Italy's lower house approves state funding cut

The proposal, which forms part of a wider package of measures to reform party finances, will cut their funding by the state to 91 million euros (73 million pounds) per year.

The move follows losses for traditional parties in local elections on Monday, and a sensational advance for comedian Beppe Grillo's Five Star Movement, which won the mayor's office in the northern city of Parma.

Public confidence in the political system has been fading in the face of repeated financing scandals.

One involved senator Luigi Lusi, accused of embezzling millions of euros of funds while serving as treasurer of the now-defunct La Margherita party, which helped form Italy's biggest centre-left force.

Even the Northern League, which presented itself for years as a crusader against corruption, is now embroiled in a scandal over misuse of public funds.

Unemployment, recession and austerity measures have encouraged voters to shift support to protest parties ahead of a general election next year, as traditional parties have become widely seen as symbols of privilege, waste and corruption.

Grillo, the Northern League and the Italy of Values party led by former prosecutor Antonio Di Pietro, had lobbied to scrap public financing of parties altogether, but parliament rejected their proposals.

A national referendum in 1993 passed with about 90 percent of votes in favour of abolishing state funding for parties.

But the following year the parties reintroduced it in the form of reimbursements of election spending, which is paid in tranches and does not correspond to the amounts actually spent.

(Reporting By Catherine Hornby; Editing by Myra MacDonald)