Labour and the Lobbyists

In​ Transparency International’s most recent Corruption Perceptions Index, published in January, the UK fell to twentieth place, its lowest ever ranking. It’s not hard to see why: a Conservative government mired in allegations of corruption; billions of pounds in Covid contracts for politically connected VIPs; peerages doled out to Tory donors; public bodies stuffed with party cronies. Rishi Sunak promised ‘integrity and professionalism’ then refused to appoint a government anti-corruption adviser – the post has been vacant since the height of the Partygate scandal. According to a poll published earlier this year, people are more likely to associate economic crime with politicians than with oligarchs or business executives.

During the general election campaign, Labour presented itself as the alternative to years of ‘Tory sleaze’. We have been here before. In 1998 Tony Blair pledged that his government would be ‘purer than pure’, after the former Labour adviser Derek Draper was caught boasting to the undercover journalist Greg Palast about selling his Downing Street connections to business clients. But little has changed in the intervening two and a half decades. Just 4 per cent of lobbying is recorded in Westminster’s official register. Keir Starmer has promised to overhaul Parliament’s standards procedures, but his first King’s Speech had little to say about the revolving door between government and the private sector, donors buying access or foreign funding of political parties.

The influence industry has become deeply enmeshed in British politics. A fifth of the Conservative MPs newly elected in 2019 had worked in lobbying or public relations. At least 34 of the new Labour MPs in this Parliament have a background in public affairs. Some have worked for charities and non-profits: Jacob Collier, the 27-year-old member for Burton and Uttoxeter, was a communications officer for Nottinghamshire Fire and Rescue Service. Others came from corporate lobbying companies: Chris Ward and Joe Morris, the new MPs for Brighton Kemptown and Peacehaven, and Hexham respectively, headed the Labour Unit at Hanbury Strategy, a firm co-founded by Vote Leave’s head of communications and a former speechwriter for David Cameron, whose clients include Citibank, Spotify and Deliveroo. In all, according to analysis by the New Statesman, more than four times as many lobbyists as teachers ran for Parliament in July.

The closer Labour got to power, the closer the business lobby got to Labour. The party conference in Liverpool last October was swarming with lobbyists. ‘This is my first Labour conference in years,’ a lobbyist for the energy industry told me at a sponsored drinks reception. ‘There was no point in going for the last few years. But now it’s different.’ Lobbyists with strong connections to Labour have been in particularly high demand, commanding a salary premium of 10 to 20 per cent at the biggest firms. In the months before the election, several Labour advisers took up public affairs jobs. Freddie Cook, a long-serving parliamentary aide, joined Hawthorn Advisers, a lobbying and PR firm co-founded by the former Conservative Party chairman Ben Elliot. Starmer’s former chief of staff, Sam White, went to Flint Global, where his boss is James Purnell, who served as a minister under Gordon Brown. Flint claims to offer its clients – which include Meta, Amazon and Uber – ‘unparalleled insight into how Labour thinks and works’. The former home secretary Jacqui Smith was a specialist partner at the firm until last month, when Starmer appointed her to the Lords and made her an education minister.

At the party conference last year, Starmer told a ‘business forum’ of more than two hundred executives and lobbyists that ‘if we do come into government, you will be coming into government with us.’ In opposition, shadow ministers with minimal experience of governing worked alongside staff seconded from HSBC, NatWest, PricewaterhouseCoopers and a number of consultancy and advisory firms. In the days before the general election, senior Labour figures reportedly asked various companies – engineering firms, tech companies, management consultancies – to send more staff to help with policy work. Jim Murphy, the former Scottish Labour leader turned lobbyist, has praised Starmer’s ‘openness with the private sector’, predicting that this will be ‘the first private-sector government in Labour’s history’. A left-wing Labour MP complained to me that ‘business is running the show and Starmer doesn’t realise that’s a problem.’

