Political donations by companies should be banned to protect UK elections from foreign interference, a thinktank has warned.
In the first big overhaul of election funding in 26 years, ministers have pledged to “keep British democracy safe” by closing a loophole that allows individuals not eligible to vote in Britain to donate to political parties through UK-registered companies.
The representation of the people bill, being debated in parliament, will oblige corporate donors to show they are controlled by UK electors or citizens.
However, in a report published today, the Centre for the Analysis of Taxation (CenTax) claims the new legislation will not solve the problem.
Sebastian Gazmuri-Barker, a senior legal analyst at CenTax, said the bill’s proposed tests “contain loopholes that are easily exploitable”.
“Parliament should either ban corporate donations outright or significantly strengthen the approach,” he said.
By matching the name of companies declared as donors to ownership records, researchers at the thinktank found that between 2001 and 2024, over 4000 companies had donated £293m, with big surges ahead of general elections.
Almost £1 in every £10 came from corporations controlled by individuals who would not have been eligible to donate directly. CenTax found their donations were on average almost twice as large as those from companies with UK-eligible owners.
The estimates are likely to be conservative, since the true extent of foreign interference is obscured by opaque corporate structures.
The researchers found a quarter of the money was not traceable because the owner of the company could not be identified. “The bill’s reforms are easy to dodge,” the report states.
Details of company ownership are kept at Companies House, where data has been criticised as unreliable and incomplete. CenTax is critical of the fact that the new legislation will continue to rely on Companies House data rather than obliging the Electoral Commission to collect the information.
In the absence of a ban on corporate donors, CenTax is calling for all but the smallest donors – both individuals and companies – to be required to register with the Electoral Commission before they can give any money, and says disclosure of the ultimate controllers of companies should be mandatory.
Introducing the bill last month, Steve Reed, the secretary of state for housing, communities and local government, said: “Growing threats from abroad mean we must make changes to keep our elections secure. We won’t let hostile foreign states use dirty money to buy our elections. We are keeping British democracy safe for British people.”
The legislation requires companies to be majority owned or controlled by UK citizens and registered electors, headquartered in the UK, and have enough income to fund donations.
The reforms were given new impetus after reports that Elon Musk was considering donating to Nigel Farage’s Reform UK party.
“Around a quarter of money donated by companies is completely untraceable, and at least one pound in 10 comes from individuals who could not donate directly,” said the CenTax director, Arun Advani. “The bill is a welcome opportunity to fix this, but its current provisions won’t do so and risk providing a false sense of security.”
