Ministry of Justice
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Funding of Political Parties - Inter-party talks suspended without agreement

Funding of Political Parties - Inter-party talks suspended without agreement

MINISTRY OF JUSTICE News Release (IPT/003/007) issued by The Government News Network on 30 October 2007

Talks between the three main political parties to reach agreement on measures to reform political party funding have been suspended, Sir Hayden Phillips, the Chairman of the Talks, announced today.

In announcing the suspension of the talks Sir Hayden said:

"The issue of how political parties are funded is one of considerable public importance, not just in terms of probity and propriety, but also in terms of helping to restore trust and confidence in the wider political system.

"In my report on party funding published in late March I set out the principles upon which I believed an agreement on future reform could be reached.

"On this basis, the three main parties agreed to enter into direct discussions with each other. These inter-party talks began in May under my chairmanship and there were four meetings held through the summer. In my view good progress was made.

"I said at the outset of these talks that I believed that a consensus between the parties on future reform was both desirable and possible. Yet despite progress on a number of issues, it became clear at the fifth session of talks held today that the parties would not be able to arrive at an agreement on an overall package of reform at present.

"I am now publishing the draft agreement that I put to the parties in late August. I hope that this will inform the current public debate.

"I wish to place on record my thanks to all of those who have assisted me in my work on party funding.

"I remain convinced that an agreement to reform party funding would be in the general public interest, and I hope that all possible efforts will be made to achieve some consensus on a comprehensive package of reform."

Proposals for the funding of political parties Annex

A draft agreement containing proposals for the funding of political parties was put to the parties represented in the Talks in late August 2007.

The draft agreement contains five sections. These are: donations; spending controls; public funding; compliance; and transitional arrangements and review.

The section on donations proposes that there should be a cap on donations set after a transitional period at a final level of £50,000, applying to parties with two or more elected representatives in Parliament, the devolved administrations, or the European Parliament. The cap would apply to donations from all permissible donors.

Donations from trade unions, which would continue to come from unions' political funds, would be subject to the £50,000 cap. Affiliation fees would not be subject to the cap, as they would be treated for the purposes of the cap as the individual donations of trade union members, provided certain conditions set out in the draft agreement were met.

The second section is spending controls. The proposal is for a spending cap to apply over the course of a Parliament, and to cover all expenditure by a political party, with certain exceptions specified in the draft agreement. This would be a change from the current system, under which only party expenditure directly used on campaigning in the year before a general election is regulated.

For a full term of the next Parliament the proposed limit on regulated spending would be £150m.

The third section is public funding. There are two proposals: first, for a matched funding scheme whereby a donation from an individual of £10 or more attracts £10 of public funding; second, for a scheme based on public support whereby parties would receive money based on the number of votes they receive at relevant elections.

Only parties subject to a cap on donations would be eligible for this public funding. The fourth section is on compliance, and sets out the principles by which the new system of party funding would be regulated by the Electoral Commission.

The fifth and final section provides for transitional arrangements to allow parties to adjust to the gradual imposition of a cap on donations and new controls on spending, and to phase in the proposed additional public funding. In addition, it proposes a mechanism whereby these arrangements can be reviewed on a regular basis.

Notes to Editors

1. Sir Hayden Phillips reported on his Review of the Funding of Political Parties on 15 March 2007. It is published at

2. The Prime Minister invited Sir Hayden to chair talks between the political parties. On 15 March 2007 the Prime Minister said:

I welcome Sir Hayden's report. He has negotiated his report with skill and dedication, and for this I am very grateful. I am sure that the other political parties share my gratitude.

The report shows very clearly that there is now the basis for a new agreement on the funding and expenditure of political parties. There are a number of detailed questions which need to be taken forward, through a process of further discussion between the political parties. I hope that following these negotiations, consensus can be reached. I have asked Sir Hayden to chair these further discussions. I believe that they should begin soon and conclude before the summer recess, in order to build a platform for legislation in the next Parliamentary session.

The time has come for us to find a new settlement on party funding and expenditure.

3. This was confirmed by the present Prime Minister when on 23rd July he said that the issue of party funding was "a matter for discussion between all the parties in the light of the Hayden Phillips Review."

4. The party delegations were led by
Conservative Party: Francis Maude MP
Labour Party: Jack Straw MP
Liberal Democrat Party: David Heath MP

5. Sir Hayden Phillips is chairman of the National Theatre, Chairman of HansonWesthouse Ltd and Charities Consultant to TRH The Prince of Wales and Duchess of Cornwall. He is a director of St Just Farms Ltd, of GSL, and an adviser to Englefield Capital. He is chairman of the Salisbury Cathedral Fabric Advisory Committee, chairman of Marlborough College Council and Deputy Chairman of the Wiltshire Historic Buildings Trust. He is a Deputy Lieutenant of Wiltshire. His previous career was in the Civil Service. He was Permanent Secretary of the Lord Chancellor's Department and the Department for Constitutional Affairs from 1998 to 2004 and Permanent Secretary of the Department for Culture, Media and Sport from 1992 to 1998. Before that he held senior positions in the Treasury, Cabinet Office, Home Office and European Commission. His report on The Review of the Honours System was published in July 2004.


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