Starmer
urged to change donation rules amid talk of Musk bankrolling Reform
Exclusive:
Electoral Commission wants prime minister to protect elections from foreign
interference
Pippa Crerar
Political editor
Wed 18 Dec
2024 23.37 GMT
Keir Starmer
must strengthen the rules around political donations to protect the electoral
system from foreign interference, the Electoral Commission has said, amid
rising concerns about Elon Musk’s plans to donate millions of pounds to Reform
UK.
Vijay
Rangarajan, chief executive of the elections watchdog, said that linking
donations to political parties to the UK profits of companies owned by
foreigners was one of the urgent changes needed to retain the trust of voters.
The move,
which the Guardian understands is being considered by the government, could cap
the amount that Musk, the world’s richest man, could donate through the British
arm of his social media company X (formerly Twitter).
Twitter UK’s
latest publicly available accounts show pre-tax profits of £8.5m in 2022, on a
turnover of £205m, substantially lower than the $100m (£80m) that Musk was
initially said to be willing to donate.
After a
meeting with Musk this week at Mar-a-Lago, Donald Trump’s Florida estate, Nigel
Farage, the Reform UK leader, said the multi-billionaire was giving “serious
thought” to bankrolling the party.
The prospect
has been met with alarm inside the Labour government, with sources suggesting
that it would “not be within the spirit” of the existing party funding rules
and that it underlined the need for the legislation to be tightened up.
Electoral
law in the UK currently stipulates that all donations and loans to political
parties worth more than £500 should come from “permissible donors” registered
in the UK. These include voters on the electoral register or companies
registered in the UK.
The watchdog
also wants political parties to be legally bound to make enhanced checks on
donations to assess their risk, and to ensure those who donate to
“unincorporated associations” are permissible donors.
“It’s
crucial that UK voters have trust in the financing of our political system, so
they need to see how parties and campaigners are financed and how they spend
that money at elections,” Rangarajan told the Guardian.
“Our current
laws include checks on the permissibility of donations and are intended to
provide transparency over the source of political donations. But the system
needs strengthening, and we have been calling for changes to the law since
2013, to protect the electoral system from foreign interference.
“We
recommend three key changes: limit company donations to the money that they
have made in the UK; legally require parties to conduct know-your-donor checks
on donations to assess and manage their risks; and ensure those who donate to
unincorporated associations are permissible donors. We are discussing these
proposals with the government.”
Labour
pledged in its manifesto to protect democracy from the threat of foreign
interference by strengthening rules around donations. The Guardian understands
that officials have already begun detailed discussions with the watchdog over
drafting and implementation of the plans.
“Now is the
moment to close the loophole,” said one source. “Any donation from Musk would
be a significant risk politically because it would open up Reform UK to the
charge of being financed by foreign money.”
As a US
citizen, Musk cannot legally make a personal political donation to a British
political party. But in an interview after the meeting Farage said: “He wants
to help us, he’s not opposed to the idea of giving us money, provided we can do
it legally through UK companies.”
Reform UK
has said it wants to “professionalise” the party as it attempts to grow its
support after winning five seats at the general election. This could include
setting up offices in constituencies across the country, an internal research
operation and spending millions on political advertising.
The prime
minister’s spokesperson said: “The rules around donations are already clear and
work is ongoing to reinforce the existing safeguards in that space … we’ll set
out more details on that in due course.”
Tightening
the rules would require primary legislation and ministers are not expected to
bring forward a bill to deliver on their manifesto pledge until the end of next
year at the earliest, with the changes not introduced until 2026.
Some
officials are concerned that pressing ahead with the Electoral Commission’s
recommendations any sooner could look like a politically motivated attempt to
prevent Reform UK from building up a war chest before the next election.
But Labour
backbenchers are pressing the government to act. Joe Powell, the MP for
Kensington and Bayswater, said on BlueSky: “I am utterly staggered by Reform
UK’s shameless plans to subvert UK election law.
“A Reform MP
explained to me this morning just how they’ll do it. This is about more than
any specific individual – it’s about hostile foreign actors trying to undermine
our democracy.”
Labour
figures are also concerned about the photograph of Reform UK’s treasurer, Nick
Candy, a multimillionaire property magnate, posing alongside Musk and Farage at
the Mar-a-Lago meeting.
They fear
that wealthy rightwingers could be encouraged to donate to Reform UK in
anticipation of a similar meeting with a senior member of the Trump
administration, particularly if they run a business that could be hit by
tariffs.
The
Commission on Standards in Public Life, which advises the PM on ethical issues,
has also previously recommended that donations be linked to UK profits in its
review on regulating election finance.
Lord Khan of
Burnley, an elections minister, told peers this month: “We are considering
changes that will help protect our system from foreign interference, such as
tighter controls on donations.
“For
example, 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.”
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