How might a cap on donations affect political party income in the UK?

Political parties in the UK rely primarily on donations for their income. This system, often described as voluntarism, allows individuals and organisations to support parties financially but has led to longstanding concerns about the influence of large donors.

The Representation of the People Bill would introduce an annual £100,000 cap on donations from individual overseas electors. This would be the first time that a limit has been placed on donations in UK politics and has prompted renewed calls for a wider cap applying to other sources.

The precise effect of a donation cap beyond simply that on overseas electors is uncertain because modelling cannot reliably predict how donors would respond. However, modelling does suggest that a broad cap on political donations would have substantially reduced annual party income in the years before the 2024 general election.

This effect is greatest for the Conservative Party and the Labour Party, reflecting their high income and high proportion of income from large donations, and is similar for Reform UK (but only in 2024 and 2025). The same modelling suggests other parties would only be affected if the cap were lower than £100,000 a year.

What function do political donations have?

Many academics and commentators argue that money in politics is essential for democracy to function. This is because it allows parties to:

• publicise their goals
• outline a vision of what a good society looks like
• be visible to voters and allow for them to make an informed choice
• conduct research to put their ideals into action

For this reason, money has been called “the fuel of party politics”, and there is debate at both the country and international level regarding how it ought to be regulated. This is because there is also widespread agreement that while money is necessary for democracy to function, it can also, like fuel, be destructive.

The UK takes a ‘voluntarist’ approach to political party funding. This is a system where political parties are funded primarily through donations (large or small) and membership fees, rather than by the state. For example, a study which aggregated the income of UK political parties between 2002 and 2017 found that only 9% of funding during this period came from the state (the rest came from a mix of donations and membership fees).

Proponents of voluntarism say it allows for the upholding of individual freedoms and encourages political participation through incentivising parties to seek members. Critics, however, point to the widespread public suspicion that political donors seek (and receive) policy favour in return for their patronage. Because of this, there is perennial concern that the system of political financing in the UK is contributing to citizens’ distrust of politics and politicians, and reforms are often suggested (and made) to the system to try and address this.

What recent reforms have been suggested?

The 2024 Labour Party manifesto contained a commitment to “protect democracy by strengthening the rules around political donations”. This commitment has been addressed in the Representation of the People Bill, which had its first reading on 12 February 2026 and its second reading on 2 March 2026.

After second reading, and in response to the Rycroft Review into countering foreign financial influence and interference in British politics, the government introduced a new clause 74 to the Representation of the People Bill. This would set an annual cap of £100,000 on donations from overseas electors, though it will apply retrospectively from 26 March 2026 at commencement date of the bill.

While general election spending has been subject to limits for candidates since 1883, and for parties since 2000, if the bill passes the cap on overseas electors will mark the first time in history donations to political parties have been subject to a limit. Given this break with the voluntarist tradition, numerous campaigners and MPs have renewed calls for a cap on donations to be extended to other permissible donors.

What effect would a wider cap on donations have on party income?

It is hard to know exactly how a donation cap beyond that on overseas electors would affect party income in the same way that it is hard to know what effect changing the electoral system would have on how people vote. It is possible to conduct modelling based on what we know from prior evidence, but harder to predict how people’s behaviour would change.

However, the Electoral Commission and the UK arm of anti-corruption campaign organisation Transparency International (TI-UK) have both released modelling which analyses how national party income would change if different levels of blanket donation cap were introduced.

Both sets of analyses have a different methodology, which means that the modelled effects vary. For example, the Electoral Commission does not draw a distinction between trade unions and other permissible donors, whereas TI-UK models systems where trade unions are either exempt from the cap or included. The Electoral Commission also has not attempted to predict how donors would respond to a cap, whereas the TI-UK model assumes that donors would spread excess donations into subsequent years.

Because of these differences, the TI-UK modelling suggests that the consequence of a cap on donations (at varying levels) would have a smaller effect on party income than the Electoral Commission modelling.

The TI-UK interactive dashboard is available online and shows the effect by party. The Electoral Commission’s sensitivity analysis is available online and shows effect by party and at the aggregate level. The commission also provides raw data, which is repurposed below.

Effects of different caps on overall party income

The interactive chart below shows the effect on party income for the years 2020 to 2025. It highlights that even setting a relatively high cap of £1 million could substantially reduce donation income in a general election year, or the year preceding one (which is unsurprising given that donations to parties tend to be cyclical and spike in election years). In the fallow years between general elections, the effect when a cap is set at either £1 million or £500,000 is less severe. Click the buttons above the chart to filter by size of cap.

