How are corporations influential in the UK political system?

Transnational corporations like google are very powerful within the political system.

Britain is a pluralist democracy. This means there are many competing beliefs, values and interests. Just as how pressure groups may influence the political system, it is absolutely undoubtable that corporations have a significant interest in the British political system too. So, how do corporations influence the political system?

In what ways might corporations influence politics in the UK?

There are a number of ways that corporations may influence politics in the UK:

  • They may use lobbying to influence politicians

Corporations use lobbyists to try to ensure their interests are represented. For example, these interests might include changing regulations or tax rates. Lobbying may take many forms including face-to-face meetings, submitting reports, attending Select Committee meetings or hosting events to bring awareness to different issues. Whilst professional lobbyists have to register their activities under the Lobbying Act (2014), in-house lobbyists do not. Most major firms have in-house lobbyists meaning there is little regulation of their activities. The amount spent on lobbying is around £2 Billion per year in the UK and 80% of lobbying comes from FTSE 100 companies. In addition, the Hansard Society has estimated that the average MP is contacted 100 times per week by lobbyists.

Labour MP Zarah Sultana gave a withering takedown of corporate lobbying in the House of Commons.
  • They may make political donations
JCB have donated significant sums to the Conservative Party.

Corporations may also make significant financial donations to politicians and political parties. Whilst they might do this as they share the ideological position of the party, but they undoubtedly they also do it as they want to extend their influence. The five biggest donations by corporations in 2022 were:

  1. £250,000 by Flowidea Ltd to the Conservative Party
  2. £200,000 by Dusty TLP Ltd to the Labour Party
  3. £200,000 by Ecotricity Group Ltd to the Labour Party
  4. £100,000 by Countywide Developments Ltd to the Conservative Party
  5. £100,000 by Thakeham Homes Limited to the Conservative Party

The biggest donation ever recorded on the Electoral Commission register by a corporation was £2.1 million by International Motors Limited to the Conservative Party in 2006.

In Britain the Electoral Commission regulate political donations and all donations have to be on a public register. However, there are undoubtedly concerns over the influence of corporations in British politics.

  • They support political campaigns

Corporations may actively support political campaigns. For example, in 2020 there was a serious row about Free School Meals. A number of businesses openly supported the campaign being mounted by Marcus Rashford to force the Conservative Government to change track on this issue. As part of this, for example, a number of businesses allowed children to eat free during the school holidays. In doing this they were undoubtedly taking a quasi-political position.

  • They may employ former politicians and civil servants through the ‘revolving door’
David Cameron lobbied for Greenshill Capital after leaving Downing Street.

Often corporations will hire former politicians and civil servants after they have left office. This is because these corporations can use the expertise and contacts of these staff to further their own interests. This is often called the ‘revolving door’. This is problematic for a number of reasons:

1. Individuals who have held senior office or civil service positions hold undue influence. This is due to both their experience, insider-knowledge and personal connections. By extension, it can be argued that this gives corporations undue influence.

George Osborne left Parliament having been Chancellor of the Exchequer to edit the London Evening Standard.

2. The revolving door can create limited expertise in government. Generally, private sector roles pay significantly more than public sector ones. Consequently, individuals might be encouraged to leave the government or civil service to earn more in the private sector. This can often mean talent and experience is lost in government.

3. Whilst these appointments may be utterly above board, the public perception can often be that they are corrupt and that government officials are keen to use their expertise to make money rather than serve the public.

Famously, after leaving Parliament former Lib Dem Leader and Deputy PM, Nick Clegg, became Facebook’s head of global affairs.

In Britain there are rules to limit the ‘revolving door’. For example, there are time limits on how quickly Ministers and Civil Servants can take a private sector job. However, questions over this process persist. Recently, Sue Grey who authored the Partygate report agreed to become Labour Chief of Staff, leading to many questions over when she had made this decision.

One of the biggest scandals to ever emerge over the ‘revolving door’ was David Cameron’s work with Greensill Capital. Following leaving office, