Hello and welcome back.
A quick housekeeping update before we dive into this week’s stories. Dark Arts has decided to split this newsletter into two – apparently, not everyone has the time or inclination to read 3,000 words on lobbying and influence in a single sitting every week, who knew?
We'll now publish a primary Dark Arts story fairly regularly, which might be an exclusive news story or investigation like this one from the weekend, or perhaps a longform interview or extended piece of data analysis. Separately, we'll also publish stories like this one, which we’re calling the Dark Arts Dispatch. These will contain a number of shorter, ‘quick hit’ stories, of the kind that have generally appeared at the bottom of the newsletter. To get them all directly into your inbox, subscribe to our Substack for free, here.
Now, onto the good stuff.
Everything is going to be fine(s): Some weeks ago, I wrote about how chancellor Rachel Reeves views the role of the state as essentially a great big derisking machine. If ‘change’ is the goal of this Labour government, then investment is how it intends to pursue it. Specifically by using state capacity largely to supplement private investment in infrastructure. Dark Arts has well-documented criticisms of this approach, not least that the potential profits that make this investment appealing to the private sector in the first place – and make it ultimately more expensive than public investment – will in the end come out of our pockets.
With the International Investment Summit earlier this week, and the events surrounding it, we saw further evidence of just how central private investment and the private sector in general are to the government’s growth strategy, and the lengths it is prepared to go to in order to facilitate the private sector; whether that’s scrapping redtape, reining in the regulators or just publicly slapping down ministers.
But perhaps Dark Arts is underestimating the government? Perhaps there is an ulterior motive at play here, with Starmer and Co. laying out the red carpet for these firms only in anticipation of coming down hard on them once they’re through the door. Maybe the plan is to get them to invest and then make a load of money for the state by slapping them with whopping fines when they inevitably breach consumer, environmental and financial regulations. Probably not, but it would be hard to intentionally assemble a cast of companies better suited to this end than Labour seems to have managed incidentally.
The government put out a press release trumpeting the £63bn of private investment brought in by the summit and naming a couple of dozen companies as investors. Between them, these firms have been fined more than £300m since 2010, according to Dark Arts’ analysis of data compiled by the Violation Tracker UK, which documents enforcement actions brought against companies by government regulators. In total, the firms were responsible for 194 separate regulatory breaches, relating to issues ranging from aviation safety and oil drilling to labour standards and consumer protection.
Dark Arts readers will be unsurprised to learn that Macquarie was the worst offender, having been responsible for 128 regulatory breaches during that time. These mostly related to the firm’s stewardship of Southern Water, which saw it receive a record fine of £126m in 2019 for a water services violation and a further £90m fine in 2021 for a water pollution violation.
Notable exceptions among the investors include DP World, the owner of P&O ferries, which famously fired 800 crew members without warning in 2022, replacing them with lower-paid agency workers on longer hours. The company didn’t receive a fine for that debacle because its actions were, unbelievably, within the rules. Another investor, US pharma giant Eli Lilly, is also yet to run afoul of UK regulators, but may well look upon the infringements of its fellow investors and laugh; the firm has been fined more than $2.8bn by US regulators since 2000.
U-turn inbound?: The Times last week reported that Labour looks set to row back on plans to close a loophole that allows private equity firms to pay a significantly reduced rate of tax on their profits. This may ring a few bells for Dark Arts readers. Just before the election, I wrote about the major lobbying campaign waged by a group pushing back against the plan, the British Venture Capital and Private Equity Association, whose key lobbyist is a former Labour spad who worked alongside Ed Balls when he was shadow chancellor.
The Times’ report suggests the cause of the potential U-turn is a Treasury analysis that suggests the policy *could* be a net loss to tax receipts, as companies *might* choose to leave rather than pay their fair share. Perhaps this will indeed be the reason if the loophole ends up unclosed. But it could also be the more than £10m the financial sector has donated to the Labour Party in the past few years, as well as the secondments from banks, City consultants and lobbyists, and a key No 10 adviser who joined government directly from a firm that claims to represent “more than three-quarters of the top 20 private equity firms in the world”. Forgive my cynicism.
It’s a big (cricket) club, and you ain’t in it: As Labour’s ties to the corporate lobbying world come under increasing scrutiny, it’s always worth pointing out that the media also has a few questions to answer in this regard. Dark Arts is committed to shining a light on this underreported aspect of SW1 dynamics – career prospects be damned – as it may go some way to explaining why corporate lobbying (and the conflicts of interest that come with it) faces so little scrutiny from the press.
Last month saw the ‘hacks vs PRs’ cricket match, in which a lobby XI faces off against a lobbyist XI in a “fun annual fixture” organised by Charles Lewington, the chairman of Hanover Communications, a former comms director for the Conservatives and a journalist with the Express before that. Lewington – whose firm represents the interests of Amazon, Uber and Meta among others – “lays it on thick” for the day, according to a message sent around to Westminster hacks before the event. Generously provided for attendees and their families; free taxis, free food and, of course, a free bar. Dark Arts (right arm, medium-fast) did consider donning the whites for a day but decided against it on ethical and reputational grounds.
This article is part of a new regular feature, the Dark Arts Dispatch, which shines a light on the world of corporate influence, lobbying and money in politics, with a handful of incisive, exclusive stories delivered directly to your inbox.
To read the second half of this article – which goes deeper into the chummy links between Westminster journalism and the public affairs world, reveals who has been visiting Starmer’s business adviser in No 10, and how the new chair of a select committee tasked with holding the lobbying industry to account used to work in that very industry – subscribe for free to our Substack, The Dark Arts, here.
