2 Regulating European political parties
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(34259)
13842/12
COM(12) 499
(b)
(34226)
13777/12
COM(12) 500
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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
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| Legal base | (a)Article 224 TFEU; co-decision; QMV
(b) —
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| Documents originated | (a)17 September 2012; (b)14 September 2012
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| Deposited in Parliament | (a) 21 September 2012; (b) 18 September 2012
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| Department | Foreign and Commonwealth Office
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| Basis of consideration | (a)EM of 8 October 2012
(b)EM of 15 October 2012
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| Previous Committee Report | None
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| Discussion in Council | No date known
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| Committee's assessment | Legally and politically important
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| Committee's decision | For debate in European Committee B
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Background
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.
CONDITIONS FOR THE ACQUISITION OF ELS
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.
EUROPEAN LEGAL STATUS AS A FUNDING PRE-CONDITION
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.
REGULATORY AND CONTROL FRAMEWORK FOR EUROPEAN POLITICAL
PARTIES AND FOUNDATIONS
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.
WITHDRAWAL OF ELS
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.
IMPOSITION OF PENALTIES
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.
PUBLIC ACCESS TO INFORMATION ABOUT EUROPEAN POLITICAL
PARTIES AND FOUNDATIONS
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.
THE ANNUAL WORK PROGRAMME, AND ESTIMATED OPERATING
BUDGETS
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.
CONTROL OF THE STATUTORY OBLIGATIONS OF EUROPEAN
POLITICAL PARTIES
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.
CONTROLS ON EXPENDITURE
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.
TIME LIMITS TO USE EU FUNDS
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.
CONTROLS AND PENALTIES
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.
FINANCING
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.
Conclusion
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, http://europa.eu/rapid/press-release_SPEECH-12-596_en.htm. 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, www.europarl.europa.eu. Back
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