| The Funding of Political Parties in the United Kingdom | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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CHAPTER SIX PUBLIC FUNDING OF POLITICAL PARTIES 6.1 The Neill Committee, whilst recognising the essential role played by political parties in our parliamentary democracy, came down against any general system of support from public funds for their general activities. The Government agrees with this conclusion. 6.2 The Neill Committee did, however, endorse specific targeted assistance to support the parties' contribution to the democratic process. They recommended the maintenance of existing arrangements for candidates and political parties to receive benefits in kind at election time, to enable them to communicate effectively with the electorate. They also supported arrangements for political parties in Parliament to receive financial support to assist them in the performance of their parliamentary duties. The Government accepts these recommendations (R35 and R41 to R44). 6.3 Two new forms of assistance are also proposed in the Committee's report. First, they recommended (R37) the establishment of a Policy Development Fund to assist the parties in working up long-term policy. The Government accepts this recommendation. Secondly, the Committee proposed that donations to political parties, below a certain level, should be eligible for income tax relief at the basic rate. The Government is not persuaded by this recommendation. Tax relief would amount to general state aid by another route. A tax-relief scheme would be expensive for the Inland Revenue and political parties to administer relative to the likely level of take-up. Furthermore, the Government has to balance the loss of revenue (likely to be upwards of £4 or £5 million a year) against other spending priorities. Assistance to Candidates and Parties at Election Time 6.4 There has been a long-standing entitlement for candidates at parliamentary elections and at elections to the European Parliament to free postage for one election communication to every address or elector within a constituency. Candidates have also been entitled to the free use of school premises or other public buildings for the purpose of holding public meetings. As recommended by the Neill Committee (R35), these benefits have been extended to candidates and parties in elections to the Scottish Parliament1 and to the National Assembly for Wales2. They have also been made available to candidates and parties standing in elections to the European Parliament under the new proportional voting system3. Candidates standing for election to the Northern Ireland Assembly are similarly entitled to free postage for an election address4. 6.5 The maintenance of these arrangements does not require any fresh primary legislation. Financial Assistance to Political Parties in Parliament The UK Parliament 6.6 Since 1975, opposition parties in Parliament have received public funds under a scheme known as 'Short money' (named after the then Leader of the House of Commons, the Rt Hon Edward Short). The purpose of Short money is to assist opposition parties in carrying out their parliamentary duties, in particular that of holding the government of the day to account. The money is used to provide research assistance for Front Bench spokesmen, assistance in the Opposition Whips' office and office staff for the Leader of the Opposition. A similar arrangement, known as 'Cranborne money', has existed in the House of Lords since 1996. These schemes are not subject to any statutory provision; each House of Parliament votes the necessary funds directly. 6.7 The Neill Committee heard evidence that the amount of Short money available was insufficient to enable opposition parties to perform their functions effectively. The Committee therefore proposed a significant increase (R40), together with the earmarking of a proportion of Short money to fund the office of the Leader of the Opposition (R43). 6.8 The Government has accepted this recommendation and, after consultation with other political parties, has agreed to increase Short money by a factor of 2.7. This change, which is effective from the start of the current financial year, was agreed by the House of Commons on 26 May 19995. It includes the sum of £500,000 a year for funding the office of the Leader of the Opposition. The maximum sums each party will receive in 1999-2000 are as follows:
For comparison, the sums made available in 1996/97 were:
6.9 The Neill Committee also recommended that the parties in the Lords should review the amount of money made available to the Opposition parties under the Cranborne money scheme, with a view to increasing it (R42). The Government has accepted this recommendation and is in discussions with the other parties in the Lords about the mechanics of an increase for the Official Opposition and the Liberal Democrats. The Government and Opposition parties have also agreed to put to the House a proposal that an additional sum of £20,000 should be set aside to enable the Convenor of the Crossbench peers to fund secretarial support. The Scottish Parliament 6.10 Following the publication of the Neill Committee's report, the Government introduced an amendment to the Scotland Bill (now section 97 of the Scotland Act 1998) to provide for financial assistance for registered political parties represented in the Scottish Parliament. An Order in Council under section 97 of the Act6 provides that qualifying parties receive £5,000 for each member of the Parliament. The maximum allocations in the period 1 July 1999 to 31 March 2000 will therefore be as follows:
