Independent report

The Funding of Political Parties in the United Kingdom

The fifth report by the Committee on Standards in Public Life, published October 1998

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In 1997 the Committee was given special terms of reference by the present Prime Minister, the Rt Hon Tony Blair MP, to look at party funding. This enabled the Committee to look widely at the subject, going beyond its usual focus on standards of conduct in public life, and into broader issues of public policy. The Committee drew on the experience of a number of other countries, undertaking study tours of Germany, Sweden, Canada, the United States and Ireland.

The Fifth Report contained 100 recommendations for the reform of party funding. The Committee proposed the introduction of a new framework, overseen by an independent Election Commission with widespread executive and investigative powers. The main features of the framework proposed in 1998 included:

clear rules on full public disclosure of donations (including benefits in kind) to political parties – of £5,000 or more nationally and of £1,000 or more in a constituency – in any one financial year, from any one person or source; an end to blind trusts; donations to political parties to be allowed only from a “permissible source” (defined so as effectively to ban foreign donations); a ban on anonymous donations to political parties in excess of £50; a limit of £20 million on national campaign expenditure in a general election (including benefits in kind) by a political party; clear rules on the preparation and auditing of a political party’s annual accounts and national expenditure on an election; no new state funding, but tax relief on donations up to £500, to encourage small donations to political parties; wider scrutiny by an Honours Scrutiny Committee of all proposals where there might be or be perceived to be a connection between the honour and a political donation; a review of the arrangements for financing opposition parties in the House of Commons and House of Lords, with a recommended increase in funding to enable them to discharge their roles more effectively; controls on the activities of organisations and individuals (other than a political party) spending more than £25,000 nationally on political activity during a general election, with registration and reporting requirements, a ban on foreign donations and both national and local expenditure limits; maintenance of free access to TV and radio for party broadcasts; maintenance of the ban on political advertising on television and radio; shareholder consent for company donations.