Regulating European Political Parties

The Committee consisted of the following Members:

Chair: Mr Dai Havard 

Brine, Steve (Winchester) (Con) 

Elliott, Julie (Sunderland Central) (Lab) 

Ellwood, Mr Tobias (Bournemouth East) (Con) 

Gapes, Mike (Ilford South) (Lab/Co-op) 

Hilling, Julie (Bolton West) (Lab) 

Horwood, Martin (Cheltenham) (LD) 

Kelly, Chris (Dudley South) (Con) 

Knight, Mr Greg (Vice-Chamberlain of Her Majesty's Household)  

Lidington, Mr David (Minister for Europe)  

Reynolds, Emma (Wolverhampton North East) (Lab) 

Shannon, Jim (Strangford) (DUP) 

Stewart, Rory (Penrith and The Border) (Con) 

Stringer, Graham (Blackley and Broughton) (Lab) 

Alison Groves, Committee Clerk

† attended the Committee

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European Committee B 

Wednesday 6 February 2013  

[Mr Dai Havard in the Chair] 

Regulating European Political Parties

2.30 pm 

The Chair:  Does a Member of the European Scrutiny Committee wish to make a brief explanatory statement about the decision to refer? 

Julie Elliott (Sunderland Central) (Lab):  Although under the current EU regulation there are already conditions placed on European political parties’ eligibility for funding from the general EU budget, the satisfaction of those conditions under the new proposals will lead to the awarding of a pan-European legal status for the parties concerned. It is the acquisition and maintenance of that status that mostly determines the eligibility for funding. Without that status no EU funding would be available. 

To acquire European legal status, article 3 of the draft regulation requires a party to have its seat in a member state and either be represented in at least one quarter of member states by Members of the European Parliament or Members of national Parliaments, regional Parliaments or regional assemblies; or have received in at least one quarter of the member states at least 3% of the votes cast in each of those member states at the most recent elections to the European Parliament. 

Parties must observe the values on which the European Union is founded, namely respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights. They must have participated in elections to the European Parliament or have expressed publicly the intention to participate in the next elections, and they must not pursue profit goals. Additionally, a European political party, having acquired European legal status upon registration with the European Parliament, can only then be eligible for EU funding 

“if represented in the European Parliament by at least one of its members” 

That is in article 12 of the draft regulation. 

The proposed change from the current system of grant-based funding to a contributions system, initially set out in the Commission’s working document but now the subject of a proposed regulation, are to be achieved by way of amendment to the financial regulation. The proposals, however, do not involve any change to the overall amounts made available under the EU budget for the funding of European political parties and foundations, which in the current year amounted to just over €31 million for 13 political parties. 

In the explanatory memorandum the Government say that although they intend to review the individual proposals in greater depth, particularly the extension to European parties of the tax relief on donations enjoyed by domestic political parties, they recognise the legitimacy and possible benefits of EU-level action and have limited subsidiarity concerns. However, the Government are unconvinced that awarding European legal status will enhance the role of European political parties at EU

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level. They are concerned that preconditions for European legal status, for example observance of EU values and penalty provisions, should not restrict fundamental rights to freedom of political association and expression, as protected by the charter of fundamental rights. 

With regard to the funding proposals, the Government recognise the benefits of a more flexible system of funding and the EU’s exclusive competence in budgetary matters, but are wary of any loss of accountability, financial propriety or transparency in the activities of parties. The European Scrutiny Committee recommended that the proposals be debated in the European Committee because of their potential impact on representative democracy in Europe and also the potential implications for national competences on taxation and taxation relief. 

The Chair:  Thank you. That has helped provide the scope of the discussion today. I now call the Minister to make the opening statement. 

2.34 pm 

The Minister for Europe (Mr David Lidington):  It is a pleasure to serve under your chairmanship, Mr Havard As the hon. Member for Sunderland Central has already pointed out, we are discussing two proposals concerning European political parties, both of which were tabled by the Commission in September. 

I should say at the start that there is still a great deal of discussion and questioning going on among different member states, not just the United Kingdom, about both the substance of what is proposed and some possible ambiguities in the language. It is possible that these instruments will be further amended, and Parliament may have to consider them again. Certainly, at the appropriate stage, the final text will of course be submitted to the European Scrutiny Committee so that due process is be observed. 

