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Inside the lobbying campaign to force Labour’s next U-turn [1]

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Date: 2024-06 

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Welcome back. On a scale of Rishi Sunak interacting with the public to Ed Davey on a paddleboard, how much are you enjoying the general election campaign so far?

A few updates on last week’s column. First, Labour’s shadow secretary to the Treasury, Darren Jones, and his partner were guests of Hakluyt once again at their forum event in May, in what seems now to be an annual tradition for the pair. You know what they say: couples that attend the shadowy functions of intelligence-adjacent corporate strategy firms together, stay together!

One perhaps predictable consequence of publishing the last newsletter was my access to a webinar hosted by Lexington being revoked. Thankfully I’d already managed to attend another of their webinars, which led me to further evidence of Macquarie’s efforts to cosy up to Labour: a senior public affairs bod at the Vampire Kangaroo boasting on LinkedIn about chatting with Labour leader Keir Starmer and shadow chancellor Rachel Reeves at the party’s East Midlands business reception event in April.

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Another consequence was my inbox filling up with a series of fascinating tips and tidbits of gossip about Labour Together – some of which may appear in future editions of this newsletter. Stay tuned.

Many thanks to those who got in touch, and please, keep it coming. I’m also working on a longread about the public affairs industry’s engagement with Labour over the last couple of years – a huge departure from the themes explored on these pages, you’ll note – so get in touch if you have thoughts and/or experience that might be of use to me on that. I’m at [email protected].

Carried interest: a lobbying case study

The Danes have a saying: prediction is hazardous, especially about the future. Well RIP to the Danes but I’m different. Dark Arts predicts Labour is about to perform another policy U-turn in the coming weeks by dropping a commitment to force private equity bosses to pay the same rate that you or I would be required to pay on their astronomical bonuses, which are currently taxed as capital gains (28%) rather than income (45% plus NI contributions). This has been the subject of a mammoth lobbying effort headed up by the industry representative body, the British Private Equity and Venture Capital Association (BVCA).

The party has already rowed back on previous pledges, including to reinstate a cap on bankers bonuses, but a U-turn on carried interest would be the starkest indication yet of Labour’s fealty to Big Finance, not to mention a major coup for the lobbyists who’ve been pushing hard against the policy. In the BVCA’s annual report for 2023/2024, a section titled ‘Influencing and shaping policy’ spells out the group’s stance on carried interest: “The BVCA strongly supports the maintenance of a competitive and stable tax system – including defending the tax treatment of carried interest”. It continues:

“The BVCA engages with all political parties to ensure that policy makers have a full picture of the current regime for the industry and international comparisons. We have made significant progress in establishing the industry’s credentials as an essential element in meeting any government’s ambitions for growth, employment, and international competitiveness.”

But what does a lobbying campaign like that look like? Allow Dark Arts to explain.

During the goldrush of last year, when public affairs agencies were biting arms, legs and all kinds of other appendages off to hire anyone who’d ever bought a shadow minister a sandwich, the BVCA made a shrewd appointment. Karim Palant was brought in as the new director of external affairs, aka chief lobbyist.

Palant’s relationship with Labour goes back at least 20 years; he was national chair of Labour Students in the early 2000s and managed to climb pretty high up the greasy pole over the following decade or so, holding a number of roles culminating in a four-year stint from 2011 as head of policy for then shadow chancellor Ed Balls – husband of current shadow home secretary Yvette Cooper. After Jeremy Corbyn won the party leadership in 2015, Palant left the party in order to jump into a big swimming pool filled with money/become public policy manager at Facebook.

Palant was present at private equity firm Endless LLP’s offices in Leeds back in February, when Reeves took part in a private roundtable meeting organised by the BVCA. Writing on LinkedIn, Palant said the group discussed key areas of Labour’s financial services review, quoting Reeves as describing the sector as “incredibly important for fulfilling our mission to grow the economy”. Palant was also at another BVCA roundtable in January with chair of the Work and Pensions select committee, Stephen Timms, as well as a meeting between BVCA members and Sarah Jones of the shadow business and trade team in November last year.

