UK has an opportunity to reshape lobbying regulation

Monday 19th April 2021

by Patrick Sullivan, Chairman and Chief Executive of Parliament Street

Corruption has played little part in British politics. In the years following our joining the “Common Market”/ European Union, British politics was not bereft of scandal entirely in the grand scheme of things; they were pretty small fry compared to some of the major corruption scandal that befell both the European Union and United States during that period. A significant factor contributing to the general lack of corruption in UK politics was that the notion of corruption tends to follow power, and when we joined the European Union, Westminster handed over significant power to Brussels and, until 2016, continued to hand over even more power at regular intervals.

As a member of the European Union, Britain was the bloc’s second largest economy and second largest contributor. Even more importantly, the City of London shares with Wall Street the position of the world’s financial services capital. The European Union would come to be the regulators for the City of London and so it was MEPs and Eurocrats whom the too-big-to-fail multinational investment banks expended their energies befriending, and so, an unholy alliance between big government and business was formed. As the now Lord Hannan, speaking of his time as freshman Member of the European Parliament, told the Oxford Union on 9th June 2016:

“The biggest surprise to me as a newly elected MEP was the extent to which these giant corporations [such as Goldman Sachs, JP Morgan, Citibank and Morgan Stanley] wanted more regulation. I had innocently supposed, being elected as a Conservative, that being private enterprises, they would want freedom of action. I was disabused of that within a week of arriving. They love regulation because they can afford the compliance costs more easily than their smaller rivals. They have captured the Brussels machine and used it to raise barriers to entry. Very good news for the cartel of established multinationals. Very bad news for the innovator, the start-up, the entrepreneur.”

Special interests seeking to influence legislation pertaining to them or regulation would plough their lobbying budgets into the under scrutinised European Parliament bubble of Brussels/Strasbourg. It is not for nothing that the British press used to harp on about the “Brussels gravy train”, indeed they underplayed its grotesqueness; it remains more like the “Brussels Champagne and Caviar Express”. It is unsurprising that Brussels managed to seduce many of the Brits who went to work in the EU machine; little work, high pay and lots of functions with free-flowing champers! What’s not to like, apart from the almost total lack of accountability and transparency, of course.

Lobbying has been an important part of representative democracy from the moment it was conceived. Lobbying has ensured that our legislators have been able to consider the needs of a broad cross-section of interest groups before legislating. Lobbying has ensured that the voices of business, labour and civil society have been heard. However, lobbyists have too often been unfairly maligned in popular culture due to the actions of a few bad actors. Ergo, it is in the best interests of the lobbying industry as a whole if the rules are such as to limit the opportunity for bad actors to emerge.

Furthermore, the situation vis-à-vis money in politics is about to experience a seismic change. Now that Britain has taken back control from the European Union, Brussels has lost a significant amount of its power, and as money follows power, then it will not be long before a tsunami of money hits the British body politic. This would have happened already save for the Covid-19 crisis.

This influx of money will benefit some who deserve it and others who don’t. The rising tide will lift all boats as multinationals who had previously not given a second thought to the goings on in Westminster fervently look for those who know the lay of land. This will accrue to the benefit of chancers who can talk a big game and inflate the important of their contribution to our politics.

The influx of lobbying money coming to the UK from large multinational corporations cannot be overstated and it is therefore essential that we update the rules pertaining to lobbying to ward of scandal before it has the chance to occur. Additionally, it is important that we maintain a lobbying sector which represents a broad array of interest and that we put in place safeguards to ensure that the loud voices of multinational corporations do not drown out all others. We must implement lobbying regulations to ensure that these large multinationals find it difficult to get big government Conservatives to push for anti-completive regulations pertaining to business and/or financial services.

After hubris comes nemesis and David Cameron is still meeting his. Cameron most likely behaved unwisely, but not illegally. The government should be thankful to him for raising an early warning to a potential crisis down the line. Rather than approach the matter from a defensive position, they should show themselves to be on the front foot and put in place new rules for lobbying. Not in response to Dave’s ill-judged actions but in response to the renewed relevance of Westminster since leaving the European Union.

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