The voting age will be lowered to 16 across the UK by the next general election in a major change of the democratic system, despite some concerns within Labour that it could benefit smaller parties like the Greens and Reform UK.

The government said it would be fairer for 16- and 17-year-olds, many of whom already work and are able to serve in the military. Keir Starmer said it was important that teenagers who paid taxes had their say on how the money was spent.

The move brings voting age for the whole of the UK to 16. Scotland and Wales have already made the change for Holyrood, Senedd and council elections. It is the biggest change to the franchise since 1969, when the voting age was lowered from 21 to 18.

Some Labour MPs are worried the move could backfire and result in a boost in support for more left-leaning parties, while others fear that it could bolster Reform UK, which is growing in support among young men.

The Reform leader, Nigel Farage, accused the government of trying to rig the system to allow schools to bias young people with “leftwing prejudice”. But he said Labour would get “the shock of its life” as Reform is intending to appeal to 16- and 17-year-old voters by the next general election.

Angela Rayner, the deputy prime minister, played down the concerns within her party, saying she was more worried about the impact of misinformation on voters.

“You can’t turn around and say: I don’t like what democracy is going to give so I’m not giving you democracy. That argument is, to me, a cul-de-sac,” she told the Guardian.

“What we have to do is engage with people about the importance of democracy and the importance of them exercising their democracy, and our argument of why we’re the right people to do the job.

“I’m more concerned about misinformation, fake news, the way people get information from these days, and how that can skewer democracy more so than I am about giving a 16- and 17-year-old the opportunity to exercise their right to vote”.

Analysis by the thinktank More in Common found that newly enfranchised teens made up such a small proportion of the electorate that they were unlikely to shift the dial politically at a national level, but in a fragmented political landscape even small changes could have large local effects.

Luke Tryl, More in Common’s director, said: “Beyond the electoral impact, the bigger question is whether this change will be popular. The public opposes lowering the voting age by a 48% to 27% margin, and it is not near the top of many Britons’ priorities.”

The move fulfils a Labour manifesto promise and gives Britain one of the lowest suffrage ages in the world.

In the rest of Europe, just Austria, Malta, the Isle of Man and the Channel Islands have a voting age of 16, while elsewhere in the world some of the few countries to have taken the step include Brazil, Argentina and Cuba.

The change was welcomed by electoral reform campaigners, who have been pushing for measures to increase democratic participation. However, the Conservatives said the change was “confusing” given that 16- and 17-year-olds could not legally smoke, drink alcohol or buy a lottery ticket.

In a sweeping package of changes, ministers will extend voter ID to include bank and veterans’ cards. There will be tougher new rules to guard against foreign political interference and abuse of candidates.

The package also appears to be taking steps towards encouraging more voter registration. Although it does not commit to entirely automatic registration, the government said it would move to a system that would reduce the need to fill out details across different government services.

On election financing, ministers will close loopholes that could allow foreign money to influence UK elections and there will be a crackdown on illegitimate donations through shell companies and new tests on political donors.

The changes were welcomed by campaigners for transparency, but the new rules stop short of imposing caps on political donations. Rayner said they would “strike the right balance”.

There will be stronger fines of up to £500,000 for those who break the rules, and any false or misleading declarations will constitute a criminal offence.

Political parties will be required to assess companies they are receiving donations from, proving their connection to the UK or Ireland. Companies used for political donations will have to prove they are generating income in these countries. Currently, any UK company can make donations to a political party, regardless of where its money comes from and who its owners are.

Some campaigners had called for more sweeping changes after the US billionaire Elon Musk floated the idea of giving $100m (£75m) to Reform UK – an idea he now appears to have dropped after tensions with Nigel Farage.

Musk would not, as a foreign national, be able to donate under the new rules and would have to prove any donation through a UK-based company had UK-generated revenue.

“Where there’s foreign influence, people should be able to identify that, as opposed to some sort of ban on donations or picking on a particular individual,” Rayner said.

“I think [you need to have] transparency about where that … money comes from, and then the electorate can see that, and can see whether there is a conflict of interest, or where a particular policy is coming from.”

There will also be enhanced “know your donor” checks, meaning parties will have to consider the risk of any money coming from illegitimate sources.

Another change is toughening the law to stop candidates, campaigners and electoral staff being intimidated, harassed or abused.

Finally, the government plans to change the law to ban those found guilty of intimidating or abusing a candidate from standing themselves in future.