The Review of the Funding of Political Parties Report published
15 March 2007
Strengthening democracy: Fair and sustainable funding of political parties
Stricter limits on the amount of money political parties can spend, and on what they can receive in single donations, are among a package of recommendations aimed at restoring public confidence and promoting a long-term solution to the issue of how parties are funded. Sir Hayden Phillips today published his report into the Review of the Funding of Political Parties.
In his report, "Strengthening Democracy: Fair and Sustainable Funding of Political Parties", Sir Hayden sets out a comprehensive range of reforms which, if accepted in full by the political parties themselves, should also include an increase in public funding of political parties to enhance public engagement in our democratic system.
The report states that the main parties are in broad agreement on a number of the issues but not yet on two in particular - the nature of a cap on donations, and spending limits. Sir Hayden believes that an agreement is however "within reach" and proposes direct talks between the parties to resolve outstanding issues.
Among Sir Hayden's recommendations are:
- the parties should, in the words of the Constitutional Affairs Committee, "agree voluntarily to binding limitations on donations"
- the two largest parties should reduce spending by about £20m each over the lifetime of a Parliament
- public funding should be increased to provide a degree of financial stability and encourage greater public engagement
- the Electoral Commission needs to be a swift and nimble-footed regulator
In publishing his report, Sir Hayden said:
"This report is about the long-term. It charts a route to a fair and sustainable solution for how political parties should be funded. A long-term solution is in reach if there is the political will on behalf of the political parties themselves to grasp it.
"The status quo is not acceptable. The public wants reform. The system needs reform. The parties know that reform is necessary.
"Our parliamentary democracy cannot operate effectively without strong and healthy political parties. Limiting donations to and spending by political parties will help restore public confidence in our party system.
"Further public funding of parties is the cost we have to pay to secure a healthier politics - but money should be closely linked to levels of public support and should seek to encourage the parties to engage more effectively with the electorate."
Next steps: Sir Hayden recommends inter-party talks
In his letter to the Prime Minister, Sir Hayden says
"There is, in my view, an overriding public interest in acting now to reform party funding. Achieving this will require tough decisions on all sides, particularly about donation limits and spending limits. There are many areas of agreement. But resolving the undoubted differences of views that remain essentially on the nature and level of a limit on donations to parties and on the nature of controls on spending needs, in my view, face-to-face discussion by the parties.
"I therefore recommend that the Government should invite the three largest parties to come together to make a determined effort to solve the remaining areas of dispute. The time has come for the major political parties to demonstrate that they can achieve this by consensus. My report sets out how I think this could be done, and it identifies where I believe that a consensus could, and should, be reached."
Sir Hayden recommends to the parties the following principles to guide them in the talks:
nothing should be agreed until everything is agreed
a fair system need not initially be a uniform system but it should aim for a common result over time
a new settlement should be reached by consensus
any solution should serve the long-term interests of our Parliamentary system
Sir Hayden recommends introducing a higher level of public funding for political parties for three reasons.
First, parties would get less money due to a cap on donations, and there would be additional costs of compliance costs with a new system.
Second, political parties face long-term financial instability because of the rising costs of their activities.
Third, properly targeted, public funding can make some contribution to reinvigorating the parties' drive to involve and engage more members of the public in political debate.
Financial instability is the enemy of healthy politics, and an injection of public funds is merited if we are to maintain public confidence in our democracy.
Sir Hayden proposes two models for public funding, one, a pence-per-vote scheme based on electoral success, and the other a scheme to encourage greater public participation, using the internet to help parties reach out to more people. The proposal is for an internet-based subscriber scheme where a person can give £5, or more, and it is matched by £5 of public funding.
Sir Hayden hopes that his proposals will assist the parties in shaping an agreement.
"This is an historic opportunity for all political parties and, more fundamentally, for the future of our Parliamentary democracy. I encourage the parties to seize the chance which is now at hand."
Page last updated: 15 May 2007