Thinktank Demands Corporate Donation Ban to Protect UK Elections from Foreign Influence
The Centre for the Analysis of Taxation (CenTax) has issued a stark warning, urging parliament to ban corporate donations to political parties entirely. This call comes as a response to what the thinktank describes as "easily exploitable" loopholes in the new representation of the people bill currently under debate.
Legislation Falls Short in Preventing Foreign Interference
In the first major overhaul of election funding in 26 years, ministers have pledged to "keep British democracy safe" by closing a loophole that allows individuals ineligible to vote in Britain to donate through UK-registered companies. The bill mandates that corporate donors must demonstrate they are controlled by UK electors or citizens.
However, CenTax's report, published today, argues that this legislation will not effectively solve the problem. Sebastian Gazmuri-Barker, a senior legal analyst at CenTax, stated that the bill's proposed tests "contain loopholes that are easily exploitable." He emphasised, "Parliament should either ban corporate donations outright or significantly strengthen the approach."
Substantial Donations from Ineligible Sources
By cross-referencing declared donor companies with ownership records, researchers found that between 2001 and 2024, over 4,000 companies donated £293 million, with significant surges preceding general elections. Alarmingly, almost £1 in every £10 came from corporations controlled by individuals who would not have been eligible to donate directly.
CenTax discovered that donations from these companies were, on average, nearly twice as large as those from companies with UK-eligible owners. The thinktank notes that these estimates are likely conservative, as the true extent of foreign interference is often hidden by opaque corporate structures.
Untraceable Funds and Reliance on Flawed Data
The researchers identified that a quarter of the donated money was untraceable because the company owners could not be identified. The report states, "The bill's reforms are easy to dodge." This issue is compounded by the reliance on Companies House data, which has been widely criticised as unreliable and incomplete.
CenTax is critical of the new legislation's continued dependence on Companies House rather than obliging the Electoral Commission to collect and verify information. In the absence of an outright ban, the thinktank proposes that all but the smallest donors—both individuals and companies—should be required to register with the Electoral Commission before making any contributions. They also advocate for mandatory disclosure of the ultimate controllers of companies.
Government's Stance and Recent Impetus for Reform
Introducing the bill last month, Steve Reed, the Secretary of State for Housing, Communities and Local Government, declared, "Growing threats from abroad mean we must make changes to keep our elections secure. We won't let hostile foreign states use dirty money to buy our elections. We are keeping British democracy safe for British people."
The legislation requires companies to be majority owned or controlled by UK citizens and registered electors, headquartered in the UK, and have sufficient income to fund donations. These reforms gained new urgency following reports that Elon Musk was considering donations to Nigel Farage's Reform UK party.
False Sense of Security Warning
Arun Advani, director of CenTax, highlighted the risks, saying, "Around a quarter of money donated by companies is completely untraceable, and at least one pound in 10 comes from individuals who could not donate directly. The bill is a welcome opportunity to fix this, but its current provisions won't do so and risk providing a false sense of security."
The debate continues as parliament weighs the need for electoral security against the potential impacts on political funding, with CenTax urging more stringent measures to safeguard the integrity of UK elections from foreign influence.
