Dark Arts Dispatch: Westminster is a ‘safe space’ for lobbyists

More government FOIbles

Dark Arts has received yet more evidence that Labour may not be sticking to its word about stepping up transparency and accountability in government.

Previous editions of this newsletter reported that The Treasury had twice delayed a response to a Freedom of Information (FOI) request made back in September for details of the meeting between Keir Starmer, Rachel Reeves and JPMorgan CEO Jamie Dimon. Now, make that three times.

The response, if it comes at all, will arrive months after the supposed 20-working day deadline.

But it’s not just the Treasury. Dark Arts has had questionable responses to FOI requests from the Department of Science, Innovation and Technology about the AI review, the Cabinet Office about No 10’s business adviser Varun Chandra, and the Department of Business and Trade about a meeting involving Justin Madders, the employment minister. Speaking of…

A ‘safe space’ at The Goring

At around 9:30am on 10 October, Madders filed into the opulent garden dining room at The Goring in Belgravia, a luxury five-star hotel that hosted Kate Middleton the night before her wedding to Prince William back in 2011.

The employment minister was there for a private roundtable event with business leaders to discuss measures in Labour’s flagship Employment Rights Bill, which had its first reading in Parliament on the same day.

Dark Arts suggested to the government that corporate lobbying firm Hanbury organised the sit-down, but the government says it was the British Chambers of Commerce (BCC). If that is the case, one wonders why Hanbury had four staffers around the table – more than any other organisations represented, including the BCC.

Aside from Madders and a senior civil servant, there were 30 people around the table. Of them, at least eight had previously worked either as senior civil servants, in Parliament or with a political party, and were at the meeting to represent the interests of the business community at large but, first and foremost, their own companies.

These firms included oil giant BP, Deliveroo, Evri, Drax (the owner of Britain’s biggest power station) and DP World, which would the next day threaten to pull out of the government’s International Investment Summit after then-transport minister Louise Haigh called for people to boycott its child company, P&O Ferries, for firing 800 workers in 2022 and replacing them with cheaper agency staff.

So what might these corporate executives have said about a bill that seeks to improve the rights of workers and put an end to ‘fire and rehire’ practices (looking at you, DP World) and zero-hours contracts? We’re none the wiser.

Despite providing details of where the meeting took place and who was there, the government refused to release any information on what was discussed, including any notes taken, because of the importance of “preserving… a ‘safe space’ to allow contributions to live policy debates”.

The government obviously takes the need for a ‘safe space’ more seriously than the attendees. A Hanbury staffer present at the meeting took to LinkedIn afterwards, to write: “It was a positive discussion with a range of business leaders, with the minister describing the introduction of the bill as ‘the end of the beginning’. Needless to say, various provisions within the bill (and some outside of the draft legislation) will now undergo detailed consultation with businesses of all sizes and across all sectors of the economy.”

One to watch.

Hard feelings, Mandy

So Peter Mandelson has lost out in his bid to become president of Oxford University, pipped to the post by former Conservative leader William Hague, who is the current chair of the advisory board at global corporate strategy firm Hakluyt. But Mandelson is still being considered for – and, Dark Arts hears, is likely to get – the role of Starmer’s man in Washington.

Serving as a conduit between Downing Street and the Trump administration won’t be an easy role, not least for an arch-remainer like Mandy, but he has connections in the US that he may be able to call on if appointed.

Earlier this year, the lobbying firm Mandelson co-founded, Global Counsel, merged with the Messina Group, run by Barack Obama’s former aide, Jim Messina, who has previously advised a couple of Conservative leaders here in the UK.

Messina is well-connected in Washington, though as an archetypal Democratic fixer, he may not prove all that useful in helping Mandy forge ties with Trump. Nonetheless, if Mandelson does get the job it will likely be seen as a significant selling-point for Global Counsel and its clients with a presence in the US, including JP Morgan, OpenAI, Palantir and M&G.

More on Mandelson, and how he may potentially find common ground with President Trump, below…

Labour Still Together (?)

