Party funding 'arms race' capped

Lord Neill wants "transparency " in political funding

Political parties should only be able to spend a maximum of £20m on general election campaigning under strict new recommendations from Lord Neill into party funding.

The long awaited report by the Committee on Standards in Public Life into the regulation of party political funding and expenditure calls for "transparency" to end the "arms race" of fundraising.

Lord Neill said: "Many members of the public believe that the policies of the major political parties have been influenced by large donors, while ignorance about the sources of funding has fostered suspicion.

"We are convinced that a fundamentally new framework is needed to provide public confidence for the future, to meet the needs of modern politics and to bring the UK into line with the best practice in other mature democracies."

Among the issues the report addresses are donations to parties, election expenditure, referendums, honours, the provision of state funding to political parties and changes in the system of 'Short money' to support opposition parties.

Labour commitment

The committee, chaired by barrister Lord Neill of Bladen, was established following a pre-election commitment by Tony Blair and has heard 17 days of evidence from journalists, politicians and academics.

Lord Neill and some of the members also visited Germany, Sweden, the United States and Canada to study international systems of regulation.

The result is 100 recommendations ranging from a £20m maximum limit for general election expenditure, the establishment of an independent Election Commission and calls for more scrutiny for honours nominations.

Home Secretary Jack Straw said the government would legislate on the main findings before the general election.

He said: "We are committed to reforming and regulating the way political parties are funded."

Conservative MP John MacGregor sounded a dissident voice on the committee, criticising the setting of a suggested £20m limit for general election expenditure.

Former Tory Party treasurer Lord McAlpine said earlier that such a limit would give the government a "colossal advantage" as it knew in advance when a general election would be held.

Lord Razzall, treasurer of the Liberal Democrat party, said the report was "good for the country and goes a long way to cleaning up the mess in British politics".

He called for a voluntary agreement between the parties to adopt the proposals now.

'Arms race'

Election expenditure has given rise to an "arms race" which led to Labour and the Conservatives spending around £54m between them at the last election, the report states.

The committee believes it is a "small step" from the public perception of money buying access, as encouraged by some party fundraisers through dinners attended by senior party figures, to money buying influence.

Donations

The report recommends donations to political parties of more than £5,000 a year must be disclosed.

An "arms race" has developed in political funding, the report says

Anonymous donations of more than £50 should be refused and blind trusts should be prohibited as a method of funding parties, the committee suggests.

But the report does not set a limit for donations from individuals, companies or organisations.

Political parties should be banned from receiving foreign donations.

Audited annual accounts detailing expenditure and clearly identifying donors and the amounts given should be open to an independent wide-reaching Election Commission.

Anyone failing to report a disclosable donation could face a criminal prosecution.

Campaign spending and tax relief

The committee proposes a £1.5m limit for elections to the Scottish Parliament, £600,000 to Welsh Assembly and £300,000 to Northern Ireland.

Lord Neill has moved to involve more ordinary voters in the political process through the introduction of tax relief on donations of up to £500 a year.

The report also calls for a review of Short money available to opposition parties with the view to increasing it by up three times the current amount.

Opposing sides in referendum campaigns should receive core funding while the ban on advertising on television and radio should be maintained.

The report also recommends the Political Honours Scrutiny Committee should scrutinise every nominee for an honour of CBE and above who has donated more than £5,000 directly or indirectly to a party.

Radical alteration

The recommendations amount to a radical upheaval for the party funding system.

But there is concern there will not be enough time to implement the reforms before elections to the Scottish Parliament and Welsh Assembly.

It may be that parties adhere to a voluntary code of practice before the recommendations become law.