Something fairly fundamental is about to change in British politics.
For the last few decades Britain has operated a slightly odd system for financing politics. We restrict how much political parties can spend during elections. We require larger donations to be declared. We restrict who is allowed to donate. But once someone qualifies as a permissible donor, there is generally no limit on how much they can give.
This has allowed individual donors to write cheques for millions of pounds. As long as they satisfy the rules governing permissible donors, that’s perfectly legal.
For years there have been complaints about this, normally from whichever political party wasn’t receiving the enormous cheque. What has changed is a series of scandals, combined with growing concern about foreign interference in British politics, creating a momentum for funding reform which now looks increasingly difficult to stop.
And once the rules change, they will be very difficult to change back.
How we got here
The immediate starting point was Nathan Gill. Gill was the former leader of Reform UK in Wales and had served as an MEP for UKIP and subsequently the Brexit Party. Last year he admitted accepting bribes in return for making statements favourable to Russian interests while serving in the European Parliament.
This was something rather more serious than the familiar argument about whether rich people should be allowed to give political parties large sums of money. It raised the possibility that foreign interests could use money to influence British politicians.
In December 2025 the government asked Philip Rycroft, a former Permanent Secretary at the Department for Exiting the European Union, to review the threat posed by foreign financial interference in British politics. His report appeared in March:
“I have been extensively briefed in the course of this review by the security services, the police, the Electoral Commission and relevant government officials. It is clear that foreign interference in our politics is real and persistent. …. beyond these hostile state threats, I am also cognisant of a potential new threat: an emerging willingness of foreign actors and private citizens, including from allies like the United States, to interfere in, and influence, politics abroad in pursuit of their own agenda”
Rycroft’s remit was relatively narrow. He wasn’t asked to redesign the way British political parties are financed. He was asked how the system could be protected from foreign money. But once you start pulling at that particular thread, quite a lot starts to unravel. Britain already prohibits foreign political donations. The problem is defining what a foreign donation actually is.
A British citizen living overseas can be registered as an overseas elector and therefore become a permissible donor. A company can qualify to donate if it satisfies the relevant tests for carrying on business in Britain. Money can move through companies, individuals and increasingly cryptocurrencies before eventually arriving in a political party’s bank account. Knowing who handed over the cheque isn’t necessarily the same thing as knowing where the money originated.
Rycroft therefore proposed considerably tougher rules.
British overseas electors should face an annual limit on their donations. Companies should have to demonstrate a genuine economic connection with Britain, with their ability to donate linked to post-tax profits. Political donations using cryptocurrencies should be prohibited for the time being. Parties should conduct more substantial “know your donor” checks on large donations, and the Electoral Commission should have better information and stronger enforcement powers.
The government has accepted all 17 of Rycroft’s recommendations. It has chosen £100,000 as the annual limit for overseas electors and intends to implement much of the package through the Representation of the People Bill currently going through Parliament.
That would already represent the biggest tightening of political finance rules for years.
But events have rather overtaken Rycroft.
The problem with very rich people
The difficulty is that foreign money isn’t the only thing which makes people uncomfortable about the way politics is financed.
The Conservatives received £10 million from businessman Frank Hester. When comments emerged in which Hester had spoken about Diane Abbott in terms which Rishi Sunak eventually acknowledged were racist and wrong, the Conservatives found themselves in the uncomfortable position of condemning the comments while retaining the money. Labour has had its own difficulties. The controversy surrounding Lord Alli’s gifts to senior Labour politicians wasn’t quite the same thing – many of the declarations involved personal gifts rather than straightforward donations to the Labour Party – but the political problem was similar.
Money appeared to buy proximity to powerful people. Again, that doesn’t mean anyone was necessarily buying a particular decision. Nor does making a large donation mean that the donor owns the politician who receives it.
The problem is subtler than that. If I give a political party £20, I have virtually no expectation that its leader will take my telephone call. If I give it £5 million, I suspect they might. That difference matters.
And Reform has made the issue considerably more immediate.
