‘Big Donors’ and influence in British politics

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Jan 244 min read

Dr Sophie Gallop, Senior Lecturer NLS , https://www.ntu.ac.uk/staff-profiles/law/sophie-gallop

In the second quarter of 2024 in the lead up to the general election, UK political parties accepted £51.6 million in donations. In that period the Labour Party received £26.1 million, the Conservative and Unionist Party £16.1 million, and Reform UK received £2.6 million. These sizable amounts have reignited decades old questions about who has been giving money to UK political parties and whether the rise in ‘big donors’ in UK politics is undermining trust in our political system with the continued perception amongst the British public that considerable donations result in improper influence and political favours. These questions come at a time when, per the Institute for Public Policy Research, there is growing dissatisfaction with British democracy, alongside an increasing perception that our political system is dominated by, and working for, a small elite.

Current legislation – its origins and omissions

Donations to UK political parties are largely regulated by the Political Parties, Elections, and Referendums Act 2000, which was enacted in part because of the ‘cash for questions’ scandal of the 1990s. This scandal began with a Guardian story in 1994 which alleged that a parliamentary lobbyist had bribed two MPs to ask parliamentary questions on behalf of Mohamed Al-Fayed, owner of the Harrods department store. Both MPs failed to declare these ‘donations’. The subsequent outcry prompted the then Prime Minister John Major to establish the Committee for Standards in Public Life (CSPL). The Committee was initially tasked with examining ‘concerns about the standards of conduct of all holders of public office, including arrangements relating to financial… activities’. However, in 1997 the terms of reference of the CSPL were extended to include ‘issues in relation to the funding of political parties, and to make recommendations as to any changes’. The following year the CSPL released the ‘Standards in Public Life – The Funding of Political Parties in the United Kingdom’ report which examined the funding of political parties in the United Kingdom, and acting on those recommendations the Political Parties, Elections, and Referendums Act 2000 was enacted.

The Political Parties, Elections, and Referendums Act 2000 introduced legislative requirements for increased transparency about the source of donations and set up an independent body to monitor compliance with campaign funding rules. However, whilst the Act provided a ‘level ceiling’ on national campaign spending, which limits party spending during the ‘regulated period’, it did not introduce any restrictions on how much a single individual or company can donate. This loop-hole has allowed the notable rise in so-called ‘mega donations’ since the start of the twenty-first century.

Transparency International has been particularly vocal in its calls for legislative reform with respect to the financing of UK politics. Created by former employees of the World Bank, this global NGO’s stated mission is to end corrupt and promote transparency and accountability. In its recent position paper on donations to British political parties, it calculated that in 2023 £56.5 million or 66% of all donations made that year, came from 19 ‘mega donors’. In fact, a single mega donor was responsible for one in every eight pounds in reported donations that year. This rise in ‘mega donors’ has come about despite a 2011 report by the CSPL which recommended that the only safe way to remove ‘big money’ from political funding was to put a cap on donations from all sources at £10,000. The CSPL noted that single very large donations undermined public trust in British politics, and that the public perception was that large donations were intended to and did in fact result in ‘special favours’ for the donor. Public concern about large donations and the motivations behind those donations has continued in the 14 years since CSPL’s initial recommendations, and in 2022 50% of those surveyed by the Institute for Public Policy Research felt that political donors, businesses, and lobbying groups were the most powerful influence on government policy decisions.

Future Reform?

Many organisations and individuals have raised concerns about the current state of political finance rules in the UK. In its aforementioned 2024 position paper ‘Cheques and Balances’ Transparency International reiterated the recommendations made by the CSPL in 2011 and called for a donation cap of £10,000 per year for both individuals and organisations to be introduced.

These are not the only reforms to political party financing being demanded, and other concerns around gifts and hospitality, overseas trips, fund management, and influence over the Electoral Commission have all been raised as areas needing scrutiny and reform.

So how likely are reforms?

The Labour Party do not apparently seem averse to introducing changes to rules around political donations, despite the fact that they were the beneficiary of various ‘big donations’ in the lead up to the general election last year. The Labour campaign included the manifesto pledge to ‘protect democracy by strengthening the rules around donations to political parties’. However, it is notable that the pledge is extremely vague; it does not elucidate which rules may be ‘strengthened’ and whether this ‘strengthening’ will even be through legal reform, and this is assuming that this manifesto pledge pursued at all. Which rules, if indeed any, may be subject to ‘strengthening’ remains unclear, but it would appear that the time may well be nigh to revisit legislative rules around big donations to political parties.

‘Big Donors’ and influence in British politics

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