Labour MPs are pushing for a cap on political donations to counteract Nigel Farage’s significant financial supporters. However, Andy Burnham is unlikely to fulfill their wishes. According to two officials familiar with government strategy, the elections bill, returning on Sept. 2, will not feature a universal domestic cap on political donations. While foreign interference and cryptocurrency donations are targeted in the legislation, the cap on domestic donations is absent, with officials not dismissing revisiting it later.
Despite pressure from MPs concerned about Farage’s donation influx and Burnham showing interest, current UK law allows unlimited domestic donor contributions, with only donations over £11,180 reported to the Electoral Commission. Burnham previously advocated for a cap, proposing an upper limit of around £500k. Since Burnham became Prime Minister, there’s been anticipation regarding the potential inclusion of a donation cap in the Representation of the People Bill.
However, two officials caution that such a cap could delay initiatives like lowering the voting age to 16. A third official acknowledges the bill’s return as a critical juncture but proposes deferring comprehensive action until the House of Lords’ consideration.
Some Labour MPs label excuses against a cap as unfounded, especially due to union concerns. A POLITICO analysis shows a £500,000 cap would significantly impact political finances over three years, most heavily affecting Farage’s Reform UK, which would see a 55% reduction, equating to £12 million. Labour stands to lose 47.4% of its donations, approximately £34 million, if union funds are not exempt.
A union exemption could preserve Labour’s financial strength, retaining £12 million during crucial election periods like 2024. The GMB union warns against MPs supporting the cap due to potential damage to Labour’s ties with unions. Either implementation—a cap with or without union exemptions—presents political risks for Burnham. A union-inclusive cap could strain Labour’s foundational relationships, whereas exemption criticism could fortify Farage’s narrative against establishment bias.
Keir Starmer, Burnham’s predecessor, previously suggested an annual £100,000 cap on overseas donations, primarily affecting expatriates like Christopher Harborne, who donated £12m to Reform UK. MPs urge Burnham to extend similar measures domestically. Various amendment proposals for a domestic cap have emerged, the most backed from Labour MP Stella Creasy, aligning with the overseas donation cap.
Creasy’s amendment, supported by Transparency International UK, suggests exempting union affiliation fees from the cap, offering a resolution for the union dilemma. POLITICO analysis highlights that this approach could minimize the financial impact on Labour, where union contribution distinctions become crucial.
The Creasy amendment’s proposed £100,000 cap could significantly reduce major party funding. In 2023, it would have cost the Conservative Party over £26 million, approximately 54% of donations, and Labour might have lost between £11 million and £16 million. The cap’s percentage impact would persist into the 2024 election cycle, affecting other parties similarly, notably hitting Reform UK due to hefty donations reliance.
Despite record election spending in 2024, a cap would have influenced party finances, aligning with public support. YouGov’s tracker in January reported 67% of Brits favoring a £50,000-or-less cap, highlighting a decline in support for unlimited donations from 21% in 2020 to 13% at the year’s start.
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