Any Dark Arts readers who’ve been lucky enough to attend a big Labour event in the last couple of years may recognise the name BVCA. The lobbying body sponsored the party’s business conference last year and the year prior, as well as a series of events at last year’s main party conference. Companies and lobbyists don’t sponsor these events as a way of getting their name out there, but to foster relations with the party and create goodwill. That the BVCA sponsored these events means its representatives will have been on hand throughout, chatting to senior Labour figures over canapes and warm glasses of fizz, in quiet corners away from the twitching ears of the press pack. According to the BVCA’s annual report, the group hosted a public panel at the party conference on “the need for private investment to ensure that businesses can grow”, plus a private roundtable with shadow business and treasury ministers, and engagements with Starmer, Reeves and “other members of the shadow cabinet”.

Another tool at the BVCA’s disposal is its ‘MP Connect Programme’, which involves coordinating visits by MPs to companies in their constituency that are owned in-part or completely by private equity firms. Shadow Scottish secretary Ian Murray and Timms were among the lucky MPs to take part in 2023, while both Reeves and deputy leader Angela Rayner took part the previous year.

Overall, hardly a month has gone by in the last year or so in which there hasn’t been some engagement between Labour and the BVCA. While Labour declined to confirm how many meetings shadow front benchers have had with the group since June last year, here’s the list of those Dark Arts knows about so far:

Key shadow cabinet figure Pat McFadden spoke at a BVCA conference in June last year.

A representative of the group took part in a roundtable with shadow treasury minister James Murray and shadow employment minister Alison McGovern co-hosted by techUK and Labour-linked lobby shop Arden Strategies in September.

Shadow treasury minister Tulip Siddiq was keynote speaker at the BVCA summit in October, where she said the group had “helped [Labour] a lot, in terms of feeding in policies and letting us test ideas on you as well”.

November saw BVCA chief executive Michael Moore appear on a panel alongside shadow business secretary Jonathan Reynolds at the New Statesman Paths to Power conference.

Shadow science minister Chi Onwura, shadow investment minister Rushanara Ali and Sarah Jones were at swanky Westminster eatery Quaglino’s in March for an exclusive BVCA event.

Ali delivered a keynote address at yet another BVCA conference in late May, immediately followed by a ‘networking lunch’.

Weeks earlier, at the BVCA’s parliamentary launch of its ‘Manifesto for Growth’, Siddiq was among MPs who spoke. She welcomed the report, which restates the lobbying group’s view that, “the treatment of carried interest in the tax system needs to continue to reflect the risk investors take… it is vital this continues.”

So what exactly did Siddiq mean back in October, when she told a crowd of private equity and venture capital bosses that the BVCA had “helped [Labour] a lot”? She could have been referring to the group’s significant contributions to a policy document published by Labour in September, titled ‘Start-Up, Scale-Up: Making Britain the best place to start and grow a business’, which advocated increased tax relief for investors. Or she may have been referring to the BVCA’s equally significant contribution to the party’s financial services review, published in February, which was described by campaign group Positive Money as “a love letter to the City of London”. There are also the many briefings and policy documents that the BVCA will have provided various shadow ministers and their advisers in private in recent months.

And applying pressure directly to shadow ministers is just one prong of any good lobbying strategy. The wider industry has also pushed its lines in a series of articles in the Financial Times, threatening an exodus of private equity bosses if the loophole is closed.

Closing the loophole would raise an estimated £600m – which the party has earmarked as going toward the cost of hiring “thousands of new mental health professionals” in order to guarantee mental health treatment within a month of referral. Treasury analysis found that 3,000 high earners made £5bn between them in carried interest in 2022 – more than £1.6m each on average – so presumably they’ll be able to afford to skip the waiting lists and go private if the policy gets canned. Dark Arts wonders whether any of the many Labour donors with links to the City of London were among that group of 3,000.

So what happens now? That depends who you speak to. One well-connected journalist friend of Dark Arts “definitely” expects movement on the pledge, and the Financial Times has reported whispers among lobbyists and industry figures that if Labour doesn’t scrap the policy altogether it will compromise by increasing the tax paid on bonuses by a few percentage points, rather than bringing it in line with the top rate of income tax. Another option is that, as with a number of measures in the package of workers rights reforms formerly known as The New Deal for Workers, the party will commit only to a consultation, kicking the can down the road and giving Palant and Co more time to bend ears and (figuratively!) grease palms. Asked directly by Dark Arts whether its policy remains the same, Labour did not respond. A BVCA spokesperson said: “Labour have set out their taxation position, and we have shown the party how much the industry contributes to the UK, backing 2.2 million jobs across the economy…” etc etc.

