Background

  3.1  In its Special Report 13/2000,[4] the European Court of Auditors (ECA) recommended a Statute on European Political Parties (EPPs) and their funding. The report drew attention to weaknesses in the way in which the European Parliament (EP) managed its finances and recommended that it adopt new rules stipulating clearly that the expenditure of the political groups must be connected with the activities and policies of the EU. A draft Statute was proposed by the Commission on 24 January 2001. It was debated, together with the ECA report and a draft of the Statute for Members of Parliament,[5] in European Standing Committee B on 29 January 2001.[6] The text of the draft Statute on the EPPs was deposited on 7 March and we cleared it on 18 July 2001.[7] The Statute has not been actively considered since then.

  3.2  Article 191 of the EC Treaty, as modified by the Treaty of Nice, states that the Council shall lay down the regulations governing political parties at European level and in particular the rules regarding their funding. This Commission proposal overtakes the text we cleared in 2001, but draws heavily on it. The aim of the Regulation is to establish a clear framework for recognising EPPs, including a transparent process for their part-funding from the EC budget. The Minister for Europe (Mr Denis MacShane) says that the new draft:

       "—  gives the European Parliament responsibility for registering EPPs;

       —  confirms that political parties and alliances of political parties are eligible for registration as an EPP;

       —  applies on the same basis to all European political parties;

       —  requires that the political party or alliance of political parties respect the principles of freedom and democracy, human rights and fundamental freedoms, and the rule of law;

       —  requires EPPs to be present in at least three Member States and to have participated in European Parliament elections (or have formally expressed its intention to do so);

       —  proposes that EPPs have legal personality in the Member State in which they are located;

       —  identifies a maximum of _8.4 million (approximately £5.75 million) from the EC budget to fund up to 75 percent of the running costs of EPPs (including administration, logistical support, meetings, studies, information and publications);

       —  includes assurances that the funds may not be used for direct or indirect financing of election campaigns or national political parties;

       —  grants access to funding for EPPs which have elected representatives (European, national or regional) in at least one-third of Member States, or have received at least 5 per cent of votes cast in the last European Parliament election in at least one-third or Member States;

       —  further requires all donations over _100 to be declared;

       —  prohibits donations from European Parliamentary political groups; anonymous donors; or State-owned companies. Donations over _5,000 per year and per donor, would not be permitted either; and

       —  requires annual accounts of revenue and expenditure to be published and submitted to the European Court of Auditors."

The Government's view

  3.3  The Minister comments that the Government has supported this Statute and has played a constructive role in negotiations:

"It fits well into our wider support for greater transparency and sound financial management, across the board of EU business. All political groups in the European Parliament have also supported a Statute".

  3.4  He says that the Government is content that the proposal retains the assurances it negotiated in 2001, namely that:

"—  any political party or alliance of political parties may register as an EPP. (Article 3)

• the funds may not be used for the direct or indirect financing of national political parties (Article 6) or election campaigns. (Article 7)

"We welcome that the draft Statute applies on the same basis to all EPPs. This means funding will go to any genuinely European party, whether they are for or against the European Union. (Article 3).

"We are, however, concerned that the threshold for eligibility for funding has been proposed as one-third of Member States. Such a high threshold could result in funding being restricted to the larger groups, thereby discriminating against smaller political parties or alliances of political parties. The Government intends to make clear our concern at such a high threshold, at a very early stage in the negotiations. (Article 5).

"The proposal for _8.4 million of the EC budget to be set aside for part funding EPP running costs represents a 20 per cent increase on the proposal discussed in 2001. This increase reflects the larger EU population that will result from the 2004 wave of enlargement. We see no difficulty with such an increase, provided that [resources] can be found from within existing financial ceilings. The financial statement attached to the draft Statute indicates that this is indeed the intention."

  3.5  The Minister adds that funding under the proposal would be provided from within the existing financial programming.

Conclusion

  3.6  We agree with the Government that the high threshold for eligibility for funding could discriminate against smaller political parties or alliances of political parties and welcome the Minister's assurance that the Government intends to take up this point at a very early stage in the negotiations. The amendments negotiated by the Government in 2001 to meet the concerns expressed then have, as the Minister notes, been retained in this draft and we welcome this too. We believe it is important that this Statute and the Statute for MEPs should be adopted in time to take full effect before the June 2004 European Parliament elections and, like the European Parliament itself and the Greek Presidency, we are keen that negotiations on them should be swiftly concluded. The texts of both proposals now put forward seem to us to offer a good prospect for agreement.

  3.7  We ask the Minister to inform us of the progress of the negotiations and meanwhile do not clear the document.

5  See paragraph 4 of this Report. Back

6  Official Report, European Standing Committee B ,29 January 2001, European Parliament. Back

7  (22163) 6270/01; see HC 28-x (2000-01), paragraph 7 (28 March 2001) and HC 152-i (2001-02), paragraph 52 (18 July 2001). Back