Political party finance |
1. On 22 November 2011 the Committee on Standards
in Public Life (CSPL) published its report on Political party
finance, the latest contribution to a debate which has been
underway since the 1990s.
2. On 15 December we met informally with the CSPL
to discuss the report, its reception and possible next steps on
party political finance.
3. Following demand during the 1990s for greater
transparency in the funding of political parties, legislation
was introduced requiring political parties to record donations
and limit their spending.
In May 2006, the Government launched a Review of the Funding
of Political Parties, to develop proposals for reform of political
party finance, chaired by Sir Hayden Phillips, a former civil
servant. Talks between the three main parties followed the publication
in March 2007 of the Phillips report,
but were suspended without agreement in October 2007.
4. There is evidence that the public continue to
lack confidence in the integrity of the current arrangements for
party political funding.
The CSPL itself describes these as "clearly corruptible".
The main parties agree that there are concerns to be addressed,
and before the 2010 General Election they all signalled their
commitment to tackle the issue of political party finance. The
Conservative Manifesto stated that the party would seek a comprehensive
package of reform that would encourage individual donations and
include an "across the- board cap on donations". The
Liberal Democrat Manifesto set out the party's wish to "Get
big money out of politics" by capping donations at £10,000
and limiting spending throughout the electoral cycle.
The Labour Party Manifesto suggested that reopened discussions
on party funding reform should take Hayden Phillips' proposals
as a starting point and proceed "with a clear understanding
that any changes should only be made on the basis of cross-party
agreement and widespread public support."
The Government's commitment to the issue was underlined in the
Coalition Agreement of May 2010, which stated:
We will also pursue a detailed agreement on limiting
donations and reforming party funding in order to remove big money
5. The Deputy Prime Minister, the Rt Hon Nick Clegg
MP expanded on this commitment during the debate on the Queen's
The influence of big money runs much deeper. It is
time to finish what was started three years ago in the cross-party
talks on party funding. Every party has had its own problems,
we all now have an opportunity to draw a line under them, so we
will seize that opportunity. We will pursue a detailed agreement
on limiting donations and reforming party funding to remove big
money from politics for good.
The CSPL report
6. In July 2010, the CSPL launched its inquiry into
Political party finance. The Government welcomed the inquiry
and promised to consider the CSPL's conclusions before taking
forward its commitment.
7. However, on 15 November 2011, Nick Clegg, pre-empted
the publication of the CSPL report, telling the House that it
would not be right to ask "hard-pressed taxpayers" to
pay more to political parties at a time when they were already
coping with difficult economic conditions.
This intervention undermined the reception of the report, published
one week later.
8. The four main recommendations in the CSPL report
A limit of £10,000 should be placed on donations
from any individual or organisation in any year to any political
party with two or more elected representatives in Westminster
or in any of the devolved legislatures.
The cap should apply to donations from all individuals
and organisations, including trade unions. But it would be possible
to regard trade union affiliation fees as a collection of individual
payments, to which the cap applied individually, by requiring
the individuals on whose behalf the payments are made to opt in
to the fee. It would also be necessary to meet certain other conditions
to ensure that undue influence cannot be exerted.
The existing limits on campaign spending in the period
before an election should be cut by the order of 15 per cent.
Existing public support to the political parties
should be supplemented by the addition of a new form of public
support paid to every party with two or more representatives in
the Westminster Parliament or the devolved legislatures. The public
funding should depend on the number of votes secured in the previous
election, at the rate of around £3.00 a vote in Westminster
elections and £1.50 a vote in devolved and European elections.
Income tax relief, analogous to Gift Aid, should also be available
on donations of up to £1,000 and on membership fees to political
The Rt Hon Margaret Beckett MP and Oliver Heald MP
dissented from some of the recommendations in the report, and
set out their reasons for doing so in an appendix to it.
9. The CSPL presents its recommendations as a package,
rather than a menu from which items can be selected. Thus the
provision of state funding to political parties is the "uncomfortable"
but necessary consequence of implementing a cap on donations of
10. The Government repeated its rejection of the
principle of additional public support for political parties in
a Written Ministerial Statement issued on 23 November:
The Government believe that the case cannot be made
for greater state funding of political parties at a time when
budgets are being squeezed and economic recovery remains the highest
priority. Reform remains a priority and is best achieved as far
as possible by consensus. To that end we plan to continue cross-party
discussions based on the principles identified by the Committee
and the Government's reform commitments.