Labour should be well placed to avoid some of the grubby scandals that dogged the last Tory administration. Few members of the new, predominantly state-educated cabinet have the blind trusts and plutocratic connections that many members of its predecessor possessed. It’s hard to imagine the chair of the BBC board arranging an £800,000 loan for Starmer, as Richard Sharp did for Johnson. But speaking to people within Labour you get the sense that the party often doesn’t recognise the tension between private interests and public office, especially when those involved are what one person described as ‘members of the Labour family’. Within days of taking power, Labour briefed that Starmer was considering bringing in Alan Milburn to ‘drive through NHS reform’. As health secretary under Blair, Milburn championed outsourcing and private finance initiative deals that saw even hospital car parks run as for-profit businesses. He is now a senior adviser to PWC’s ‘government and health industries practice’ and an adviser to the private equity group Bridgepoint Capital, which owns one of England’s largest external providers of NHS services, including a chain of care homes. Milburn’s own private consultancy, AM Strategy, has paid out more than £8 million in dividends to his family over the past decade. AM Strategy doesn’t have to declare its clients and wouldn’t even if Milburn were brought into government, since disclosure requirements for ministers are less stringent than those for MPs. In theory, a minister could promote reforms that might benefit his previous employers without our knowing that they had a connection.

Another Labour grandee, Peter Mandelson, who was made a peer in 2008, also has his own consultancy business, Global Counsel, which recently spent £36,000 on seconding a staff member to the office of the Treasury minister Tulip Siddiq for six months (another member of Siddiq’s team had been seconded from Oliver Wyman, a City consultancy that has since been hired to work on the National Wealth Fund, which will draw on private financing to build infrastructure). At Global Counsel’s reception during Labour Party Conference, held in an upmarket Liverpool hotel, I met lobbyists from the mining giant Anglo American and the Ontario teachers’ pension fund. A well-dressed man in his mid-twenties disappeared almost as soon as I’d introduced myself. He was from Palantir, the tech firm founded by the Republican donor Peter Thiel, which is best known for its work with intelligence agencies around the world. Palantir used to be represented by Global Counsel, whose previous clients also include Oleg Deripaska and other now sanctioned Russian oligarchs. Palantir has a UK government contract worth up to £330 million to develop a data platform for the NHS. The NHS England official responsible for the project was a guest of honour at a dinner organised by Global Counsel in February; a Palantir representative was also present. Mandelson recently stepped down from Global Counsel’s board but is the company president and holds a significant financial stake in the business. When Barack Obama’s former campaign manager Jim Messina bought a 20 per cent stake in Global Counsel earlier this year, the deal valued the firm at £30 million.

Mandelson has been following in the footsteps of Blair, who set up a consultancy business within eighteen months of leaving office. The clients included the Saudis and the former Kazakh dictator Nursultan Nazarbayev, whom Blair advised in the early 2010s at a reported cost of more than £20 million. Tony Blair Associates has now been replaced by a think tank, the Tony Blair Institute for Global Change (often referred to as TBI), which claims to have more than 750 staff around the world. Its most recent accounts show a turnover of more than $120 million in 2022; much of its funding has come from the Trump-supporting tech tycoon Larry Ellison, who has donated nearly £300 million. As well as pumping out policy papers ahead of the election, TBI provided free advice to Starmer and his shadow cabinet.

One former TBI adviser, Jim Murphy, has struck out on his own. He has talked of wanting ‘to create a different type of advisory firm – one that had an authenticity and personality’. But Arden Strategies, which has expanded considerably in the last year, looks a lot like the Conservative-friendly outfits that exerted so much influence over the last fourteen years: it donates money to Labour, sponsors constituency dinners and conference lounges, and now boasts two former staffers among the new intake of Labour MPs. Arden’s clients (again, the company hasn’t so far had to disclose them) seem to include the arms manufacturer Northrop Grumman and the energy distribution companies UK Power Networks and SGN. A number of other former Labour MPs work as industry lobbyists. Michael Dugher is chair of the Betting & Gaming Council – an industry that has donated almost £400,000 to Labour since Starmer ran for leader. ‘I’d be shocked if there isn’t a lobbying scandal in the first year,’ a veteran lobby journalist who covered many of the biggest scandals in the last government told me. ‘You have so many people working on policies that could really conflict with their company’s clients. It could start to look really bad.’