During the second quarter of this year Reform received £5.3 million in private donations, more than either Labour or the Conservatives. £4 million of it came from one man, the cryptocurrency entrepreneur Ben Delo. Delo is not simply a wealthy businessman who has suddenly developed an interest in British politics. In 2022 he pleaded guilty in the United States to violating the Bank Secrecy Act after BitMEX, the cryptocurrency exchange he co-founded, failed to implement adequate anti-money-laundering controls. He was subsequently pardoned by Donald Trump. Delo argues that what he did would not have been a criminal offence in Britain.
Then there is Christopher Harborne, previously Reform’s biggest donor, who has given millions to the party and, separately, £5 million personally to Nigel Farage. Harborne is British-born, but has lived in Thailand for around two decades, became a Thai citizen in 2011 and is also known by his Thai name, Chakrit Sakunkrit. He conducts much of his business from Bangkok and has extensive international interests, including a substantial holding in Tether, the company behind the world’s largest stablecoin. None of that prevents him from legally donating to British political parties under the existing rules. Indeed, that is rather the point: someone who has lived abroad for twenty years, acquired another citizenship and another name can nevertheless provide a substantial part of the financial firepower of a party seeking to form the next British government. Harborne has donated nearly £25 million to British political causes since 2001, despite living in Thailand for most of that period.
Harborne is also a significant shareholder in Tether, the company behind the world’s largest stablecoin. Tether has faced scrutiny over the use of its currency for sanctions evasion and money laundering, including by Russian networks. A US investigation into possible sanctions and anti-money-laundering violations at Tether was reported before Trump’s return to office and appears subsequently to have stalled. There is no suggestion that Harborne himself participated in those activities, and his lawyers have rejected attempts to associate him with crimes committed by people using Tether. This matters politically because the regulatory environment for cryptocurrencies and stablecoins in Britain is itself changing, while Reform has promised a markedly more crypto-friendly regime, including lower taxes on crypto gains and lighter regulation of the sector.
Nor does the story end with Reform’s declared donors. George Cottrell, a longstanding Farage associate who is frequently present at Reform events despite the party saying he has no formal role, spent eight months in a US prison after pleading guilty to wire fraud. Police have been investigating £500,000 of donations to Reform made by his mother, while the Financial Times has reported on wider questions surrounding Cottrell’s relationship with Farage and the party. Reform says the electoral rules were followed.
None of this proves that Reform has sold political influence, or that its donors have bought it. That isn’t really the point. The question is whether a political funding system in which a party aspiring to form the next government can depend so heavily upon a handful of enormously wealthy individuals — some with criminal convictions, others whose business interests intersect with areas of acute regulatory and national-security concern — provides anything approaching adequate protection for British democracy.
Then last week an undercover investigation alleged that senior Reform figures had discussed ways in which an American donor might fund political activity in Britain. Reform strongly denies breaking electoral law, says it was the victim of a hoax, and the Electoral Commission is examining the evidence. Two senior aides stepped aside.
These cases are not all the same and it would be wrong to pretend that they are. Some involve allegations of illegality. Others involve perfectly legal political donations. Some concern personal gifts. Others raise questions about foreign money or corporate structures.
But collectively they have created a much bigger political problem.
Company Donations
There is another route through which money can enter British politics which is considerably less spectacular, but potentially just as important: companies.
Under the existing rules a company registered in Britain and carrying on business here can make political donations. It does not have to demonstrate that it has made sufficient profits in Britain to pay for them. That creates an obvious question. If a British company gives £100,000 to a political party despite making no British profit, where did the £100,000 ultimately come from?
This is not a hypothetical problem. R20 Advisory, a company owned by the businessman Robert Tchenguiz, gave £100,000 to Reform in 2025. Its accounts showed a loss of almost £2 million, while much of the money moving through the business involved transactions with offshore entities. The donation was nevertheless permissible under the existing rules.
