Musk and Farage have handed Starmer a golden chance to clean up political murky money

It’s in the Labour Party’s interest to have a cap on individual donations, otherwise Musk’s attempt to buy votes could put Reform in the running for the next election, writes Andrew Grice

The talks between Nigel Farage and Elon Musk at Donald Trump’s Mar-a-Lago estate in Florida have highlighted the urgent need to reform the UK’s archaic rules on how political parties are funded.

No money for Reform UK was agreed and Farage described reports of a $100m donation by Musk as “for the birds”.

Westminster whispers suggest the figure was floated by a jittery, cash-strapped Conservative Party fretting about Reform’s momentum in the opinion polls. But Musk and Farage will talk again about a multi-million-pound injection that could be the biggest donation in UK political history, which is believed to be John Sainsbury’s £10m gift to the Tories in his will.

Musk’s hypocrisy is clear. He is prepared, it seems, to interfere in UK elections to tilt the playing field hugely in Reform’s favour. Yet he cried “illegal” foreign interference when Labour aides went to the US to support the Democrats’ campaign against Trump in this year’s election.

Musk, who could give money legally under the current rules through his X or Tesla companies because they are UK-registered, wants to give Keir Starmer the order of the boot. Trump’s first buddy has accused Starmer of running a “tyrannical police state”, “going full Stalin” by making farmers subject to inheritance tax and said “civil war is inevitable” in the UK during the summer riots, which were whipped up on X (Twitter).

Perhaps Musk’s real agenda is his opposition to the government’s Online Safety Act, which will make social media companies more responsible for their users’ safety while on their platforms. And he has declared war on the Center for Countering Digital Hate (CCDH), co-founded by Morgan McSweeney, now Starmer’s chief of staff.

It would be unhealthy for the world’s richest man to provide a huge chunk of one party’s funds and even more unhealthy if that money is “foreign” because of a gaping hole in the rules. It would be equally wrong for Bill Gates to bankroll Labour or Mark Zuckerberg the Liberal Democrats, once led by Nick Clegg, now global affairs president for Meta.

The Musk-Farage link-up has handed Starmer a golden opportunity to clean up the dark money flowing into British politics. According to Transparency International, almost £1 in every £10 reported by UK parties since 2001 came from unknown or questionable sources.

The Committee on Standards in Public Life has proposed a £10,000 cap and a limited extension of state funding for parties. I think a little more public money would be a small price to pay to tackle the corrosive perception that favours can be bought. But I doubt any government will dare touch this third rail in our anti-politics age as it would play into the hands of the populists.

The government will study proposals coming soon by the Institute For Public Policy Research (IPPR) think tank for a £100,000 a year cap on individual and corporate donations – part of a plan to modernise elections and re-engage voters. Some Labour MPs want an outright ban on company donations but that would leave their party open to the charge of double standards unless it ended its trade union donations.

The time for a cap has come, as the economics of political campaigns have changed dramatically since the UK’s rules were written in 2000. A megabucks donation from Musk would allow Reform to have a massive online advertising blitz, targeting difficult-to-reach groups such as young adults before limits on party spending kicked in 12 months before the next election. The other parties couldn’t compete. As well as dominating the air war, Musk’s zillions would also allow Farage to build the ground operation he failed to do in Ukip and the Brexit Party, which held them back.

Labour MPs are pressing the PM to act over Musk. “This would be a scandal and we have to stop it,” one told me. “There won’t be a better time to act.” They think Angela Rayner, the deputy prime minister, is sympathetic. But Starmer has a dilemma as the party’s rich benefactors are believed to oppose a cap on individual donations.

The government should legislate for such a limit. Farage would cry foul but Labour could win the battle of public opinion as voters would not welcome foreign money interfering in UK elections. Labour can claim a mandate from its manifesto, which pledged to strengthen the rules on funding.

Labour and the Tories have argued bitterly for decades about reform, with Labour criticising the Tories’ big donations and the Tories Labour’s union money. It would be ironic if the Musk-Farage Show persuaded the old enemies to come together to shake up party funding.

But they would be right to ensure fair elections by stopping Musk’s attempt to buy votes. Labour and the Tories would get the added benefit of reducing the real threat to both of them from Reform at the next election.