Labour reportedly dropped a plan to ban foreign political donations after an intervention from Waheed Alli, the Labour peer who paid for Keir Starmer’s clothes and glasses.
The plan would have scuppered any potential donations from the billionaire Elon Musk to Reform UK. It would have made it illegal to donate unless donors were registered to vote in the UK or via companies owned by people based in Britain.
Labour has received £4m from a hedge fund based in the Cayman Islands, Quadrature Capital, though it pays corporation tax in the UK on profits.
But Lord Alli, the party’s fundraising chief in opposition, is said to have stopped the planned speech by Angela Rayner, the deputy prime minister, and Gordon Brown to announce the changes, according to a new book about Labour’s path to power.
The former Labour prime minister had already booked accommodation in London for the speech announcing the changes when it was canned, according to Get In, by Patrick Maguire and Gabriel Pogrund.
Labour and Alli declined to comment.
The book contains a leaked policy paper for the speech intended to take place in December 2023 at Chatham House – and suggests it had been signed off by Morgan McSweeney, Starmer’s now chief of staff.
Though McSweeney was reportedly concerned about seeming anti-donor, he is said to have agreed the plan on the basis it would prevent donations from those without “skin in the game”.
A Labour source told the authors that Alli had intervened to pull the announcement with a week to go, with no explanation.
Labour is said to be examining proposals to limit how much individuals and companies can donate to political parties as part of an effort to tighten the rules around money in UK politics. The Institute for Public Policy Research has recommended that ministers limit individual and corporate donations to political parties to £100,000 a year.
In its manifesto, Labour committed to “protect democracy by strengthening the rules around donations to political parties”. At the core of this promise was an aim to tighten protections around foreign interference in UK democracy.
Donation caps are among a number of measures the government is looking at as part of plans for an election and democracy bill in the next parliamentary session. The bill did not form part of the king’s speech in July.
According to the policy paper quoted in the book, Rayner’s proposal was to “close loopholes in UK donation law which currently allow dodgy money to enter our politics – primarily through the Tory party – via shell companies or companies with no connection to the UK.
“This policy will provide us with a robust defence to the Tories’ attack on our donations by laying out with full transparency the robustness of our donation due diligence, and inviting the Tories to close loopholes which allow foreign money into UK democracy.”
Alli, a businessman who had donated more than £100,000 to Labour for more than 20 years, drew public attention when he was given a Downing Street pass when Labour won the election in July last year, which he then returned.
The emergence that he had then donated thousands for Starmer and his wife Victoria’s clothes and eyewear became known as the “passes for glasses” affair and led to accusations of cronyism, since the peer had no formal role in No 10.
In mid-September, it emerged that Starmer had initially failed to declare £5,000 of gifts from Alli used to buy clothes for his wife. He approached the parliamentary authorities to make a late declaration after being given fresh advice on what should be disclosed. The standards commissioner decided not to investigate.
Article by:Source: Jessica Elgot Deputy politcial editor