Labour is said to have turned last September to another ‘strategic advisory’ firm, Hakluyt, to facilitate meetings with business leaders. Hakluyt began in a field in which the UK truly excels: private spying. Named after the Elizabethan geographer Richard Hakluyt, the company was founded in 1995 by a group of former MI6 agents, but in recent years has sought to distance itself from the world of spooks. Spying on Greenpeace activists on behalf of oil companies is supposedly a thing of the past. The company’s website looks more like that of a private bank than a corporate espionage outfit, with a list of staff and advisers that includes the Conservative peers Paul Deighton and William Hague, director and chairman respectively. The former Labour minister Shriti Vadera sits on the advisory board. ‘Hakluyt sells its political connections,’ a contact who has worked in London’s corporate intelligence world for decades told me. ‘It’s incredibly well connected. That’s how it can charge so much. Hakluyt wouldn’t get out of bed for less than a hundred grand.’ Its contact book is set to become even more valuable now Starmer has appointed its managing partner, Varun Chandra, a former investment banker who helped set up Tony Blair Associates, as his special adviser on business and investment (Chandra duly resigned from Hakluyt). He might well be joined in government by Olly Robbins, the former Brexit chief negotiator and a Hakluyt partner. Another Hakluyt executive is Tony Benn’s granddaughter Emily Benn.

One striking feature​ of the election is that Labour, not the Conservatives, was the party of big money. The Tories raised the election spending cap to £35 million last year, despite warnings from watchdogs and experts, but then failed to raise anything close to that sum. Under Johnson, the Conservatives received donations of £5.7 million in the first week of the 2019 election campaign. Sunak raised barely a third of that in the entire 2024 campaign. When the alleged racist comments about Diane Abbott made by Frank Hester, the CEO of a healthcare software company called the Phoenix Partnership, surfaced earlier this year, the Tories were too broke to return the £10 million he had donated, even if they had wanted to.

Labour, by contrast, raised more money during the election campaign than all the other parties combined. A drive to boost private donations brought in £12 million from wealthy individuals and businesses in the first half of 2024, making it less reliant on funding from trade unions. Lord Sainsbury, who had left Labour during the Corbyn period, has donated £8 million since the start of 2023. Dale Vince, the founder of Ecotricity, has given more than £3.3 million since Starmer became leader. Gary Lubner, the former Autoglass boss, has donated £5.5 million, but says he doesn’t want a seat in the House of Lords or to influence policy. ‘In a perfect world I don’t think there should be any bloody donations to political parties,’ Simon Kuper quotes him as saying in Good Chaps, his recent book about corruption in British politics.* ‘In some countries the state does that.’ Not all donors are so public-spirited. For a quarter of a million pounds a year Johnson’s Tories offered a direct line to lobby senior ministers. New Labour’s time in office was pockmarked by access scandals: the Ecclestone affair, cash for passports, cash for honours. More recently, the Welsh first minister Vaughan Gething accepted £200,000 from David Neal, who runs several waste and energy firms, when he was running for the leadership and lobbied on behalf of Neal’s businesses in 2016. Neal was convicted in 2013 of illegally dumping waste on a conservation site; Gething resigned last month, but it’s not clear that Labour has learned the lessons of his downfall. Starmer’s more interventionist state will inevitably offer more opportunities for corruption, whether from planning deals or infrastructure contracts.

Kuper thinks Labour’s success at fund-raising reflects ‘a self-reinforcing symbiosis between the political positions that the donors want, what Starmer instinctively wants, and what seems to make electoral sense’. The party’s record haul of donations doesn’t include the millions that have flowed into Labour Together, probably the most influential political organisation that most voters have never heard of. Founded in 2015 in the aftermath of Ed Miliband’s election defeat, its original purpose was to shore up Labour’s fissiparous coalition by uniting its factions. There were discussion groups, policy papers, debates. ‘I always saw Labour Together as more about keeping the party together and reconciliation within, not as a revenue raiser, which is very different to what it has become,’ says Jon Cruddas, the former MP for Dagenham and Rainham, who was a leading figure in the organisation early on but left last year. Labour Together, in its current incarnation, might seem a new phenomenon in British politics: a protean think tank, structurally independent of the Labour Party, but existing primarily to funnel money and personnel to the leader’s office.