In recent weeks, readers may have noticed a dearth of news about Labour Together, the UK’s first US-style super PAC, which raised millions for the Starmer project in the two years prior to the election and paid for a small army of staffers working in the offices of senior cabinet ministers.

The organisation’s former chief exec, Josh Simons, stepped down because he won a seat at the election and was replaced by outgoing shadow cabinet minister Jonathan Ashworth (who, it is always worth remembering, lost a seat at the election). Since then, Labour Together has gone relatively quiet and with several members of staff leaving either for advisory roles in government, as Dark Arts has previously reported, or to join the world of corporate lobbying.

But behind the scenes, Dark Arts hears the operation is still ticking over. The organisation has retained a few key staffers who developed strong links with now-cabinet ministers while they were in opposition and now provide advice and policy support outside the formal structures of government (and therefore without any transparency or accountability).

And it is still pulling in major sums from the party’s big donors. Labour Together has received more than £850,000 since the election – including more than £320,000 each from hedge fund boss Martin Taylor and Lord David Sainsbury, plus £200,000 from Gary Lubner, the boss of Belron, a firm specialising in vehicle glass repair. This is a striking amount for what is essentially an internal party grouping. To put it in context, the Green Party raised only £160,000 during the whole pre-election period.

Party time

In Westminster, Christmas party season is in full swing. As discussed in previous editions of Dark Arts, networking plays a major role in the work of corporate lobbyists, as a way of forging and maintaining relationships with contacts at all levels of politics, but particularly for junior staffers and even party activists, among whose ranks the parties’ future stars likely reside.

This might explain why a serious corporate lobbying firm with clients as blue-chip as Coca-Cola and Microsoft would bother to sponsor an event for a regional youth activist organisation, as was the case last week.

The London Young Labour group ‘relaunched’ with a party sponsored by 5654 & Company, a consultancy co-founded by former Tory spad James Starkie. As well as all the future ‘ones to watch’, several London MPs turned up, including a star-turn from Foreign Affairs Select Committee chair, Emily Thornberry, plus the Labour National Executive Committee’s resident lobbyist, Abdi Duale.

Meanwhile, this week saw WPI Strategy – another firm co-founded by a veteran Tory adviser (Sean Worth) – host a knees-up for parliamentary staffers at the Walkers of Whitehall pub. As the gatekeepers to the MPs they work for, parliamentary staffers are the most important contacts for more junior lobbyists to develop, with the added bonus that a sizeable proportion of staffers end up as MPs themselves further down the line.

The event was sponsored by one of WPI’s big clients, Vodafone. Whoever runs the Vodafone account at WPI has every reason to party at the moment; after 18 months of analysis the Competition and Markets Authority (CMA) finally gave the green light on Vodafone’s merger with Three – despite concerns about increased bills and reduced competition.

We won’t know the full extent of WPI’s role in getting the decision over the line, but the firm certainly pulled out a few stops to push for ‘reform’ of the CMA. Last year, Conservative MP Bim Afolami was found to have breached the Code of Conduct after WPI paid for him to chair the Regulatory Reform Group. The firm essentially set up Afolami as a de-facto lobbyist to put pressure on regulators generally and the CMA specifically. The lobbying watchdog cleared Afolami of wrongdoing because of a loophole which means that, no matter what they do, an individual or organisation cannot be classified as a ‘consultant lobbyist’ – and therefore subject to the bare minimum lobbying legislation - if they are not VAT registered.

How the finance lobby always wins

The Treasury Select Committee met this week to discuss the work of the embattled regulator, the Financial Conduct Authority (FCA), after a damning report by MPs and peers said the watchdog is “incompetent at best, dishonest at worst”.

The committee held two sessions. The first was with financial industry lobbyists such as Miles Celic of TheCityUK, who worked alongside current pensions minister Emma Reynolds at the lobbying body until she stood for election.

Later, MPs heard from another group of experts representing the interests of consumers. Among those giving evidence was Mick McAteer, formerly a director of the FCA, who earlier this year told Dark Arts of his concerns that financial lobbyists are winning across the board – to the detriment of consumers and society in general.

