The UK government has announced sweeping new laws that could see politicians and political parties fined up to £20,000 or face prison sentences of up to seven years for accepting donations from companies that do not meet new profit-based criteria. The measures, part of the Representation of the People Bill, aim to crack down on unfair financial interference and dirty money in British politics.
New Profit-Based Restrictions on Company Donations
Under the updated legislation, company donations will be restricted based on the donor's profit rather than revenue, as originally proposed. Companies must demonstrate they have made sufficient profit to cover their donation and will be limited in how frequently they can donate over a specified period. This change follows the independent Rycroft Review into foreign financial interference in UK democracy, led by former permanent secretary Philip Rycroft.
The Rycroft Review recommended a pause on cryptocurrency donations and a cap on donations from British voters abroad. It argued that restricting donations by profit is a more effective way to prevent foreign interference than the revenue test initially included in the bill.
Penalties for Non-Compliance
If a political party fails to verify that a company donation complies with the new rules, it could face a fine of up to £20,000 from the Electoral Commission. For the most serious offences, individuals could receive up to seven years in prison. An MHCLG spokesperson stated: “In the current political landscape, it is vital we take strong action to protect our democracy from outside threats and hostile actors. Our new restrictions on company donations will make sure only legitimate UK companies who contribute to our society will be able to make donations, and will stop illegitimate money being funnelled into our democracy.”
Context and Impact
This newspaper previously revealed that of the £18.6 million donated to Reform last year, some £15 million came from donors with offshore links—almost 80% of the cash given to the party. Reform's donations this year far outstripped those of Labour and the Conservatives, with Keir Starmer's party raising £4 million and the Conservatives recording £4.2 million in the same period. The Green Party received just £263,884 in donations, while the Liberal Democrats were handed £3,019,235.
