Has Labour just accepted the case for a political donations cap?

The Rycroft Review has exposed the extent of foreign interference in our politics. Now the government needs to go even further

Something significant happened in the Commons earlier today. Housing secretary Steve Reed announced a moratorium on political donations in cryptocurrency and a cap on donations from Britons living abroad.

The crypto ban made the headlines. And rightly so.

Cryptocurrency is opaque and hard to trace. Campaigners have long warned it could be used to funnel dark money into British politics. That loophole is now, at last, being closed. Nigel Farage, who has openly courted crypto donations, will not be pleased.

But the second part of Reed’s statement really caught my attention.

From now on, Britons abroad will be limited to donating £100,000 a year.

That is a major shift. In recent months, Thailand-based Christopher Harborne has given Reform £12 million. (And guess where his money comes from? Yep, crypto…) As we reported yesterday, Farage’s party has also received large donations from Brits in Monaco, and other offshore jurisdictions.

But this is potentially far more significant than just making it harder for rich Reform-curious Brits abroad to bankroll our politics.

As I told James O’Brien on LBC this afternoon, Reed’s announcement marked the first time a British government accepted the principle of caps on political donations.

Make no mistake, this is potentially a seismic moment.

Britain has never had a cap on political donations. For anyone. As we have shown time and again, a handful of super-rich donors have effectively bought our politics. In 2023, two-thirds of all political donations came from just 19 multi-millionaires.

Could this be about to change?

Reed was responding to the publication this morning of a review by Philip Rycroft into foreign interference in British politics.

Rycroft’s remit only covered foreign financing, so there was no discussion of domestic funding, but his report is a remarkably clear-eyed analysis of the problems of dark money and hidden influence in our politics. (I recommend reading it. Full disclosure: I gave evidence to Rycroft’s review after being asked to contribute.)

For a former senior civil servant, Rycroft is remarkably blunt about the threats to our democracy. Indeed, he puts the failure of successive British governments to act to shame.

“I am not pressing the panic button,” he writes. “But I am ringing the alarm bell. If government does not act swiftly to gear up to counter these threats, there is a real risk they will run away from us.”

I don’t know much weight was placed on my contribution to the review, but I was heartened to see Rycroft taking up many of the points I raised: more stringent checks on political donors, and effectively a ban on donations from shell companies.

Rycroft recommends that foreign consultant lobbyists should have to join the official register. As we previously exposed, Peter Mandelson’s lobbying firm Global Counsel avoided disclosing its work for the Qataris by using its Middle Eastern arm, which was not VAT registered. This should end now.

Proposals to limit campaign spending, and to require third-party campaigners to declare donations all year round, not just during election periods, are welcome, too.

Rycroft also flags the influence of foreign-based betting on political gambling markets, and warns about foreign influence through think tanks. (Something Democracy for Sale has repeatedly exposed.)

But what I kept coming back to as I read the review, was the thing that Rycroft couldn’t say: that we need to get the money out of British politics.

If we think foreign oligarchs shouldn’t be allowed to buy access in Westminster, why is it OK for the domestic super rich? If we know that lobbyists and think tanks can influence our politics opaquely, shouldn’t we tackle that even if it’s not a foreign interest footing the bill?

The government has finally accepted the principle that donations should be capped. Now it needs to extend to everyone, not just Britons abroad.

The good news is that there is momentum behind a cap. The Elections Bill is still going through Parliament and many backbench Labour MPs support it.

More than 100,000 people have now signed a petition we have been running with campaign group 38 Degrees calling for a cap. These calls are only likely to grow in the wake of the Rycroft Review.

We will continue to expose how big money buys influence, and to fight to clean up our politics. Thanks for your support - together, we really are making a difference.