‘Lovebombed by lobbyists: How Labour became the party of Big Business’

 

Unlike in many other democracies, such as Canada, Germany and Scotland, voters have no right to know who is lobbying opposition politicians in Westminster. Only government ministers are required to regularly publish a list of any meetings they have with businesses, charities, think tanks and corporate lobbyists, along with a brief description of what was discussed. Details of government politicians’ meetings are not disclosed unless a specific Freedom of Information request is made asking about them, and the government may well decide to refuse to answer such requests.

 

This heavily flawed system is a major issue in a year such as this one, when the opposition’s election victory was almost a foregone conclusion and interest groups have been queuing up to influence its plans for government.

 

While firms do not need to declare which opposition politicians they’ve lobbied, many advertise their ability to secure access to the shadow frontbench. openDemocracy monitored the leading lobbying firms and found dozens of public references to meetings involving senior Labour politicians. In every instance where openDemocracy asked the lobbying firms and Labour which clients were present at these meetings, neither would provide any details.

 

Tim Bierley, campaigner at Global Justice Now, warned that Labour may be treating lobbyists as “independent experts” rather than people “responsible primarily for boosting their shareholders’ income”.

 

Bierley added: “On climate, trade and the economy, the interests of giant corporations are extremely different from the public’s – their outsized influence would blur any visions of progress under Labour.

 

“To provide a remotely adequate response to crises on multiple fronts, Labour needs to take on the vested interests of big corporations, not give them the pen to write policy.”

 

Few interest groups carry as much sway with Labour as the representatives of the City of London – and the wider financial services sector that the City rests at the heart of. In recent years, no other industry has more effectively forged ties with the party.

 

In the weeks before polling day, Labour’s shadow City minister Tulip Siddiq – who is expected to keep the post in government – took to LinkedIn to share manifesto documents on three occasions. Tellingly, it wasn’t her party’s manifesto she was sharing, but those of three major financial services industry representative bodies, UK Finance, TheCityUK and the Association of British Insurers.

 

“I have worked closely with TheCityUK and its members in recent years,” wrote Siddiq in one of the posts, “to formulate the Labour Party’s policies for the financial and professional services sector.”

 

Her other two posts are seemingly copy-and-paste jobs, with near-identical wording. In both, Siddiq told of how “delighted” she had been to “work closely” with the Association of British Insurers and UK Finance “to inform Labour’s plans for the sector”.

 

All three posts suggest that the lobbyists for the City of London and the financial institutions were directly involved in shaping the policies and regulatory approach that will apply to their own industry.

 

When Labour published a policy document earlier this year laying out its plans for the financial services sector, the party held a no-press-allowed soiree in the City of London’s Guildhall, sponsored by the City of London Corporation, to thank the industry for its contributions. The plans were criticised for committing the party to the same lax regulatory approach taken by the Conservatives, with campaigners describing the document as “a love letter to the city”.

 

Labour’s frontbench team, including Siddiq, has met with City lobbyists on more than 20 occasions in the past year – not counting its significant engagement with the British Private Equity and Venture Capital Association, which openDemocracy revealed last month. BlackRock, Macquarie, HSBC, Bloomberg, Lloyds, Brookfield Asset Management and Blackstone are among firms to have secured access to leading members of the new government, including Starmer, Reeves, Reynolds and the chancellor of the Duchy of Lancaster, Pat McFadden.

 

Mick McAteer, a former board member at the Financial Conduct Authority and a campaigner for economic social justice at the Financial Inclusion Centre, told openDemocracy that the close relationship between incoming ministers and the Labour Party can essentially be seen as a kind of quid-pro-quo.

 

Lobbyists for financial institutions push Labour to commit to a favourable regulatory environment while dangling the promise of vast amounts of private capital. McAteer is increasingly concerned this relationship will amount to a rehashed form of the Private Finance Initiatives (PFI) favoured by New Labour, in which private firms provide all or most of the investment to build infrastructure such as hospitals and schools, and generate profits from lucrative contracts to maintain the infrastructure long after it has been built.

 

These public-private partnerships, McAteer warns, will shape almost every aspect of Labour’s agenda in government – from its plans for house-building to energy generation and distribution – and will represent a bad deal for the public.

 

“Private investment is by definition more expensive than public investment, because of the high returns that financial institutions expect to make for their shareholders,” MacAteer said. “These returns have to be paid for in some way, so ultimately, the costs get passed on to households through higher bills.”

 

The financial services sector has consolidated its relationship with Labour in different ways. HSBC has had a staffer in Reynolds’ office for almost a year, for example, and NatWest had a similar arrangement with the new business secretary for a few months prior to that. Staffers seconded from the firms have been involved in policy development and business engagement – but because they are still paid by their employers while working for Labour, the Electoral Commission classes the arrangements as political donations.