Effects of caps on different parties

The Electoral Commission data can also be filtered by party and by year. In the interactive chart below, the shaded area shows the hypothetical reduction as a result of a cap being in place and demonstrates that the Conservative Party and the Labour Party are most affected by caps (set at any level). This is unsurprising: a cap on donations is a fiscal measure, and academic evidence outlines that the UK “is still very much two-party politics” in terms of party income.

However, the interactive chart also shows that Reform in 2024 and 2025 face similar financial effects to Labour and the Conservatives. Other parties only see effects on party income with a cap placed at £100,000 or lower. Click the buttons above the chart to filter by party.

Do the public support a cap on donations?

There have been several polls recently which show a high degree of public support for caps on donations at different levels. For example, Survation conducted one on behalf of campaign group 38 Degrees in December 2025. It showed that 57% of people support a cap on donations (with 7% against). Since November 2019, YouGov has published a more detailed bi-annual tracking survey which asks whether there should or should not be a limit on the donations that individuals, businesses and trade unions give to political parties. The chart below shows the results YouGov published on June 15 2026.

It shows the highest level of public support was for an outright ban on all political donations, especially donations from trade unions and businesses, and caps were less popular the higher they were set. Over 50% of respondents supported either a ban, a £500 limit or a £5,000 limit on donations from individuals (55%), business (54%) and trade unions (59%).

How does political affiliation affect views on donation caps?

The chart below shows how public opinion changes with political affiliation. Conservative-affiliated voters, and those that voted Leave in the 2016 referendum are least likely to support a total ban, a cap of £500 or a cap of £5,000 on political donations from individuals or business. However, these options combined still retained close to 50% support among these voters. This is similar to findings from the Survation poll which found that 47% of Reform voters supported a cap on donations.

Given that trade union donations benefit the Labour Party, it might be expected that union donations are viewed more favourably by Labour voters than other forms of giving. However, 59% of Labour-affiliated voters support either a ban, or a cap of £500 or £5,000 on donations from trade unions.

Does the public support a cap even if state funding must increase to replace party income?

An approach which often complements capping donations – especially at a very low level – is to make up the income shortfall with increased state funding. However, it is unclear from the above surveys how much this is understood by the public and whether knowing this would change people’s opinions on donation caps. No public opinion poll has yet asked a representative sample of the British population to engage in capping donations and increasing state funding as an explicit trade off.

There is some evidence from qualitative research, though it does not always point in the same direction. For example, as a part of its 2011 report Ending the Big Donor Culture, the Committee on Standards in Public Life conducted a series of focus groups which began with concerns over large donations and an openness to state funding as a response to them. However, they also found that as “participants were faced with the reality of a trade-off between a cap on donations and a subsequent increase in state funding, this solution…decreased in acceptability”.

Findings from a series of deliberative workshops conducted by the Electoral Commission in 2026 run slightly counter to this. They ultimately pointed to four options selected by the majority of participants that would “build trust in the [political finance] system”, these were:

• the introduction of a donation limit
• increasing public funding
• closing loopholes
• increasing the maximum fine that can be imposed by the Electoral Commission

In the case of public funding, it was reported that participants were initially sceptical of increasing public funding due to an a) unwillingness to fund parties they disagreed with, b) a feeling that they already pay enough tax and c) a belief that taxpayer money should be ringfenced for public services such as healthcare and education as opposed to political parties (which were not viewed as providing a public service).

However, they reported that when participants learned “how public funding worked elsewhere, in particular direct exposure to international comparisons…[this] moved views substantially”. This was especially the case if public funding was seen to reduce the influence of wealthy donors and increase public engagement in politics.

This echoes academic work conducted in Denmark and the UK, in which survey experiments explicitly tested whether people found state funding of parties more acceptable if it was presented to them in certain ways. The research found that “highlighting state funding’s ability to reduce party reliance on big donors substantially increases support for the policy, especially among low trusting Britons”.

Why have caps on donations proven hard to introduce in the UK?

Given that the principle of capping donations holds public support across the political spectrum, academics have long considered why they have not been introduced in the UK.

Academic work which has analysed this – pointing to the fact that the Conservatives, Labour and the Liberal Democrats all committed to donation caps in their 2010 manifesto – has argued that there are two main reasons caps have not been introduced in the UK:

1. An inability to agree on whether trade unions should be included in a cap.
2. A lack of public support for, and therefore the political will to, increase state funding.

