Evidence submitted by The Electoral Commission
INTRODUCTION
1. The Electoral Commission is an independent
body set up by Parliament. The Commission aims to promote integrity,
involvement and effectiveness in the democratic process.
2. The Commission welcomes the opportunity
to contribute to the Constitutional Affairs Committee inquiry
into the funding of political parties. We believe that there is
a clear need to examine the operation of the current system and
to consider the desirability and practicability of any possible
reforms. The Commission believes that political parties are essential
to the functioning of a sustainable, representative democracy.
In order to carry out effectively their democratic functions,
political parties require appropriate funding. However, public
confidence in the integrity of the democratic process has clearly
been damaged by recent events surrounding loans to political parties
and needs to be bolstered. The Constitutional Affairs Committee's
decision to initiate a review into party funding is therefore
a timely one.
3. The Commission's chairman, Sam Younger,
is due to give oral evidence to the Constitutional Affairs Committee
on 16 May 2006 and will provide detailed evidence in relation
to the review's terms of reference at that session. This brief
statement focuses on the broad issues raised by the review's terms
of reference.
COMMISSION WORK
ON PARTY
FUNDING
4. The Commission published a report on
the funding of political parties in December 2004 and hopes that
the Constitutional Affairs Committee will find this useful in
informing the evidence gathering stage of its review. A copy of
the report is enclosed for information.
5. The Commission is currently developing
a statement of the principles it believes should underpin any
future arrangements for funding political parties. These will
be published in early May. We do not, however, intend to make
any further detailed recommendations for specific changes to the
law in this area.
6. The Commission has also been pressing
for a revised penalty regime linked to the regulation of political
party funding. To take this work a stage further, we will begin
a new review of the operation of the regulatory framework set
out in the Political Parties, Elections and Referendums Act 2000
(PPERA) later this month. This review will look at the powers
available to the Commission to police the regulatory framework
and the penalty regime provided by PPERA. As part of this project,
we expect to organise a conference in the autumn focusing on comparative
regulatory regimes in various democracies around the world.
7. We also intend to undertake work to engage
the public in debates on party funding, including some quantitative
and qualitative research focusing on public views about party
funding, to explore further the issues identified in the Commission's
earlier research in this area. This programme of public engagement
and research will commence in May 2006.
GENERAL COMMENTS
ON TERMS
OF REFERENCE
8. The Committee invited comments on the
proposed terms of reference for its inquiry. We note that the
Government has also asked Sir Hayden Phillips to undertake a review
of the funding of political parties and that he will be reporting
his findings by the end of December 2006. The Commission welcomes
both reviews, and we hope that they will (as far as possible)
complement one another. However, there is an inevitable risk that
the reviews will reach different conclusions.
9. The Commission agrees that the inquiry
should include within its terms of reference the workability of
the current system and the question of whether reforms are needed.
We also note the Committee's intention to examine the issue of
donation caps. Clearly, any cap on donations would have a significant
impact on the funding of parties and would raise questions about
campaign spending limits and the acceptability of compensating
parties with public money. Further, it would provoke debate about
the rights of people to spend their money as they choose, and
about the independence of parties from the state. The Commission
would urge the Committee to consider these issues carefully during
the course of its inquiry.
10. We are pleased that the Committee plans
to examine whether further safeguards are necessary to ensure
transparency and propriety in party funding. The disclosure provisions
introduced by the Political Parties, Elections and Referendums
Act 2000 have undoubtedly contributed to greater transparency
in party finances. However, the recent debates around loans to
political parties have highlighted the importance of examining
afresh what constitutes a suitable level of transparency, with
a view to enhancing public confidence. The Commission has already
called for parties to declare full details of all loans, on the
same basis as donations. We understand that the Government intends
to amend the Electoral Administration Bill to make it compulsory
for political parties to declare any loans they receive. While
welcoming this commitment, the Commission believes that it is
necessary to examine in broader terms the current regulatory framework.
11. We note that the proposed terms of reference
include consideration of possible alternative funding methods.
We hope that this will include consideration of whether any extension
of state funding is desirable as well as the form such an extension
might take. An examination of alternative funding methods will
need to consider eligibility criteria and allocation rules, the
uses to which any state funding should be put and the extent to
which they might foster public confidence and participation in
the democratic process. The Commission believes that any system
for the funding of political parties should be fully open to public
scrutiny, simple and practicable in terms of implementation. Whatever
solution is arrived at must also work for all parties (including
those operating primarily or exclusively in Scotland, Wales and
Northern Ireland) and not just in favour of established ones,
in the interests of an effective and vibrant democracy. We will
expand on these issues in our statement of principles planned
for publication next month, and in the Chairman's oral evidence
to the Committee.
CONCLUSION
12. The Commission looks forward to making
a positive contribution to the Constitutional Affairs Committee
inquiry and awaits its conclusions with interest.
The Electoral Commission
March 2006
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