Documents considered by the Committee on 7 November - European Scrutiny Committee Contents

2 Regulating European political parties




COM(12) 499




COM(12) 500

Proposal for a Regulation of the European Parliament and of the Council on the statute and funding of European political parties and European political foundations

Commission working document prefiguring the proposal for an amendment to the Financial Regulation introducing a new title on the financing of European political parties

Legal base(a)Article 224 TFEU; co-decision; QMV

(b) —

Documents originated(a)17 September 2012; (b)14 September 2012
Deposited in Parliament(a) 21 September 2012; (b) 18 September 2012
DepartmentForeign and Commonwealth Office
Basis of consideration(a)EM of 8 October 2012

(b)EM of 15 October 2012

Previous Committee ReportNone
Discussion in CouncilNo date known
Committee's assessmentLegally and politically important
Committee's decisionFor debate in European Committee B


2.1 These complementary initiatives aim to improve funding and regulatory frameworks for European political parties and foundations and to increase their legal recognition, effectiveness, transparency and accountability. The Commission proposes to achieve these objectives by making the acquisition by European parties and foundations of a uniform European Legal Status (ELS) a pre-requisite for funding from the EU budget (the draft Regulation) and also by changing the current funding mechanism of grants, linked to programme and project participation, to a more flexible contributions based system (the Working Document). Both initiatives have acquired some prominence following the reference made to a "better statute for political parties" by Commission President Barroso in his State of the Union Speech on 12 September 2012.[3]

2.2 In the draft Regulation, a European political party is defined as a political alliance between peoples or parties from different Member States, which pursues political objectives and is registered with the European Parliament. A European political foundation is an entity which is formally affiliated with a European political party, is registered with the European Parliament and whose activities support the objectives of its associated party.

2.3 It is intended that by July 2013, in time for the 2014 EU Elections, the draft Regulation will replace the current Regulation (EC) No 2004/2003 which governs European parties/foundations and their funding. The Working Document initiative (not yet a formal proposal) envisages changes to the funding system by amending the Financial Regulation (FR) when it is finally adopted in late 2012. The FR sets out the financial rules applicable to the annual EU budget.

The proposed Regulation

2.4 The proposed Regulation outlines the rules, procedures and criteria which would govern obtaining and maintaining a new ELS and some relevant provisions on funding.

2.5 The impetus for these proposals (and the initiative in the Working Document) was the Giannakou report,[4] adopted by a European Parliament resolution, which evaluated existing party political funding at European level pursuant to Article 12 of Regulation (EC) No 2004/2003.

2.6 The Giannakou report:

  • called on the Commission to propose a statute for European parties and foundations which would address related issues of internal party democracy (addressed in the draft Regulation); and
  • suggested a number of changes linked to the funding regime applicable to European parties and foundations, requesting stricter conditions for access to funding, on the one hand, and a more flexible system, on the other (which are largely dealt with in the Working Document).

2.7 Although the legal base for the proposed Regulation is Article 224 TFEU, the wider legal context for the Commission's proposals includes Article 10(4) TEU and Article 12(2) of the Charter of Fundamental Rights which state that political parties at European level contribute to forming European political awareness and to expressing the political will of citizens of the Union.

2.8 Articles 11 and 12 of the Charter of Fundamental Rights state that the right to freedom of association at all levels, for example in political and civic matters, and the right to freedom of expression, which includes the freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers, are fundamental rights of every citizen of the Union.

2.9 Accordingly the Commission asserts that genuinely transnational European political parties and foundations have a key role to play representing citizens at European level, by bridging the gap between politics at national and Union level.

2.10 The Commission suggests that its approach to achieving this objective of enhancing European political party influence is evidence based. It states that:

"Experiences acquired by the European political parties and their affiliated European political foundations in applying Regulation (EC) No 2004/2003 of the European Parliament and of the Council of 4 November 2003 on the regulations governing political parties at European level and the rules regarding their funding, and the legislative resolution on the application of Regulation (EC) No 2004/2003, adopted by the European Parliament on 6 April 2011, show the necessity to improve the legal and financial framework for European political parties and their affiliated European political foundations to enable them to become more visible and effective actors in the multi-level political system of the Union."

