For many Labour and MPs and party officials, it was a nightmarish image that encapsulated the forces buffeting politics across the west.
A gleeful Nigel Farage standing next to Elon Musk, the world’s richest man, having discussed the possibility of a political donation big enough to bankroll any British party, with cash to spare.
At Musk’s other shoulder stood Nick Candy, the former Tory donor and now Reform UK’s treasurer. And hanging above them all, a portrait of the political disrupter-in-chief, Donald Trump.
When the picture emerged on Tuesday, hours after a meeting between Musk and the Reform duo at Trump’s Mar-a-Lago Florida estate, it inevitably kicked off demands for a change in Britain’s porous political donation laws.
For years, figures across the legal, security and political worlds have come to the unanimous view that the rules are far too lax. Yet by the end of another fraught political week, attitudes towards the issue inside the government were hardening.
According to a source familiar with discussions, a common view began to emerge among key figures in Keir Starmer’s team. Yes, the government should eventually pursue a manifesto pledge to strengthen donation rules. But any kneejerk reaction – or specific laws targeting a Musk donation – could backfire.
“[Reform’s] message is that the Tories and Labour are exactly the same, the establishment has failed and you need to do something different,” said one influential figure.
“But if we can show the country is improving, we’re getting better; that feels like the best way to combat a third party – rather than getting embroiled in an argument directly with Nigel Farage.”
The government is looking at measures to tighten donation rules, but insiders said there was little prospect of action soon. One dismissed the idea that “we are going to suddenly dream up or rush through stuff in response to the idea Musk may or may not give money”.
Others believe that if Farage opts to be financed by a rightwing tech billionaire, then it may also provoke support for Labour from figures wanting to combat it.
In effect, Starmer’s team recommitted to the idea that the best way to deal with populism is to make hard decisions now in order to deliver improvements by 2029.
Even those most passionate about Labour’s plan, however, acknowledge that it requires short-term pain and a lengthy period of holding their nerve.
The next big flashpoint where that resilience will be needed comes in May’s local elections.
They offer an opportunity for Reform to continue its momentum and exploit the early unpopularity of a Labour government that has raised taxes, cut the winter fuel allowance and rejected compensation for “Waspi women”.
Unusually, it is not yet clear which local elections will take place because of Labour’s plans for a rearrangement of local government.
Nigel Farage’s Reform party is targeting the mayorality of Lincolnshire with former Tory MP Andrea Jenkyns as its candidate. Photograph: Stefan Rousseau/PA
However, there are a series of potential areas that will be of serious interest to Reform across the south-east and the East Midlands. Essex and Kent will also be targeted, along with Lincolnshire, Nottinghamshire and Derbyshire.
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Recently, Reform strategists were prioritising the mayoralty of Lincolnshire, where they have former Tory MP and Boris Johnson acolyte Andrea Jenkyns as their candidate. Control of Thurrock council in Essex is also one of their aims if elections take place there.
Meanwhile, Doncaster could give Reform the chance to show its credentials for taking on Labour.
There is also the curve ball of a potential byelection in Runcorn and Helsby, where the MP Mike Amesbury, already suspended by Labour, has been charged with assault after an incident following a night out.
Labour won the seat comfortably at the election, with Reform in a distant second. But it would represent a free hit for Reform and a test of its efforts to professionalise and mobilise.
While there continues to be evidence that Reform’s rise threatens the Conservatives more than Labour, pollsters point to some worrying early signs for the governing party. In Dudley, Labour lost a council byelection to the Tories, pushed into third place by Reform. In a byelection in Swale, Kent, it lost a seat to Reform. Farage’s party also picked up a council seat in St Helens, Merseyside, earlier this month.
For Starmer’s team, the new year will be another test of the party’s willingness to stick to the plan. “You can’t really fight against a party that has five MPs and can say whatever it wants – you have to focus on delivering for people,” said one influential figure. “If we’re able to deliver, we’ll have a really good argument and platform to stand on at the next election.”
Other experienced heads are also urging caution in assuming that the interest from Musk, combined with the early unpopularity of the Labour government, will inevitably see UK politics veer farther to the right.
“There’s quite a lot of panic,” said Theo Bertram, who advised both Tony Blair and Gordon Brown and now oversees the Social Market Foundation thinktank.
“It’s not like it was when Theresa May was tottering, or even David Cameron when he was playing up to the right of the Conservatives on Europe. The ceiling for Farage was not reached at this year’s election, but in 2014, when 4.3 million people voted for Ukip.
“Reform thrives on the idea of mistrust. There’s a need for reaffirming that sense of hope and confidence in the social contract – the idea that if you work hard and play by the rules, you expect that your salary is going to pay for your house, food and a holiday.
“Both Conservative and Labour have not yet found a way of making the case. I don’t think they’ve given that vision.”
