Illegal donations: how does dark money get into UK politics?

AI-driven disinformation campaigns, the hacking of confidential trade documents, cyberattacks on the Electoral Commission – recent years have made it clear that the UK’s democracy is under serious threat from foreign interference.

And while authoritarian states like Russia and China attempt increasingly sophisticated disruption strategies, there is one particular element of UK politics that leaves the entire system open to exploitation: the reliance on private donations.

Big money has long dominated US elections. Now the UK is starting to follow suit. Figures released last month showed political parties accepted a total of £55.5m in donations between April and June 2024 – one of the highest quarters on record. And last year, Michael Gove, then a government minister, dramatically increased the limits on how much political parties are allowed to spend on an election campaign – from £30,000 per constituency to more than £54,000 (Gove said this reflected inflation since 2000).

This increasing reliance on a war chest to win an election opens the door to people willing to subvert the rules to put money in the pocket of their preferred party. And the UK has particularly weak defences against foreign money making its way into politics.

What’s wrong with foreign money entering UK politics?

The problem, in short, is that it can buy influence that serves outside interests. In July, the Bureau of Investigative Journalism (TBIJ) published an investigation which tested the six major political parties’ ability to detect and prevent illegal donations. We arranged for a series of payments to be made by someone not on the UK electoral roll to each major party, all totalling more than £500 – the threshold at which a political donation must come from a UK voter. Five of the six parties accepted the funds.

So the issue is with individual donors?

Not exactly. Single-person donations like those are the tip of the iceberg. Since 2020, more than £13m has been donated to political parties through organisations known as “unincorporated associations”. Nearly two thirds went to the Conservative Party.

Unincorporated associations are informal organisations of two or more people who come together for a common purpose, such as a housing association or a religious community. They don’t need to file yearly finances. Or open business accounts. Or even settle on a name.

An unincorporated association doesn’t even need to register with the Electoral Commission unless it makes political contributions exceeding £37,270 in a calendar year – and even then, it doesn’t have to reveal how it raised the money. As Gavin Millar KC, a leading expert in election law with Matrix Chambers, told TBIJ: “Unincorporated associations can act as front donors, concealing that the money is actually coming from impermissible sources.”

In July 2021, the Committee on Standards in Public Life warned in a report to Downing Street that these associations provide “a route for foreign money to influence UK elections” and recommended donations should only be made from profits generated in the UK. But no such law change has occurred.

Who’s responsible for closing these loopholes?

Although UK law puts the onus on whoever is acting on behalf of a donor to disclose the source of funds, in practice they can still hide the origin of the money. And as long as the intermediary is on the electoral roll, neither the Electoral Commission nor the political party is automatically required to investigate further.

Millar gave the hypothetical example of a Russian oligarch’s wife, who is a British citizen registered on the electoral roll in London, making a donation in her own name. “The authorities will just accept it without investigating, because they say, ‘Well, she’s on the register, and she says it’s her money'.”

What’s the solution?

According to Millar, it is the system’s reliance on self-regulation by both parties and donors, combined with weak enforcement, that makes it vulnerable to abuse. “There is no state entity with the powers and resources needed to properly regulate the system. Neither the Electoral Commission nor the police are able to do it,” he said.

But rather than stronger enforcement, the answer might live in a move away from private funding altogether. In the European Parliament, the majority of party funding is made up of public money from the EU budget. This limits individuals with deep pockets – as well as foreign donors and even sovereign states – from flooding the system with large donations to buy influence.

In 2021 for example, about 80% of a typical European party’s funding came directly from the EU budget, with the remaining 20% sourced largely from member parties, not private donations. Allocating funds from a central pool based on the number of elected members reduces the need for individuals to be policed.

Of course, any change at this scale would require the party in power taking it upon itself to overhaul the system that got it there. Perhaps we shouldn’t hold our breath.

This article was amended on 29 October 2024 to remove a reference to a political donor after TBIJ received further information about the individual.