Cursed cash conundrum

SNEAK PEEK

— U.K. politics has a cash flow problem: there’s far too much of it coming in unchecked.

— Peers are ignoring pressure over public affairs gigs — despite industry pleas.

— Labour rebrands its business bash at conference… and it comes with a £5,000-a-pop price tag.

MO MONEY MO PROBLEMS

CURSED CASH CONUNDRUM: Britain’s political finance rules have more holes in them than a colander — and Labour is today facing a renewed push to start plugging them.

Why we’re talking about this again: It’s not just the Elon Musk factor, as the overseas billionaire flirts with Reform UK. Campaigners watched the run up to the last election with dismay. And a Commons debate brought by a Labour backbencher today aims to focus minds and push the issue of limiting flows of shady cash into British politics back up the political agenda. The Lib Dems smell blood too.

Quick reminder: Tory ministers quietly upped election spending limits — the amount each individual party can spend on the national campaign — before last year’s vote. The national spending cap almost doubled from £19m to a whopping £34.1m (not that it helped them much.)

Plus plus plus… The cap for party spending on individual candidates also rose by a similar proportion — and higher thresholds were introduced at which parties, candidates and official campaign groups have to declare donation details to the Electoral Commission. Toss in staffing costs — which are excluded from the spending caps — and the final amounts that can be pumped into politics are ballooning.

New world: While U.K. election spending has traditionally been kept pretty low due to a longstanding ban on TV advertising — the reason for monster expenditure in many other countries — the advent of social media and online campaigning routes has flipped the script.

But but but: “There is something of an arms race in campaigning expenditure and therefore fundraising,” argues Duncan Hames, director of policy at Transparency International UK. And yet, nobody wants to blink, Hames says. “You look them in the eye when you’re talking about this issue and they’re worrying ‘How the hell am I going to fund my campaign?'”

In stats: In 2023 alone, around £85m in political donations came from private sources. Number-crunching from Transparency International UK found that around £56.5m of this came from a blend of companies, trade unions — and 19 individuals all giving £1m or more in a year to parties. Campaigners fear that a scramble for cash by parties only raises the risk of dodgy dosh sloshing into the system. YouGov polling suggests the majority of voters believe mega-donors are motivated to splash cash in the hopes of gaining influence.

Starting point: Hames believes stricter spending limits imposed on the parties themselves are an obvious first step. His group is calling for the national campaign cap to be set at £16.1m — well below even the previous threshold. “If you restrict how much campaigns spend, then with it you restrict some of the more risky ways in which they raise the money,” he says. “That affects all of them and they don’t actually need as much money.”

Pincer attack: But there’s a push to tighten donation rules at source, too, and it’s something Liberal Democrat MP Manuela Perteghella is trying to reignite with her own Political Finance Bill. Her plan would replace the system in which individuals can give unlimited funds to a party with a cap decided through an independent review. She wants a closer look at existing loopholes which allow foreign donors to skirt current restrictions by funneling cash through U.K.-based companies and campaign groups. (Sub-tweeting Elon, there…)

Cap in hand: “We need the cap to be effective without undermining legitimate political participation,” she tells Influence. “It has to be a cap that tells the British people that big wallets aren’t going to have a louder voice. It’s important for democracy they feel like they’ll be listened to and it’s not just the corporate interests.”

Speaking of big wallets: Musk’s brief suggestion he may donate millions to Nigel Farage’s Reform UK rocketed the issue up the agenda. But it also raised charges of hypocrisy against any parties wanting to pull up the drawbridge against Musk just because they haven’t wooed their own billionaires.

However: As Perteghella points out, similar proposals have been floating about for more than a decade, and Labour promised action long before Musk’s nudge and wink in Nige’s direction.

Caveat corner: Perteghella concedes her backbench bill is unlikely to pass into law — but she wants to put a bit of pressure on ministers to finally act and keep the issue in the public eye.

I’m alright, Jack: Governments may of course baulk at turning off the taps when they are being courted by well-heeled suitors. Such a move would be properly short-sighted, argues Hames. “I would encourage politicians of all stripes to have some confidence in their own convictions, rather than relying on a generous billionaire to get them out of a tight spot in the future,” he says.

But but but: None of this is going to work while Britain’s systems for identifying, tracking and scrutinizing cash flows are full of gaps … something today’s debate from Labour MP Lloyd Hatton is looking to shed light on.

Some classics of the genre: Cash can flow through British companies to parties even if it comes from offshore parts of a firm … including in tax havens. Politicians are advised to check whether firms are dormant or about to be struck off — but they aren’t actually banned from accepting that cash. And the ban on foreign funding can be easily subverted by using U.K.-based firms to handle the transfer.

Even worse… Are unincorporated associations. These loose groups have no legal identity and are not required to register with Companies House. They are only required to register with the Electoral Commission if they donate £37,250 in a single year… and even then the detail provided about who has provided those funds is near worthless. Influence did a big-sigh explainer on all this a couple of years back and, of course, nothing has changed since then.

Watchdog woes: Despite being the official policeman of the regime, the Electoral Commission has had its ability to monitor the system watered down by what Hames describes as a “vindictive” neutering of its powers from politicians. Individuals are technically able to bring private prosecutions against those breaking the rules — but the Electoral Commission itself is banned from doing so.