The proposals consist, first, of a regulation on the statute and funding of European political parties and European political foundations under article 224 of the treaty on the functioning of the European Union. Secondly, there is a proposal for a regulation to amend the EU financial regulation under article 322 of the TFEU by introducing a new title on the financing of European political parties. 

As the Committee will know, European political parties already exist. Broadly speaking, they are alliances of political parties within member states, usually based on the alliances of parties that exist in the European Parliament, but in recent years those alliances have often enlarged their membership to include political parties from candidate countries and other countries in Europe that are not yet in the EU. 

The Commission’s proposals would establish a new European legal status specifically tailored for European-level political parties and foundations. The Commission outlines eligibility criteria, registration procedures, a procedure for checking ongoing eligibility and a penalty regime associated with the new status. A party could suffer those penalties if it failed to comply with the rules laid down. Obtaining the new European legal status would in future be a prerequisite for access to EU funding, whereas at the moment the transnational parties are registered in one or other of the member states and subject to the laws of that member state. 

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The Commission is also seeking to change the funding regime for European political parties, in both the draft regulation and the proposed amendment to the financial regulation. Proposals include a change in the funding mechanism from a contribution-based to a grant-based system, with all that that entails, and further changes to, for example, the co-financing rate and the ceiling on donations from individuals and other legal persons. 

In its report of 7 November 2012, the European Scrutiny Committee notes that the proposals form part of a broader emerging narrative from the EU institutions about how to enhance the democratic legitimacy of the EU. In President Barroso’s state of the union address last September, he spoke about the European public debate and how the voices of EU citizens could be better heard and represented. The Commission argues that the proposals that we are discussing this afternoon would help to enhance the role and visibility of European political parties and develop what it describes as a “pan-European political space” to facilitate public debate and counteract criticisms that EU decisions and institutions lack democratic legitimacy. 

I agree with the diagnosis that there is a problem of democratic legitimacy in the EU. I must say that I am sceptical as to whether these proposals will be the right means to address that democratic deficit, but to discuss that would take us on to a much broader debate than is possible today, about how to encourage democratic engagement and accountability. EU citizens are, and will continue to be, most closely connected to their national political parties and Parliaments, which they see as their primary representatives. As the Prime Minister said recently, enhancing the role of national Parliaments in an European context is the most effective means by which to address the EU’s democratic deficit. We will want to pursue such issues in the forthcoming negotiations, because some challenges are worth making to the Commission’s rationale for introducing these proposals, on its own terms. 

Let me say a few words about the detail of the regulations before us, although the hon. Member for Sunderland Central sketched the key contents of these two measures. The United Kingdom Government attach great importance to the independence of political parties and the right of citizens to associate freely in political organisations. It is with that approach that the Government have engaged in negotiations and discussions so far. Members of the Committee are aware that our own domestic procedures on the registration of political parties are deliberately light-touch, and therefore help to encourage the establishment of political alliances. The registration procedure outlined in the Commission’s proposals seems pretty burdensome by contrast. 

Within the UK, the Electoral Commission acts as an independent organisation. It makes administrative judgments on the registration of political parties. In the Commission’s proposals, that role is given to the European Parliament. I question the legitimacy and fairness of giving the power to take that kind of administrative decision to what is obviously a party political body. 

Graham Stringer (Blackley and Broughton) (Lab):  Is it possible to intervene at this stage? 

The Chair:  Not at this stage, no. After the initial statement there will be a period for questions. 

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Mr Lidington:  Domestic political parties here in the UK receive very limited funding from the public purse. European political parties, on the other hand, already receive considerable funding from the EU budget. The Commission’s proposal to increase the co-financing rate would see a further rise in the proportion of those parties’ income that comes from that source. I appreciate that a clear parallel cannot always be drawn between political parties at the European and the national level, and that they are different entities, but considering these proposals through the prism of our domestic arrangements and the UK’s general approach to political freedom helps to sharpen some of the questions that need to be posed. 

It is important that any proposal to regulate European political parties avoids stifling the creation of new political movements arising in response to genuine public feeling. We believe that European political parties have an important role to fulfil in facilitating co-operation and co-ordination at European level between domestic political parties. Citizens of the European Union and the political parties of the member states should not have to overcome unnecessary bureaucratic hurdles if they want to form a political alliance. Similarly, they should not have to worry about political decisions being taken over their eligibility, or about political decisions governing whether they have met registration requirements. 

