Questions raised over Reform’s ‘multimillion-pound black hole’

Reform UK’s funding has come under increased scrutiny since news broke of an undeclared £5m gift in 2024 to Nigel Farage from the crypto billionaire Christopher Harborne. But now questions are also being asked about a multimillion-pound black hole stemming from the party’s early days.

In December 2019, the first year of existence for what was then called the Brexit party, Farage’s outfit recorded donations of almost £17.3m in its annual accounts. Yet only £11.7m of donations were reported to the Electoral Commission, meaning they are open to public scrutiny.

So where did the rest come from?

The party itself has offered some explanations. Farage claimed in June 2019 that more than 110,000 registered supporters had signed up, each paying £25, adding up to a total of about £2.8m.

But that would still leave a gap of approximately £2.8m.

Separately, the party claimed to have raised about £5m within the first two months of its existence, “mainly” through small donations of £500 or less. But there is no way of establishing what proportion of the £5m came from other sources. The accounts also praise other “generous donations”.

Reform offers no precise figure and, under UK rules, does not have to.

At the time, the threshold for declaring donors was £7,500, although parties had to carry out permissibility checks on any donations of £500 or more. Concerns about the party’s use of PayPal, potentially enabling multiple small donations to fly under the radar, prompted a warning – and additional checks – from the Electoral Commission.

As a challenger party, Reform has always had an unorthodox relationship with fundraising and grassroots support. That has been facilitated by the UK’s system, which puts the onus on the party to ensure donations are permissible, but often does so without the public – including potential voters – being able to independently verify what they are being told.

As well as money coming into the Brexit party, there are growing questions about its expenditure of nearly £19m, which left it with a deficit of £1.6m after its first year. A column in its accounts notes that almost £7.8m went on “other expenditure”, which came on top of “campaign” and “staff costs” of a further £11.1m.

Even accounting for the fact there were European elections and a general election that year, Prof Sam Power, a leading expert on political financing, says the numbers do not stack up.

Speaking to The Observer for a new four-part podcast series, Who Funds Reform, in partnership with The Rest Is Politics, he said: “That expenditure is bizarre more than anything else, in that there is no good reason why the Brexit party needed to raise £17m, and there is no really good reason that I can see that they would need to spend nearly £19m.

“There is just so much that we don’t know. There are numbers here which just operate like a black hole.”

Harborne’s pre-election £5m gift to Farage has raised questions about the sources of Reform’s income.

Farage has insisted he did nothing wrong in accepting the money, although the parliamentary standards commissioner, Daniel Greenberg, is investigating the Clacton MP over a potential breach of the code of conduct. The Electoral Commission is yet to determine whether it will open a formal investigation into the matter.

Since the £5m “personal gift” to Farage, Harborne has donated another £12m to Reform, but his support for the party goes back further – and extends beyond donations.

The Observer has established that the multibillionaire was plugged into the party machine from its early days.

Sources said that when they visited the Brexit party’s offices during the run-up to the European elections in 2019, Harborne appeared to be working on the team. One source said he had been given a desk, where he was working “on the algorithms”.

The Labour party’s chair, Anna Turley, told The Observer: “Reform’s finances, and those of people at the top of the party, including Nigel Farage, just get murkier and murkier. It looks very much like Farage’s secret £5m gift could be just the tip of the iceberg when it comes to Reform’s shady relationship with money. It’s vital the public has confidence that political parties and those seeking the highest public office are playing by the rules.

“We’ve seen far too many examples from Reform now where that just doesn’t appear to be the case. There’s a lot we don’t know, but we do know this: Farage and Reform aren’t on the side of working people – they’re just in it for themselves.”

A spokesperson for Reform said: “All reportable donations were duly reported to the Electoral Commission and are publicly available on the commission’s published register.”

Episode one of Who Funds Reform, a four-part investigative series by The Observer and The Rest Is Politics, is available now on The Rest Is Politics podcast feed.

Photograph by James Manning/PA