Angela Rayner has suggested that political donations from wealthy individuals could be capped, prompting claims of a “two-tier” system to protect Labour’s union funding.
The Communities Secretary said a government task force would examine whether new laws were needed to prevent individual donors “buying their way into democracy” after Nigel Farage’s Reform UK received a record £72m in two days.
However, unions suggested their own donations should be exempt. Sharon Graham, the general secretary of Unite, said donations from trade unions were “not the same as two crypto millionaires waking up and giving £72m”.
Pressed on the BBC about union donations, Ms Rayner said they were “made up of millions of members who put in their membership fees”. Labour has received more than £22m from the unions since the start of 2023, just under a quarter of its total funding in that period.
She also suggested that Reform could be forced to return some of its record £72m donations if the two billionaire backers fell foul of new overseas funding rules.
Richard Tice, Reform’s deputy leader, said: “Labour and their union pals know they can’t win an election fairly so now they want to rig the system.
“If the unions have their way, we’ll have a two-tier system that only allows major donations from the unions and no one else. Reform will be watching very closely.”
The row broke out after The Telegraph revealed Reform’s two record-breaking donations of £36m each from Ben Delo and Christopher Harborne, both crypto-currency tycoons.
The party has raised more than £86m in donations so far this year, dwarfing the £10.2m secured by the Conservatives and £7.7m handed to Labour.
Labour has already proposed new legislation on party funding which will bar British donors based overseas from donating more than £100,000 a year. This will be backdated to March 25 this year but Reform says it is “100 per cent confident” its billionaire donations will not be affected.
Now Andy Burnham is under pressure from dozens of Labour MPs and unions to go further. They want him to stick to a proposal he raised during his campaign in the Makerfield by-election to place an initial £500,000 cap on donations from UK individuals and companies, dropping to £100,000 in subsequent years.
Appearing on BBC’s Sunday with Laura Kuenssberg, Ms Rayner opened the door to a cap, explicitly saying it had not been ruled out. She said the Government had set up a “task and finish” group to look at whether further legislation is needed.
“So it’s not as simple as we’re saying we won’t put a cap [on],” she said.
“It’s a question of making sure that the task and finish group look at how we implement this so that we protect our democracy in the spirit of individuals not being able to overpower and buy their way into democracy at the expense of those people that are at the ballot box.”
She said she was also consulting with the Electoral Commission, the elections watchdog, as she voiced her personal “concern” over the prospect of individuals being able to fund politics to such an extent.
On Sunday, Paul Nowak, the general secretary of the Trade Union Congress (TUC), suggested he would back a cap on donations from “wealthy” individuals despite having previously opposed the change because of concerns over the impact it could have on the unions’ ability to donate to Labour.
“Without a doubt, we are going to need to restrict the ability of billionaires like Delo to buy and sell our politics,” he said.
However, he indicated any cap would need to avoid penalising union members who wanted their subscriptions to support Labour. “A crypto billionaire with a criminal record donating millions to a party is fundamentally different to a care worker donating a few pounds a year,” he said.
“We need a grown-up conversation about how we clean up our politics without pushing workers to the margins, and it’s critical we get the detail right.”
Asked about union donations to Labour, Unite’s Ms Graham said: “It’’s very different when you’ve got millions of members who are giving 10p each, when they say that they want to, into a political fund, and some of that then goes to Labour. That’s nurses, that’s people who clean our streets, that’s people who make vehicles.”
Ms Rayner also said any party found to have accepted money in breach of proposed restrictions on funding by Britons overseas would have 60 days to hand it back, with the measures applied retrospectively from March.
Although both Mr Delo and Mr Harborne have been based abroad, Reform UK sources said they were “100 per cent confident” neither of the donations would be declared unlawful under the retrospective rules on overseas funds or current legislation on party donations.
Zia Yusuf, the party’s home affairs spokesman, posting on X, accused Labour of “collapsing the rule of law” by “weaponising Parliament in order to pass retrospective laws to punish political opponents and confiscate their donations”.
Lord Blunkett, the former home secretary, said Sir Keir Starmer’s government ought to have moved more rapidly and decisively when the bill was introduced a year ago to excluded “these bizarre and anti-democratic donations”.
“If we don’t find a way of acting now with a rational initial ceiling of say £1m, then I am afraid we will carry responsibility for the undermining of our long-held procedures to block wealth rather than citizenship as the bedrock of our freedoms,” he said.
He was backed by Baroness Hodge, Labour’s anti-corruption champion, who warned that the donations posed an “extremely dangerous threat to democracy.” She urged Labour to consider limits on individual donations and caps on annual and election spending by political parties.