In July, Ms Rayner herself received around £30,000 in donations, with similar sums paid earlier this year. Her donors would be unaffected by the cap she is backing.

Speaking to Sky News on Monday, Ms Rayner said the law would “be backdated” and will apply to “overseas donors” and those who have “recently returned to the UK”.

Asked on the BBC‘s Sunday With Laura Kuenssberg if Nigel Farage might need to hand back the money given to him by cryptocurrency billionaires Ben Delo and Christopher Harborne, Ms Rayner said she did not know their “individual circumstances”.

But she added: “With the retrospective action, anyone that’s received donations that don’t comply with what was in the Rycroft review, what legislation is currently going through Parliament, would have 60 days to return that money.”

Senior Reform figures slammed Labour over the plans, with Westminster insiders pointing out that Labour pocketed £4million from Quadrature Capital in 2024, which has funds based in the Cayman Islands.

Labour is also said to be plotting a cap on donations from any individual, but not trade unions. Mr Burnham previously backed a cap of £500,000, but is believed to have stopped backing it after lobbying by trade union barons.

Home affairs spokesman Zia Yusuf said the pledge to backdate the terms of the Bill would “weaponise Parliament” to “confiscate donations”.

He dubbed it “literally changing the rules after the fact to hurt and punish a political opponent”, adding: “There is no precedent for this in modern British political history. How can anybody operate on these terms?”

Labour sparks fury with ‘shoddy stitch-up’ on donations – ‘behaving like gangsters!’

Labour has come under fierce political attack after ministers moved to tighten the rules governing political donations, with opponents accusing the government of changing the rules in response to Reform UK’s extraordinary £72 million fundraising haul.

The dispute erupted after two cryptocurrency businessmen, Ben Delo and Christopher Harborne, each donated £36 million to Reform UK within days of one another.

The donations have prompted renewed discussion in Westminster about whether Britain’s political funding system allows individuals to contribute sums on such a large scale.

But the government’s proposed response has proved just as controversial.

Labour is backing restrictions that would affect certain donations from British citizens living overseas or people who have recently returned to the UK. Local Government Secretary Angela Rayner said the proposed legislation would be retrospective.

That immediately produced a furious response from Reform and Conservative politicians.

Treasury spokesman Robert Jenrick described the proposal as Labour “behaving like gangsters” and called it a “shoddy stitch-up”. Those are his political characterisations, rather than established findings about the government’s motives.

The £72 million that changed the debate

The immediate trigger for the controversy is Reform UK’s remarkable fundraising success.

Delo and Harborne each provided £36 million, giving the party £72 million in total.

For Reform, the money represents an enormous increase in the resources available to develop its organisation, employ staff, conduct research and prepare for future campaigning.

For opponents, however, the donations have raised a different question: whether Britain’s existing political donation rules are still appropriate when an individual can contribute tens of millions of pounds to a political party.

That question was already being debated before the latest proposals.

The size of Reform’s donations has now made it much more prominent.

Labour’s proposed restrictions

The government is proposing restrictions aimed particularly at donations from British citizens who live overseas or who have recently returned to the country.

According to reporting on the proposals, a £100,000 annual limit would apply to certain overseas donors.

Rayner said the government believed that people who do not live in Britain or pay taxes in Britain should not be able to use their wealth to exert influence over British democracy.

She also confirmed that the proposed rules would be backdated.

That retrospective element is at the heart of the political confrontation.

Rayner said that individuals whose donations did not comply with the eventual legislation would have a period of time to return the money.

The precise legal consequences will depend on the legislation and how Parliament ultimately approves it.

Reform’s response

Reform UK has rejected the suggestion that its £72 million donations are improper.

The party has said it is “100% confident” that the donations comply with existing rules and has indicated that the donors will not be required to return the money.

Reform figures have accused Labour of attempting to alter the rules after the donations have already been made.

Zia Yusuf, Reform’s home affairs spokesman, described the retrospective proposal as an attempt to “weaponise Parliament”.

He argued that changing the rules after money had been legally donated would create uncertainty for political organisations.

The argument is essentially about the principle of retrospective legislation.

Reform says political parties and donors should be able to rely on the rules that existed when contributions were made.

Labour’s position is that Parliament can change the legal framework governing political donations and that stronger safeguards are necessary to protect the integrity of the political system.

Why the word “retrospective” matters

The retrospective element makes this dispute particularly sensitive.

Normally, political donors and parties operate according to rules that are already in force.

If Parliament subsequently changes those rules, applying them to earlier transactions can create questions about fairness and legal certainty.

In this case, the proposed restrictions have attracted particular attention because they follow immediately after Reform’s £72 million donations.

That timing has allowed Reform’s opponents to question whether the policy is being driven primarily by a broader principle or by the immediate political circumstances.

Labour has defended the proposals on the basis that political funding rules need to prevent people without a current connection to Britain from exercising excessive financial influence.

The two sides therefore disagree not only about the specific £72 million but also about the underlying principle governing political donations.

The issue of trade unions

Another source of controversy concerns the treatment of trade unions.