When new Labour MP Yuan Yang asked the panel whether they felt able to match the City of London’s vast army of public affairs professionals in terms of lobbying power and ‘getting the ear of the regulator’, McAteer gave an interesting response.

Citing research by London-based non-profit Positive Money, which works to reform central banks and redesign the global economic system, he said: “There are 18 financial trade associations with a turnover of more than £1m. Their total combined turnover [is] over £145m. Compared to the combined resources we have, and all the consumer groups put together, we come nowhere near that.

“[...] One-third of meetings with Treasury ministers were with representatives of the financial sector, more than any other industry… From memory, whenever I used to have time to analyse consultancy responses to the FCA, something like 90% of the responses would come from industry groups, individual firms or trade bodies, so we are massively outgunned when it comes to representation at every single level of the decision making process.”

Carried interest

Before the budget, the government published a report off the back of its consultation on the ‘carried interest’ tax loophole enjoyed by private equity firms, which Dark Arts has been banging on about for the past six months or so.

Labour originally pledged to close the loophole entirely, but following a major lobbying effort, the policy has been scaled back significantly. One of the ways the government can kick the can down the road on policies like this is to open up an endless process of consultation, knowing that the vast majority of the responses will be from industry, which will inevitably call for the policy to be softened or scrapped.

Of the roughly 100 responses to this consultation, all but one (from The Charity Tax Group) are from private equity firms, lobbying organisations representing private equity firms, or City consultants who get a huge amount of work from private equity firms. The voice of the consumer is totally absent. Interestingly though, among the respondents are four City consultants who all made in-kind donations of staff time to Labour prior to the election: Ernst & Young, Grant Thornton, DLA Piper and PriceWaterhouseCoopers.

Also among the respondents, unsurprisingly, was the British Private Equity and Venture Capital Association (BVCA), which has led the way on engaging with Labour. Like the rest of the respondents, it is pretty safe to assume the BVCA came out against closing the loophole, but on what basis it made this argument we are not allowed to know. A Dark Arts FOI request for a copy of their response was declined, on the basis that discussions about the policy are ongoing. The ‘safe space’ prevails once again.

A friend in common

As mentioned above, Peter Mandelson is in the running to become the UK’s ambassador to Washington. If he gets the gig, Mandy will need to find ways to forge ties with the Trump administration and ideally the president himself. But how can an arch-europhile find common ground with the man who once called himself Mr Brexit?

Perhaps the pair could bond over their many happy times spent with a shared friend: the late paedophile, sex trafficker and financier, Jeffrey Epstein. Earlier this year, author Michaell Wolff released audio recordings of Epstein, which he says were made in 2017. In the tapes, Epstein appears to detail his close relationship with the US president – contradicting Trump’s claim that the pair had fallen out many years prior. Trump famously told New York Magazine in 2002 that Epstein was “a terrific guy” who liked his women “on the young side”.

Mandelson was perhaps even closer to Epstein. Last year, a 2019 internal report by JPMorgan into its 15-year relationship with Epstein was part of court documents unsealed in the US. The report found Epstein appeared to “maintain a particularly close relationship with Prince Andrew the Duke of York and Lord Peter Mandelson, a senior member of the British government”.

The report found Epstein had made multiple references to meetings with Mandelson between June 2009 and February 2011. On two of these occasions, in 2010 and 2011, Epstein said he was with “Petie” – which the bank believed to refer to Mandelson. This was after Epstein pleaded guilty to and was convicted of procuring a teenage girl for prostitution in 2008.

After missing out on the Oxford gig, Mandy may be worried that he didn’t get it because his CV is a little light. As a former secretary of state, European trade commissioner and head of a major corporate lobbying firm, Mandelson has held many top-level gigs. But the JP Morgan report shows the so-called Prince of Darkness may once have been considered for another high-profile role: one of the ‘stars’ of a consultancy set up by Epstein.

In a 2010 email to his private banker Jes Staley, Epstein discussed wanting to “gear up [his] advisory business”. Brainstorming how best to proceed, he wrote: “grab a group from goldman. ? Hire 5-10 stars? Larry?, peter? Andrew?”.

Oh, what could have been.