It would be wrong if political parties at European level were always operating under the threat of revocation of their status on the back of a political—possibly very partisan—decision. It is not clear from the Commission’s proposals whether this is a real threat, and in fairness I should say that the public statements by the president of the Commission—and by the Commission collectively—have stated plainly that that would not be their intention. However, we should still challenge the proposals as currently drafted, given that an administrative role would be carried out by a political body. 

We should also encourage European political parties to look for independent sources of funding, just as we do domestic political parties. That will actually serve the aim of enhancing their independence and fostering a pan-European base in the way that transnational alliances are designed to achieve. That is important if we are to ensure that the proposals do not lead to an increase in funding from the European Parliament’s budget, and consequently further pressures on the EU’s budget as a whole. 

So far the discussions within Council working groups have centred around the questions that many member states have about the proposals, including, but by no means only, the United Kingdom. Some of those questions are on issues that I have raised today, and we will push for them to be answered during the course of negotiations before any agreement can be reached. 

It is important, not just for Governments but for political parties of left, right and centre throughout the European Union, that when we get to a final text we all have clarity on the exact consequences that flow from such an agreement for political organisations at European level. I am grateful for the opportunity to debate the proposals with the Committee, and I look forward to hearing hon. Members’ views. 

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The Chair:  Thank you very much. Two things before we start. We may be interrupted by a Division, although we are not yet certain whether that will happen. If it does, we will have to suspend for 15 minutes. 

Now we have a period for questions. It is at my discretion, and I am here to try to facilitate you. I will take a series of questions from the Labour Front-Bench team first of all. My intention is to take a few questions from them, and then to take questions in pairs so that the Minister can respond. We will see how we go. 

Emma Reynolds (Wolverhampton North East) (Lab):  It is a great pleasure to serve under your chairmanship, Mr Havard. I would like to ask the Minister about the criteria for registering European political parties. Do the Government believe that those criteria are strict enough? Does the Minister think that it is sufficient for pan-European parties to have representation at local, national or European level in only a quarter of member states? Given that there are 27—soon to be 28—member states of the European Union, a quarter seems to be a fairly low threshold. 

Mr Lidington:  Given the growth in the European Union through the welcome and continuing project of EU enlargement, I think that that is a reasonable proportion. The larger the European Union gets, the more diverse the range of countries represented around the table and the more diverse the political traditions represented at European level. I do not think it is unreasonable for parties from seven out of the 27 or 28 countries to be required in order to form an allowance. 

Emma Reynolds:  Libertas Party Ltd received €202,823 in 2009. Despite fielding 600 candidates in several different member states, it gained only one MEP in the 2009. Is the threshold really sufficient if a party that has only one MEP is granted money? 

Mr Lidington:  It is difficult to comment on the detail of an individual case. The grant to Libertas was made by the Bureau of the European Parliament, which brings together the senior office holders in that institution from the various political families. They will have listened to the evidence and studied the report from Libertas saying what it wanted the money spent on before they took their decision. 

One of the upsides of the proposed arrangements is that money would be linked more directly to representation in the European Parliament. The pot of available money would be split between all European political parties that were deemed eligible. All eligible parties would be awarded an equal share of 15% of the money, but 85% of the pot would be distributed in proportion to each European party’s share of elected Members of the European Parliament. The greater the representation in the European Parliament, therefore, the greater would be the share of any money available. 

Emma Reynolds:  I am sympathetic to the Minister’s concern that decisions about registration should be taken in the most objective manner possible. Can I therefore assume that the Government are building

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alliances on the matter? Which other member states are of like mind? What are the chances of changing that aspect of the proposals? 

Mr Lidington:  It is still early days. At the moment, the discussion in Council working groups has been interrogative, and we have not crystallised alliances. We are now at the stage of waiting for the Commission to come back and either suggest changes or provide answers to the questions that have been posed. It would be wrong for me at this stage, while discussions are taking place in working groups and not in public, to name other countries. A large number of countries have expressed some disquiet about different aspects of this proposal, including elements that I did not have time to mention in my opening remarks, such as article 16 on taxation and the broader question of how the rules for transnational parties relate to each country’s rules governing the registration and permissible funding of their own political parties. My key answer to the hon. Lady is, yes, we are aware of the need to seek alliances, and we shall be actively doing so. 

