Andy Burnham’s government could thwart Reform’s unprecedented £72m donations with retrospective restrictions on political donors that will include tough new residency requirements, ministers have announced.
In a move that is likely to set off furious complaints from Nigel Farage’s party, the government will table amendments to legislation going through the House of Lords within weeks that puts the legality of Reform’s latest donations in doubt.
Senior Labour and union figures had urged ministers to look again at party funding rules after Reform announced at the weekend that two cryptocurrency billionaires, Ben Delo and Christopher Harborne, who have both previously been based overseas, were each donating £36m to the party.
Government sources, however, said the plans to strengthen the representation of the people bill had been under way for weeks, after MPs pushed 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 the residence requirements applied to other areas of government policy, such as tax status.
The extraordinary measure will be seen as a sign of the stakes attached to the donations, which would give Reform a vast advantage in organising supporters on the ground before the next election.
However, Farage acknowledged on Monday that Reform could fall foul of government moves to clamp down on foreign donors, although the party has said the £72m donations are in line with both current rules and those already voted on by MPs in the bill.
The legislation currently restricts donations from expats to £100,000, which would also apply for the first 12 months after they return to the UK – backdated to 25 March this year.
Ministers have already brought in a minimum residency requirement of the remainder of the calendar year in which they return, plus a further full year, meaning Reform may not be able to accept the £72m donations until January 2028.
Delo has been based in Hong Kong but said in April he 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 these donations are 100% compliant with the law today, of that there is no question whatsoever,” Farage told the BBC. When asked if the two billionaires were UK residents as of 25 March, he replied: “All I’m going to say is, with the law of the land as it stands, they are both compliant.”
Sharon Taylor, a Labour minister in the Lords, told peers that as well as donors having to demonstrate a “genuine and ongoing connection to the UK”, the government was also looking at further restrictions.
“We are considering how we will strengthen the residency requirements, including ensuring the length of time spent in the UK aligns with broader government policy,” Lady Taylor added.
Angela Rayner, speaking at the TUC, criticised Reform for suggesting its donations from cryptocurrency billionaires were equivalent to the contributions from trade union members to Labour.
“How dare they try to compare money from a couple of crypto billionaires to union members’ subs? The most highly regulated political funding we can have,” the communities secretary said.
“It couldn’t be more different from a couple of offshore billionaires trying to buy our democracy … We will never undermine the rights of working people to organise collectively and democratically.”
Trade unions are set to issue a statement on Tuesday on political donations condemning attempts by Farage to compare wealthy individual donors with individual members who donate to Labour through their union, and urging the government to go further on political donations.
The head of Britain’s union movement, Paul Nowak, said the government must act to “stop the super-rich corrupting our politics”. But union sources had said there were “significant differences” between general secretaries on how to proceed.
Unite’s general secretary, Sharon Graham, on Sunday broke ranks and backed a limit on individual domestic donations. But others, including GMB chief Gary Smith, fear it would lead a future rightwing government to curb union donations.
Government sources said that calls from opposition parties for any changes to domestic donations to apply to the unions too were “not under active consideration”.
However, the government is understood to be looking at spending limits for parties, which are currently restricted to the year before a general election, with tighter limits in the weeks running up to polling day.
In a letter to the Electoral Commission in August, Rayner and Louise Haigh, the first secretary of state, wrote: “We believe spending limits on parties and candidates are too high, and ought to be reduced.”
The government has also set up a cross-government “task and finish” team to consider threats to UK democracy, including political finance, illegitimate influence, and broader threats to political equality.
Philip Rycroft, who produced an independent report on tightening electoral law around overseas donations, said the Reform donations reopened broader questions about donations and spending caps.
“The time has come when this does need a hard look. It would have been better if the government had started out before we had these huge donations coming down the track,” he said.
“But we have to ask the question, is this healthy for our democratic process to have more money coming from fewer people in bigger lumps?”
MPs who have campaigned for a donations cap are working with peers on a number of amendments to the bill which would tighten it up without having to wait for another act of parliament.
They include one to enable ministers to set a cap on all donations at a later date, and another to prevent spending limits being raised without Electoral Commission approval.
Teresa O’Neill, a shadow local government minister in the Lords, said some of the measures in the bill were deeply troubling. “Even just the perception of partisan, targeted legislation risks breaking down longstanding political conventions and, crucially, trust in the system,” she said.
Reform denounced the government’s existing plans, with Zia Yusuf, the party’s home affairs spokesperson, describing them on X as “an unprecedented step from a leftwing government to plunge Britain into dictatorship and communism”.
