UK Labour government blocks domestic donations cap, disappointing its own MPs

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Labour’s Farage donor crackdown hits a Downing Street roadblock

A domestic donations cap will not be in the elections bill when it returns next month.

By JOHN JOHNSTON

and SAM BLEWETT

in London

Illustration by Arnau Busquets Guàrdia/POLITICO

Labour MPs want a cap on political donations to stave off Nigel Farage’s big-money backers. Andy Burnham is set to disappoint them.

Downing Street will not include a universal domestic cap on political donations in Britain when the elections bill returns on Sept. 2, two officials briefed on government thinking said. But both the officials, who were granted anonymity to discuss policy considerations, did not rule out returning to the issue again in the future.

“We’re prioritizing cracking down on foreign interference and crypto billionaires as part of this piece of legislation,” one of the officials said, referencing existing proposals in the elections bill from Burnham’s predecessor Keir Starmer to cap overseas donors and ban cryptocurrency donations.

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That’s despite mounting pressure to act from the British PM’s own MPs as they fret about Farage, whose rise has been aided by a flurry of cash from individual donors — and hints from Burnham himself that he is minded to move ahead.

There is currently no limit on the amount individual donors based in the U.K. can give to a political party. Donations above £11,180 must be reported to the Electoral Commission watchdog.

Burnham told transparency campaigners before becoming prime minister that he supported a cap to “guard against the perception of any one party being unduly influenced or swayed by one person or organisation.”

A Liberal Democrat supporter holds up a donation bucket at a party conference in 2021. | Chris J Ratcliffe/Getty Images

While indicating a wider review of political funding would be required before setting a firm figure, Burnham said his “gut feeling would suggest somewhere in the region of £500k” for the upper limit.

Following Burnham’s arrival in No. 10 Downing Street in July, officials in Whitehall had been waiting for a signal that they should start work to include a donation cap in the Representation of the People Bill — the official title of the elections bill.

But the two officials quoted above said using that bill as the vehicle for a cap could delay plans also included in the legislation to give 16-year-olds the right to vote at the next general election.

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A third British official acknowledged the Sept. 2 date, when the elections bill returns, is a “crunch point,” and suggested ministers could “kick the can” and commit to considering action when the bill gets to the House of Lords.

A Labour MP pushing for a donations cap said the arguments being put forward for not going ahead with a donations cap are “bullshit,” adding: “They are scared of the unions.”

Complicated landscape

A POLITICO analysis of how a £500,000 donation cap would have hit the main political parties’ finances over the last three years demonstrates the trade-offs Burnham would face in pushing ahead.

The analysis draws on publicly-available Electoral Commission returns for Westminster’s main political parties between Jan. 1 2023 and Dec. 31, 2025.

It shows a £500,000 ceiling would have curbed 55 percent of Reform UK’s reported private donations over the past three years — amounting to some £12 million — suggesting Nigel Farage’s party would have taken the greatest hit of any of the parties in proportional terms over the period.

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But the data also shows there is potential peril for Labour in slamming a lid on funding — particularly if cash from trade unions, which represent some of the party’s major backers, is included.

A £500,000 cap over the same period — with no union exclusion — would have wiped out 47.4 percent of all private donations to Labour, or around £34 million in funding.

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An exemption from the cap for unions would leave Labour’s war chest significantly stronger. Labour would have kept hold of £12 million of that money over the same period, which included the donation-rich run-up to the 2024 general election.

The GMB trade union has already urged Labour MPs not to back a cap due to concerns it will damage the labor movement’s historic relationship with the party.

Parliamentary pressure

Opting for a cap with or without a union exemption carries significant political risk for Burnham. Capping unions alongside individual donors and corporates would dent Labour’s finances and strain relations with the movement seen as foundational to the party’s identity.

But exempting them from any cap would bolster Farage’s narrative that changes to election rules are part of an intentional establishment campaign to halt his party’s progress.

Burnham’s predecessor, Starmer, already proposed an annual £100,000 cap on donations from British citizens living overseas.

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The measure could create a major hurdle for crypto-entrepreneur Christopher Harborne, who has donated over £12m to Reform UK despite being based in Thailand.

But MPs are already putting pressure on Burnham’s new government to go further.

Several amendments pushing for domestic caps set at various amounts — up to £1 million — were proposed when the bill was introduced earlier this year. A proposal from Labour MP Stella Creasy, which would mirror the £100,000 cap on overseas donors, gained the most support.

A donations bucket featuring Nigel Farage at a UKIP conference in Margate, Kent in 2015. | Ben Stanstall/AFP via Getty Images

At the time, the amendments were aimed at demonstrating political appetite for a long-running campaign to limit the sway of mega-donors, but MPs and campaigners had hoped Burnham’s previous comments had indicated he was gearing up to act.

One adviser working the parliamentary push for a donations cap said MPs could back down if the government suggests its own cap — regardless of the size of it.

“Our preferred outcome is the government come forward with their own individual donation cap,” the adviser said. “Whatever the level is we will support it.”

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Supporters of a cap also pointed to Creasy’s amendment, drafted with assistance from Transparency International UK, as a potential middle-ground for the knotty union problem. Rather than a blanket policy, Creasy proposes that affiliation fees — an annual political levy usually paid by unions on a per-member basis — would be exempt from the cap, while other donations would be included.

POLITICO’s analysis shows that approach would lessen the blow on Labour’s finances — while not providing unions a complete carve-out.

In 2024, GMB gave Labour £2m in total — of which £1.1m was affiliation fees.

Under Creasy’s carve-out for unions, the £1.1m in affiliation fees would go directly to Labour.

Only the remaining £900,000 would be subject to the cap, wherever it is set — meaning a far gentler loss to Labour.

“The loophole must be closed to prevent mega-rich donors who have the potential to harm democracy — as the government has accepted is possible — that means they can continue to donate just because they claim a U.K. postcode,” Creasy said.

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POLITICO’s analysis suggests that the Creasy amendment’s proposed cap — £100,000 — would have eaten into the donation income of leading parties had it been applied over the last three years.

In 2023, a £100,000 cap would have deprived the then-governing Conservative Party of more than £26 million — around 54 percent of all its declared donations.

Labour would have lost between £11 million and £16 million, depending on how the rules were applied to unions — a loss of between 50 percent and 70 percent of its declared donations.

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In 2024, both Labour and Conservatives would have lost higher sums of cash as election campaign fundraising hit its peak, although the losses remain similar in percentage terms.

Other parties would have faced similar hits, with the Liberal Democrats losing around 20 percent of their £9 million declared donation income, while around 40 percent of Reform UK’s £3 million of declared funds would have been ineligible.

Analysis of last year’s data suggests a £100,000 cap would have been devastating for Farage’s outfit given its reliance on mega-donors.

Of the £18.8 million declared in donations for 2025, more than £15 million would be lost under Creasy’s plan — around 80 percent of Reform’s total declared donations.

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With campaign spending hitting record highs at the 2024 election, even a lenient cap would have had a substantial impact on the country’s major political parties. But successive polls have found public support for the measures.

In January, YouGov’s biannual tracker showed that 67 percent of Brits backed a donations cap of £50,000 or less, with support for the current, unlimited system dropping from 21 percent in 2020 to just 13 percent at the start of this year.