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The Guardian - UK
The Guardian - UK
Comment
Peter Geoghegan

British political giving is increasingly dominated by the rich – it’s a system ripe for abuse

The Tories’ senior treasurer Mohamed Mansour has donated £5m to the party.
The Tories’ senior treasurer Mohamed Mansour, a former minister in Egyptian dictator Hosni Mubarak’s regime, has donated £5m to the party. Photograph: Xinhua/Alamy

The date of the next UK general election has not yet been set, but one thing seems certain: the contest will be the most expensive in British history. Already, huge sums of money are flowing into party coffers. But what does that mean for our politics?

When it comes to political funding, Britain is something of an anomaly. Unlike in many European states, there is little public funding for parties. Like the US, British politics runs on private money but, unlike the US, our politics is cheap: the US elections in 2020 cost $14bn. The Tories spent just north of £16m securing their 2019 general election win.

As a result, political giving is a minority pursuit. A striking feature of recent political donations data is how reliant British parties, particularly the Conservatives, are on a very small number of donors. In the first quarter of this year, Rishi Sunak’s Conservatives took in more than £14m, mostly in cash donations from a handful of super-wealthy individuals. The last time the Tories registered donations on this scale outside an election year was the winter of 2009, when David Cameron was shaping up to be the next prime minister. But that strong headline donation figure is inflated by a single gift: a joint-record £5m from Mohamed Mansour, a former minister in Egyptian dictator Hosni Mubarak’s regime, who is the Tories’ senior treasurer.

Labour is building a war chest, too, and has raised more than £5m in the first quarter of this year. While the unions remain the bedrock of the party’s finances, Keir Starmer has been aggressively targeting private donors. There are signs that Labour’s “Rose Network” – which seems to mirror the Tory “Leader’s Group”, where for £50,000 donors get regular off-the-record meetings with senior ministers – is beginning to bloom: investor Stuart Roden gave Labour £180,000 in February. Gary Lubner, former boss of Autoglass, has pledged up to £5m to help Labour build up its “capacity and capability” before the next general election. Some notable New Labour names are back in the fold, too. Francesca Perrin, daughter of David Sainsbury, has given more than £1m since Starmer became leader. Michael Levy, who donated £25,000 last year, was previously embroiled in a “cash for honours” scandal under Tony Blair.

Labour’s growing reliance on “high net worth individuals” is partly a product of necessity. As members have left the party in large numbers, income from dues has fallen – it was down more than £3m in 2021, according to its latest annual accounts. Donations were up, but the party still recorded a £4.8m deficit.

The motives for largesse are not always clear, but donors often benefit from preferential access to political elites. Tory donors were bumper-to-bumper in the notorious “VIP lane” set up by the government for suppliers of personal protective equipment during the Covid pandemic. In all, almost £5bn in contracts was awarded to companies with political connections.

In 2021, it was revealed that donors, some of whom had given the Tories more than £250,000, sat on a secret “advisory board” that had meetings with ministers. Its members have reportedly lobbied for the government to lower taxes.

Peter Cruddas, left, speaking with Jacob Rees-Mogg, has said he won’t fund the Conservatives under Rishi Sunak.
Peter Cruddas, left, speaking with Jacob Rees-Mogg, has said he won’t fund the Conservatives under Rishi Sunak. Photograph: Andrew Matthews/PA

Donors can, of course, withdraw their support when they’re unhappy with how the party is being run: Peter Cruddas, for example, has said he won’t fund the Conservatives under Sunak. Cruddas, a City trader elevated to the House of Lords by Boris Johnson against official advice, has been backing the avowedly pro-Johnson Conservative Democratic Organisation instead. Other donors have stopped giving altogether, or even switched allegiance to Labour – such as Gareth Quarry, who cited the Conservatives’ arrogance and complacency. Another Cameron-era Tory, Kasim Kutay, chief executive officer of life science investor Novo Holdings, has done the same.

Nevertheless, the Conservatives are still attracting new funders. Nigerian-born oil mogul Orikolade Karim gave £50,000 earlier this year. Amit Lohia, who has not previously donated, gave the Tories a hefty £2m in March. Nicknamed the “prince of polyester”, Lohia is a director of an Indonesian conglomerate whose only UK outpost is a plastic bottle factory in Northern Ireland. And other veteran donors are sticking with them: party treasurer Graham Edwards gave £2m earlier this year, and former deputy chairman Michael Ashcroft gave £50,000 in February, as did Lubov Chernukhin. (In all, Chernukhin has given almost £2.5m to the Tories since 2014.)

The Conservatives’ muscle memory for raising money is well developed. The party revolutionised political funding in the 1980s, when the late Alistair McAlpine would reportedly turn up in the City of London with a large sack, asking for bundles of cash to fill it – something that would have been entirely legal at the time. By the time the Tories returned to power under Cameron, half of the party’s funding came from City donors. But after the 2016 Brexit vote, the pro-European business elite fled the Tories as factions such as the European Research Group became increasingly powerful. Around two-thirds of existing Tory donors reduced their contributions after the EU referendum or stopped giving at all.

Nowadays the Conservatives are dependent on a mix of largely pro-leave donors, often with ties to the world of hedge funds and speculative finance, and international businessmen (they are almost all men).

Accepting sums from private donors leaves parties open to charges of hypocrisy, cronyism, or worse. That’s especially the case when, as Labour has, you’ve pledged to clean up politics. Conservative calls for Starmer to return money from the Just Stop Oil funder Dale Vince are patently partisan, but the risk of taking cash from other, less savoury characters is all too evident.

Political donations can be a way for sectional interests to guarantee a seat at the table: the Tories have received millions from property developers in recent years. Money can shape broader policies, too. Boris Johnson’s hardline Brexit was championed by the speculators who bankrolled his election victory. As Labour becomes more reliant on private money, it will doubtless come under pressure to temper any radical edges and adopt more “business-friendly” policies.

There is a reason most countries don’t follow Britain’s model of political funding. The system is ripe for abuse. Our electoral law is outdated, with loopholes so large they could be seen from space. The Conservatives brought in mandatory voter ID – a move resisted by the Electoral Commission – but have done nothing to tackle the threat of foreign funding of British politics. The maximum fine for breaking electoral law is a paltry £20,000.

The easiest way to curb the influence of money on politics would be a cap on donations. But there seems little prospect of that. In its absence, the race for political contributions is likely to only intensify in the run-up to the next general election.

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