Finance firms gave Labour £2m in two years before banker bonuses U-turn
Exclusive: Labour’s ‘love letter to the City’ policies come after influx of cash and donations in kind from sector
Bankers and City-linked firms have handed Labour the equivalent of £2m since the party launched its charm offensive on big business in 2022, openDemocracy analysis of Electoral Commission data shows.
The party’s shift toward an increasingly pro-business policy platform over the last two years has coincided with a huge influx of money from international banks, professional services firms, consultancies and financiers, with campaigners suggesting this financial relationship could explain why Labour’s policies “read like a love letter to the City”.
Hundreds of corporate executives gathered in London today for Labour’s business conference, where the party unveiled its approach to financial services and the City of London.
HSBC was a main sponsor of the event and the bank’s CEO of innovation banking Erin Platts was brought on stage to introduce shadow chancellor Rachel Reeves. Reeves went on to field questions from the press about the party’s U-turn 24 hours earlier on reintroducing the cap on bankers’ bonuses scrapped by the Conservatives last year.
The striking about-face on a policy that is considered to be widely popular has angered parts of the wider labour movement. The general secretary of the Labour-affiliated Fire Brigades Union (FBU) Matt Wrack hit out at the policy on X (formerly Twitter), describing it as “an utterly daft approach”.
“Tackling abuse by wealthy bankers would be a popular move and a vote winner,” he said. “The desperation from [Keir] Starmer’s team to win approval from the people who run the finance industry is appalling.”
Staff secondments
SInce February last year, HSBC has provided a senior policy manager to work part-time in the office of shadow business secretary Jonathan Reynolds. It follows similar arrangements with NatWest and consultant lobbyist firm the Lowick Group in 2022.
MP Tulip Siddiq, who picked up Reynolds’ previous brief as shadow City minister following his promotion, has also benefited from secondments. In November, the international lobbying firm Global Counsel provided Siddiq with a member of staff who works in her office as a policy specialist – Harry Palmer, a senior associate in Global Counsel’s financial services practice.
Global Counsel, which is chaired by Labour grandee and Starmer adviser Peter Mandelson, recently published a list of UK lobbying clients for the first time since early 2022. They include the Bank of America and JP Morgan Chase.
Another secondee to the party in Siddiq’s office was brought in from City consultancy Oliver Wyman, with a specific brief to engage with financial industry bodies and feed into the party’s work on winning over the sector, according to The Guardian.
Adam Bychawski
City consultants and professional services firms have also provided frontbenchers with staff, either on full secondments or alongside their primary roles. Both Ernst & Young and Grant Thornton LLP have members of staff currently working in Keir Starmer’s office, PricewaterhouseCoopers has donated more than £96,000 worth of staff time to the party, and consultants Beringa recently seconded a staffer to the team of Darren Jones, who is shadow chief secretary to the Treasury. Overall, the value of secondments from firms with significant interests in the financial services sector totals more than £430,000 since January 2022.
Hedge fund first-timers and returning donors
Almost half of the total £2m from the wider finance sector that has flooded into Labour has come from individuals in the hedge fund, asset management and private equity sectors. Of this £980,000, just over £400,000 was given directly to the Starmerite campaign group Labour Together.
Martin Taylor is a hedge fund manager focused on emerging markets and is increasingly one of Labour’s most important individual backers. He was a major donor to Labour under Ed Miliband but scaled back his contributions significantly during Jeremy Corbyn’s tenure. Taylor gave one of the largest amounts to Keir Starmer’s leadership campaign in 2020 and has in the last two years given more than £300,000 to the party – mostly through Labour Together, which in turn funds staff in the offices of favoured MPs.
The former managing director of Merrill Lynch Investment Managers, Stuart Roden, has become a Labour donor for the first time under Keir Starmer, giving £180,000 to the party last year. As well as current roles with two investment funds, Roden sits on the board of the centre-right think tank Centre for Social Justice, which was founded by former Conservative leader Iain Duncan-Smith.
Other first-time Labour donors from the world of investment banking and asset management in the last two years include Kasim Kutay (£50,000), Grayden Reece-Smith (£45,000), Andrew Dyson (£25,000) and Garret Turley (£25,000).
Former Goldman Sachs Asset Management CEO and current senior partner at the Generation Investment hedge fund, David Blood, gave £100,000 in September last year – his first donation to a UK political party. And Irish hedge fund boss John Armitage has given over £100,000, having donated to the Conservatives as recently as May 2020.
Fran Boait, co-executive director of Positive Money, said: “It’s hardly surprising Labour’s latest policies read like a love letter to the City when they’re being bankrolled by them.
“Labour must remember that it was chummy relationships with the finance sector that ushered in an era of weak regulation before the crash, ultimately costing the party power.
“This is precisely why we’ve called for caps on donations to political parties: to prevent politics being captured by vested private interests.”
Former chair of Lloyds Bank Victor Blank has also returned to the fold under Starmer, giving £125,000 since 2022, while Bank of London founder Anthony Watson has upped his contributions significantly, providing £167,500 to the party and a small handful of MPs including shadow health secretary Wes Streeting.
Emeritus professor of accounting at the University of Essex, Prem Sikka, described the close ties between political parties and the financial sector as “part of institutionalised corruption”.
Sikka, who sits in the House of Lords as a Labour peer, added: “Big business and the ultra-wealthy fund political parties in order to influence the policymaking and political agenda. They are effectively making an investment, and the return they expect may come in the form of honours, jobs, crony contracts, lax regulation or ineffective policy.
“It is unacceptable for Labour to continue with the practices which have been used by the Conservative Party.”
But a Labour spokesperson insisted: “Private sector support via secondments in no way influences or impacts upon Labour Party policy – we will always be driven by what is in the best interests of the country.”
They added: “Labour’s plan for government will spur a decade of national renewal after 14 years of Tory economic decline.
“That includes spending taxpayers’ money wisely and working collaboratively with the private sector to unlock economic growth. We are proud to be working with business to deliver this.”
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