Graham Stringer:  Beneath all the high-falutin’, bizarre European language, such as “pan-European political space”, which I defy the Minister to define—I am surprised he is not ashamed of using language like that—the basic purpose of the change in regulation is, as I understand it, to ban the British National party and other fascist parties. I have two concerns about that, and I would like the Minister to share his views with the Committee. First, is it not wrong for a group of political parties in the European Parliament to ban another political party, however unpleasant and undesirable it is? Secondly, in supporting the regulation, or trying to amend it, is the Minister not agreeing to things in the European Union and the European Parliament about which he would not try to legislate in this country? 

Mr Lidington:  I will make a few points in response to the hon. Gentleman. First, European political parties and governance arrangements already exist. We are talking about proposals that the Commission is entitled to bring forward under the treaties to alter arrangements that are already in existence. Secondly, that treaty base means that the decision will be made by qualified majority voting. As a single member state we do not have an automatic right block a text about which others agree. 

I will move on to the substance of the hon. Gentleman’s comments. The proposal is, in part, a further effort of a sort that I am used to seeing from the Commission and the European Parliament in their attempt to create—to borrow an ancient Greek term—a European demos, a sense of pan-European political identity. I happen to think that even if one believes that such an objective is desirable and obtainable, and I am somewhat sceptical of that, the proposal will not set the world alight and transform the attitudes of citizens. 

On the BNP point, yes, that motivation lies clearly behind the measure. There are proposals in the European Parliament, as I am sure the hon. Gentleman knows, to try to exclude the BNP and related parties from access to funds under the current arrangements. The specific requirement that for parties to get EU money—money from EU taxpayers—they must subscribe to European values, as defined in article 2 of the treaty on the

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functioning of the European Union, is already in the current arrangements, and is recapitulated in the proposed new system. 

My view is that many more questions need to be asked. What criteria will determine which parties are beyond the pale, and at what point does a party go beyond the pale? Those questions are to be asked in respect of parties of the far left as well as of the far right. I am uneasy about the proposal, particularly when the decision is given to an overtly political body. My long-standing view has been that the best way to defeat odious movements such as the BNP, Golden Dawn or Jobbik is to expose them for what they are, take them on in principled debate and defeat them in elections. 

Martin Horwood (Cheltenham) (LD):  I am happy to speak from what I suppose I should call the European Liberal Democrat and Reform Benches, and say that since we have 75 member parties and 11 EU member states where we are in Government, I would be quite relaxed about a higher threshold than 25%, although I think that might cause some problems for our Conservative colleagues. 

I want to ask about the Minister’s assertion that the best way to enhance European political participation is to enhance the process of scrutiny of European legislation and issues in this place. When were today’s documents presented to the UK Government for consideration, and how long has it therefore taken for them to reach this Committee? 

As a supplementary but related question, how is the process that the Minister announced last January of examining the scrutiny of European legislation and documents in this Parliament progressing? Many of us made submissions and recommendations, including the recommendation that Select Committees routinely and automatically consider European legislation and documents that are relevant to their brief, rather than having everything going through the filter of the European Scrutiny Committee. That process seems to be taking an awfully long time—it might be unkind to say that it is stalling—and it would be nice to know how things are progressing on that. 

The Chair:  Before you answer, Mr Lidington, Mr Horwood has made his comments and they are on the record, but can you perhaps bring us back to the narrower substance of what we are discussing today? 

Mr Lidington:  To reply to the question that my hon. Friend asked about dates, I am looking at the history printed at the front of the European Scrutiny Committee’s reports. It is slightly different for the two documents, but the draft regulation originated on 14 and 17 September 2012, and was deposited in Parliament on 18 and 21 September 2012. Expansion memorandums were deposited in October. The Committee reported on 7 November 2012, so actually, given the pressures on parliamentary time and the Christmas and New Year break, I do not think there has been an unreasonable delay there. I can provide my hon. Friend with the comparable figures for the second document, but they are similar—in fact, the originating dates are slightly

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later. Clearly it was sensible to table the two papers for debate at the same time and not have separate Committee meetings. 

