Electoral Commission Report on the Funding of Political Parties
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Central Lobby
The Funding of Political Parties
  Our View By far the most significant element of the Electoral Commission’s report is its emphasis on local activism and engagement; where changes have been proposed to the funding of political parties it is explicitly intended to increase local political activity. The clearest example of this is perhaps the decrease in the national campaign spending limit and the almost doubling of the candidate spending limit. The increase in the time limit for the campaign spending limit will also impact on the nature of constituency campaigning effectively lengthening the campaign period and encouraging prolonged engagement with the electorate in the run up to an election being called rather than focusing exclusively on the period after the formal announcement. The Electoral Commission is incentivising political activity which engages the electorate rather than national advertising campaigns. The Commission has also clearly indicated that where changes may be proposed in the future, for example the introduction of caps on large donations, they would be linked to proposals to encourage grassroots support for political parties and small donations from individuals.The first step in this process is the proposed introduction of tax relief on small donations to political parties. Although the details of how the system would work in practice are still unclear the proposal to allow tax relief on small donations to political parties is a significant development. Not only would it obviously mean additional financial benefit from donations up to £200, it would also equate donations to a political party with donations to a charity. A donation to charity is seen as putting something back into society while at present donations to political parties are seen as an attempt to buy influence. By putting small donations to political parties on a par with donations to charity the Electoral Commission has recognised the contribution that political parties make to civil society and that they are essential to the functioning of a sustainable, representative democracy. |
The report of the Electoral Commission’s two year investigation into the funding of political parties was published on 16 December 2004. The report recognised that political parties are fundamental to the health of our democracy and that they require sufficient funds to fulfil their democratic functions. Its findings also supported the New Politics Network’s argument that increases in funding should be linked to local party activism.
Key recommendations included
- the national spending limit applying to Westminster general elections should be reviewed with the aim of reducing the limit to £15m. Candidate spending limits should be increased significantly to encourage more activity at the local level.
- the policy development grant scheme should be expanded to include parties with at least two members elected to either the House of Commons, European Parliament, Scottish Parliament, National Assembly for Wales or Northern Ireland Assembly. In order not to disadvantage existing recipients the sum available should be increased to £3m.
- a system of income tax relief should be introduced for donations to eligible political parties up to the value of £200. the benefits of such a scheme should be extended to include non-taxpayers possibly through a system of matched funding.
- Any further significant increase in public funding must be contingent on acceptance of a cap on donations.
The New Politics Network has published a policy briefing on the funding of political parties. The briefing outlines the issues involved in the financing of political parties, summarises the report's recommendations with particular emphasis on what they mean for MPs and gives the New Politics Network's response to them.
Government Response
Although there were a number of Westminster Hall debates and parliamentary questions asked about the Electoral Commission report the Government did not formally respond to the recommendations.
This has in many ways now been superceded by the The Review of the Funding of Political Parties which was set up in the aftermath of the cash for peerages scandal.
Chaired by Sir Hayden Phillips, the review will produce an interim report in October 2006 wiith a final report due by the end of the year.