More recently, Eldridge Capital Management Services (UK) gave Reform £75,000. It is a British company, but is ultimately controlled by Todd Boehly, the American billionaire and Chelsea co-owner who has also been a substantial donor to Donald Trump and Republican candidates in the United States. Again, there is no suggestion that the donation was unlawful. The point is that our rules depend heavily upon the legal identity of the entity writing the cheque rather than establishing where the money ultimately originated.
That is one reason Rycroft proposed a profit test. A company should not simply have to demonstrate that it does some business in Britain; the amount it gives to British politics should be related to the profits it actually generates here. The Electoral Commission agrees. The Government originally proposed a much weaker test based on turnover, but has now moved towards using profits.
That sounds like an obscure technical amendment to electoral law. It isn’t. It is an attempt to answer a remarkably simple question: if a company has not made the money in Britain, should it be allowed to spend that money influencing British elections?
From foreign money to big money
This is where the debate has moved significantly beyond Rycroft’s original terms of reference. If someone living abroad giving a political party £1 million creates an unacceptable risk of undue influence, why is the same £1 million harmless when the person giving it happens to live in Britain?
It isn’t an entirely rhetorical question. Someone who lives, works and pays taxes in Britain plainly has a different relationship with the country from someone whose principal economic interests are thousands of miles away. There are perfectly reasonable grounds for treating them differently.
But that still leaves the question of whether any individual should be able to give a political party £5 million or £10 million. MPs are now proposing limits on all political donations. Various numbers have been suggested: £1 million, £500,000, £250,000, £100,000 and considerably less.
This isn’t tinkering. Commons Library analysis of donations between 2020 and 2025 suggests that a £1 million cap would have affected around 23 per cent of reported donation income. A £500,000 cap would have affected around 34 per cent. At £100,000, the figure rises to around 57 per cent.
A sufficiently low donation limit wouldn’t simply stop a few billionaires writing enormous cheques. It would fundamentally change how British political parties are financed.
Everybody else’s donor is the problem
This is where things become complicated. The Conservatives have traditionally relied heavily upon wealthy individuals and businesses. A meaningful donation cap would force them to find a much larger number of smaller donors.
Reform increasingly faces the same problem. Its recent fundraising figures look spectacular. Raising £5.3 million in three months is impressive for a relatively new political party. But if £4 million comes from one person, what you have isn’t really a mass fundraising operation. You have a man with £4 million.
Labour presents a different problem. Its historic relationship with the trade union movement means that substantial sums reach the party through affiliated unions and their political funds. Should those be subject to the same limit?
There is an obvious argument that they should. If we’re trying to prevent organisations exercising disproportionate influence through money, why should a business be limited to £100,000 while a trade union can provide millions? There is also an obvious argument that they shouldn’t. A billionaire writing a cheque for £1 million is one person making one decision. A union political fund potentially represents relatively small contributions from hundreds of thousands of members.
Treating those things as identical isn’t necessarily any fairer than treating them differently. And whichever answer Parliament chooses will advantage somebody.
Welcome to political finance reform.
So what are the choices?
At one extreme we could essentially retain the existing system while dramatically improving transparency. Make parties establish where large donations ultimately originated. Tighten the rules around companies. Require proper due diligence. Give the Electoral Commission meaningful investigative powers. If the money is legal and transparent, let people give as much as they like.
That’s a defensible position.
Alternatively, we could introduce a relatively high limit – perhaps £1 million. That would eliminate the most spectacular examples of mega-donations without completely dismantling the current financing model. A £500,000 or £250,000 limit would go considerably further. At £100,000 we start talking about something approaching a different political financing system.
Go substantially below that and we would have to rethink the whole thing.
Which brings us to the question everyone understandably prefers not to answer.
Who pays instead?
Political parties cost money. They employ people, rent offices, commission research, advertise, organise conferences, maintain databases and fight elections. If we stop rich people and large organisations paying for all that, the money has to come from somewhere else.
One possibility is membership. Parties could attempt to rebuild themselves as genuine mass-membership organisations, collecting relatively modest subscriptions and donations from hundreds of thousands of people. They could become much better at attracting small donations. They could also spend less.