These reasons feature in the ways the two most recent pushes for a cap on donations failed to achieve their goal.

The Hayden Phillips Review

In 2007 Sir Hayden Phillips conducted a wide-ranging review of political financing in the wake of the loans-for-honours scandal following the 2005 general election. His report, Strengthening Democracy: Fair and Sustainable Funding for Political Parties, made a series of recommendations, one of which was to introduce a cap on donations at £50,000 (and make up the income shortfall with increased state funding).

Sir Hayden then chaired talks between Labour, the Conservatives and the Liberal Democrats in an attempt to reach consensus over reforms, adopting a principle that “nothing should be agreed until everything was agreed”. He had suggested a compromise position where unions could donate above a cap “if, and only if, the decisions made are clearly transparent and it is possible to trace payments back to identifiable individuals”. The talks were unsuccessful and Sir Hayden told the CSPL that they ultimately broke down over a dispute as to how unions should be incorporated into the £50,000 cap.

Reflecting on the breakdown of negotiations in 2011, Hayden Phillips remarked that a problem with his consensus seeking approach was that it “enabled, and possibly encouraged, the parties to revert to their default position of tribal introspection, which, once it had begun to infect the process, was going to be impossible to eradicate”.

The Committee on Standards in Public Life

In 2011, the Committee on Standards in Public Life published its report Political Party Finance: Ending The Big Donor Culture after it was asked to review the issue of money in politics. This followed the coalition government’s promise to “pursue a detailed agreement on limiting donations and reforming party funding in order to remove big money from politics”.

The CSPL recommended a cap on donations at £10,000 (with the income shortfall to be met with an increase in public funding). The CSPL argued that the cap should apply across all sources, including trade unions, and unions should only be exempt if:

1. members opted in, as opposed to opted out, of affiliation fees on their behalf to the Labour Party
2. members were able to opt in to the political fund but opt out of their donations to this fund going to the Labour Party, and
3. the fees paid accurately reflected the number of union members opting in

Dame Margaret Beckett (who was the MP from the Labour Party that sat on the CSPL) produced a note of dissent on publication of the report. She said that while there was “much in the Committee’s report with which I concur…I have grave concerns about the way trade union affiliation fees and the funding of the Co-Operative Party are proposed to be treated under the cap”. Beckett also suggested a £10,000 cap was too high given it is a figure “beyond the reach of the vast majority”.

Sir Oliver Heald (who was the Conservative representative) also produced a note of dissent expressing concern that the £10,000 cap was too low and that union members should be given the choice to give their affiliation fees to any political party – as opposed to just Labour – under the new rules.

The debate around union affiliation fees notwithstanding, the recommendations in the report were not taken forward by the coalition government primarily due to concerns around the increase in state funding that would be required to fund a £10,000 cap. Deputy Prime Minister Nick Clegg, in a written ministerial statement responding to the report, said:

The Government believe that the case cannot be made for greater state funding of political parties at a time when budgets are being squeezed and economic recovery remains the highest priority…the Government accept in principle the Committee’s recommendation that donations to political parties should be capped. But the level of a cap will need to be considered with reference to other elements of a reform package, in particular the ability of parties to continue to raise sufficient funds and the absence of any additional support from the state.

Are caps on donations common in other countries?

The International Institute for Democracy and Electoral Assistance collates comparative data on political finance regulation across the world. Its political finance database shows that of the 175 countries with available data, 49% do not limit donations during non-election periods and 50% do (the total does not add up to 100% because Tuvalu does not have formal political parties, so the question is not applicable).

Countries which cap donations to political parties include Australia (at 50,000 AUD), Canada (at 1,500 CAD), France (at 7,500 EUR) and Ireland (at 2,500 EUR). Countries which do not cap donations to political parties include Denmark, Germany, New Zealand and Norway.

Declaration

Dr Sam Power is Parliamentary Academic Fellow in the Parliament and Constitution Centre at the House of Commons Library. In his capacity as an independent academic, he acted as an expert advisor to the Committee on Standards in Public Life’s Regulating Election Finance review. He has also given evidence to the Joint Committee on the National Security Strategy, the Public Bill Committee for the Representation of the People Bill and the Housing, Communities and Local Government Committee on matters related to political financing. In July 2026 he was appointed to a five-year term as an Independent Member of the Ethics and Integrity Commission.