Andy Burnham’s government has pledged to “tackle the issue of mega-donors in UK politics” as soon as possible, with dozens of Labour MPs demanding an immediate cap on donations before the next election.
The government outlined plans for a taskforce that will look at dealing with the influence of donors giving multimillion-pound contributions and suggested ministers wanted to find a “solution” to the issue quickly.
Burnham has previously backed the idea of an annual donations cap in correspondence with a campaigner but the Guardian revealed last week that he was not in favour of including it in the new representation of the people bill debated by MPs on Wednesday.
Trade unions have been pushing back against the idea of a donation cap over fears that a rightwing government could take steps to stop large donations from their movement.
But during the debate, a string of MPs, led by Labour’s Stella Creasy, made the case for a cap on donations to help restore trust in democracy and argued there were ways of bringing in limits that would not restrict union funding.
Florence Eshalomi, the democracy minister, told the Commons that the government had already put forward a significant package to stop British donors overseas giving large sums and that it was prepared to do more on the issue of big money in politics.
“The secretary of state and the prime minister are determined to tackle the UK-based issue of mega donors in UK politics,” she said, promising a “new cross-government taskforce to work at pace to find a solution without unintended consequences”.
Eshalomi said “once these solutions have been found we would want them in force as soon as possible”.
The statement was welcomed by Creasy but she is still pressing for a firm commitment to bring in a cap before the next election.
The primary purpose of the bill is to lower the voting age to 16 and cap donations by Britons based abroad at £100,000 a year. It will include a ban on cryptocurrency donations until these are not deemed to be a risk by the Electoral Commission.
Any changes to the ban would have to be lifted by further primary legislation – a victory for campaigners who were pushing for it to be permanent rather than a temporary moratorium.
In the debate, other MPs called for a range of measures to strengthen the political finance system. Liam Byrne, a Labour former minister, said there should be further measures to tighten loopholes that mean cryptocurrency systems can still be used for donations before being converted into traditional currency.
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The issue of a donations cap has been hotly debated for months since Reform UK took donations of more than £12m from Thailand-based crypto investor Christopher Harborne and £4m from crypto platform founder Ben Delo. The Tories also took about £20m from IT healthcare founder Frank Hester before the last election.
Creasy had put forward an amendment to cap domestic donations at £100,000, while a colleague put forward an amendment to cap them at £1m.
Creasy subsequently changed her amendment to set the cap at £500,000, reducing in the second year to £100,000 unless ministers intervened to set it at a different level.
Last week, Burnham’s aides said that while the prime minister was not backing a donations cap next week, he was not ruling one out in the future. A Labour source said: “This bill was designed to deliver our manifesto commitments on votes at 16 and to strengthen political donation rules to guard against foreign interference and that’s what the government is prioritising. But we’re not ruling out taking further steps to protect our democracy in the future.”
In her first outing at the dispatch box since her appointment by Burnham, Eshalomi said the bill would “deliver a modern and secure and inclusive electoral system that the public rightly deserve”.
