GMB warns Labour MPs that cap on political donations could endanger party funding

Exclusive: Sources say Labour whips are calling MPs urging them to heed union’s warning and not vote for cap

One of Britain’s biggest trade unions has told Labour MPs not to vote for a cap on political donations next week, saying it could endanger union funding for the party.

The GMB union has written to its affiliated MPs urging them not to vote for amendments to the representation of the people bill that would cap donations at either £100,000 or £1m.

The measures will be voted on next week as one of a number of potential changes to the bill that are aimed at curbing the role of big money in politics, amid a growing controversy over how Reform UK and its senior politicians are funded.

Ministers are preparing for a battle with backbenchers over some of the proposed amendments, including the donations cap and an outright ban on cryptocurrency donations.

Sources say Labour whips have been calling MPs, urging them to heed the GMB’s warning, causing some MPs to drop their support for a cap.

The letter, which was sent to more than 80 MPs who are members of the union and which has been seen by the Guardian, says: “We believe this amendment risks having significant unintended consequences.

“Trade unions are already subject to a level of statutory regulation over political expenditure that no other membership organisations face. Political funds are governed by legislation, members have clear rights to opt out, and unions are subject to extensive transparency and reporting requirements.

“Affiliation arrangements are also fundamentally different from political donations and should not be treated as though they are the same.”

Other major Labour-affiliated unions are understood to share the concerns.

The letter underlines the decades-old battle to limit political donations, which has been resisted by the Conservatives, who have historically relied on large donations from wealthy individuals, and Labour, which is funded in large part by trade unions.

Research by Transparency International shows the proportion of political donations coming from individuals and companies giving £1m or more has jumped from 1% in 2015 to 35% in 2024.

That battle has intensified in recent weeks, given the revelations about funding to Nigel Farage and his party from the crypto billionaire Christopher Harborne and the convicted fraudster George Cottrell.

The Times reported on Thursday that police are now investigating donations worth £500,000 made to Reform by Cottrell’s mother, Fiona, while parliamentary authorities are conducting their own inquiries into gifts made by both Harborne and Cottrell.

The Guardian revealed earlier this week that multiple transactions to Farage and his deputy leader, Richard Tice, had been flagged as potentially suspicious to the National Crime Agency.

Labour MPs had hoped that the combination of the Reform controversy and the likely arrival of Andy Burnham in Downing Street would pave the way for stronger rules on donations and spending.

While he was campaigning for his Makerfield seat, Burnham told transparency campaigners he backed the idea of a donations cap, saying it “would guard against the perception of any one party being unduly influenced or swayed by one person or organisation”.

In an email to Shaun Bowler, the founder of the grassroots campaign group WakeUpGB, Burnham wrote: “As to the level, I think that would have to be subject to wider review of political funding but my gut feeling would suggest somewhere in the region of £500k.”

A spokesperson for Burnham did not respond to a request for comment.

While ministers have proposed a £100,000 cap on donations from British people living abroad, it is not planning to do the same for donors in the UK, prompting protest from some Labour MPs.

Stella Creasy, the MP for Walthamstow, has brought an amendment that would cap individual donations at £100,000, while her colleague Alex Sobel has tabled another that would set the cap at £1m.

If selected by the speaker, the amendments will be debated on Tuesday when the representation of the people bill comes back in front of the Commons.

Creasy wrote in the Guardian on Friday: “Whether a million-pound individual donation from a private benefactor comes from overseas or from a UK-based billionaire, the public understand the risk remains broadly the same: that political outcomes are being sold to the highest bidder rather than being fought for through a battle of ideas.

“The apparent view of Harborne that where there’s a will, there’s a way correctly describes the current situation – but that’s a bad situation. This Tuesday, MPs can show they have both a will and a way to protect our politics from the perception as well as the reality of impropriety.”