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‘Dangerous loophole’ means group which gave £130,000 to party not required to disclose names
Labour is under pressure to reveal the names of anonymous donors who are part of a secretive group that has given more than £100,000 through a secretive group.
The West Midlands Breakfast Club donated £130,530 to the Labour Party earlier this year, but because it is an “unincorporated association” it is not required to disclose the names of members.
Under Electoral Commission rules, unincorporated associations such as the West Midlands Breakfast Club do not have to file annual accounts.
And the businessman who coordinates the group told The Telegraph that he could not reveal the names involved in the “business club” without their permission.
Campaigners are concerned that these groups could be used to funnel money to political parties from donors who would not be allowed to donate as individuals.
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The donor status is intended to be used for groups such as local wings of a political party and are designed to make it less onerous for these groups to donate.
A spokesman for the political finances regulator said it is in the process of “clarifying the status” of the group.
The Telegraph established that a local businessman is connected to the group, after discovering that the phone number used for the association links back to several of his companies.
However, when approached by this newspaper, Stephen Goldstein OBE, a director of a large number of companies including property firms, said he was unable to disclose the members of the club unless they agreed.
He did not respond to follow up requests.
The businessman said that the donation made in February was intended to support the candidacy of Richard Parker, who was running to be mayor of the West Midlands. Mr Parker beat the incumbent mayor, Andy Street, in May this year.
Official records list the funds as being given to the central Labour Party. The Labour Party and Richard Parker’s office did not respond to requests for comment.
Labour has previously criticised the Conservative Party for taking money from these secretive groups, calling such donations “shady”, and the Electoral Reform Society recently said unincorporated associations were a “dangerous loophole in our political financing rules”.
On Sunday night, Conservative MPs criticised the Labour Party for their lack of transparency.
Dame Caroline Dinenage, the Tory MP for Gosport in Hants, said: “Labour should reveal who these donors are. People want to know who’s funding the political parties that they’re electing, particularly if those parties are putting forward significant changes to government policy.
“We’re all very keen to be sure that there aren’t any vested interests at the heart of that.”
Greg Smith, MP for Mid Buckinghamshire, said: “Labour, having criticised such donations in the past now, has a duty to disclose who those donors are or withdraw their press comments. No one likes a hypocrite.”
And Matt Vickers, Tory deputy chairman, said: “This is yet more blatant hypocrisy from the Labour Party.
“After all their attempts to try and score political points on this then they should at least have the decency to hold themselves to the same standard.
“Clearly this new Government is more interested in protecting its own interests than practising what they preach.”
Since 2010, politicians and political parties have reported donations totalling just over £42.5 million from unincorporated associations. Many of these groups are clearly affiliated to political parties – the second largest donation to Labour from an unincorporated association in 2024 so far was £31,500 from Manchester Labour Group.
One of the most well-known groups that has donated through this route is the Midlands Industrial Council (MIC), whose members have given millions to the Conservative Party and who briefly bowed to pressure in 2006 and identified themselves following questions over transparency.
Its membership is now secret again.
The donation by the West Midlands Breakfast Club (WMBC) has been released in the most recent set of data. The money was given in February this year, according to Electoral Commission records.
Mr Goldstein co-owns an office space in the Midlands called Malvern House. WMBC and a large number of his companies are registered there.
Mr Goldstein told The Telegraph he was responsible for coordinating the West Midlands Breakfast Club, but not the donations.
“People donated to the West Midlands, whatever it’s called – West Midlands Breakfast Club – and it was decided that that money would be donated to help the campaign,” he said.
Mr Goldstein said he was a friend of Mr Parker and that his office was used as the mayor’s campaign office.
He said that the “business club” was “set up primarily to support… to have a platform for Richard prior to getting elected”.
He said it meant that Parker was able to “talk to people that were not necessarily members of the Labour Party, just interested people, that wanted to hear from him… they’re mainly business people who have already connected with each other”.
“I’m not going to give you a list of the people, because without their permission I couldn’t do that. But they’re people in different… a cross section of businesses in the West Midlands. It was merely a platform for people.”
He described the donors as “people that connected with each other from across the communities and the diversity”.
The businessman also suggested that not all the money donated was intended to go to the Labour Party. “People did make donations to the club, but the whole idea was not necessarily that all the money was donated to the Labour Party, per se, but it was donated on condition it was to support Richard Parker, or to support the campaign.”
He added: “There’s nothing Machiavellian about it”.
An Electoral Commission spokesman said: “We are in the process of clarifying the status of the West Midlands Breakfast Club. The law places a responsibility on the recipient of a donation to ensure they are satisfied with the identity of the donor, and that the donor is permissible.”
The businessman has previously donated to the Liberal Democrats – between 2011 and 2014 – and was given a CBE by the coalition government in 2015 for “services to business and the community in the West Midlands”.
Mr Goldstein set up a children’s charity and is the director of at least 47 companies spanning property, biodiversity and a management consultancy with a focus on Chinese and English business relations.
Mr Parker has faced questions over his own donations after it emerged that he had donated £12,000 to chancellor Rachel Reeves before he was chosen as a candidate for the West Midlands mayoral race, and gifted her the use of his Cornwall home after he was selected.
In a response to the Daily Mail, Labour declined to say why Mr Parker had made the donations to Ms Reeves but said in a statement: “Richard Parker is a successful businessman with a proven track record of delivering for the West Midlands, bringing over £1bn of investment to the region.”
The Electoral Reform Society has said unincorporated associations represent a “dangerous loophole in our political financing rules” and that the lack of transparency means they could “potentially be exploited to funnel foreign money into British politics”.
Dr Jess Garland, director of research and policy at the campaign group said: “UK voters have a right to know who is paying to influence democracy.”
In 2021, the UK Parliament’s Committee on Standards in Public Life said unincorporated associations are a “weak point in the regime” and recommended “tighter rules”.