Tech billionaire Elon Musk. TED Conference/flickr.com

Nigel Farage, a UK member of Parliament and leader of the Reform Party, announced in December that US-based tech billionaire Elon Musk was giving ‘serious thought’ to donating to his political party. Reports indicated that the donation could be as much as $100m. 

Musk later denied he planned to funnel funds to Farage and has reportedly said his role in the new US administration might complicate any funding, but the potential for such a donation has led to increased pressure on the UK government to strengthen political financing legislation. 

Concern over wealthy individuals pumping money into British politics to further their own interests is not new. The Intelligence and Security Committee has, in recent years, warned about donations with links to the Kremlin, and MI5, the UK’s domestic counter-intelligence and security agency, issued a rare warning in 2022 that an alleged Chinese agent had sought to influence parliamentarians by donating over £420,000 to an MP over a five-year period.  

Mark Stephens CBE, Co-Chair of the IBA’s Human Rights Institute, says that the UK’s political financing law needs updating and doesn’t account for the role of multinationals and people who are global citizens. ‘We haven’t really wrestled with those challenges since the advent of a greater interconnected world where foreign individuals or foreign-born individuals want to shape and have a say in our political process,’ he says. 

The most obvious way Musk could donate to a British political party is by using a UK based subsidiary of his social media company X, or electric car business Tesla, to contribute the funds.  

Another way the donation could be achieved would be for Musk to gift the money to someone on the UK electoral roll, who could then donate the money. In this event, there would be no legal obligation for the individual donating to provide any information about the original source of the funds and the donation would be legal so long as the individual chose to donate the money of their own accord.  

Much of the anxiety about Musk’s potential financial support stems from his perceived success in using his deep pockets to influence the outcome of the US presidential election. In the run up to the election, the Justice Department reportedly warned Musk that he might have violated federal law by offering $1m random payouts to registered voters in battleground states who signed a petition in support of First and Second amendment freedoms. Musk denies wrongdoing and says the lottery was open to voters from any political party. A lawyer for Musk did not respond to a request from Global Insight for comment.

Peter Geoghegan, an investigative reporter focused on finance and influence in British politics, believes the ability of foreign billionaires to donate huge amounts of money to UK political parties represents an existential threat to democracy. ‘Our legislation is really designed to prevent someone who is a South African born US based billionaire from donating and the fact that it can’t really does throw into sharp relief the kind of failures that are in our laws,’ he says. 

Stephens CBE says that the reluctance in the UK to tighten the rules around political donations is likely to be because political parties don’t want to shut down funding opportunities. ‘Frankly all political parties have fought shy of it because they want the donations, so I think it'll be a long time before essentially the turkeys vote for Christmas and vote for regulation, which means foreign money is essentially excluded,’ he says. 

But public trust is on the line. Polling by the Electoral Commission in 2024 – the UK elections watchdog – found that 85 per cent of the public believe the funding of political parties isn’t transparent, and only 36 per cent believe parties that break the rules will face action. Havenhand says that a lack of trust in government ‘fosters disengagement and cynicism with democracy’, which ultimately affects elected governments’ legitimacy. 

UK Prime Minister Keir Starmer pledged in his party’s 2024 manifesto to protect democracy from the threat of foreign interference by strengthening rules around donations. The Electoral Commission told Global Insight that it is currently in talks with the government about various recommendations it has made to amend the law including banning companies from donating that can’t finance their donation with UK profits and implementing ‘know your donor checks’ that require political parties to conduct more due diligence on the donations they receive. 

Havenhand says that caps on political donations could form part of the solution, but that they would need to be implemented within a broader package of reform, including more robust checks on the original source of donations and greater regulation and transparency surrounding donors’ access to politicians. ‘It's a complete transparency black hole,’ he says. 

Mark Stephens CBE believes caps to political donations if not enforced effectively may be easy to avoid with the possibility of individuals or companies being able to make lots of smaller donations via multiple channels. ‘There are ways around these systems, and I think until you start policing it in a meaningful way there will always be abuse,’ he says.