6.11 Under the Scotland Act, matters concerning the funding of political parties are reserved to the United Kingdom Parliament. But the Government has decided to exercise the powers available under section 30(2) of the Act to give the Scottish Parliament legislative competence in respect of financial support to parties in the Parliament8. This change took effect from 1 July 1999, and so it is now open to the Scottish Parliament to continue, modify or replace the original scheme introduced under section 97 as it sees fit. National Assembly for Wales 6.12 The Government of Wales Act 1998 received Royal Assent before the Neill Committee reported and makes no provision, comparable to section 97 of the Scotland Act, for financial assistance to parties represented in the National Assembly. Paragraph 10 of Schedule 9 to the draft Bill amends the Government of Wales Act so as to enable the Assembly to make payments to parties for the purpose of assisting them to discharge their Assembly functions. The amount of such payments will be a matter for the Assembly to determine. 6.13 As an interim arrangement, the Assembly intends to use the powers conferred by section 16 of the Government of Wales Act to make an allowance available to the leaders of the political parties represented in the Assembly. The allowance will be linked directly to their positions as leaders and for the better performance of their duties in that role. The Northern Ireland Assembly 6.14 The provision of financial assistance to parties represented in the Northern Ireland Assembly is a devolved matter under the terms of the Northern Ireland Act 1998. At present, during the current shadow period between elections to the Assembly and the formal transfer of powers, the Government is administering a scheme which is providing parties with funding to enable them to prepare for devolution. 6.15 It is expected that, immediately following devolution, the Northern Ireland Assembly will introduce legislation which will enable the Assembly Commission to prepare and lay before the Assembly a new scheme for making payments to political parties for the purpose of assisting members to perform their Assembly duties. Policy Development Fund 6.16 The Neill Committee made a strong case for limited financial assistance to political parties represented in Parliament to help them with the vital function of long-term policy development. The Government supports the establishment of a modest Policy Development Fund as recommended by the Neill Committee (R37). Such a fund would complement the provision of Short money, which helps opposition parties to respond to current policy developments. Both governing and opposition parties represented in the House of Commons will have access to the Policy Development Fund. 6.17 Clause 10 of the Bill provides for policy development grants to be paid to those political parties with at least two sitting Members of the House of Commons. The grants will be administered by the Electoral Commission. The detailed arrangements for the allocation of such grants will be set down in secondary legislation. Such arrangements might provide, for example, that policy development grants are distributed amongst the parties on the basis of the proportion of the vote won at the last general election. As recommended by the Neill Committee, a total of £2 million will be available annually to eligible parties. The clause provides that this sum may be varied by Order made by the Home Secretary, with the consent of the Treasury.
1 Articles 58, 61 and 62 of and Schedule 7 to the Scottish Parliament (Elections etc) Order 1999 (SI No 1999/787). 2 Articles 66 and 69 of and Schedule 7 to the National Assembly for Wales (Representation of the People) Order 1999 (SI No 1999/450). 3 Sections 91 and 95 of the Representation of the People Act 1983 as applied by Schedule 1 to the European Parliamentary Elections Regulations 1999 (SI No 1999/1214). 4 Section 91 of the Representation of the People Act 1983 as applied by Schedule 1 to the new Northern Ireland Assembly (Elections) Order 1998 (SI No 1998/1287). 5 Official Report, cols. 427 to 429. 6 The Scottish Parliament (Assistance for Registered Political Parties) Order 1999 (SI No 1999/1745). 7 For the purpose of calculating entitlement to this support, the four Liberal Democrat members holding Ministerial posts are disregarded. 8 The Scotland Act 1998 (Modifications of Schedules 4 and 5) Order 1999 (SI No.1999/1749).
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