Labour faces accusations of attempting to 'punish' the Reform UK party with a new law that could retroactively compel it to return £72 million in donations. Communities Secretary Angela Rayner indicated on Sunday that while legislation targeting overseas political funding is progressing through Parliament, it will include backdated provisions.
The proposed changes under the Representation of the People Bill, scheduled for debate in the House of Lords, would establish a 'minimum residency period.' This would prevent individuals who have recently returned to the UK from exceeding an annual donation limit of £100,000, even if they have moved back to Britain. The rules would apply to all donations received since March 25, the date the government published a review of foreign influence in politics.
When questioned by Sky News about the potential impact on two £36 million donations to Reform UK from expatriate cryptocurrency billionaires, Rayner stated, "It will be backdated." She elaborated that the rules are intended for "overseas donators" and those who have "recently returned to the UK," asserting, "we're saying that if you don't pay taxes, if you don't live here, you can't buy your way into our democracy."
Reform UK has expressed confidence that the donations are legal and will not need to be returned, reportedly believing the donors had returned to Britain before the March cut-off. However, senior figures within Reform UK have reacted critically. Zia Yusuf, the party's Home Affairs spokesman, described the potential backdating as an attempt to "weaponise Parliament" to "confiscate donations" and create a precedent in British political history. Treasury spokesman Robert Jenrick characterized Labour's actions as akin to "gangsters" and a "shoddy stitch-up."
Beyond overseas funding, Labour is also reportedly considering a cap on individual donations. While a limit of £500,000 was previously supported, Prime Minister Andy Burnham is said to have withdrawn his backing following lobbying from trade unions that provide significant financial support to the party. However, Rayner mentioned that a group is examining the issue.
Labour MP Stella Creasy, who has advocated for a donations cap, stated that the government acknowledges the issue of "UK mega-donors" and that such large contributions can make the public feel unheard. She believes it is not too late to address this distortion of politics.
Union leaders have also weighed in on donation limits. Paul Nowak of the Trades Union Congress commented on the "game-changing" nature of large donations and the need to ensure democracy is not "sold to the highest bidder." Sharon Graham of Unite specifically called for a cap on donations from individual donors.
Reform UK deputy leader Richard Tice criticized Labour and its union allies, suggesting they are seeking to "rig the system" because they cannot win elections fairly. He warned that a two-tier system could emerge, potentially favouring union donations over those from other sources.