Labour must act to cap political donations or risk democracy being bought by the wealthy

Christopher Harborne gave Reform £9m in one day – more than double the amount all trade unions combined gave Labour nationally and its MPs directly for the entirety of the last general election. Once such “largesse” in our politics was rare, now it is commonplace. In 2015, just 1% of donations were from individuals and companies giving £1m or more – by 2024, that figure was a third. The chequebooks of the rich and powerful are already circling the next election. The question for Labour is, are we prepared to pay the price if we refuse to stop them?

The prime minister deserves credit for recognising how toxic this has become and the public support for action too. As a result, on Wednesday, measures to cap what overseas donors can give will come before parliament in the representation of the people bill. Yet focusing on location rather than the level of a donation misses how wealthy individuals can set up a UK shell company or use a UK postcode to continue to dominate our democracy. With several British millionaires already funding political entities and parties and others waiting in the wings, our goal must be to ensure no one – near or far – can buy Westminster.

Labour is yet to commit to this because some are uneasy that capping individual donations could lead to calls to cap collective donations from membership organisations and trade unions. This is not the first time this fear has led to inaction. The Phillips review of party funding in 2007 collapsed over this dilemma, despite support from major Labour donors including Lord Sainsbury for a cap. With hindsight, we can see how this opened the door for the crisis we now face.

That is why I have proposed an amendment to the bill – new clause 120 – that would introduce an immediate £500,000 annual cap on donations, falling to £100,000 in the following calendar year. This would give the government until the end of the second year to establish a permanent cap. Whatever level is ultimately chosen could not exceed £500,000 and would have to be approved by parliament, giving all MPs the chance to shape the final scheme.

Critically NC120 explicitly exempts trade unions from the cap if they abide by the existing rules around political funds. Thousands of working people pooling their contributions through a democratic membership organisation is not the same as one extraordinarily wealthy individual writing a cheque for millions of pounds. Since 1913, there has been legislation on how trade union funds can be used – making the comparative lack of parity in how we regulate moneys given by companies and individuals even more startling.

Most of us could never dream of having £100,000 to give to a political party. We make ourselves heard by voting, campaigning, volunteering, joining political parties and organising collectively. Safeguarding such organisations on all parts of the political spectrum is therefore also part of a healthy democracy because they allow people who could never wield significant financial power individually to act together.

The government has now said it will consider lowering the amount of money political parties are permitted to spend. This is welcome if it happens, but is only half the solution to stopping the voices of ordinary people from being increasingly drowned out by those of billionaires and big business. Without a donation cap, too, donors will circumvent rules by using local groups, parties will stockpile funds and enforcement will be retrospective at best.

If passed, the proposal coming before parliament would mean the government would not have to agree on the formal limit now. We would only have to agree that there should be one for all donors – whatever passport they hold – and to act before the next election. Such a deadline would also prevent disagreement about details becoming a convenient excuse for doing nothing at all.

In common with Donald Trump, Nigel Farage is clear he intends to keep taking the sums in question and celebrates those giving. Inevitably, when political parties can accept unlimited individual donations, politics degenerates into a fundraising arms race. One party attracts a multimillion-pound donor, so another goes searching for its own to be able to compete.

As a democratic as well as socialist movement, Labour cannot stand by as our democracy disintegrates under these pressures. Opposing donation caps is at odds with helping to organise the will of working people against the dominance of capital. Political power should not simply belong to whoever has the most money. Without a meaningful cap, each new quarterly donation report for Westminster politics will provide another nail in the coffin for our hopes of doing things differently. If we fail to seize this moment, the largest wallets will become the loudest voices in deciding Britain’s future.