The Electoral Commission believes that political parties should declare details of all the loans they receive. This would demonstrate to voters that the parties have nothing to hide.
We welcome the commitments from the parties to greater transparency in this area in the future and have begun consulting with them to agree a code of conduct on reporting loans pending a change in the law.
However, public confidence in the democratic process has been damaged by recent revelations and real questions remain about loans received to date.
Although we are aware that parties have taken the view that past loans were on commercial terms, reports recently quoting both lenders and party representatives have raised doubts over whether parties were right to regard them in this way.
The Commission last week wrote to the registered treasurers of political parties asking for confirmation that any loans that their party had already received and not so far reported were made on fully commercial terms and involved no benefit to the party that should have been declared under the Political Parties, Elections and Referendums Act 2000.
The Commission has now received replies to this letter. The parties concerned have said that the loans they have received and not so far reported are on commercial terms and they involved no benefit that should have been declared.
In our view, questions remain about whether these previous loans were made on commercial terms, and therefore whether parties are right to maintain that no element of them should have been reported as a donation.
The Commission will, therefore, requesting an explanation of their rationale for concluding that loans were made on commercial terms and asking them to provide supporting evidence for their decision.
The Electoral Commission has powers, under Section 146 of the Political Parties, Elections and Referendums Act 2000, to require political parties to provide relevant documents, records and other information about their income and expenditure.
If necessary, we would be prepared to exercise these powers to obtain the information we require to judge whether a political party has fully complied with the law.