I will not be tempted, enjoyable though it would be, to respond in detail to the wider points made by my hon. Friend, except to say that the European Scrutiny Committee has itself decided to conduct an inquiry into the process of scrutiny and whether it could be improved. The Government want to see the conclusions of that report before we bring forward proposals of our own. Any changes to scrutiny must not be a matter for Government diktat; they must be measures that Parliament itself feels that it owns. To a considerable extent, it is therefore for Chairs of Committees in this House to exercise the rights of scrutiny that they already have under the Standing Orders on Select Committees, as well as in the scrutiny resolution, and to push for additional powers of scrutiny where they think it appropriate. 

Graham Stringer:  I have read the documents very quickly. Is it the Government’s position that the €31 million —I think that was the figure the Minister gave—which the Parliament intends to dole out to political parties, should be part of the overall debate, discussions and negotiations on the European budget and should not have been dealt with separately? 

Mr Lidington:  It is. The Commission assures us that the measure will be cost-neutral. Certainly, the European Parliament is supposed to find the money to be allocated to European political parties and foundations from within its finite overall budget, which itself is a subset of the overall EU budget. Our concern is that both the more generous arrangements and requirements for co-financing included in the measure and the probability that transnational political parties will make ambitious proposals for additional resource means that the European Parliament, in turn, will bid for additional spending. We are very clear that we will resist such bids and insist that the proposal is cost-neutral. 

The Chair:  If no Members wish to ask any more questions, we will move to the debate. 

Motion made, and Question proposed,  

That the Committee takes note of European Union Documents No. 13842/12, draft proposal for a Regulation on the statute and funding of European political parties and European political foundations, No. 13777/12, a Commission working document prefiguring the proposal for an amendment to the Financial Regulation introducing a new title on the financing of European political parties, and No. 17469/12, a Regulation of the European Parliament and of the Council amending Regulation (EU Euratom) No. 966/2012 as regards the financing of European political parties; notes that these proposals are still being considered by the Council; and supports the Government’s position that the UK, along with other Member States, should seek further clarification on a number of points before negotiations progress further. —(Mr Lidington.)  

3.1 pm 

Emma Reynolds:  I should say at the start that I worked for the party of European Socialists, which is one of the biggest European political parties, from 2004 to 2006. I witnessed the transition of the PES and other European political parties, apart from the European

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People’s party, which was already outside the European Parliament. In that transition, the PES, which was originally within the European Parliament and linked to the then Socialist group, as it was called, became an independent European political party outside the European Parliament. 

I agree with the Minister that it is right for the European Commission, and indeed for this House, to take stock of that change, which made a significant difference to how the parties operated and, for example, how member parties such as the Labour party worked with the party of European Socialists. It seems to be an appropriate time to consider how the parties are registered, what the criteria are and how they operate at European level. 

The PES has 37 member parties covering each of the current 27 member states. We are soon to be joined by Croatia, and we have a significant sister party there—the Social Democratic party of Croatia—which is currently in government. The PES provides an important platform for debate between the different socialist, social democratic and centre-left parties across the European Union. It is a useful forum in which to share best practice in many different domestic and foreign policy areas. It also helps to foster relationships between Ministers and spokespeople who are not in government, which are very useful if and when such parties return to power. 

It should be noted that the party of European Socialists—I imagine that some of the other parties also do this—acts as a useful proponent of democracy, human rights and the rule of law beyond the EU’s borders, not only in the so-called European neighbourhood, particularly the Balkans, but in north Africa in the wake of the Arab spring. It has been useful for the Labour party to have contacts in that part of the world, where it is not always clear which ones are your sister parties. That has not been clear in the past, and it does not seem to be getting any clearer now. It is important for each of the UK political parties represented in this place to help foster democracy in that part of the world. It is useful to have a vehicle through which to foster those relationships, and to identify the appropriate parties and individuals to work with. I want to put on record that that is one of the most useful elements of the work of the PES. 

Coming down to the drier detail of the papers that the Committee put before us, as I said in my questioning of the Minister, the criteria for the registration and recognition of European political parties should be looked at again. To have representation at a local, national or European level in only a quarter of the 27 member states is not strict enough and the bar is pretty low. I would rather, if the funding continues—though I know there will be changes to the system—that we concentrate resources where they really count. That is why I referred to one of the small parties that only receives some funding for one year. I do not think it is sufficient to have only one MEP. 

