Concerns have been raised over the City’s influence on Westminster, after a report found financial firms and individuals tied to the sector donated £15m to political parties and gave £2m to MPs during the pandemic.
The campaign group Positive Money tallied the gifts, expenses and donations handed to MPs, peers and their parties, as well as the value of income from politicians’ second jobs, saying it contributed to finance’s “oversized influence” on policymaking.
It found banks, insurers and lobby groups held a “disproportionate” amount of meetings with the Treasury, accounting for a third of minister meetings in 2020 and 2021, and argued that led to favourable policies such as deregulation, and an economy that was “structurally reliant” on the City of London.
The Conservative party was the largest recipient of City donations to political parties, accounting for more than £11m or 76% of donated cash over the two-year period.
“Once the scale of big finance’s influence over government is laid bare, it becomes obvious how banks get bailouts and tax cuts while the rest of us get austerity and tax rises,” said David Barmes, a senior economist at Positive Money.
The report, titled The Power of Big Finance: How to Reclaim Our Democracy From the Banking Lobby, found 47 MPs received £2.3m between them – an average of £48,936 each – from the financial sector between January 2020 and December 2021. While 26 did no work in return for the payments, those who did were paid an average of £2,738 an hour, 180 times the average UK wage of £15.15.
About £1.2m of that total was collected by just five Conservative politicians, including former prime minister Theresa May, who was paid more than £200,000 for speeches at events run by JP Morgan and Amundi Asset Management, and the health secretary, Sajid Javid, who was paid a total of £175,000 for his former role as a senior adviser for JP Morgan, as well as speeches for firms including HSBC.
JP Morgan was the biggest spender among City firms in Westminster as a result, having paid £300,000 on salaries and speaker fees during the period.
The Eurosceptic Conservative MP John Redwood was the highest City earner 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 a fifth of peers registered paid positions at financial firms, including more than half of the peers on a committee responsible for investigating matters related to economics and finance.
Positive Money also raised concerns about the revolving door between Westminster and the City. That issue of possible conflicts of interest became prominent during the recent Greensill scandal, after former prime minister David Cameron and ex-civil servants were found to have lobbied ex-colleagues on behalf of the now-collapsed lender Greensill Capital.
“Access to public institutions isn’t just the exceptional case of a few bad apples bending the rules – such as David Cameron’s lobbying on behalf of … Greensill Capital – but represents a far wider systemic problem,” Positive Money said.
It is now recommending a ban on second jobs for MPs – aside from public service roles – and introducing longer cooling-off periods and bans on lobbying by ex-ministers, civil servants and regulators. It is also calling for a cap on political party donations and the amount that politicians can be paid for speeches, as well as requiring all party parliamentary groups to disclose sources of funding.
TheCityUK and UK Finance declined to comment on the report, saying the issue was a matter for individual donors.
The Treasury said that as the department responsible for the financial services sector, it was “entirely right that ministers and officials meet regularly with representatives from the sector, as is standard with policy engagement.
“There is a clear policy in place on declaration and management of interests for those working in government, with steps being taken to avoid any conflict of interest.”