 

Then there are two advisory panels made up of executives from major financial institutions, which Labour set up while in opposition but that will continue to advise it on where and how to deploy billions worth of private sector investment in government. One board, the National Wealth Fund Taskforce, is headed by Mark Carney, the former Bank of England director general who now works for Brookfield Asset Management. The other, the British Infrastructure Council, includes senior figures from investment firms such as M&G and BlackRock.

 

McAteer warns these advisory panels constitute a major conflict of interest. “The British Infrastructure Council is full of representatives from firms that stand to financially benefit, who will not just be determining where the money goes, but in what form does the money go, what are the terms of the deals, and that the capital is de-risked before they’ll commit the finance.

 

“There’s a reason why they want to be on this infrastructure council, they’re not charities. This is not a criticism, it’s just how finance institutions work, and how markets work. They exist to get the best deal for their shareholders and their owners.

 

“This thing has been sold as a win-win for the economy and for the investors, but somebody pays for that. Ordinary households pay for it, and more importantly, because they don’t have a say in this, it will be future generations who will pay for this.”

 

He added: “Because these firms will have ownership of the economy and they’ll be able to extract value for as long as that infrastructure lasts. Ordinary people are really going to end up on the wrong side of some very, very badly designed transactions here, shaped by the financial institutions in the City of London.

 

“They’ve been lobbying for this for a couple of years – and they’ve got what they wanted.”

 

openDemocracy reached out to each of the firms mentioned above, but only HSBC provided a response. A spokesperson said: “HSBC regularly engages with the major political parties in the UK on issues facing our customers and the wider financial services industry.”

 

If the City of London’s financial institutions stand to win big from Labour’s PFI 2.0, then so, too, do the City management consultancies and accountancies that work so closely with them.

 

Firms such as the ‘Big Four’ consultancies – Deloitte, KPMG, Ernst and Young (EY) and PriceWaterhouseCoopers (PwC) – and the industry lobbying body, the Management Consultants Association, have met with senior Labour figures at least 13 times since March last year.

Lord Sikka, a Labour peer and Emeritus professor of accounting at the University of Essex, said his party should not be working so closely with management consultancies.

 

“I think this new form of PFI would be disastrous, it would be a continuation of what we’ve seen in the UK since the late 1970s, a kind of right-wing coup which has seen a restructuring of the state so that it has become a guarantor of corporate profits, rather than an entrepreneurial state which invests,” Sikka said.

 

“PFI, privatisation and outsourcing – the very things these companies advise on and profit from – are all examples of that.”

 

Though Starmer doesn’t appear to have attended many of the meetings openDemocracy has uncovered, he was present at a day of business roundtable events at EY’s London offices in March 2023. There, the Labour leader, along with Reeves and Reynolds, heard from business leaders about “the potential value of public and private sector collaboration”, according to a LinkedIn post by EY’s managing partner. The trio returned to EY in November, along with the now chief secretary to the Treasury, Darren Jones, for similar discussions with a few dozen business leaders.

 

Jones has also attended secretive meetings with elusive consultant Hakluyt, which was founded by former MI6 operatives in 1995 and claims to work with “at least one of the world’s top five corporations in every major sector globally” and “three-quarters of the top 20 private equity firms in the world”. The firm also organised a dinner with Labour MP Peter Kyle, then the shadow secretary for science, innovation and technology, while he was in the US earlier this year.

 

Hakluyt counts among its advisory board former executives from Rolls Royce and Coca-Cola, as well as former senior civil servants and politicians. It has previously been linked with large oil and gas interests, having been accused by The Sunday Times in 2001 of deploying an agent to spy on Greenpeace campaigners on behalf of oil companies. In recent years Hakluyt has sought to “demystify” and says it now has “no relationship with the spooky world”. A spokesperson said Hakluyt is not a lobbying organisation and does not advise political parties.

 

Speaking at last year’s Labour Party Conference, Reeves pledged to slash public spending on consultants if elected. This promise also made it into the party’s manifesto. But as economists and authors Mariana Mazzucato and Rosie Collington highlight in their book, The Big Con, the industry has been known to offer its services pro-bono during times of austerity, in hopes of securing lucrative paid contracts in future. In 2011, the then head of public sector at KPMG described the strategy to the Guardian, in the context of working with David Cameron’s coalition government: “We can’t afford to [work pro bono] indefinitely, but we can in the short-term. We’re hoping to position ourselves well when the government decides it is willing to pay.”

 

In a similar vein, when Labour’s shadow Treasury team was working on its aforementioned plan for financial services, City consultancy Oliver Wyman donated a staff member to help out – at a cost of more than £58,000 for the past year, according to Electoral Commission data. Senior staffers at leading consultancies Grant Thornton and EY have held parliamentary passes as members of Starmer’s team for the past year or so, according to the register of MPs’ staff interests. Since 2021, firms including PwC and Baringa have provided combined pro-bono services to the party worth more than £650,000.

 

“There are huge questions about why these firms have been providing free staff,” Lord Sikka said, “because obviously that has a cost to them and they would expect a return because they’ve made an investment.”

None of the firms mentioned above responded to openDemocracy’s request for comment.