I did not look into it in enough detail because Wikipedia only gives so much, but I do not know whether the member parties of Libertas had MPs in their respective member states or had local councillors. I would again urge the Minister to look at that aspect in more detail, so that the existing, established and, in many cases,

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effective parties can be supported. However, those who are not represented in meaningful numbers should not be. 

We did not touch on this much in questions, but if there is to be a change from a grant-based system to a contribution-based system, I agree with the explanatory memorandum that the Minister submitted that it is important, if that change is made, that there is still accountability, financial propriety and transparency. That is key. I am an openly pro-European Member of this House, but I think it is essential that every penny, or euro, spent should be spent wisely. Whatever changes the Government agree to, whatever changes are agreed between the member states, we must ensure that there is adequate scrutiny of any new system introduced. 

3.8 pm 

Martin Horwood:  First, I would like to correct one thing for the record. When I talked about the European Liberal Democrat and Reform party, I neglected to notice that at its recent Dublin conference it changed its name to the Alliance of Liberals and Democrats for Europe. I am sure Hansard will record that accurately. 

It is important for political parties that share common values across international boundaries to take part in transnational organisations. We very much value our membership of the Liberal International and the Alliance of Liberals and Democrats for Europe. For instance, they have provided us with useful counselling on the stresses of coalition politics in recent years, which we found extremely helpful. We even had a joint parliamentary party meeting with our Swedish sister party, with two Deputy Prime Ministers present, which was very instructive. 

Emma Reynolds:  Does the hon. Gentleman regard it as regrettable that the party group the Conservatives now associate with at European level will not provide any counselling on that issue, because most of them are on the fringes of their political systems rather than in the mainstream? 

The Chair:  Do not stray too far, Mr Horwood. 

Martin Horwood:  The hon. Lady does make a point. The trauma is evident among some of the Back Benchers in the Conservative party. On a more serious note, retaining participation in the European People’s party might have been a valuable networking opportunity for our Ministers, particularly the Prime Minister, at some recent European Councils. However, I am now straying slightly from the subject so, with Mr Havard’s eye on me, I shall return to it. 

The current system for the financing and regulation of European political parties is clearly a bit crazy. It is nonsense for those parties to be registered as NGOs under Belgian law, and that process needs to be regularised. As the Minister said, strictures about European values are already in some current regulations, but I share some of the disquiet of the hon. Member for Blackley and Broughton about expanding political judgments in what should be a neutral and administrative process—we should not start deciding which political parties are acceptable or not in political terms. That is a slightly dangerous path to go down for a free community such as the European Union. 

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I have no great difficulty with the approach of the British Government, and I shall not take up much more of our time. We should be relaxed about the whole idea of the public financing of European political parties. In effect, we undertake the financing of political parties from public funds in this country, and the European level should not necessarily be different. The hon. Member for Wolverhampton North East was right when she said that, whatever the new system, we must put an absolute premium on accountability and transparency. 

Although it might seem like a good idea perhaps to be generous in the funding of European political parties in an attempt to raise the profile of European political debate and to tackle the democratic deficit, all sides of the coalition Government will be aware of the overarching need for Governments at all levels in Europe at the moment to be restrained in their use of public funds. They must contribute to the tackling of deficits throughout the continent and not overspend, and certainly not increase the European budget without due cause. I am reassured that, on page 80 of our documents, the Minister assures us that there are no significant implications for the European budget behind the proposals. 

The democratic deficit does need to be tackled but, to be honest, the largest task in that respect lies with the media and their lamentable coverage of European political debate. We only seem to see excerpts from the European Parliament when Mr Nigel Farage makes one of his rather more explosive comments, which is very poor, and I am sad to include the BBC in that comment. That is the route to tackle the democratic deficit, not extravagant funding for European political parties. However, I am sure that the Minister has such a stricture very much in mind already, so I am content to support the motion. 

3.13 pm 

Graham Stringer:  Unusually, I find myself almost in agreement with the Minister—usually, on the Floor of the House, we do not see eye to eye on European matters. This is a small item that does not deal with what is a very large and serious problem in the European party politic. The Minister prefers to deal with the rise of unpleasant parties of the right or, as he said, the left, through the ballot box and by argument and organisation. This is trying to do that in a different way. 

