City donations worth £15m raise concerns over influence on UK politics | Financial sector
Concerns have been raised about the city’s influence over Westminster, after a report revealed financial firms and individuals linked to the sector donated £15million to political parties and £2million pounds to MPs during the pandemic.
Campaign group Positive Money tallied gifts, expenses and donations given to MPs, peers and their parties, as well as the value of politicians’ second job earnings, saying it contributed to ‘oversized influence’ of finance on policy-making.
He revealed that banks, insurers and lobby groups had held a ‘disproportionate’ number of meetings with the Treasury, accounting for a third of ministers’ meetings in 2020 and 2021, and argued that this had led to policies favorable ones such as deregulation and an economy that was “structurally dependent” on the City of London.
The Conservative Party was the biggest recipient of the City’s donations to political parties, accounting for more than £11million or 76% of cash donations over the two-year period.
“Once the extent of big finance’s influence over government is laid bare, it becomes clear that the banks are getting bailouts and tax cuts while the rest of us are enjoying austerity. and tax increases,” said David Barmes, senior economist at Positive Money.
The report, titled The Power of Big Finance: How to Reclaim Our Democracy From the Banking Lobby, found that 47 MPs had received £2.3million between them – an average of £48,936 each – from the sector financial between January 2020 and December 2021. While 26 did not work in return for the payments, those who did were paid an average of £2,738 an hour, 180 times the UK average wage of 15.15 £.
Around £1.2million of that total was raised by just five Tory politicians, including former prime minister Theresa May, who received more than £200,000 for speeches at events hosted by JP Morgan and Amundi Asset Management, and Health Secretary Sajid Javid, who received a total of £175,000 for his former role as senior adviser for JP Morgan, as well as speeches for companies such as HSBC.
As a result, JP Morgan was the biggest spender among businesses in the City of Westminster, having paid £300,000 in salaries and speaking fees during the period.
Eurosceptic Tory MP John Redwood was the highest paid in town among his peers, receiving nearly £471,000 for roles including his position as chief global strategist at investment manager Charles Stanley and an advisory role to private equity firm EPIC.
In the House of Lords, the report found that a fifth of peers have registered paid positions in financial companies, including more than half of peers on a committee set up to investigate issues relating to the economy and to finance.
Positive Money has also raised concerns about the revolving door between Westminster and the City. This question of potential conflicts of interest became prominent during the recent Greensill scandal, after former Prime Minister David Cameron and former officials were found guilty of pressuring former colleagues on behalf of the now lender collapsed Greensill Capital.
“Access to public institutions is not just the exceptional case of a few bad apples bending the rules – like David Cameron’s lobbying on behalf of…Greensill Capital – but represents a much larger systemic problem,” said Positive Money.
It now recommends banning second jobs for MPs – outside of public service jobs – and introducing longer cooling-off periods and lobbying bans by former ministers, civil servants and regulators. It also calls for a cap on political party donations and the amount politicians can be paid for speeches, as well as a requirement for all party parliamentary groups to disclose their sources of funding.
TheCityUK and UK Finance declined to comment on the report, saying the matter was up to individual donors.
The Treasury said that as the department responsible for the financial services sector, it was “just right for ministers and civil servants to meet regularly with representatives of the sector, as is the norm with political engagement.
“There is a clear policy in place on the declaration and management of interests for those who work in government, with measures taken to avoid any conflicts of interest.”