The question of who funds politicians and political parties – and why they want to give money to get people elected – is an extremely heated one. In principle, UK voters can support their chosen politicians through donations or benefits, as long as those candidates and their parties keep within spending limits during an election period, which is designed to stop powerful interests from influencing the result.
However, recent years have seen the rise of mega-donors giving vast sums to political parties, leading to calls for a new cap on the amount one individual or company can donate in a year. There has also been pressure for greater transparency around financial interests after the furore over Nigel Farage’s £5m gift from Thailand-based crypto billionaire Christopher Harborne, shortly before the Reform UK leader became an MP. The rules state that gifts only have to be declared if they are political, and Farage has said it was “personal” and freely given with no demands attached. Parliament’s standards commissioner is investigating the case. So, what are the rules on political donations and gifts?
How are political parties funded?
Donations from individuals, companies and organisations make up the biggest element of political funding, but parties also get money from membership fees, party conference events, and state funding known as “Short money” for opposition parties with MPs.
Who can donate to political parties?
Donations above £500 for parties and above £50 for candidates can be made by voters on the electoral register, UK-registered companies carrying out legitimate business, UK-registered trade unions and unincorporated associations.
Why are private donations allowed in preference to greater state funding?
The House of Commons library explains that political funding is underpinned by the principles of “voluntarism”. It says this protects citizens’ freedom to give money as they choose, and avoids placing political parties under excessive control via state funding.
However, critics of voluntarism argue that political parties can become reliant on a small number of wealthy donors, which the Commons library says can “generate a suspicion and risk of undue influence”.
Politicians are also aware that voting to give their parties greater state funding may not be popular with the public, when there are so many other demands on the Treasury.
How do we know who is donating?
Legislation from 2000 governs the transparency regime around donations, adding to the century-old laws that brought in spending limits for elections.
Under the rules, donors and parties have to register names, the size of the donations and the date it was given for a publicly available register. Donations greater than £11,180 in one year must be reported.
Why is there a push by some MPs and civil society groups for a donations cap?
Many MPs are troubled by the millions that have been flowing into politics from mega-donors in the last few years. This includes £20m to the Conservatives before the last election, as well as £15m to Reform UK by Harborne and £4m from Ben Delo, another crypto entrepreneur. The government recently brought in a cap on donations from overseas investors, limiting it to £100,000 in a year.
Research by Transparency International shows the proportion of political donations coming from individuals and companies giving £1m or more has jumped from 1% in 2015 to 35% by 2024.
Stella Creasy, a Labour MP, says this does not go far enough and is pushing for a £100,000 cap for all donors. Another Labour MP, Alex Sobel, has proposed a cap set at £1m.
Why has the government resisted this so far?
No 10 has said people should be free to give whatever they want to political parties. There is also a suspicion that Labour is reluctant to back a policy that could limit donations from trade unions, even though it could be possible to get around that. The GMB union has said it opposes the idea of a cap as it could lead to a backlash against unions funding parties in future.
What are the rules around gifts and benefits for MPs?
MPs must declare any gifts or benefits above £300 in value if they are received in their capacity as a parliamentarian or there is a political purpose for them. If the gift is worth more than £500, then the person giving the gift or benefit must be a permissible source.
They must also register any gift received by third parties – such as family members – if the gift was given because of their status as an MP.
The rules state that MPs do not need to register “benefits which could not reasonably be thought by others to be related to membership of the house or to the member’s parliamentary or political activities; for example, purely personal gifts or benefits from partners or family members”. But the rules add: “Both the possible motive of the giver and the use to which the gift is to be put should be considered. If there is any doubt, the benefit should be registered.”
It says that MPs must declare all their current financial interests, and any benefits (other than earnings) received in the 12 months before their election.
Would a cap have prevented Farage from accepting £5m gift?
It depends. Farage has argued the gift is personal, not political, and did not need to be declared. All gifts or benefits over the threshold need to be registered if they happen within 12 months of an MP elected – but only if they are political. The standards commissioner will decide.
A cap would certainly have curtailed funding from Harborne and Delo to the political party, and also affected the Conservatives and Labour to a lesser extent.