We are better having the debate, rather than not having such a discussion, but what is being obscured is the rise of Golden Dawn in Greece. That is partly a consequence of European policies and deflation. We can argue about it, but it is my firm conviction that, if Greece still had the drachma, we would not see such high levels of unemployment. We would not have unemployment levels of 55% among young people in Spain, if that country still had the peseta. I could go the countries of the south, but that is one of the reasons for the rise of the right. It is that debate and allowing the political sentiments in those countries to come through the ballot box, which are not represented in the European Parliament, that will help the process. 

One is left with really difficult problems, because Golden Dawn is a significant presence in the Greek Parliament and there are deeply unpleasant ruling parties. It would be difficult for the Hungarian ruling party to meet the criteria that the Minister read out. Is that party to be removed and not funded? At the turn of the

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century the same would have been true of Haider’s party, which was in power in Austria. Would that party have been banned? The European Union took some action against it at the time. I am not sure that any of the actions that were taken against Austria, or that could be taken against the Hungarian ruling party, would be helpful. The Minister and I probably agree that there are different ways of dealing with such deep-seated problems and tackling the reasons why such parties grow. Whatever language Barroso uses to talk about it, he is intentionally missing the point. Across Europe, the public almost certainly do not agree with the direction of many policies, and they have no political outlet for their views. 

On the simpler issue before us, the Government should take a much harder line on cash. The Minister did not say why the Government would support a process for funding political parties at a European level that the Conservative party would not support at a national level, although the Liberal Democrats would. I certainly would not support such funding of parties in this country, and I do not think that my party would. I do not think that there is a valid comparison, as the hon. Member for Cheltenham suggested, between Short money—funding for the Opposition party to carry out research and to have the right to appear on television during general elections, which is the real subsidy that goes into our political parties at election times—and this kind of straightforward funding, which, if I read the documents properly, is accounted two years in arrears. That does not constitute looking after taxpayers’ money properly, and we would not do it in this country. 

I ask the Government to take a much harder line on the cash, with the possibility of reducing it. Some reduction has to be made in the European budget, and this would be a sensible place to start. I hope that the Government will also put up a strong argument for the ballot box and for dealing with the real political problems in Europe, rather than believing that by using very long words, the proposals will make the European project work and will make it relevant to ordinary people throughout Europe. 


3.18 pm 

Mr Lidington:  It is a pleasure to respond to a brief debate in which the general tone, from both sides of the Committee, has been one of agreement on most aspects of the policy. I am happy to endorse what the hon. Member for Wolverhampton North East has said about the importance of international networks for United Kingdom political parties. That is true of both European networks, which have been of great importance during the past 20 years in helping to equip nascent democratic parties in eastern and central Europe with the political and campaigning know-how to cope with a democratic world, and wider, global networks of political parties. Like her, I have some experience of talking to emerging democratic parties in north Africa, and there is no doubt in my mind that it is exciting to be able to share ideas and experiences with people who are still adjusting to the completely novel experience of trying to function in a multi-party democracy. I agree, too, with my hon. Friend the Member for Cheltenham when he said that it was time now for us to have a thorough look at the current system of funding and the checks and balances that are in place, and to overhaul matters. 

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I will now deal with some of the more detailed points that have been made in this short debate. The problem with what the hon. Lady suggested about raising the threshold for eligibility is that almost inevitably it would end up reinforcing the dominant position of those political parties that are already well established. She is right that in 2009, Libertas received just under €203,000 from the European Parliament funds. That was for one year only. In the same year, the party of European Socialists received €3.1 million from the European Parliament, a figure that rose to €4.3 million in 2012, the most recent year for which we have figures available. So the bigger groups do better out of the current system. 

As I explained in my response to questions earlier, those groups that have greater representation in the European Parliament will continue to take the lion’s share of the funds. I would be uneasy if we set the threshold so low that, for example, regional parties that exist and are important in a number of member states of the European Union would find it impossible to form any kind of alliance. I would also be uneasy if we made it too difficult for new political movements and parties, which had enjoyed genuine public support, to get their share and we sought to rig the system in favour of incumbents. One of the strengths of the UK system is that it is easy to register a political party and for someone to start a new movement and, if they can raise funds, set up an organisation to get it going. 

Martin Horwood:  Although I made a light-hearted remark about being relaxed about the threshold increasing, I entirely support what the Minister says. It is important that we have an open political system in Europe and that we do not set the threshold too low and thereby reinforce political establishments. 