Love to see it… One unincorporated association — the Barnes and Richmond Labour Club and Institute — was found by the watchdog to have broken the disclosure rules four times last year. The punishment imposed in relation to its near £600,000 donation? A £500 fine. That’ll learn ’em.

Risky business: Failing to address this all raises the risk of corruption — or at least the perception of it. But while Hames says a proper rethink of limits is vital in rebuilding trust in politicians, he admits it won’t be easy, likening it to “helping someone take responsibility for breaking an addictive habit.”

Cold turkey: “People that have successfully done that are so much better for it afterwards — and the same could be true of British politicians at a time when public confidence and trust in the way our politics works is at a record low,” he adds.

QUICK HITS

DEAR PEERS: A House of Lords debate about changes to its code of conduct Wednesday could have been a perfect moment for peers to at least acknowledge the growing concerns around the issue of doing side gigs in public affairs … But obviously it didn’t get a passing mention.

Nice try: It’s not like peers can plead ignorance either, given the Chartered Institute of Public Relations wrote to each member of the House of Lords due to speak in the debate to highlight the growing media interest in the overlap between lobbyist and legislation — with an invitation to help them draft tougher rules.

Good lord: “It is an unacceptable conflict of interest for a legislator to be paid by a lobbying firm and this debate should provide a catalyst to ensure that practice ends,” wrote CIPR boss Alastair McCapra. Maybe next time, your lordships?

COST OF LOBBYING CRISIS: Following mixed reviews of Labour’s business day event at last year’s conference, the party has opted to… massively increase the prices?!

How much? Having undergone a rebrand, tickets for this year’s “summit” are being touted for a cool £5,000-a-head. A risky move given the lack of ministerial engagement and chaotic structure of last year’s event prompted a swathe of attendees to demand a refund on their £3,000-a-pop tickets.

But but but: Grayling associate director Leo Watson tells Influence the “smart” rebrand is much needed, with the party appearing to acknowledge feedback. But he wants to see some more “meat on the bones” this time around.

Boss class cash: “Will Labour hold out for a genuine c-suite attendees to give this summit the more exclusive feel that these events crave?” he asks. “If so, will their beefed-up offer be enough to convince a bruised business sector to stump up £5,000 to talk Labour Party policy? I’m not so sure.”

META GAME: Brutal news for the BBC as it slips into second place behind Facebook as the most consumed news outlet among Brits, according to new study into media habits from consulting firm Charlesbye.

WhatsApp with you? The Beeb’s bump has happened in the 12 months since Charlesbye’s last iteration of the study, with the other big change being the surge of WhatsApp as a source for sharing and consuming curated news content. A trend that is seen across all age groups.

App-y days: That social media surge is huge in the under-45s, with BBC TV sitting in eighth place for most used news source with the top seven slots all taken by social media platforms including TikTok, Instagram and even Snapchat.

Hang on a minute: Aren’t most Brits getting their news from nerdy politics emails? Are we so out of touch?!

FAIR PLAY: The Spotlight on Corruption campaign group is claimeing victory after measures were inserted in the new Crime Bill offering law enforcement agencies better protection against legal costs when going after well-heeled crooks.

Reminder: The group had warned that enforcement agencies were often reluctant to launch recovery efforts against kleptocrats and money launderers because getting lumped with legal costs at the end of a case could essentially wipe out their entire annual budget.

But but but: The new proposals would see crime busters let off the hook for legal costs should they lose the case — provided there is proof they carried out the investigation by the book. Now go get ’em.

GRIM STATS: A grim new study finds nearly two-thirds of women working in PR have experienced gender-based discrimination or harassment, with almost 4,000 quitting the industry mid-career or failing to advance to senior roles.

Of course… The report — authored by Socially Mobile founder Stephen Waddington and team and funded by the CIPR — finds an ongoing “boys’ club” mentality permeating the industry, while the “always on” culture and lack of flexible working has contributed to huge burnout rates. Happy International Women’s Day! Read the full report here.

ON THE MOVE

Former SpAd Beth Armstrong joined Charlesbye as a director.

Maxwell Marlow has been promoted to director of public affairs at the Adam Smith Institute while Sam Bidwell has been bumped up to director of research.

Natasha Moncrieff joined Lexington as a research assistant.

Nicole Greene is getting going as a communications officer at the Open Government Partnership after a stint at the Race Equality Foundation.

Lewis Redmond has a new gig as press secretary to the financial secretary to the Treasury after a two-year spell at the DWP.

Amanda Sefton has a new role as account manager at Headland Consultancy.

Jobs jobs jobs: The British Beer & Pub Association is looking for a public affairs and communications intern… Devo Agency are on the hunt for an APPG consultant… There’s a public affairs assistant gig going at The Law Society… The Royal Society of Chemistry wants to snag a parliamentary affairs adviser… The Cabinet Office wants to add a media officer… and LNER has an opening for a media and PR apprentice.

Thanks: To editor Matt Honeycombe-Foster for imposing a cap on typos. And to the production team for making Influence look a million bucks.

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