Prime Minister Andy Burnham has dropped his support for a general cap on large political donations, opening a fresh row inside Labour as MPs push for tougher restrictions on mega-donors.
Burnham had previously backed limiting the amount wealthy individuals and organisations could give to political parties, but the Government will not support attempts to add a broad donations cap to the Representation of the People Bill, according to The Guardian.
The decision comes as Labour MPs join a cross-party effort to tighten Britain's political finance rules and reduce the influence of exceptionally large donations.
Ministers are still pursuing separate restrictions aimed specifically at foreign financial influence, including a £100,000 annual cap on donations from overseas electors and a moratorium on cryptocurrency donations.
Burnham drops support for general donations cap
The Guardian reports that Burnham previously supported a £500,000 ceiling on political donations but has now declined to back amendments that would introduce a general cap on money given by permissible domestic donors.
The reversal has prompted criticism from Labour MPs and electoral reform campaigners who argue that Britain's political funding system gives wealthy donors disproportionate influence.
Trade unions, which remain major financial supporters of Labour, have raised concerns that a broadly drawn cap could restrict their ability to support the party.
The Government has not announced a new alternative ceiling on domestic political donations.
Labour MPs push £1m annual limit
One amendment tabled to the Representation of the People Bill by Labour MP Alex Sobel would introduce a £1 million annual cap on donations from any permissible donor to regulated political entities.
The proposed rules would apply to political parties, candidates, recognised third-party campaigners and other regulated recipients.
Qualifying trade union affiliation fees would be treated separately under the amendment, reflecting concerns about how a donations ceiling could interact with Labour's traditional funding arrangements.
Parliament records that the amendment has not yet been considered by the House of Commons and no decision has been taken.
No overall cap exists under current law
There is currently no general upper limit on how much a permissible individual, company or trade union can donate to a UK political party.
Instead, the law regulates who may donate, requires checks on permissible donors and imposes disclosure requirements once relevant thresholds are reached.
The Representation of the People Bill already proposes tougher checks on political donations and corporate donors, but those measures do not amount to a general ceiling on donations from domestic permissible donors.
Government still tightening rules on foreign-linked money
The Government's decision not to support a broad domestic cap does not mean ministers have abandoned political finance reform altogether.
Following the independent Rycroft Review into foreign financial influence, ministers accepted recommendations including a £100,000 annual cap on political donations and regulated transactions from overseas electors.
The Government has also committed to a moratorium on political donations made using cryptoassets until Parliament and the Electoral Commission are satisfied that adequate regulation and transparency safeguards are in place.
Further reforms include tighter corporate donation tests based on post-tax profits and stronger transparency requirements.
House of Commons research highlights impact of a cap
House of Commons Library analysis published this week concluded that imposing a cap on political donations would have substantially reduced political party income in the year of, and the year before, the 2024 general election.
The effect of any cap would depend heavily on where the limit was set and whether exemptions or special arrangements were made for organisations such as trade unions.
The debate has intensified following a period in which exceptionally large individual donations have become an increasingly prominent feature of British political funding.
Labour pressure grows ahead of Commons showdown
The Representation of the People Bill is returning to the Commons with MPs seeking changes across electoral reform and political finance.
Burnham is therefore facing pressure from Labour MPs on two fronts: calls for a national commission on replacing First Past the Post and demands for tougher limits on the size of political donations.
Supporters of a donations cap argue that limiting individual contributions would reduce the risk of wealthy donors exercising excessive influence over political parties.
Opponents warn that a poorly designed ceiling could damage legitimate political participation, restrict party funding and disproportionately affect organisations whose support is built from collective membership contributions.
For now, the Government is continuing with targeted safeguards against foreign financial influence while declining to support a general cap on domestic political donations.