1 Financing of European
political parties
| (28763)
11559/07
COM(07) 364
| Draft Regulation amending Regulation (EC) No.2004/2003 on the regulations governing political parties at European level and the rules regarding their funding
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| Legal base | Article 191 EC; codecision; QMV
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| Document originated | 27 June 2007
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| Deposited in Parliament | 6 July 2007
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| Department | Foreign and Commonwealth Office
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| Basis of consideration | EM of 23 July 2007
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| Previous Committee Report | None; but see (24296) 6669/03 HC 63-xviii (2002-03), para 3 (9 April 2003), HC 63-xxvii (2002-03), para 4 (25 June 2003) and HC 63-xxxii (2002-03), para 28 (17 September 2003)
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| To be discussed in Council | No date set
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| Committee's assessment | Legally and politically important
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| Committee's decision | Not cleared; further information requested
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Background
1.1 A report of the Court of Auditors in 2000[1]
drew attention to weaknesses in the way in which the European
Parliament managed its finances, and recommended that new rules
should be adopted so as to stipulate clearly that the expenditure
of the political groups in the European Parliament must be connected
with the activities and policies of the European Union. Subsequently,
Article 191 EC was amended by the Treaty of Nice and provides
for the adoption by the Council, acting by codecision with the
European Parliament, of regulations governing political parties
at European level and rules regarding their funding.
1.2 Our predecessors considered the proposal which
became Regulation (EC) 2004/2003 in the course of 2003. Their
principal concern, which it shared with the Government, was that
the threshold for eligibility for funding of a political party
should not be set so high as to discriminate against smaller political
parties or alliances of parties. In the event, agreement on the
proposal was reached by qualified majority voting[2]
with a threshold requiring an eligible party to be represented
in at least one quarter of the Member States by Members of the
European Parliament, in national or regional parliaments and assemblies,
or that it should have received 3% of the votes cast in the most
recent European election in each of at least one quarter of the
Member States. Our predecessors noted the view of the then Minister
for Europe that this outcome was acceptable, and cleared the proposal
from scrutiny on 17 September 2003.
1.3 Regulation (EC) 2004/2003[3]
provides a framework for the European Parliament to provide funding
to eligible political parties at European level. Such funding
may only be used to meet expenditure directly linked to the objectives
set out in the party's political programme (Article 8) and the
funding may not be used for the direct or indirect funding of
other political parties, in particular national political parties
(Article 7). Article 12 requires the European Parliament to publish
a report not later than 15 February 2006 on the operation of the
Regulation. Such a report was adopted on 23 March 2006 and forms
the basis of the Commission's proposals for amendments to the
Regulation.
The proposed amendments to the Regulation
1.4 The Commission proposes amendments to the Regulation
to cover three main points. The first concerns the ability of
parties in receipt of funding to carry over surpluses into the
following year and to build up reserves. The relevant amendment
(to Article 9 of the Regulation) would allow a party to carry
over 25% of its income for that year into the next year, on condition
that the sum carried over would be used before the end of the
first quarter of the following year.
1.5 The second set of amendments would allow a party
to build up reserves and to accumulate such reserves equivalent
to 100% of a party's average annual income without losing the
entitlement to apply for funding.
1.6 Thirdly, the amendments would allow a "political
foundation at European level" to apply for funding through
a political a party at European level to which it is affiliated.
A "political foundation at European level" is defined
(in Article 2(4)) as an entity or network of entities, which has
a legal personality in a Member State, and is "affiliated
with a political party at European level " which through
its activities "underpins and complements" the objectives
of the political party. Such underpinning and complementing is
to be done by "observing, analysing and contributing to the
debate on European public policy issues and the process of European
integration", by organising and supporting seminars and studies
on such issues and by "serving as a framework for national
political foundations, academics, and other relevant actors to
work together at European level".
1.7 A new Article 4(6) provides that funding which
is allocated to a European political foundation "may only
be used for the purpose of financing the activities of the [foundation]
in accordance with the provisions of Article 2(4)".
The Government's view
1.8 In his Explanatory Memorandum of 23 July, the
Minister for Europe at the Foreign and Commonwealth Office (Mr
Jim Murphy) describes the three significant changes made by the
proposals as providing for new funding for political foundations,[4]
to allow funding for European parties to extend to financing campaigns
conducted at European level for European Parliamentary elections,
and to allow political parties to carry over 25% of their annual
income from one year to the first quarter of the following year,
and to accumulate reserves from their own resources of up to 100%
of their annual expenditure[5]
without losing future EU funding.
1.9 The Minister states that the Government supports
the proposals as a "sensible way to strengthen the original
proposal and increase transparency in the funding of European
Political Parties". In relation to political foundations,
the Minister comments that such foundations already play a useful
role in many Member States, and refers to the Konrad Adenauer
Stiftung in Germany as an example. The Minister adds that "fostering
political foundations' activity at EU level could help promote
debate on longer-term EU reform issues and offer a useful vehicle
for the UK's vision of reformed EU".
1.10 The Minister states that the Government supports
the proposition that EU funding should be extended to financing
campaigns conducted at EU level by European political parties
for European Parliamentary elections as it believes that this
will increase turnout in EP elections. The Minister explains that,
whilst allowing European political parties to carry over funding
"would require a derogation from normal EU spending rules",
this is acceptable to the Government in this case as it "reflects
the peaks and troughs of spending experienced by political parties"
and would also stop unnecessary spending towards the end of a
financial year, as parties would be able to carry over any surplus
without losing future EU funding.
Conclusion
1.11 Measures to increase the transparency in
which European political parties are funded are plainly to be
welcomed, and the present proposals appear to further this objective.
1.12 Nevertheless, we have a number of concerns
of detail in relation to the proposal that 'political foundations'
should be eligible for EU funding.
1.13 The first concerns the legal base of the
proposal. In our view, Article 191 EC authorises the Council to
make rules regarding the funding of political parties at European
level, but not the funding of 'political foundations' which have
separate legal identities and are merely linked to such parties.
Neither, in our view, does the provision authorise the making
of rules permitting any charge on the Budget to meet the expenses
of such bodies. We ask the Minister to consider this issue and
to inform us of the Government's view.
1.14 Secondly, Article 2(4) defines a 'political
foundation' as performing, in particular, the task of "observing,
analysing and contributing to the debate on European public policy
issues and the process of European integration". A European
political party is not defined in Regulation (EC) No 2004/2003
by reference to "the process of European integration",
and we are concerned that this definition could be used to deny
funding to a political foundation which does not support deeper
European integration. It seems to us that the funding regime must
ensure a plurality of views, and we ask the Minister for his comments.
1.15 We shall hold the document under scrutiny
pending the Minister's reply.
1 Special Report 13/2000. Back
2
Denmark, Italy and Austria voted against the text, because they
wished the threshold to be set at three Member States, rather
than one-quarter of all Member States. Back
3
OJ No. L 297, 15.11.03, p.1. Back
4
The Minister estimates that such funding is likely to amount to
around €5 million per year. Back
5
The draft Regulation in fact refers to "100% of the average
annual income", rather than expenditure. Back
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