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Political parties fund their activities through a variety of sources including public funding, such as policy development grants, Short money and Cranborne money, and through sources such as donations, loans and membership fees. The issue of reform of political party funding is a contentious one, and there have been various attempts at reform in previous decades. The House of Commons Library briefing Political Party Funding: Controversies and Reform Since 1997, 24 March 2016, provides a history of this issue. This Lords Library briefing gives an overview of recent developments in advance of a debate in the House of Lords on 3 November on what plans the Government has for further reform to party funding. The Conservative Party Manifesto 2015 stated “We will continue to seek agreement on a comprehensive package of party funding reform”. The Labour Party and the Liberal Democrats also committed themselves to further reform of party funding in their respective 2015 manifestos.

Since the 2015 general election, the Government introduced two measures which have been seen to relate to party funding. The Trade Union Bill, introduced in the 2015–16 session, included provisions which Labour argued would have a significant impact on their party resources The Government’s position was that the proposals in the Bill were about transparency in union activities, and not about party funding. The Spending Review and Autumn Statement 2015 proposed a reduction of Short money and the policy development grant available. In a recent debate regarding public institutions, Baroness Chisholm of Owlpen, answering for the Government, stated that on party funding, “the Government cannot impose consensus on the political parties but we are open to constructive debate and dialogue on how we can further strengthen confidence in our democratic process and increase transparency and accountability”.

In August 2016, Lord Bew (Crossbench), chair of the Committee on Standards in Public Life, wrote to the Prime Minister and leaders of the main political parties in England, Wales and Scotland, asking them “to re-convene cross-party talks to look again at possible reforms to bring greater integrity into the funding of political parties”. He noted: “In the absence of cross-party consensus for wholesale reform, the Committee remains interested in exploring smaller reforms”.

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