This possibility sometimes gets rather neglected. Rycroft himself raised the question of whether election spending limits should be reduced. If ever-increasing campaign expenditure creates an arms race in which parties become ever more dependent upon large donors, one solution is to stop the arms race.
But there is another answer.
The taxpayer.
Britain already publicly funds politics to some extent, most obviously through Short Money paid to opposition parties in Parliament. We could expand public funding considerably. We could match small individual donations with public money. Someone gives £10 and the state adds another £30. We could give every voter a small democracy voucher which they could allocate to whichever political party they wished. Or we could simply provide parties with public funding according to their electoral support.
None of these options is particularly attractive. Public funding inevitably raises the question of why someone who loathes Reform should have to fund Reform, or why a Conservative voter should subsidise Labour. Funding according to previous election results risks protecting established parties from new competitors. Democracy vouchers would create their own bureaucracy. Small-donor matching systems can be gamed.
And telling voters that the solution to politicians being too dependent upon rich people is to give politicians more of their taxes is unlikely to produce spontaneous outbreaks of cheering in the streets.
There is no perfect answer.
But something is going to change
This, I think, is the important point. We don’t need to decide today whether the correct donation limit is £1 million or £100,000. I’m not sure there is a correct number. The interesting thing is that British politics appears to have reached one of those moments when the argument has moved on.
The vehicle for all of this is the Representation of the People Bill, which was introduced in February and has already completed its passage through the Commons. It received its Commons Third Reading on 2 September, moved to the House of Lords the following day, and is due its Second Reading there on 14 September. The Bill has changed substantially since it was introduced, not least because the Government accepted the recommendations of the Rycroft Review and brought forward a series of amendments at Report Stage. These include a £100,000 annual limit on donations from overseas electors; a moratorium on political donations made in cryptocurrency; stronger requirements intended to establish the identity and source of donors; and new restrictions on company donations, linking the amount a company can give to profits generated through its UK activities rather than simply requiring it to be carrying on business here.
The Government changed its original proposal from a revenue test to a profit test following Rycroft, although its five-year calculation remains significantly more permissive than Rycroft recommended. What the Bill still does not contain is a general cap on donations from permissible UK individuals: an attempt to introduce one at Report Stage was withdrawn, leaving the question of the multi-million-pound “mega-donor” unresolved.
A year ago the question was whether the rules governing political donations needed significant reform. Now the argument is about what that reform should look like. The government has already accepted the Rycroft recommendations. A £100,000 limit on donations from overseas electors is coming. Cryptocurrency donations are being stopped. Company donations and the provenance of political money will face much greater scrutiny.
Once you’ve accepted those principles, the argument becomes difficult to contain.
If £1 million from someone living overseas creates an unacceptable risk of influence, Parliament eventually has to explain why £5 million from someone living in London doesn’t. If companies have to demonstrate where the money they donate comes from, people will reasonably ask why similarly large donations from individuals shouldn’t receive comparable scrutiny. And if a single person providing most of a political party’s quarterly donation income makes us uncomfortable, eventually somebody has to decide how much is too much.
There is another reason I suspect the direction of travel is now difficult to reverse. Once these restrictions exist, removing them would be politically extraordinarily difficult.
Imagine a future political party going into a general election promising to abolish the £100,000 overseas-donor limit. Its opponents wouldn’t describe that as a technical reform to political finance legislation.
They would say:
“They want foreign millionaires and billionaires to be able to give them unlimited amounts of money.”
Try putting that on a leaflet. The same problem would face anyone wanting to weaken source-of-funds checks or restore unlimited mega-donations once Parliament had decided they represented a threat to confidence in democracy.
Political finance reform therefore has something of a ratchet built into it. We can argue about how far to turn it. Turning it backwards is much harder. And that leaves us with an uncomfortable question which British politics has managed to avoid for a surprisingly long time.
We don’t yet know who will pay for British politics in ten years’ time.
But we’re beginning to have a much better idea who won’t.