Mr Lidington:  I am grateful to my hon. Friend. I certainly agree. 

Emma Reynolds:  I just have to respond to this great show of unity at least between one side of the coalition and another, although not within the Conservative party, of course. I think there is a difference, if the Minister will allow me, between the eligibility for registration and the granting of funds. Some attention needs to be given to how successful and meaningful the establishment of some European political parties is. I chose Libertas because it was in existence for no longer than a year. It might not even have been a year. The Minister is right. It did not get an enormous pot of money, especially in comparison with what the EPP got in that period, for example, which was some €3.4 million— 

The Chair:  This is an intervention. 

Mr Lidington:  I concede this point to the hon. Lady. A balance has to be struck here. It is important to have a system that is open and does not discriminate excessively in favour of large, well established groups to the detriment of newcomers. At the same time, I take her point that one has to judge the point at which a political movement is serious enough and has more than a handful of local

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council seats for it to merit getting this kind of support. This is a judgment we will have to make as we continue with the negotiations. I reiterate once again the point that both the current and the proposed new structures allocate significantly greater funds to those parties that have the greatest representation in the European Parliament. 

The hon. Member for Blackley and Broughton talked about the need for financial discipline; he thought that the Government should be strict. I agree with what my hon. Friend the Member for Cheltenham said. Although the three principles that he listed—accountability, transparency and financial discipline—are all of central importance, I worry about some of the detailed changes that have been proposed on financial regulation. Like the hon. Gentleman, I am unhappy with the idea that a European political party will, under the system currently proposed, no longer have to submit any advance statement or budget indicating why it wants funds and what those funds will be spent on against which its actual spend could subsequently be judged. 

The new proposals involve a post facto audit of how money has been spent. We certainly need an audit of how money has actually been spent, but I question whether leaving out the element of a budget in the first place is wise. I think not. Like the hon. Gentleman, I have serious questions about leaving it as long as two years before things have to be thoroughly checked over and audited. On his criticisms about the overall sums involved, a system already exists for funding from European parliamentary funds: transnational political parties and foundations. It is not something that is being created de novo. 

There are some improvements in the current system. The permissible ceiling for donations to European political parties is being raised significantly under the proposals, so there will now be a greater potential for European political movements to go out and look for support other than from taxpayers’ money. It is not the case that there will be an automatic increase in the EU budget to meet the requirements. In all honesty, it represents a very small part of overall EU spending, but the pennies do matter. 

The Commission has said that the proposals should be cost-neutral. I think pressure will come from the European Parliament as an institution saying that it needs to bid for more spending for it as a Parliament. It is for the Parliament to decide what share of its own budget it dedicates towards the payments for European political foundations and parties. It is that political pressure that concerns me somewhat as we look forward, and I think we need to have the toughest possible rules to try to insist on fiscal neutrality. 

Finally, let me say a brief word about the vexed matter of eligibility for European political status and about the question of extremism. Probably all of us in Committee find ourselves torn to some extent. There is an understandable abhorrence at the thought that taxpayers’ money raised in a democracy could be used to finance political movements that are inimical to democracy and the standards and values by which we live. 

On the other hand, there is the question of who is to set and judge the criteria that determine whether a particular political movement is deemed to be acceptable. We can probably all come up with our own individual list of persons or parties that we think are acceptable or unacceptable. I am deeply concerned that the proposals

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give that decision to an overtly political body that is asked to pass judgment upon the values of its political rivals. I agree very much with the thrust of what the hon. Gentleman said. Whatever we do with eligibility or ineligibility for European Parliament funds will make not a ha’p’orth of difference to the degree of electoral support that extreme populist movements are able to command. In my view, the risk is that they will be able to pose as martyrs—as champions of the poor and downtrodden against the establishment, which is trying to crush them and, they would claim, deny the people a voice. 

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The lesson that we should learn from is the one that was given to us—we have a spirit of cross-party agreement here—by the right hon. Member for Barking (Margaret Hodge), who showed that it is possible to take on extreme political movements and see them thoroughly defeated on the basis of active campaigning, sound political argument and persuading the voters to turn out and stick by democratic values. 

Question put and agreed to.  

3.31 pm 

Committee rose.  

Prepared 7th February 2013