UK Weighs Donation Cap to Stem Farage’s Pursuit of Musk Cash
(Bloomberg) -- Prime Minister Keir Starmer’s government is talking to Britain’s election watchdog about tougher rules on political donations, amid fears that Reform UK leader Nigel Farage may secure funding from Elon Musk on a scale that could upend the country’s politics in favor of his right-wing party.
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The Electoral Commission wants to apply a limit to company donations that is linked to the profit they make in the UK, the watchdog’s head Vijay Rangarajan said in an emailed statement. Two more recommendations — to enforce know-your-donor checks and to ensure money flowing to unincorporated associations is from “permissible” sources — are also part of the discussions, he said.
Though the commission has been pushing for the changes for over a decade, the issue was thrust into the spotlight by reports Musk was considering a donation of as much as £100 million ($126 million) to Reform UK. As a lump sum that would smash British political records, and while Farage initially played it down, this week he boasted of meeting Musk at President-elect Donald Trump’s Mar-a-Lago resort in Florida along with Reform UK treasurer Nick Candy.
Farage then wrote in the Telegraph newspaper he is in “ongoing negotiations” with Musk about funding, though he didn’t specify any amount.
Under UK rules, there’s no limit on the amount political parties can raise — but they cannot take money from a foreign individual. Any company registered in the UK and is active can, however, make donations. That is why there is scrutiny on how much Musk could give via his X social media platform.
The Electoral Commission wants the rule to change so that companies cannot donate more than they have earned in the UK. Supporters of the watchdog’s position argue anything close to the reported £100 million would be against the spirit of the rules and exploit a loophole that was never intended.
Musk’s Twitter UK posted gross profits of £8.6m in 2022, according to its most recent financial statement at Companies House.
“It’s crucial that UK voters have trust in the financing of our political system, so they need to see how parties and campaigners are financed and how they spend that money at elections,” Rangarajan said. “The system needs strengthening, and we have been calling for changes to the law since 2013, to protect the electoral system from foreign interference.”
But the issue poses a dilemma for Starmer and his government that is fraught with risk. On the one hand, the billionaire Musk has the financial power to dwarf anything seen before in British politics. Placed behind Farage’s Reform UK, that could have major implications not only for Starmer’s Labour Party but also Kemi Badenoch’s opposition Conservative Party, which fears losing more votes to Reform’s populist positions including on immigration.
More fundamentally, concerns about foreign influence on UK political processes have been building since the 2016 Brexit referendum.
Yet moving now to tighten financing laws also risks triggering a backlash from Reform UK voters that would likely be seized on by Musk. The billionaire has repeatedly attacked Starmer’s government on issues including taxes on farmers and the government crackdown on anti-immigration rioters in the summer.
Musk’s X platform was criticized for not clamping down on disinformation that contributed to the unrest.
That prompted the UK to extend its rules against illegal material online to cover social media companies, according to a statement from British regulator Ofcom this week, confirming an earlier Bloomberg report.
The donation question is part of a broader issue facing Starmer — the close links Farage is forging with Trump and his team. That poses a significant challenge to the UK’s new Labour government, from trade to foreign policy.
Trump has repeatedly pledged to slap tariffs of up to 20% on all imports to the US, and even higher on those from China. Starmer on Thursday said he’s “not a fan” of tariffs, though he declined to speculate on what Trump will end up doing when he takes office next month.
“Am I alive to the danger of tariffs? Yes of course,” the premier told the House of Commons Liaison Committee of senior backbench lawmakers. “We have to make sure that we avoid tariffs. We’ve got very good trade with the US.”
Amid growing scrutiny over the strength of Starmer’s relationship with Trump — and whether Farage was usurping the government’s place in UK-US relations — the premier and the president-elect held a phone call on Wednesday.
Starmer’s chief of staff, Morgan McSweeney, and his national security adviser Jonathan Powell also met senior members of Trump’s incoming administration in the US this month, people familiar with the matter said, in an attempt to deepen relations before his inauguration in January.
--With assistance from Alex Morales.
(Updates with Starmer comments on tariffs starting in 15th paragraph.)
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