11. The Government's rejection of public support
for political parties was echoed by representatives of the three
main parties and
much of the press. Yet the CSPL notes that the main political
parties already receive public funding of around £7 million
a year (in the form of Short Money, Cranborne Money and Policy
as well as significant benefits in kind (including party political
broadcasts and free postage).
12. The cost of the CSPL's proposed additional support
could amount in total to a further £23 million per year.
This is, as they note, "not trivial". But at around
£1 per year per income tax payer or 50 pence per elector,
neither would it be a substantial burden. As it has been put to
us, it amounts to little more than the cost of a telephone vote
for an act on the television programme 'X-Factor'.
13. In these times of economic difficulty, the issue
of party political funding may not be at the forefront of most
voters' minds. But the suspicion that donors are able to exert
improper influence or receive favours in return for their contributions
to political parties continues to taint the public view of party
politics. The CSPL report is an opportunity to reach a cross-party
consensus on a solution to this vexed issue.
14. We are not in a position to comment on the particular
merits of the package of recommendations proposed by the CSPL,
given the differences of view which exist on our own Committee.
However we note that the report on which the recommendations are
based is thoroughly researched, balanced and thoughtful. Its recommendations
can only be treated as a package; any cherry picking of recommendations
risks being seen as partisan. It is clear to us that the CSPL
has striven to ensure that the impact of its recommendations taken
as a package would be reasonably even-handed between the two main
Government and political parties should consider the CSPL report
seriously as a basis for future negotiations.
party should be perceived as having gained disproportionately
from reform in this area. A solution perceived as partisan would
undermine any positive impact on public opinion which would otherwise
be achieved by resolving the issue.
cross-party solution will not be easy to achieve. But public confidence
in politics risks being further undermined if some future scandal
intervenes before a solution is in place. The Government and political
parties must seize the opportunity presented by the CSPL to find
such a solution. The Government has a particular duty to pursue
an agreement, and should set out how it intends to take this commitment
forward before the summer.
1 The main provisions of the Political Parties, Elections
and Referendums Act 2000 were: registration of parties, so that
parties had to supply details of income and expenditure; disclosure
of donations made to national parties, individual candidates and
campaigning groups associated with parties; national expenditure
limits, supplementing constituency limits in force since the 19th
century; and, the creation of an Electoral Commission, partly
to oversee the new rules, but without powers of prosecution. Back
Sir Hayden Phillips, Strengthening Democracy: fair and sustainable
funding for political parties, March 2007 Back
Committee on Standards in Public Life, Political party finance:
ending the big donor culture, Cm 8208, November 2011, p22 Back
As above, p8 Back
The Conservative Manifesto 2010, p66 Back
Liberal Democrat Manifesto 2010, p89 Back
The Labour Party Manifesto 2010, p9:4 Back
The Coalition: our programme for government, May 2010,
HC Deb 7 June 2010 c42 Back
For example HC Deb 11 October 2011 c341W Back
HC Deb 15 November 2011 c683 Back
Political party finance, Thirteenth report of the Committee
on Standards in Public Life, CM8208, November 2011, p8-9 Back
HC Deb 23 November 2011 c25WS-26WS Back
The Conservative party co-chairman Baroness Warsi said: "the
public will simply not accept a plan to hand over almost £100m
of taxpayers' money to politicians"('Reform party funding
or politics will sink in sleaze, says watchdog', The Independent,
23 November 2011); the Liberal Democrat president, Tim Farron
MP, said: "While it is clear now is not the time for more
public money to be spent on politicians, that shouldn't stop us
taking immediate action to reform political funding"('Political
parties 'should get more taxpayer funding'', BBC News online,
22 November 2011); and Michael Dugher MP, Labour's Shadow Cabinet
Office Minister, said: "In the current economic environment,
we recognise that a significant increase in state funding for
political parties is not a priority and any such measure would
need to command broad public support" ('Labour: Tories wouldn't
accept party funding cap', Politics.co.uk, 22 November
In 2010-11 £6.3 million of Short Money was allocated to the
six eligible parties (the Labour Party, the Democratic Unionist
Party (DUP), the Green Party, Plaid Cymru, the Social Democratic
and Labour Party (SDLP) and the Scottish Nationalist Party (SNP)),
£587,000 was allocated in Cranborne Money - the equivalent
of Short Money in the House of Lords - including to crossbench
peers, and £2 million was allocated in Policy Development
Grants to all the main political parties. Back
Political party finance, p35-37 Back