Critics of Labour’s proposal argue that a £100,000 limit on certain individual donors would not apply in the same way to trade unions.

That distinction matters because trade unions are major financial supporters of the Labour Party.

According to reporting on the controversy, Labour has received tens of millions of pounds from trade unions over the past decade.

Critics therefore argue that the government could be restricting one source of political funding while leaving another major source largely untouched.

Labour’s supporters can make a different argument: trade unions are membership organisations representing large numbers of people, rather than individual wealthy donors.

That distinction is central to the disagreement over whether unions and individual donors should be treated identically under political finance rules.

Labour’s own donations

The controversy has also prompted scrutiny of donations received by Labour politicians.

The report triggering the latest row noted that Angela Rayner herself received around £30,000 in donations in July, following similar contributions earlier in the year.

Those donations would not necessarily be affected by the proposed overseas-donor restrictions.

That has provided ammunition for critics who argue that the government’s proposals are politically selective.

However, receiving a lawful donation under the existing rules is not itself evidence that a politician has breached any rule.

The relevant question is how the new legislation would apply once Parliament has considered and approved it.

The Quadrature comparison

Reform supporters have also highlighted Labour’s own history of accepting large donations from companies with international financial connections.

One example raised in the debate is Quadrature Capital, which gave Labour £4 million in 2024.

Critics have pointed to the company’s links to funds based in the Cayman Islands while Labour has been arguing for tougher restrictions on overseas-linked donations.

That comparison has become a major part of Reform’s political response.

However, the existence of international financial structures does not by itself establish that a donation was unlawful.

Political donation law contains specific rules about who is eligible to donate and how companies are treated.

The legal status of individual contributions therefore depends on the circumstances and the legislation in force at the relevant time.

The wider argument over wealthy donors

At the centre of the dispute is a much bigger question.

Should wealthy individuals be allowed to donate very large sums to political parties if they meet the legal requirements?

Supporters of the existing system argue that citizens should be free to support political organisations financially, provided the source of the money is transparent and lawful.

Those calling for restrictions argue that extremely large donations can give wealthy individuals a level of political influence unavailable to ordinary citizens.

The £72 million Reform donation has brought that argument into sharp focus.

The amount is so large that it has prompted politicians across Westminster to reconsider whether Britain’s current framework is adequate.

A difficult position for Labour

The government’s dilemma is that any new funding rules could affect Labour as well as Reform.

A broad cap on all individual donations could reduce the ability of wealthy Labour supporters to provide large sums.

At the same time, restrictions that focus primarily on overseas donors would leave the party’s trade-union funding arrangements largely untouched.

That has created pressure from different directions.

Reform wants the proposed measures withdrawn.

Some Conservatives want stronger limits but oppose what they describe as retrospective changes.

Meanwhile, some Labour figures want tougher restrictions on large donations but must consider how those rules would affect the party’s own finances.

The issue is therefore not as simple as a dispute between two parties.

It concerns the entire structure of political finance in Britain.

Jenrick’s “gangsters” accusation

The strongest language has come from Robert Jenrick.

The Conservative Treasury spokesman wrote that Labour was “behaving like gangsters” and called the proposal a “shoddy stitch-up”.

The language reflects the intensity of the political disagreement.

But it is important to distinguish an accusation from an established fact.

There is no independent finding contained in the available reporting that Labour’s motivation is to punish Reform.

The government’s stated position is that political funding rules should prevent people who do not live in Britain or pay taxes there from effectively buying influence in British politics.

Reform and its allies dispute that explanation and argue that the timing makes the proposal politically motivated.

Those competing interpretations are likely to remain part of the debate as the legislation progresses.

What happens to the £72 million?

One of the most important unanswered questions is whether the new rules would ultimately force Reform to return any part of the £72 million.

Reform says it does not expect that to happen.

Rayner said that if donations were found not to comply with the eventual legal requirements, donors could have 60 days to return them.

The outcome will therefore depend on the final wording of the legislation, its application to the donors concerned and Parliament’s decisions during the legislative process.

Until those questions are resolved, claims that the money definitely has to be returned would go beyond the available evidence.

A battle over the rules of political competition

The dispute is significant because it goes beyond one political party and two wealthy donors.

Britain has traditionally permitted substantial political donations provided they meet legal requirements.

The Reform donations have demonstrated how dramatically that system can affect the resources available to a political organisation.

Now Labour is seeking changes.

The government’s supporters say the reforms are designed to strengthen democratic safeguards.

Opponents argue that the timing makes the legislation look like a response to Reform’s fundraising success.

The disagreement is therefore partly about political finance and partly about trust in the process by which political rules are changed.

The road ahead

The controversy is unlikely to disappear quickly.

Parliament will have to consider the proposed legislation, including questions about overseas donors, retrospective application and the treatment of different types of political organisations.

Reform will continue to defend the legality of the £72 million donations.

Labour will face pressure to explain why the restrictions are necessary and how they will operate in practice.

Other parties will also have to consider how any new rules could affect their own fundraising arrangements.

For voters, the central issue is ultimately one of transparency and accountability.

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