Labour Together’s transformation began in the immediate aftermath of the 2017 general election when Morgan McSweeney, who had worked with Cruddas in Dagenham and ran the Blairite Liz Kendall’s disastrous leadership bid in 2015, took over as director. Publicly, Labour Together remained a cross-factional campaign group; privately, it was attempting under McSweeney to wrest control of the party. Its offices in Vauxhall had a pirate flag on the wall, a symbol of its resistance to Corbyn’s leadership. McSweeney commissioned regular polling of party members, developing a schema for an alternative leader who would appeal to enough of those who had backed Corbyn. ‘Morgan alighted on Starmer as the person who could best speak to the polling data,’ Cruddas told me. ‘And then a lot of that analysis was mainlined into what became the [Starmer leadership] campaign. [Starmer’s] pledges were a way of creating a bridge from Corbyn into mainstream Labour politics.’ Although Labour Together didn’t officially back any of the candidates in the 2020 Labour leadership race, McSweeney ran Starmer’s campaign. After Starmer won, McSweeney left to become his chief of staff. Labour Together went back to producing policy papers and holding seminars with Labour MPs, but there was little interest from the new leadership. ‘Starmer came to a session we did on political economy,’ a prominent left-leaning academic told me. ‘He looked visibly bored. Didn’t ask a single question.’

Labour Together underwent another change in late 2022. After the catastrophic Liz Truss government, Labour seemed increasingly likely to win the next election. But internally there were concerns that the members of the shadow cabinet lacked experience. Only a handful had held ministerial office. Senior party figures such as Rachel Reeves, Shabana Mahmood and Wes Streeting felt that Labour needed an organisation to shape policy as the party prepared for government. Labour Together was recast as a ‘political think tank’, a progressive rival to the anonymously funded think tanks of Tufton Street, such as the Institute of Economic Affairs. Josh Simons, a former Harvard postdoc who had worked on Facebook’s ‘AI ethics strategy’ and resigned as an aide to Corbyn over Corbyn’s handling of antisemitism, was brought in as director. Labour Together was now effectively an adjunct of the leader’s office. Cash started flowing in. Someone who joined the organisation around that time told me this money enabled shadow cabinet ministers to hire people with civil service experience that the party usually wouldn’t be able to afford. As well as seconding staff, some of whom are now special advisers, Labour Together worked on Starmer’s political messaging and provided the shadow cabinet with policy and research support.

At the outset, Labour Together was financed by anti-Corbyn Labour donors like the hedge fund manager Martin Taylor and the venture capitalist Trevor Chinn, and donations were published on the Electoral Commission website. Then, on McSweeney’s watch, it stopped declaring them. Documents released to the investigative journalist Paul Holden show that the electoral authorities repeatedly advised McSweeney that, as a members’ association, Labour Together had to declare donations. But between December 2017 and late 2020 McSweeney registered just a single gift, of £12,500 from Chinn, and failed to report donations worth a total of £730,000. The Electoral Commission found in 2021 that he had breached election law, and Labour Together was fined £14,250 (the maximum fine the commission can levy is a paltry £20,000 per offence). The organisation dismissed it as an ‘administrative oversight’.

Donors weren’t put off. Labour Together has raised more than £4 million in the last eighteen months or so, including £2.1 million from Taylor and more than £600,000 from Lubner. Ian Laming, chief executive of the property investment firm Tristan Capital Partners, gave £100,000 last October, his first recorded political donation. In February, William Reeves, an American hedge fund manager and long-standing Liberal Democrat donor, donated £50,000. At last year’s party conference, Labour Together ran more than half a dozen events with corporate partners including the outsourcer Capita, the Association of the British Pharmaceutical Industry, and the American financial software firm Intuit, which paid $141 million to settle a consumer deception case in 2022. Some Labour figures worry that Labour Together could be an alternative route for donors to push their interests. But my source dismissed the accusation that it is selling political access: ‘If you are one of Labour’s ten biggest donors you will meet the Labour leadership more than you will through Labour Together.’ For Cruddas, Labour Together has become a vehicle for ‘corralling some of the hot money around Labour. The best way to understand it is as Labour’s first Super PAC.’

