The £5 million question: why Britain's political donation rules are broken

How much money would it take to transform your life. Ten thousand pounds? Fifty thousand? A million? 

How about five million. Overnight you would become one of the richest 1 per cent in the country. For the overwhelming majority, their lives would be radically different. 

And who would you tell? Your family? Friends? It is up to you so long as you tell HMRC when you need to. 

What if you were the leader of a political party, and the money came not from a lottery but from a billionaire with big investments in a fast-growing industry, and who was already bankrolling most of your party’s finances? Should you have to declare that? What if this was the single biggest gift to a UK politician, ever, or indeed the most any politician has received in total over the past 26 years since records began? 

This is, in essence, the debate about Chris Harborne’s £5 million gift to Nigel Farage shortly before he became Reform UK’s party leader and committed to stand at the 2024 general election. 

There is a clear public interest in knowing who funds our politicians, and therefore who they may be indebted to when they secure positions of power. In theory, there are various rules and laws intended to provide transparency about where money comes from in politics. In practice, they are ageing, complex, and subject to wildly different interpretations – not useful for those complying with or enforcing them. 

The House of Commons Code of Conduct requires MPs to declare any ‘personal benefit’ they received in the 12 months prior to taking office – unless these gifts could not reasonably be thought to relate to their political activities. There are, however, separate but overlapping rules under the Political Parties, Elections and Referendums Act (PPERA) that also require members of political parties to report substantial gifts for similar purposes. Consequently, whether Mr Farage broke either of these rules will turn largely on how ‘political activities’ are defined. 

The problem is that ‘political activities’ in PPERA have been interpreted far too narrowly in recent years, creating a regulatory black hole with no effective controls on donations for a range of politicians, including ministers, prospective candidates, and others campaigning for election outside the short four-week regulated period ahead of polling day. Our analysis from the last Parliament estimated this loophole was concealing about £5 million of contributions at general elections. Given what we know now about Harborne’s gift, it could have been £10 million or more in 2024. 

With the Representation of the People Bill now before Parliament, we are calling on ministers to close this loophole for good with some targeted and clinical tweaks to the law. These would make it absolutely clear that big gifts to politicians – whether it be to finance or reward their campaigning or pay for their personal security – must come from legal sources and be a matter of public record. 

At the same time, they should make it clear that politics is not for sale and introduce an annual limit on how much any individual or organisation can donate, as is the case in Canada, Italy, France and Australia. When polled, over two thirds of respondents thought such as cap should be £50,000 or less. Our modelling shows this is possible without recourse to public funding – often a straw man used to deter anyone proposing such a radical shake-up of our broken status quo. 

Before the last election Labour pledged to protect democracy by strengthening the rules on political donations and putting the national good above partisan interest. The Government’s own review of foreign interference recommended these issues should be debated by Parliament. Ministers have the majority and the mandate to deliver on these crucial reforms. They should do so now before we have the same issue ahead of the next general election, which will do nothing to allay plummeting trust in our politics.