Meet the new candidates, same as the old candidates

Candidate selections in the Labour Party became the breakout story of the first full week of the campaign, with accusations of a ‘Stalinist purge’ of leftwingers including Lloyd Russell-Moyle and Faiza Shaheen. After much back and forth, the leader’s office was forced into an about-face over Diane Abbott, who has been reluctantly allowed to run again in Hackney.

At the same time, candidates with strong links to the leader’s office and the party’s ruling committee – including some actual members of the ruling committee, which is heavily involved in the selections process – were imposed in a handful of safe seats where veteran MPs coincidentally only announced their intention to stand down after it would have been impossible to let local members carry out a proper selection process. Funny how these things work out.

But Starmer’s outriders have sought to justify this horse-trading, saying the party is rightly and ruthlessly focused on ensuring that only the highest calibre candidates are able to stand. So who are these high-flying would-be MPs, and are they really so competent as to warrant carrying out what journalist and self-described Blairite Michael Crick labelled “one of the most disgraceful episodes in modern Labour Party history”?

Back in March we reported on the significant number of Labour candidates who currently work as corporate lobbyists, and how a number of these candidates were facilitating meetings between the firms they work for, their clients and Labour frontbenchers. The story prompted some interesting responses, not all of them favourable. One stalwart of the Labour right tweeted: “People highly political enough to run for parliament work in highly political jobs shocker.” Ouch!

Though Dark Arts has screenshots (natch), curiously this tweet was deleted recently, just days before its author, Luke Akehurst, was selected to contest the safe seat of North Durham. Akehurst is an infamous Labour Party factional bruiser and pro-Israel lobbyist with the group We Believe in Israel. His was one of the most controversial selections, in part due to his strident foreign policy stances, but he also has strong ties to the corporate lobbying world, having worked as a director at Weber Shandwick for a decade until 2010. Also making the cut is former MP and climate-sceptic Graham Stringer, of the infamous Tufton Street outfit Global Warming Policy Foundation – DeSmog’s Sam Bright has more on his selection here.

Here are just a few more of the Labour Party’s ever-growing number of lobbyist-cum-candidates:

Chris Ward: Ward is a former chief-of-staff to Starmer (albeit briefly) who, FWIW, is not highly rated among many former colleagues and friends – and not just those with differing political traditions. He currently runs the Labour Unit at Hanbury Strategy, whose clients include Blackstone, Citibank, Bain & Company (more on them below) and gambling giant Flutter. His selection means Hanbury now has three current staffers standing for Labour, plus one for the Tories. A record, as far as Dark Arts is aware.

Jade Botterill: A former corporate affairs adviser at Yorkshire Water, Botterill was selected as a candidate in September 2023 when she was working in public affairs at the campaign organisation 38 Degrees. But Botterill started working at lobby firm Portland towards the start of this year – though there’s no mention of this anywhere on her LinkedIn profile (or campaign materials). She represented the lobbyist at a recent UK Real Estate and Investment Infrastructure Forum event, and co-authored a Portland guide to incoming Labour MPs, which advises that, for clients wishing to influence a future Labour government, “no public affairs strategy is complete without a comprehensive approach to PPCs [prospective parliamentary candidates]” and that “engaging now is a must”. Portland clients include BP, EDF Energy, Southern Water, Diageo and KPMG.

Steve Race: Like Botterill, Race joined his current employer only after being selected as a Labour candidate in July 2022, though he is an experienced lobbyist. Now at Lexington (alongside fellow candidate Mary Creagh) he has previously worked at BCW, McKesson, FleishmanHillard and as a parliamentary researcher for Ben Bradshaw MP. Readers of last week’s Dark Arts newsletter will know all too well the kind of clients that Lexington represents.

There’s another prominent figure in the lobbying world who is standing for the party, but Dark Arts thinks his tale deserves telling in greater detail, so keep an eye out for that in the coming days, and get in touch if you think we’ve missed anyone.

