Andy Burnham’s government could thwart reforms to an unprecedented £72 million donation with retrospective restrictions on political donors that would include tough new residency requirements, ministers have said.
In a move that is likely to draw furious complaints from Nigel Farage’s party, the government will within weeks introduce amendments to legislation that are going through the House of Lords that will call into question the legality of the latest Reform donations.
Senior Labor and trade union figures have called on ministers to once again review the party’s funding rules after Reform announced at the weekend that two cryptocurrency billionaires, Ben Delo and Christopher Harborne, who previously lived overseas, had each donated £36 million to the party.
However, government sources said plans to strengthen the representation of the People’s Bill have been under way for weeks after MPs pressed for further action on domestic donations in the House of Commons.
Under the proposals, which are expected to be tabled at the Lords committee stage of the legislation, individual donors will have to prove their ongoing physical presence in the UK, in line with residency requirements that apply to other areas of public policy such as tax status.
The emergency measure will be seen as a sign that donations are making bets that will give Reform a huge advantage in organizing supporters on the ground ahead of the next election.
However, Farage acknowledged on Monday that the reform could conflict with the government’s moves to clamp down on foreign donors, although the party said the £72 million in donations complied with both the current rules and those already voted on by MPs in the bill.
The legislation currently caps donations from expats at £100,000, which will also apply for the first 12 months of their return to the UK – starting on March 25 this year.
Ministers have already introduced a minimum residency requirement for the remainder of the calendar year in which they return, plus an additional full year, meaning Reform may not be able to accept the £72 million in donations until January 2028.
The case was based in Hong Kong but said in April it would return to the UK to avoid restrictions, while Harborne was based in Thailand but is believed to have registered to vote in Hampshire in June.
“Both of these donations today are 100% compliant with the law, there’s no doubt about that,” Farage told the BBC. When asked whether the two billionaires were UK residents as of March 25, he replied: “All I’m saying is that under the laws of the land as they stand, they both comply.”
Sharon Taylor, the Labor minister in the House of Lords, told colleagues that as well as requiring donors to demonstrate a “genuine and ongoing connection to the UK”, the government was also considering further restrictions.
“We are considering how to tighten residency requirements, including ensuring that the length of time spent in the UK is consistent with wider government policy,” Lady Taylor added.
Angela Rayner, speaking to the TUC, criticized Reform for suggesting that donations from cryptocurrency billionaires were equivalent to donations from union members to the Labor Party.
“How dare they try to compare the money of a couple of crypto billionaires with the money of union members? The most highly regulated political finance we can have,” said the community secretary.
“This is completely different from a couple of offshore billionaires trying to buy our democracy… We will never undermine the rights of workers to organize collectively and democratically.”
Unions are set to publish a statement on political donations on Tuesday, condemning Farage’s efforts to compare wealthy individual donors to individual members who donate to Labor through their union, and calling on the government to go further on political donations.
The head of the British trade union movement, Paul Novak, said the government must act to “stop the super-rich corrupting our politics”. But union sources said there was “significant disagreement” between the general secretaries on how to proceed.
Unite general secretary Sharon Graham broke ranks on Sunday to back a cap on individual domestic donations. But others, including GMB chief Gary Smith, fear it will lead to a future right-wing government capping union donations.
Government sources said calls from opposition parties to unions for any changes to internal donations were also “not under active consideration”.
However, the government is understood to be considering party spending limits, currently limited to a year before a general election, with tighter restrictions in the weeks leading up to polling day.
In a letter to the Electoral Commission in August, Rayner and Louise Hay, the first secretary of state, wrote: “We believe that spending limits on parties and candidates are too high and should be reduced.”
The government has also set up an intergovernmental “challenge and completion” group to look at threats to British democracy, including political funding, undue influence and wider threats to political equality.
Philip Rycroft, who produced an independent report into the tightening of electoral laws on overseas donations, said the reform donations had reopened wider questions about donations and spending limits.
“The time has come when this really requires careful consideration. It would have been better if the government had acted before we received these huge donations,” he said.
“But we have to ask: Is it good for our democratic process to get more money from fewer people in bigger chunks?”
MPs who supported the donation cap are working with colleagues on a series of amendments to the bill that would tighten it without waiting for another act of parliament.
These include one allowing ministers to later set a cap on all donations, and another preventing spending limits from being raised without Electoral Commission approval.
Theresa O’Neill, shadow minister for local government in the House of Lords, said some of the measures in the bill were deeply worrying. “Even the perception of partisan and targeted legislation can lead to the destruction of long-standing political traditions and, crucially, the destruction of trust in the system,” she said.
Reform denounced the government’s existing plans, with Zia Yusuf, the party’s home affairs spokesman, describing them at X as “an unprecedented move by a left-wing government to plunge Britain into dictatorship and communism.”