2.11 A summary of the detailed proposals set out in the draft Regulation follows.


2.12 The draft Regulation proposes conditions for registration and corresponding obtainment of legal recognition (by acquiring ELS) as a European political party or foundation. These conditions impose an overall requirement for high standards of governance, accountability and transparency and include the following:

  • A requirement for both European political parties and their associated foundations to align with the values of the European Union, as set out in Article 2, Treaty on European Union.
  • Minimum requirements for certain administrative and legal provisions to be included within the statutes of the European political party, such as a written political programme setting out the purpose and objectives of the party.
  • Minimum requirements for rules on internal party democracy to be included within the statutes of the European political party, including, for example, a requirement for detail to be included within the European political party's statute on the party's internal decision-making processes, in particular the voting procedures and quorum requirements.
  • Minimum requirements for what should be included within the statutes governing European political foundations, including, for example, the name of the foundation and the European political party to which it is directly affiliated.

2.13   The proposed Regulation also specifies the process for European political parties and foundations registering for ELS, including details of how they should prove satisfaction of the above conditions. The Regulation also places the onus on the European Parliament to verify the continued accuracy of the information provided in support of registration.


2.14 The proposed Regulation specifies that a European political party or foundation with ELS will be eligible to apply for funding from the EU general budget in accordance with the terms and conditions outlined by the European Parliament.

2.15 The proposal outlines further provisions on the process for application, award and distribution of funding, treatment of donations and contributions, financing of European Parliament election campaigns and prohibited funding usages.


2.16 Obligations for ongoing regulation of European political parties and foundations with ELS are imposed not only on those entities themselves, but also on the European Parliament in its supervisory capacity in respect of the reporting of :

  • annual accounts, including financial statements subject to external audit reports and donor information; and
  • technical assistance provided by the European Parliament to European political parties and foundations.


2.17 This includes instances in which a European political party winds up or decides to convert to a legal entity with legal recognition in a Member State legal system, or where a party has failed to meet requirements for the maintenance of ELS, provided for within the Regulation, as determined by the European Parliament.


2.18 Such penalties, which would be determined by the European Parliament, include financial penalties, removal from the registry, forfeiture of status and withdrawal of funding. The mechanisms to be used in determining the penalty in question, and the process for rebutting or appealing any potential penalty, are also outlined.


2.19 This includes, for example, a list of all European political parties and details of funding received on an annual basis.

The Government's view

2.20 In an Explanatory Memorandum dated 8 October 2012 the Minister for Europe (Mr David Lidington) undertakes to keep the Committee informed of developments as negotiations on the draft Regulation progress.

2.21 He also comments that the Government will be:

  • considering the proposals in depth over the coming months, including whether they meet the overarching Commission objectives of addressing the EU democratic deficit by facilitating the role of European political parties and foundations at EU level and whether the UK is minded to agree with the Commission on its overall approach;
  • considering each provision within the proposed Regulation in detail, seeking further clarification of the meaning and implications of individual provisions where necessary;
  • examining how the imposition of conditions for the granting of an ELS compares with existing provisions within UK law, and whether the outcome of these proposals will to be of sufficient value to justify making these changes; and
  • seeking to remove Article 16 from the draft Regulation as negotiations progress as the Government is minded to oppose the extension of tax reliefs for domestic political parties to all European political parties since the Government considers that tax matters are primarily within Member States' competence.

The Commission's Working Document

2.22 The Commission again refers to the Giannakou Report in explaining the origins of the initiative to change the financing system for European political parties when it states in its Working Document that:

"The proposal follows the EP resolution regarding the financing of the European political parties (the Giannakou report) which considers that, in light of the experience gained, the financing of European political parties and European political foundations should be improved as regards a number of points. In particular, it calls for an end to the system of grants and the creation of a new financing instrument in the FR 'devoted solely and tailored specifically to the funding of European Parties and foundations'."

