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British Democracy Is Not For Sale – It's Time To Clean Up Political Donation Rules, Labour MPs Say
Joe Powell and Lloyd Hatton write for HuffPost UK about the clear mandate for change.
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Trust in politics has hit rock bottom – we hear it on the doorstep all the time.
Too many people feel unheard in decisions that shape their lives.
As Labour’s manifesto made clear, “there is now a crisis of confidence in our political system’s ability to deliver any change.”
At last, we have a government stepping up to the challenge.
When politics is seen as the preserve of wealthy elites, democracy itself is at risk.
That’s why it was encouraging to see over a dozen MPs join our debate this month to confront the dangers of suspect political donations.
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Unsurprisingly, not a single Reform UK member showed up – no shock from a party that panders to populist foreign billionaires and their extreme agendas.
News outlet OpenDemocracy reported this week that George Cottrell, a former UKIP fundraiser once described by Nigel Farage as being “like a son to me,” may be bankrolling Reform UK through a company registered in Britain.
Cottrell, who was found guilty of wire fraud for offering money laundering services on the dark web and largely lives in Montenegro, has recently established Geostrategy International Unlimited, a type of private company often used to avoid financial disclosure.
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This raises serious questions about whether secret – or perhaps even suspect – donations could be funnelled into Reform UK’s coffers by the backdoor.
A backdoor for dark money
This is not an isolated case but part of a larger and deeply concerning trend.
Transparency International UK has found that nearly £115 million – one in every £10 donated to political parties since 2001 – has come from unknown or suspect sources.
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So how has this been allowed to happen? Unfortunately, the UK’s political finance rules, designed to block foreign donations and dirty money from seeping into political parties, are ripe for abuse and riddled with loopholes.
This means that hostile state actors, oligarchs and international billionaires are easily able to sidestep the rule book and funnel money into a political party via UK-registered shell companies.
As it stands, a British company is permitted to donate to a political party using money raised overseas, even if the company has not generated sufficient funds to support the donation.
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This means that foreign interests, or indeed mystery donors, could legitimately use this type of company to secretly channel money into a political party here in Britain.
It should not be this easy to pump money into British politics – seemingly behind a layer of corporate secrecy.
“This isn’t just about cash; it’s about control, and who really wields power”
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Mega-donor problem
Beyond shadowy overseas transactions, there is also the excessive influence of a handful of super-wealthy individuals.
Just two years ago, private donations to political parties totalled £85 million, two-thirds of which came from just 19 mega-donors —each contributing well over £1 million.
And recently, one would-be mega-donor dominated headlines for this very reason.
Elon Musk, the richest man in the world and not a British citizen, was reportedly giving “serious thought” to donating tens of millions to Reform UK.
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As a South African-born billionaire who lives in sunny California, Musk cannot legally make a personal donation to a British political party.
But, as we know, he could easily do so through the UK subsidiaries of his various companies.
Though these rumours have not yet materialised, the risk that this poses to the integrity of our democracy and its institutions cannot be understated.
Even the perception that our political parties are in the pockets of the super-rich is corrosive.
A handful of billionaires – like Musk – and corporate interests must not be allowed to drown out the voices of ordinary citizens.
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This isn’t just about cash; it’s about control, and who really wields power: the British voter or the highest bidder.
Lloyd Hatton, MP for South DorsetLloyd Hatton
A clear mandate for reform
Rushanara Ali, the minister for democracy, recently acknowledged these concerns and promised to announce change.
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According to Sky News, that could include restricting donations based on how much money a company makes, later this year.
It shows that this new Labour government is committed to introducing tough new rules to strengthen the integrity of our democracy.
We are optimistic that these reforms will deliver meaningful change, ensuring that foreign money and suspect donations are not welcome.
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At a minimum, reforms must ensure that political donations made by companies are only allowed if they are funded by genuine economic activity.
If a company cannot prove legitimate revenue streams here in the UK, it should not be permitted to donate. But we also need a tough deterrent.
The current maximum fine for violating election laws is a paltry £20,000. That is pocket money for mega-donors.
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We need a serious deterrent, including higher fines, greater investigative powers, and robust enforcement – and we don’t have to wait for a new Bill to act.
Some of the most critical reforms, such as increasing the Electoral Commission’s fining powers, lowering reporting thresholds, do not require primary legislation.
These changes could be enacted swiftly, significantly curbing the influence of dark money in British politics.
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It is also critical to restore the independence of the Electoral Commission, which the previous Conservative government shamefully undermined.
The provision in the Elections Act 2022 – which allows the government to impose a Strategy and Policy Statement on the Electoral Commission, a blatant power grab by the Tories designed to weaken the watchdog’s independence –must be repealed.
A strong and independent elections watchdog is essential for holding parties accountable and ensuring our democracy remains free from undue or malign influence.
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Protecting British democracy
This is not just about the integrity of British democracy, it is about our national security.
In recent years, we have seen multiple warnings about the risks posed by foreign money infiltrating our political landscape.
The landmark ‘Russia report’, published in 2020, highlighted how political donations from Russian elites with ties to the Kremlin were a serious concern here in Britain.
It’s not right that foreign billionaires – be they Russian oligarchs or “tech bros” from Silicon Valley – can influence the outcome of British elections.
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We have an opportunity now to show the British public that our politics is not for sale.
We must act decisively to strengthen transparency, limit the influence of mega-donors, and close the loopholes that allow foreign money to seep into our democracy.
The prime minister was right when he said, in his victory speech in the early hours, that “the fight for trust is the battle that defines our age.”
And that battle starts here.
Joe Powell and Lloyd Hatton are Co-Chairs for the All-Party Parliamentary Group on Anti-Corruption and Responsible Tax.
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