Constitutional Affairs Committee

Press Notice 2 of Session 2006-07, 19 December 2006


The Constitutional Affairs Committee of the House of Commons has unanimously agreed a report calling for fundamental reform of party funding. The present system is "unstable" and has a negative impact on public confidence.

MPs from all three main parties agreed on a two-stage approach, leading in time to:

€voluntarily agreed binding limits on all large donations, whether individual, corporate or trade union;

€a cap on all party spending, including spending outside the election period, as the precondition for

€substantially increased state funding

Without such a package of measures, the Committee said, "voters will conclude that the parties are voting to give themselves more money without removing dependence on other paymasters". The Committee accepts that "it would be unreasonable to expect the parties to complete the change immediately" and therefore recommends a transition period to enable the parties to adjust to fundamental reform.

Only a fair system would be durable. No party should be put at a disadvantage by the implementation of the proposals, nor be required to change its internal organisation in ways which violate their democratic relationships with other institutions.

The Committee recognises that such radical changes cannot be achieved overnight. As a first stage the Committee recommends:

€a lower national cap on spending alongside a voluntarily agreed binding framework for limited donations;

€a combined tax relief and matched funding scheme to encourage small donations;

€a modest increase in state funding

€a ban on all loans except from UK financial institutions, at commercial rates

The Committee also recommends reforms to the Electoral Commission, to allow the appointment of a minority of Board members who have had experience in politics.

The Committee warns that "failure to undertake reform, or the promulgation of reforms which are seen to be of a partisan nature will serve only to alienate the public".

The Committee draws particularly on the experience of Canada where radical changes in regulation of parties and in state funding provision have been accepted by all parties as an improvement.

The Rt Hon Alan Beith, Chairman of the Committee, said:

"Parties are an essential part of democracy, and their activities inevitably cost money. If the taxpayer is to provide more of the money, it will need to be clear that state funding is used to achieve cleaner and healthier politics, without the fear that influence can be bought by big donations. Change in this area is difficult because of the different history and traditions of the parties and because they are in fierce competition with each other, but change is vital, and I am glad that MPs of all three parties have agreed on a route we can take. Building a system which can secure grater public confidence will require balanced measures such as these, and a quick fix will not work."

Andrew Tyrie MP, Conservative member of the Committee, said:

"I have felt for years that the current free-for-all, in which a small number of trade unions and big donors are the parties' paymasters, should not be allowed to continue. The electorate believe that the big donors buy influence, access and honours - no wonder, as I have argued, they have concluded that party funding stinks. So it is a breath of fresh air that this report has unanimously agreed the outlines of a stable and fair system of party finance for the future. It is one in which the electorate can have confidence. Our committee has shown the way, by delivering a unanimous report. Now the parties should too."

Alan Whitehead MP, Labour member of the Committee, said:

"The committee's enquiry clearly establishes just how important political parties are to our system of democracy and yet how the present unstable methods of funding them has the potential to undermine public confidence in their role in the process. The committee's recommendations of early moves towards greater transparency of funding coupled with a comprehensive cap in spending levels will begin the journey towards a stable settlement of party funding. An agreed reduction of donation levels and the enhancement of fair state funding will move a resolution forward. At present there is a big question mark hanging over the future of Britain's political parties - the Committee's report provides, I hope, some of the answers."


1. The Committee's Report Party Funding (HC 163 I and II), is available on the Committee's website:

2. Committee Membership is as follows: Rt Hon Alan Beith MP (Chairman), David Howarth MP, Siân James MP, Mr Piara S Khabra MP, Jessica Morden MP, Julie Morgan MP, Robert Neill MP, Mr Andrew Tyrie MP, Rt Hon Keith Vaz MP, Dr Alan Whitehead MP, Jeremy Wright MP

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