and we would not wish to see unnecessary
burdens placed on the volunteers who support political parties
at a local level. It is important that we protect the right of
our citizens to be politically active.
However we must also prevent parties from bypassing
new proposals by spending vast amounts outside of the period of
the short campaign and therefore outside of any election limits.
Media reports indicate that Lord Ashcroft financed a number of
local campaigns for the Conservative Party in this way in the
period running up to and during the 2005 general election.
3. A LOWER LIMIT
ON INDIVIDUAL
DONATIONS
The Labour Party believes there is a case to
examine a limit on individual donations, which should be applied
equally and not circumvented. The merits of such a limit will
need to be examined carefully. If there is to be such a limit,
it should be low enough to address any public concerns about individual
donations. However it is important to remember that many systems
with caps on individual funding still have significant problems
with public confidence, for example through the activities of
third party organisations, as exist in America with the so-called
527 groups.
It is important that the regulatory framework
enables the Electoral Commission to intervene when the Commission
has legitimate grounds for investigating—not after the event.
All loopholes need to be closed; we should not close some loopholes
simply to open others.
4. RESPECT FOR
THE INTERNAL
MEMBERSHIP STRUCTURES
OF POLITICAL
PARTIES
As has already been stressed, it is important
that the review respects the membership and constitution of political
parties. We believe that all our affiliates must remain an integral
part of the Labour party. Our link is one that is based on values,
not simply finances. However we totally reject the trivial assertion
from the Leader of the Opposition that the Labour-union link is
"one of the biggest problems in the party funding of this
country".
There is an important, material difference between,
say, donations from business and donations from affiliated organisations.
An affiliated organisation is different: business may give money
to any particular political party or parties, but they are not
a component element of the party, as an affiliated organisation
is. We believe our internal membership structures are open and
transparent and are happy to discuss this matter if raised with
the Review.
5. TRANSPARENCY
ON SPENDING
We believe that all political parties should
conduct their finances in a way that is transparent, sustainable
and fair. For this reason we believe it is vital that there is
a compulsory system to which all political parties must adhere.
Political parties should not be able to opt out of a transparent,
sustainable and fair system with greater investment from the state,
simply because they believe they may be able to raise a greater
sum outside of the recognised system.
6. FOUNDATION
FOR DEMOCRACY
To oversee a greater investment in democracy,
the Labour Party is examining the establishment of a Foundation
for Democracy. Through the Westminster Foundation for Democracy
we invest in political parties in the developing world to encourage
democracy, yet we do not offer such support to the democratic
institutions at home.
This foundation would be independent of the
political parties, but with representatives from the political
parties and independent people from civic society who have an
understanding of the political process and the political parties.
It would be responsible for managing core funding and project
funding to political parties.
7. CHARITABLE
STATUS
We believe it is right that we consider a greater
investment in our democracy as a nation. Furthermore, we believe
that political parties play a vital role in ensuring that democracy
is healthy, which we believe is good for society. We therefore
support the principle of political parties having charitable status.
8. DEVOLVED INSTITUTIONS
It is vital that any proposals consider the
impact upon the Parties contesting elections for devolved institutions,
the British membership of the European Parliament and local government.
As I stressed earlier in my letter, this should
be seen as the Labour Party's opening comments. This is a subject
that will be discussed with our members, supporters and the wider
community across the country over the coming months. We will also
be taking final proposals on this issue at our annual conference
in September.
To be clear, this letter sets out our initial
comments on the forthcoming debate, and has been agreed by my
NEC Officer colleagues. Over the coming months, as the debate
continues within our National Policy Forum and at our annual conference,
specific proposals will emerge. At such time I will of course
keep you informed of our discussions. I, along with Labour's General
Secretary, the Chair of our National Executive Committee and appropriate
NEC Officers, would be happy to meet and discuss any arising issues
with you at any stage.
March 2006
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