Needs Musk: Minister Pledges Crackdown on ‘Dark Money’ in British Politics

Keir Starmer’s Government has pledged to tackle loopholes in Britain’s political funding system, amid growing concerns over foreign interference in UK political parties. 

MPs debated the “urgent need” to reform political finance rules on Thursday, as public trust in political parties remains at record lows.

The debate followed warnings from multiple independent bodies, including the Intelligence and Security Committee and the Committee on Standards in Public Life, about the dangers of unchecked political donations.

Political finance regulations have come under intense scrutiny in recent years — and are a national security issue given Russia’s intense disinformation and influencing campaigns to destabilise Western democracies. 

It has also been given fresh urgency by suggestions that Donald Trump ally and the world’s richest man, Elon Musk, is considering giving up to $100m (around £80m) to Nigel Farage’s far-right Reform UK party. 

Transparency International UK notes there is “widespread evidence” of opaque donations, foreign interference, and unchecked big money influencing elections. 

Research from the non-profit campaign group revealed that nearly £1 in every £10 donated to political parties since 2013 comes from unknown or questionable sources.

In Thursday’s debate in the main Commons chamber, MPs called on the Government to take immediate action to close legal loopholes that allow potentially dark money to flow into UK politics. Proposed reforms include:

• Capping political donations and spending to reduce the influence of big money.
• Strengthening transparency by lowering donation reporting thresholds to £500.
• Protecting democracy from foreign interference by ensuring corporate donations only come from UK profits and improving checks on donations made by unincorporated associations.
• Restoring the independence of the Electoral Commission and increasing fines for breaches to £500,000 per offence or 4% of a campaign’s total spend.

The Government is set to publish a document outlining its approach to elections and electoral reform before the summer recess, with legislation likely in the next King’s Speech. 

Speaking for the Government, Parliamentary Under-Secretary of State for Housing, Communities and Local Government Rushanara Ali MP said: “This Government [is] committed to strengthening our democracy and ensuring full participation in our elections. We will set out the Government’s approach to elections and electoral reform for this Parliament in a published document before the summer recess.”

Responding to concerns over foreign donations, she added: “Foreign money has no place in the UK’s political system, which is why the law is clear that foreign donations are not permitted, with the exception of donations from certain Irish sources to Northern Ireland political parties.”

However, loopholes currently allow foreign donors to skirt this law by donating via UK-registered and trading companies. For example, X’s UK subsidiaries, of which there are several.

Ali made clear the Government does “not think that the current rules provide strong enough safeguards”.

She restated Labour’s manifesto commitment to “protect democracy by strengthening the rules around donations to political parties”. The minister said this would include “enhanced safeguards against foreign donations”.

“We are considering a series of policy interventions, such as enhanced checks by recipients of donations and tighter controls on donors, including more restrictions around company donations,” Ali added. 

Ali further revealed that the Government is “reviewing whether any changes are required to the role and powers of the regulator to ensure that enforcement provides a clear deterrent against breaking the law while remaining proportionate”.

“The Government [is] developing proposals to give effect to those commitments.”

Ahead of the debate, Lloyd Hatton MP, member of the APPG on Anti-Corruption & Responsible Tax, said it is “currently far too easy to sidestep the rules or hide political donations”, adding: “This makes our elections and British democracy vulnerable to undue influence from malign foreign actors or from a handful of billionaire donors. In order to safeguard our national interest and democracy, we must close secrecy loopholes and toughen up enforcement against suspect political donations.”

Daniel Bruce, Chief Executive of Transparency International UK, added: “MPs know better than most the privileged access and influence that big money can buy in politics. They are also right to be concerned about foreign interference and money from hidden sources. 

The Government appears to have ruled out a cap on political donations, but other changes appear likely. 

So-called unincorporated associations, often ‘dining clubs’ for the wealthy, aren’t required to check if their donors are permissible, potentially allowing foreign money to flow through them (£38.6 million came from such associations).

The Electoral Commission’s maximum fine for wrongdoing is only £20,000, which is considered insufficient to deter wealthy donors from breaking rules.

The previous Conservative Government was criticised for weakening the Electoral Commission’s independence and increasing spending limits during election periods by around 80% — shortly before the 2024 General Election. 

But concerns about Britain’s loophole-ridden election laws go further back. The Electoral Commission has been calling for reforms for around twenty years.

The Parliamentary Intelligence and Security Committee’s 2020 ‘Russia Report’ identified that multiple members of the Russian elite with links to Vladimir Putin had attempted to donate to British political parties. Key parts of the report were redacted, and it is yet to be published in full. 

A swathe of Labour MPs called for legal changes in Thursday’s debate. Chris Hinchliff MP raised concerns about property developers’ donations influencing planning decisions, suggesting a ban on political donations from developers.

Neil Duncan-Jordan emphasised that public trust in the political system is at an all-time low, with nearly 60% thinking party funding lacks transparency.

Several others including Joe Powell raised the Musk case as emblematic of the problem. 

Lloyd Hatton noted: “Elon Musk, the richest man in the world and not a British citizen, was giving ‘serious thought’ to donating millions of pounds to a British political party—Reform UK. As a South African-born billionaire who lives in the United States, Elon Musk cannot legally make a personal donation to a British political party, but, as we know, he could easily go through the UK subsidiaries of his various companies.” 

Lib Dem Sarah Olney pointed to Musk — just weeks before he became a US Government official — suggesting that America should “liberate” the people of Britain and overthrow the UK Government. 

“I hope that other parties will join the Liberal Democrats in unequivocally condemning such remarks. That incident further proves that we urgently need to tighten up political funding. That includes a cap on big donations. We must prevent foreign oligarchs from being able to interfere in our democracy.”

Phil Brickell mentioned past examples including Lubov Chernukhin (wife of a former Putin Minister) donating over £2 million to the Conservative party.

Only one Conservative MP spoke during the dirty money debate, Shadow Minister for Communities, David Simmonds. He noted that despite increased spending limits, actual spending by parties in the last election decreased. 

Simmonds questioned why the Labour Government had “abandoned” commitments in the National Security Act 2023 to enhance information sharing between regulators and political parties about potential dodgy donors.

The Conservative frontbencher also raised several alleged missteps of the Labour Government on foreign interference: “Will the Government take steps to close the loophole created by the Labour Welsh Government and the SNP Scottish Government that, for the first time, allowed Russian, Chinese and Iranian citizens resident in those countries to donate to UK-wide politicians and political parties? 

“Why has the Minister chosen not to include China in the enhanced tier of the foreign influence registration scheme?…Is that not a green light to the Chinese Communist party to enhance the degree of influence it seeks to transact in British politics?”

The Defending Democracy taskforce, chaired by the Home Secretary alongside the Deputy PM, is examining these issues to “protect democratic integrity.”

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