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Keir Starmer is considering plans to close a loophole that allows foreign billionaires like Elon Musk to bankroll British political parties, one of his ministers has signalled.
Recent reports suggest the X-owner is considering donating up to $100m – around £80m – to Nigel Farage’s Reform, after signalling his support for the party.
While there are restrictions on foreign citizens donating to British political parties, these can currently be evaded under the law, if the donation is made via a UK-based company.
While both Farage and Musk have denied suggestions of any imminent donation, the Reform leader has also said he would accept money were it offered.
Asked on Thursday by Lib Dem peer Lord Rennard whether the Government has plans to change the law on political donations, DHLG minister Lord Khan replied that the Government is “considering changes that will help protect our system from foreign interference” adding that these could include “such as “tighter controls on donations.”
He told peers: “The Government [has] committed to reforming political finance rules…The Electoral Commission has pointed to a need to consider the rules on company donations. Details of these proposals will be brought forward in due course.”
On Monday, Elon Musk’s father said that Nigel Farage could get a $100 million donation if it was needed to ensure that Reform UK wins the next General Election, saying “I think it’s a good idea”.
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Lord Rennard cited reports from Transparency International this week on “how dark money from dodgy sources can infect British politics” and called for a £10,000 cap on individual donations, as recommended by the Committee on Standards in Public Life.
Interestingly in a week where speculation about Elon Musk donating to Reform UK has run rife, Government spokesman Lord Khan adding that the Government’s “primary concern is reducing the threat of foreign interference” and they are developing proposals while engaging with stakeholders like the Electoral Commission.
Labour peer Baroness (Margaret) Hodge added that it’s “vital that the new Government take every step to clean up our politics” and called for greater transparency, banning foreign donations, and strengthening the Electoral Commission’s powers. Baroness Hodge was speaking during a panel on the issue organised by the campaign group Transparency International earlier this week.
Conservative peer Lord Forsyth used his slot to stick the boot into the Lib Dems, who back reform (unlike the Conservatives). He told the chamber the party had received funds from a “convicted fraudster, Michael Brown” and asked if parties should have to return money from fraudulent sources.
Elon Musk’s $100m Threat to Bankroll Nigel Farage and Reform Exposes the Gaping Loopholes Endangering UK Democracy
Keir Starmer is being urged to act now to prevent foreign billionaires from exploiting these gaps in our electoral system
Fellow Conservative Baroness Finn asked if donation caps would “also extend to clothes and glasses,” a jibe at the PM and his wife receiving gifts from Labour peer Lord Alli. Labour frontbencher Lord Khan said it was not relevant to the question.
Others in the debate called for a focus on so-called unincorporated associations, which allow large donations to be made anonymously through private clubs and unregistered bodies.
Labour’s Lord Beamish said the method “has been used by the Conservative Party on an industrial scale to make it very difficult to know where large sums of public money affecting our elections are coming from.” Labour has also made use of unincorporated associations, though on a smaller scale than the Conservatives.
Lord Dodds raised a “backdoor loophole whereby foreign donations to political parties find their way to Northern Ireland through the Irish Republic.” The Government promised to look into it. It is possible that this method was used to fund pro-Brexit adverts in England by the Northern Ireland-based Democratic Unionist Party during the EU referendum campaign in 2016.
Caps on donations to parties would “democratise the process” and get parties to focus on building their membership again, rather than bowing to big business and the wealthiest, Lib Dem Lord Taylor argued.
Speaking for the Government, Lord Khan also revealed that the total number of Brits registered to vote from abroad in July’s General Election was 191,338, roughly equivalent to the electorate for 2.5 parliamentary constituencies (of 650). Last year the Conservative Government scrapped the 15-year time limit Brits could still vote while living abroad.
Lord Khan ended by noting that “democracy is precious… The Government’s focus is on our manifesto commitment to strengthen integrity in our democratic process…We want to make sure that no malign actors can contribute to it and that any foreign interference is stopped.
“However, it is for political parties themselves, under law, to ensure the nature of the donation and the background of the company or individual making it.”
There was no legislation on party funding brought forward in Keir Starmer’s first King’s Speech after July’s General Election – so reformers are looking to the next one, likely to be delivered towards the end of 2025.
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MPs Call for Tighter Laws
The development comes after a new parliamentary group made up of over 100 MPs launched a report pushing for urgent democratic reform, amid growing concerns about the integrity of Britain’s elections.
Backers of the All-Party Parliamentary Group (APPG) for Fair Elections, launched by Open Britain and Fair Vote UK, say it represents Parliament’s biggest democracy reform coalition to date, with 109 members.
The group’s inaugural report, launched in Westminster last Monday, is dubbed “Free But Not Fair” and calls for three major reforms by PM Starmer:
- Creating a National Commission on Electoral Reform
- Strengthening rules around political funding and restoring the powers and independence of the Electoral Commission
- Requiring greater transparency from social media platforms on content moderation to clamp down on misinformation and disinformation
The launch follows Donald Trump’s recent presidential election victory and growing concerns about the surge of the far-right in Western democracies.
There is no cap on donations to UK parties, and donations can be made through UK-trading companies, even if the funds are from foreign sources under current loopholes.
But a Downing Street source had insisted earlier this week that capping donations was “not a priority” for the Government.
Reform leader Nigel Farage MP told the BBC: “I’ve never solicited a donation from [Musk], and one has never been offered.” But he added: “Of course I’d accept money” from the US billionaire.
Democracy group Open Britain says polling shows a strong public appetite for political reform.
Mark Kieran, CEO of Open Britain, said: “The public are demanding change, and their message is clear: they want a political system that truly works for them – and they want it before the next general election.”
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