Big money's tightening grip on British politics

They say there’s no such thing as a free lunch, so when we increasingly rely on a small number of extremely wealthy people to bankroll the election campaigns of political parties, we cannot expect it to be without consequence.  

Across the Atlantic we can see that playing out all too clearly. Elon Musk, the world’s richest man and key backer of President Trump, has been instrumental in dismantling considerable parts of the federal state, including USAID – the world’s largest humanitarian effort.  

British politics' seeming addiction to big money is regrettably heading the same way. Our research last year found election costs for our major political parties have increased to £100m – no small change. It has not always been this way. The previous government increased national campaign spending limits from £19m to £34m (which doesn’t include constituency campaigns), intensifying the demand for donations in our political parties.

In this competition for cash, a blind eye has been turned to the source of these funds. In the past two decades, £1 in £10 reported by political parties has come from either unknown or questionable sources. Unincorporated associations have been a particular means of money of undeclared origin entering political parties, with the source of £38.6m in funding from these organisations from 2010 unknown.

More and more of these election campaign war chests come from a small number of super donors. Of the £85m in private donations in 2023 alone, two-thirds came from 19 donors giving over a million pounds each – the highest ever share of mega donations. 

This reliance on increasingly few donors helps feed the perception that political decisions are too often taken in donors' interests, rather than the public’s. Polling out just last month found 63% of the public believe the very rich have too much influence on UK politics. As recent research from IPPR makes clear, the “perceived returns” to voting have also declined in part due to the greater share and concentration of political donations from the mega-rich. What’s more, in 2011, 37% of the public felt political funding was transparent yet by 2024, this had declined to a mere 15%.  

The associated corruption risks are obvious: £42 million has been raised from donors alleged or proven to have been involved in corruption, fraud and/or money laundering. Between 2012 and 2023, there was a further £48.2 million in political funding from donors alleged to have bought privileged access, potential influence and/or honours. There are also 26 peers sitting in the House of Lords who have given over £100,000, with these super donors donating more than £57m between them.  

The politicians are trapped in the middle of this mess, struggling to get one over their rivals, and unable to break free from a dependence on the biggest of political donors. Don’t expect them therefore to call time on this risky, unhealthy and unpopular arrangement without public pressure.   

The solution to this problem is actually fairly simple: limiting the amount any one individual or organisation can donate. It also enjoys public support: more than 60% of the public back donation caps – including a majority of voters supporting each of our major political parties.  

The Government has a mandate for it too – should it decide to exercise it – stating in its recent manifesto that it will strengthen controls on political donations.

Earlier this month, the Committee on Housing, Communities and Local Government, held an oral evidence session on elections policy, I was fortunate enough to be invited to give evidence at. Again, questions were asked on how money from overseas was entering the UK and why transparency regulations are currently insufficient. All important issues, especially in light of reports that Elon Musk was interested in giving money to UK politicians.  

Luckily this time, however, the elephant in the room was addressed. The problem with political party financing in the UK is not just where the money is coming from, but how much money comes from the biggest donors.  

As the Government prepares an Elections Bill expected for the next parliamentary session, they would do well to listen to the public, and not just think of themselves. While closing loopholes allowing foreign money to enter our politics is commendable, we fundamentally need meaningful caps on political donations to end the ability of the mega-rich to wield unfettered influence over our politics.  

With the US showing what could happen here if money in politics is left unchecked, the time to act is now.