The donation of £72m to Reform by two cryptocurrency billionaires formerly living abroad has prompted a wider debate about money in our politics.
In 2025 the government commissioned Sir Philip Rycroft to investigate allegations of foreign interference in British politics. He recommended a cap on party donations from British citizens living abroad, and the government immediately accepted this, including it in the Representation of the People Bill, currently in the House of Lords. Stella Creasy MP proposed a broader amendment that would cap all donations. Although she eventually withdrew it, the proposal may be revived in the House of Lords. So, what are the issues?
Principles
Parties need money to pay for research, policy development and campaigning, but in a democracy, we want everyone’s voice to have equal weight. That is not the case if rich individuals are allowed to give unlimited money to a political party.
So, there are two questions to consider. What limits should there be on donations to a political party, and how much a party can spend on an election?
Recent history
Traditionally, very large donations have been rare, going mostly to the two main parties: from business to the Conservatives and trade unions to Labour. Other parties have been funded mainly through small donations and membership fees. But the size of donations has been rising. Since 2010, more than 20 individuals and organisations have donated more than £1 million to a political party.
Having money is not the same as spending it, and the law already restricts how much a party can spend on an election. In 2023 the Conservative government raised the limits, and the table shows the result.
| 2015 | 2024 | |
| Spending limit for each party | £19m | £34m |
| Total spent by all parties | £37m | £69m |
| Percentage in donations over £1m | <1% | 35% |
Election spending limits apply during a regulated period covering the 365 days ending on polling day, calculated retrospectively once a general election date is announced. Before that, there is no limit on how much a party can spend to raise awareness and promote its policies.
During that regulated period, high spending caps enable parties with few active members to buy mailshots and advertising to compensate for lack of activists on the ground.
And the situation has been transformed by two individuals who have donated more this year to Reform than the combined spend of all the main parties in the 2024 election.
Do parties need this much?
Total general election spending rose by 250% between 2019 and 2024. But international evidence suggests that it is possible to run a democracy with much less money. Nineteen European countries have some form of donation cap. The average is around €50,000, but with a very wide range, from €500 a year in Belgium to €100,000 in Italy.
Capping donations
A cap on donations would affect different parties differently. The Electoral Commission has examined the impact of different levels of donation cap, based on current data. Overall, a cap at £100,000 would reduce the total collected by all parties by 57%. A cap at £10,000 would reduce it by 86%.
The table shows the relative effect of those caps on five parties. The cap columns show each party’s share of the total donations that would remain if the relevant cap were applied.
| Total reported donations 2020-2025 £m | % of all donations to these five parties 2020-2025 | Cap at £100k | Cap at £50k | Cap at £10k | |
| Conservative | 142 | 47% | 49% | 50% | 48% |
| Labour & Coop | 103 | 34% | 23% | 21% | 19% |
| Liberal Democrats | 31 | 10% | 20% | 22% | 27% |
| Reform UK | 24 | 8% | 5% | 4% | 3% |
| Green | 3 | 1% | 2% | 2% | 3% |
| Total | 304 | 100% | 100% | 100% | 100% |
| Alternative Reform calculation including the two recent £36m donations | 96 | 26% | 6% | 4% | 3% |
In the past, the main losers from capping donations would have been Labour, because of their heavy dependency on a few trade unions. The Conservatives, whose donor base is wider, would have lost less, and the relative winners would be the Liberal Democrats, who lack major donors at present. But the decision is most critical for Reform. If their recent donations are allowed, their share of overall funding rises to over 26%. But any cap would put them back to under 10%.
Labour and the Unions
In this debate, Labour faces a special dilemma. The party was founded by the trade union movement to represent the interests of working people, and the big unions remain its biggest donors. But these are not individual decisions. Union funds come from a voluntary political levy paid by around 4 million members, and unions have democratic procedures to determine how that money is spent.
The Labour party will claim that union donations, as the collective voice of thousands of individuals, should be treated differently. A voluntary donation on behalf of a million members is very different from the same sum from a single rich individual. However, in considering whether to introduce a cap, the Labour government will be very aware that opposition parties will present this as special pleading, or indeed as a direct attempt to disable Reform.
Public opinion
Public opinion has long been in favour of limiting donations. YouGov’s latest tracker data shows 60% of people in favour of a donation limit, with only 22% opposed. And in a previous survey when they asked in more detail, they found 55% in favour of limiting donations to £5,000 or less.
State funding?
An alternative to donation funding is state funding. And we have an element of this already. Around £10m of public money (known as ‘Short Money’) is given to opposition parties, since they lack the resources of the state available to the governing party.
In 2011 the independent Committee on Standards in Public Life recommended a radical reform, aimed at reducing the influence of money on politics. They proposed that the state should become the main source of party funds, using taxpayers’ money, allocated on the number of votes cast for each party. Individual donations would then be capped at £10,000 a year.
The Committee calculated that, based on party spending at the time, this would have cost the average income taxpayer only £1 a year, and it would largely remove the influence of big money on politics. But despite the relatively small sums involved, the level of public mistrust of politicians has made governments reluctant to propose it. But perhaps its time has come.
Time to grasp the nettle?
Amending the current bill could make our system more democratic, and reflect the views of most of the electorate. It might even attract some cross-party support, since caps would benefit the smaller parties, and even the Conservatives, whose large donation base has been dwindling. But Reform are already presenting the plans to cap foreign donations as an attempt to lock them out of mainstream politics. Any attempt by the current government to cap domestic donations will be attacked as yet another politically motivated conspiracy.
But there is a broader principle. Do we really want our politics to be dominated by money, in the way it is in the US? And would a system which spent much less be less democratic?
More from East Anglia Bylines
What happens when the media itself becomes part of the problem? Who holds it to account? 14 years after the Leveson Inquiry reported its findings, has anything really changed? And how can we build something better?
Join Bylines Network on Wednesday 21 October, for a vital conversation about the media Britain needs — and what it will take to get there.
The event will conclude with a live audience Q&A.
