Political party funding — the lobbyists' loophole?

6th Apr 2010

The recent controversy involving MPs offering influence in return for cash from lobbying firms has been dubbed by some commentators as "bigger news" than the expenses scandal that rocked Parliament last year.

Indeed, even before the revelations came to light, David Cameron had predicted that lobbying was the next scandal waiting to happen.

The MPs have been named and shamed and all the political parties have pledged to do better but is this really the end of the affair?

From our initial investigations it appears not.

Full Fact decided to take a closer look at the code of conduct that governs public affairs firms as well as the register of party donations.

Our research shows that despite a ban on donations to individual MPs, there appears to be a loophole that allows lobbying firms to give money directly to political parties.

Despite Brown, Cameron and Clegg wringing their hands over the undue influence of lobbyists, the three main parties have received a total of almost half a million pounds over the past eight years from the lobbying industry.

Cash donations

A look at the register of party donations shows that since 2002 public affairs agencies have given £465,000 to the three main political parties in cash donations.

Over £405,000 has gone directly to the Labour party. The Conservatives have received over £55,000 and the Liberal Democrats almost £5,000.

There are 16 public affairs agencies who have donated money to political parties including top firms such as Weber Shandwick, Bell Pottinger and Citigate.

Some are open about this. EUK Consulting has given a total of £105,025 to all the main political parties spread over the last eight years.

As the EUK website explains: "We are firm believers in the political process and feel it appropriate, from time to time, to make donations to a number of different parties, principally by attending party political events."

Although the donations we refer to are separate from the commercial transactions the parties receive through events, it is clear the sums of public affairs money going to political parties are dwarfed by the total levels of party political funding. In the last year alone Labour, the Conservatives and Liberal Democrats received almost £42 million in cash donations.

Yet questions remain over the influence that these donations buy.

Between 2002 and 2007 the vast majority of lobbyists' cash went to the Labour government. Sovereign Strategy, an international political consultancy, has given a total of £133,438 to the Labour party in 21 separate donations since 2002.

Sovereign Strategy was setup by former Labour MEP Alan Donnelly in 2000 and its client list includes the Government of Luxembourg, the City of London and Formula One.

In 2006 the Sunday Times reported that Sovereign had paid £2,000 to refurbish the constituency office of David Miliband, then the Environment Secretary. At the time Sovereign's clients included Fluor, one of the world's largest nuclear companies.

Weber Shandwick, the UK's largest public affairs consultancy, has donated £77,100 to the Labour party in the years between 2004 and 2007. Labour's former chief press officer, Colin Byrne is the firm's UK and European CEO and a current director, Priti Patel, is also the Tory candidate for Witham.

Money follows the power

It is interesting to note how the trend in donations reflects the parties fortunes in the opinion polls. The register of party interests shows that between 2002 and 2007, public affairs agencies did not consider the Conservatives a worthy investment. Since their standing began to improve in 2007 the Conservatives have received £55,170 from five separate agencies.

The rise in the Conservatives fortunes mirrors Labour's fall in favour. In the past three years only two agencies have made donations to Gordon Brown's party. The sums total less than half what the Tories have received in the same period.

Speaking to Full Fact, David Miller of SpinWatch said he believed it was time for a new system of lobbying regulation. 

"It is not surprising we see a shift in funding from the Labour Government to the Conservative Party who were widely seen as the next government. Lobbyists have been courting the Tories for the past couple of years and hiring anyone with connections to Cameron.

"Self-regulation for lobbyists is a failed system, run by and for lobbyists. Lobbying firms should be prohibited from buying favour with politicians in this way," he said.

The industry code

In light of the recent lobbying scandal, Labour has said it will introduce a compulsory register of lobbyists, where all meetings with politicians must be declared publicly. The Liberal Democrats also support the move. The Conservatives are yet to make the same commitment, despite pressure from a new 38 degrees campaign.

At the moment the public affairs industry is self-regulated. The Association of Professional Political Consultants (APPC) code of conduct is clear that money cannot be given to individuals but does not explicitly rule out donations to political parties.

A spokesperson for APPC told Full Fact the code "expressly forbids money being paid to MPs". She acknowledged however that there was no such rule for political parties. "Our code is constantly under review," she added.

parliamentary committee recently reported on the influence of lobbying in politics. It recommended a compulsory register of lobbyists but it does not appear that the funding of political parties by lobbying agencies was considered.

Sources

To find the full details of donations to political parties visit the Electoral Commission register pages.

The list of APPC members and the code of conduct is available here.

A list of public affairs agencies, including those that are not members of the APPC, is available through the public affairs networking site.