No Bain, no gain

You will not often find praise for the Rt Hon Jacob Rees-Mogg in this newsletter, but credit where credit is due, during his tenure as a Cabinet Office minister JRM came down hard on the disgraced global consulting firm Bain & Co.

After a report by a judge-led inquiry in South Africa accused the firm’s South African arm of being deeply complicit in a state capture and corruption case that rocked the country, Mogg imposed a two-year ban on Bain & Co’s UK operation bidding for public sector contracts. But less than a year later, and shortly after Mogg left office, his replacement Jeremy Quinn lifted the ban.

The day before Quinn’s announcement, he sat down to play footsie with Bain & Co’s top man in the UK, all but confirming at the meeting that the ban would be scrapped. Correspondence obtained by Dark Arts shows that a number of peers were unhappy with the decision to lift the ban, but were reassured that Bain was told in no uncertain terms at the meeting that there would be strict conditions on its revived working relationship with the government. Records from the meeting seen by Dark Arts show that no such conversation took place.

Nonetheless, Bain is back in the government’s good books and back in the money. The firm has been invited in to meet with senior ministers in the Department for Business and Trade and the Treasury, and late last year it picked up a contract to provide consultancy services for three months to the ailing HS2 project, worth a cool £3.4m. This was dished out through a pre-existing procurement framework agreement, which, to the laymen, means they didn’t even have to bid for it. Nice work, if you can get it.

The decision to block Bain from public contracts came about largely thanks to the campaigning of Labour peer Lord Hain – could an incoming Labour government revisit the ban? Only time will tell.

Quick hits

When the lobby meets the lobbyists: While we’re used to talking about the revolving door between politics and the lobbying industry, less explored is the equally spinny passageway between the media and the lobbying industry. As Dark Arts is due to join the Westminster lobby in the coming months, there’s a risk of alienating influential future colleagues here, but nonetheless I want to highlight a potentially worrying trend of journalists giving private briefings to public affairs firms and their clients. Some of the biggest names in the Westminster lobby have made recent appearances: Laura Kuenssberg at a Hawthorn Advisors lunch event, Emily Maitlis at a Hanover event and the New Statesman’s Rachel Cunliffe briefing PLMR and clients are just the latest examples. The problem here perhaps needs spelling out: if political journalists have friendly relations with lobbying firms, how much faith can the public be expected to have that these journalists are willing to report critically on them if and when the need to do so arises?

Starmer in the stands: An interesting line in this Guardian piece states: “Starmer is expected to lean into his love of Arsenal, having repeatedly emphasised he is a real fan who watches ‘from the stands’ rather than in a corporate box”. Is that so? Dark Arts has previously pointed out that Starmer has received more corporate hospitality for football games than any other MP in recent years, and his last day out “on the terraces” was at Old Trafford in May. Manchester United provided the Labour leader with two tickets in the Directors’ Box, valued at £1,790, as his beloved Arsenal earned a 1-0 win.

Things can only stay more-or-less the same: Plenty of chatter this week about Labour looking for an equivalent election anthem to 1997’s Things Can Only Get Better, by D:Ream, who gave an amusingly grumpy interview on the subject. But the best solution to this was already put forward last year by one of the Starmersphere’s key influencers: Arden Strategies director Jim Murphy. Ever the dour Scotsman, Murphy told a fringe event at party conference that the theme tune for a Labour victory this time around should be a D:Ream cover in “a Leonard Cohen [style], in a morose sense of, well, can it get any worse?”. Much more on Murphy’s lobby shop in next week’s edition.

Now check out:

Read: Two interesting pieces to delve into this week: the first is a Politico report on the City lobbyists queuing up for jobs in a Labour administration, and the second is a Novara Media deep-dive into Josh Simons, Labour candidate and director of Labour Together

Listen to: Private Eye’s Page 94 podcast is running through the candidates for this year’s Paul Foot award this week, featuring some of the best investigative journalists in the business uncovering truly shocking stories

Watch: Anything other than the leadership debate. Dark Arts skipped the ITV debacle and went to the theatre instead; five stars from me for The Book of Grace at Dalston’s Arcola.

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