The Quandary of How Political Parties Should be Funded

I always find political donation stories somewhat amusing. They’re as predictable as night follows day. Party X receives a large donation and parties y and z say how outrageous it is and call for legislation to cap donations. Admittedly, it’s unprecedented that a party is offered two £36 million donations in the same week, and there’s no doubt that for Reform UK, it could be a gamechanger. Nigel Farage says it will enable them to prepare for government and will ‘level the playing field’. Up to a point, Lord Copper.

Angela Rayner was touring the studios this morning muttering darkly about outlawing donations like these, but we’ve heard it all before. She also threatened retrospective legislation. I wonder how realistic that is. If these donations are in line with the law as it is, then it would be fundamentally undemocratic to force Reform UK to return the donations at a later date, especially if they have already spent some of the money.

Of course, the Conservatives and Labour have also received huge donations from individual and trade union donors over the years. Lord David Sainsbury has donated £24.75 million to Labour, admittedly over many years. Frank Hester has donated £20 million to the Conservatives since 2023. The trade unions donated £68 million to Labour during the last parliament, according to Robert Jenrick today. On its own, United the Union, and its predecessor, the TGWU, have donated more than £78 million over the years. Assuming Jenrick’s figure is correct, you can see why Farage describes their donations as levelling the playing field.

All of these donations are perfectly legal, but to the ordinary voter, they leave a nasty smell. People naturally assume that the donors are driving a bargain – that for a large donation, they expect something in return. In my experience, that is not true, and most donors act in a philanthropic way. But I do understand why people don’t believe that.

During the 2005 Conservative leadership contest, I was responsible for handling all the donors to David Davis’s leadership campaign. We were only allowed to raise £100,000, but not a single donor ever demanded a quid pro quo for their donation.

Elected politicians of all parties absolutely hate dealing with donors and donations, but raising money is necessary for every political party to be able to fund its day to day operations and local and national election campaigns. If that is to no longer be permissible, or limited to a capped amount, then the only alternative is for the taxpayer to fund political parties through a regime set up by the State.  But I wonder how many taxpayers would think this was a wise use of their taxes. Not many, I suspect.

As a final observation, I think Reform’s decline in support over the last few months is at least in part because some of their less hardline supporters felt the £5 million personal donation to Nigel Farage didn’t pass their sniff test. I’ve had callers to my LBC show say as much. They felt let down by Nigel Farage. Will these two massive party donations increase that trend? I don’t know, but what I do know is that Crypto is a very dodgy way of making money and is prone to foreign influence and money laundering. I make no comment on the two gentlemen who are donating this money to Reform, but given one of them has faced serious allegations in the US and had to be pardoned by Donald Trump, they had better be sure that this money is completely kosher. And you can’t blame their political opponents for asking serious questions.