Elon Musk has denied he is gearing up to chuck $100m at Nigel Farage’s Reform UK party, as it pushes to take on the Tories. But the very fact the question arose is a reminder of the pressing need for political funding reform on this side of the Atlantic.

Musk is the living embodiment of economic power in the modern US: a multibillionaire, with spicy political views, who has bought his way into a role as Donald Trump’s costcutter-in-chief.

Part of his motivation seems to be not just slashing spending for the sake of itbut the dismantling of regulators that his companies have found irksome.

He had previously joined legal action, alongside Amazon’s Jeff Bezos, aimed at having the National Labor Relations Board declared unconstitutional, for example.

This is the body, created in 1935, that enforces workers’ rights. It ensured staff at Amazon’s Staten Island warehouse had the opportunity to ballot – successfully – for union recognition (an outcome the giant retailer has continued to challenge).

Musk has also said he wants to “delete”, the Consumer Financial Protection Agency, suggesting it is “duplicative”.

Musk et al’s affront at the very idea that federal agencies have oversight of business, is reminiscent of the fury faced by president Theodore Roosevelt and his allies during the so-called Progressive Era, at the turn of the 20th century, when they fought to bust vast monopolies and tame the worst excesses of capitalism.

The mega-rich capitalists back then were the likes of JD Rockefeller and JP Morgan but then, as now, there was a clash of principles about the government’s right to oversee corporations. And then, as now, money was used to buy influence over the debate.

If Musk and his co-director Vivek Ramaswamy succeed in scrapping a whole suite of regulators, it could fundamentally shift the relationship between capital and the individual (which, of course, is exactly his hope).

Musk’s deregulatory zeal may yet run into trouble in Congress; and Trump may tire of his fellow egotist and end up wheeling out his catchphrase from the Apprentice to tell the Tesla boss, “you’re fired”.

But the immense influence Musk has bought, by spending an extraordinary $243m (£190m) on getting Trump re-elected, and using X to pump out pro-Trump propaganda, should sound alarm bells in the UK.

We may lack the equivalent of Silicon Valley’s galactically rich donor class, with their screwball libertarianism. But we still have a system where wealthy individuals can effectively give unlimited sums to their favourite political parties.

There are spending limits during campaigns, but these are very high: for a party standing candidates in every seat in the UK, it topped £34m at this year’s general election.

Party funding rules state that you have to be a UK citizen to give more than £500 – or a UK-registered company, which “carries out business in the UK”.

So even if Musk felt so minded, he could not donate as an individual, but would have to channel any donation to Farage’s crew via the UK outpost of Twitter, now known as X.

But the very fact he could do so in theory highlights the gaping holes in our funding rules.

Keir Starmer’s Labour seems at ease with big money. Labour declared three times as much in donations as all other parties combined during this year’s election campaign – more than £9.5m – with big donors including the trade unions, of course, but also wealthy individuals, such as Lord Sainsbury, the former chair of the supermarket chain, Autoglass founder Gary Lubner, and hedge fund manager Martin Taylor.

Yet the row over freebies – which led to Starmer being castigated over donations of glasses and gig tickets – revealed a deep public scepticism over the role of private money in politics.

Just as with the MPs’ expenses scandal, a practice which Westminster considered perfectly normal, was shown to be deeply unpalatable to voters.

Labour’s manifesto included a promise to “protect democracy by strengthening the rules around donations to political parties”.

It is unclear what that meant, and it didn’t feature in Labour’s first King’s Speech; but my colleague Eleni Courea has reported that Labour will look closely at a forthcoming report from the IPPR thinktank, which is expected to recommend a £100,000 annual cap on individual donations.

Cross-party talks on political funding have often foundered on Labour’s reluctance to accept any cap on trade union donations.

This is a difficult circle to square – Labour is, after all, the party of labour. At the very least, union donations should be democratically endorsed, so that they function as much as possible like a collection of individual members’ subs.

On this basis, plans in the employment bill to move to an “opt out” approach for union political funds, seem like a backwards step. (Though the unions would point out that they do hold regular votes on how their political funds are used).

Transparency International, which campaigns to drive big money out of politics, recommends a much lower, £10,000 cap on donations, and has a slate of other suggestions – including reducing campaign spending limits, which were raised dramatically by the Tories. Labour would be wise to look closely at these, too.

Political funding reform should be a worthy aim in itself, without the looming threat of the populist right. But If Elon Musk’s enthusiasm for Nigel Farage helps motivate the UK’s mainstream parties to crack on with cleaning up politics, both men will have made an unexpectedly positive contribution to public life.