2.23 It continues:

"After close analysis, it is proposed that political parties should indeed be financed through a new instrument ('contributions') as illustrated in this draft proposal rather than through an operating grant, as it is currently the case.

As regards European political foundations, it is considered that they should continue to receive an operating grant."

2.24 The summary of the measures suggested in the Working Document follows.


2.25 European political parties will no longer have to:

  • submit an annual work programme and estimated operating budget when applying for funding from the EU budget. Such information is not required of domestic political parties in Member States, and, the Commission argues, does not recognise the need for the flexibility to react to external events, which political parties require; nor
  • satisfy selection criteria, which the Commission considers unnecessary if an annual work programme or estimated budget is not submitted.


2.26 The Commission proposes that a provision be introduced which would result in the reduction of, termination of, and recovery of any pre-financed contributions from European political parties rather than debarment from the European Parliament registry or the imposition of an administrative penalty, during the financial year covered by the contribution.


2.27 In lieu of the current requirements for European political parties to submit work programmes and operating budgets for advance approval of grants, the Commission is proposing an alternative, more flexible "ex post" control on expenditure. Parties will have to justify the use of the funds attributed to them.


2.28 The Commission acknowledges the need for flexibility in the use of funds, particularly the need for European political parties to be able to "'build up reserves and carry-over" funds (as the Giannakou Report recommends). Parties can amass reserves and flexibility regarding time limits for the use of EU funds allows parties to carry forward contributions. The Commission says that: "A strict application of the obligation to use these funds within the financial year for which they were awarded would be difficult to reconcile" with the need for European political parties "to adjust their resources to the electoral cycle".

2.29 However, the Commission proposes that EU funds that have not been spent should be used within a reasonable time. Contributions to European political parties should be spent to cover reimbursable expenditures within two financial years following the financial year for which they were awarded after which any unused funds must be repaid.


2.30 There are provisions for the European Parliament, European Anti-Fraud Office and the Court of Auditors to exercise powers of control over parties' contributions documents and the premises of parties and for penalties to be imposed in the event of fraudulent applications or failure to supply information requested.


2.31 The Commission outlines within its proposals the mechanisms through which contributions may be paid, the treatment of interest on pre-financed sums and how co-financing works in this context.

The Government's view

2.32 In an Explanatory Memorandum dated 15 October 2012 on the Working Document the Minister for Europe recognises the benefits of a more flexible system of funding and notes the exclusive competence of the EU on such budgetary matters, but is wary of any possible consequential loss of accountability, financial propriety or transparency in respect of the activities of European political parties or foundations.

2.33 The Minister says the Government:

  • will consider the detail of these proposals over the coming weeks and months;
  • has sympathy with the suggestion that grants, intended for EU programmes and projects, may not be the best mechanism by which to fund European political parties;
  • insists, however, that a change to that system must both be a demonstrable improvement over current arrangements, and must not compromise current levels of accountability, financial propriety, or transparency;
  • will assess how these proposals compare with the mechanism which is in place for the funding of domestic UK political parties; and
  • intends to investigate the timing of these funding proposals and the reason why they were not included in the recent, broader negotiations for the new Financial Regulation.


2.34 We further note the Government's competence and implementation concerns arising from the draft Regulation's taxation relief proposals and from the need to ensure that the proposals do not infringe on fundamental freedoms enabling parties to participate in the EU political process.

2.35 Given the significance of these proposals for representative democracy in the EU, we recommend that both proposals be debated in European Committee B.

3   President of the European Commission State of the Union 2012 Address Plenary session of the European Parliament/Strasbourg 12 September 2012, Back

4   Report of 18 March 2011 on the application of Regulation (EC) No 2004/2003 on the regulations governing political parties at European level and the rules governing their funding (2010/2201 (INI)), A7-0062/2011, Back

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Prepared 16 November 2012