With Starmer​ in power, Labour Together is likely to become even more influential. McSweeney is now head of political strategy at Number 10. In a recent virtual forum with David Axelrod, Obama’s chief strategist, he said that his job was to focus on winning the next general election. Simons is also in the new government, having been parachuted into the safe seat of Makerfield five weeks before the election. Labour Together is now being run by Jonathan Ashworth, a member of the shadow cabinet under Corbyn and Starmer, who ran Labour’s rebuttal unit during the election campaign and unexpectedly lost his Leicester South seat to a pro-Palestine independent candidate.

Labour’s manifesto included a commitment to ‘protect democracy by strengthening the rules around donations to political parties’. But what this means in practice is far from clear. There has been talk behind the scenes of a ban on donations from companies that bid for public contracts, and of new rules around the opaque unincorporated associations that funnelled more than £14 million to parties between 2018 and 2023 (the Tories were the main beneficiaries by some distance). But there seems to be a wariness about going further: a well-placed source told me that Labour decided not to propose a cap on political donations after a backlash from party donors.

Starmer has promised some concrete reforms: an independent adviser on ministers’ interests with the power to launch investigations, filling a lacuna that Johnson took advantage of; an Ethics and Integrity Commission that would pull together Westminster’s hodgepodge of standards regulators into a single body. But, as the Committee on Standards in Public Life has warned, unless they are placed on a statutory footing, standards regulators can never be truly independent, and can easily be ignored or even abolished. Labour acted fast to ban MPs from holding ‘paid advisory or consultancy roles’, but this doesn’t go as far as its earlier commitment to outlaw second jobs with ‘very limited exceptions’. Similarly, a proposal to stop former ministers taking up lobbying gigs until five years after they’ve left office has been watered down to a ban on roles ‘relating to their former job’. Labour has said relatively little about lobbying reform despite the fact that the current regime, introduced by Cameron, is so deficient that even the lobbying trade body, the Chartered Institute of Public Relations, has called for tougher rules. A standardised register of MPs’ interests and timely, accurate transparency disclosures would be a start. So would a functioning freedom of information regime. Starmer’s chief of staff, Sue Gray, isn’t too keen on transparency: as a senior civil servant, she oversaw the Cabinet Office’s notorious FOI ‘clearing house’, which screened requests from journalists and campaigners.

Cleaning up British politics is in Labour’s long-term interests. The right would suffer most if big money were properly tamed. Labour has far more members than the Conservatives, and still receives union affiliation fees. (Reform, a private company masquerading as a political party, has no members but does have connections to foreign networks of clandestine funding, particularly in the US.) Taking money out of the system would be relatively straightforward: limit individual donations to, say, £10,000 a year and lower the caps on spending; force political parties to check the true source of donations; ban companies from giving sums greater than their UK profits; increase fines for breaching electoral law. Much of the Conservatives’ dreadful Elections Act could be reversed, restoring the independence of the Electoral Commission (currently under government supervision) and ending a situation in which a person has to prove their identity before voting but not before running for office. The meagre sums provided to parties for policy formation could be dramatically increased, eliminating the dependence on big business to supply researchers and advisers. Alternative models for funding politics, from state support to matching small donations, could replace the current US-style scenario in which a handful of super-rich donors effectively bankroll the entire political system.

Yet anti-corruption rules and regulations will only ever make so much difference. So far Starmer and many of those around him seem oddly naive about the way influence operates. The prime minister has accepted £76,000 worth of gifts since 2019, including £16,200 of ‘work clothing’ from the Labour peer Waheed Alli. When pressed on repeatedly taking hospitality from the Premier League, which has protested against a bill on football governance reintroduced by Labour, Starmer appeared defensive, saying that his public declaration of gifts ‘ensured there’s no conflict of interest’. A KC should know that declaring an interest mitigates a conflict but doesn’t nullify it.