Even before the unprecedented donations of £36m each from Ben Delo and Christopher Harborne, The Independent had drawn attention to the high dependence of Reform UK on donors who made their money in cryptocurrencies.
That dependence is now almost total, which puts the policies of Nigel Farage’s party in an even more questionable light.
The party proposes to cut capital gains tax on crypto assets from 24 per cent for higher-rate taxpayers and 18 per cent for basic-rate taxpayers to a flat 10 per cent. It wants to establish a Bank of England bitcoin reserve fund, and it wants to allow British taxes to be paid in cryptocurrency.
The capital gains tax change alone would be worth about £100m a year to crypto investors – and would do nothing to promote growth. Paul Johnson, the former director of the Institute of Fiscal Studies, told The Independent: “There is quite clearly no feasible economic rationale for treating crypto more leniently than other economically productive assets.”
The party seems to have now realised that looking like the political wing of the crypto industry might be a problem for it. The pro-crypto policies, contained in a document called the Cryptoassets and Digital Finance Bill, published in May last year, have recently been removed from Reform’s website. However, they have not been disowned. On the contrary, although Richard Tice, the deputy leader, has hinted that the policies are now under review, he made it clear that Reform has a favourable view of cryptocurrencies and said that they should be “sensibly lightly taxed”.
Reform’s association with the crypto business in fact could be a serious weakness. Far fewer people in the UK own cryptocurrency (8 per cent) than in, say, America (25 per cent). In fact, enthusiasm for digital currencies has nothing to do with the main issues that animate Reform voters, namely Brexit and immigration. In some more intellectual parts of the right, there is a link between libertarianism and crypto, because digital currencies are a potential store of value that is independent of the state. But this is a tangent to the main driver of Reform support: immigration. Indeed, extreme liberals, if they are consistent, ought to be in favour of the free movement of people.
It is somewhat paradoxical, then, that Reform’s funding should come almost exclusively from people who have made their fortune in crypto. And even more curious that the party’s two mega-donors, Mr Delo and Mr Harborne, lived abroad until this year. They are British citizens, and so are entitled to make political donations. But what is striking is that they support Mr Farage so strongly that both of them appear to have moved back to the UK specifically in order to try to avoid the Labour government’s new restrictions on donations from citizens living abroad. How ironic that, while Labour’s policies on non-doms are driving many of the globally mobile rich away, its policy on donations is encouraging at least two wealthy individuals to return to these shores.
Reform’s funding could be its Achilles’ heel, because it seems so out of sync with the party’s natural supporters. Mr Farage was already losing popularity because of the way he responded to legitimate questions about the £5m personal gift he received from Mr Harborne shortly before the last election. His aggressive “none of your business” and “I could spend it on Ferraris if I want” dented his man-of-the-people image. The sheer size of the sum involved automatically made him “out of touch” with normal people, and the source of the money, from a crypto billionaire based in Thailand, made it seem even stranger.
There is no link between the party’s crypto donors and the Channel 4 sting that found two Reform officials apparently suggesting ways of getting around the law against foreign donations, but the general impression of a party of funny money is taking its toll on its support.
Reform’s policies on immigration are bad enough. They are mean-spirited, xenophobic and likely to be ineffective. But its policies on crypto make no sense. Mr Delo and Mr Harborne have already made their money and do not need favourable tax treatment. The policies are only likely to alienate swing voters who might otherwise be tempted by Mr Farage’s core message.
We suspect that self-interest will encourage Mr Farage to drop the pro-crypto policies altogether. He would hardly deserve praise for avoiding the appearance of his party’s policies being bought by wealthy backers, because he should never have agreed to such an unseemly show in the first place.
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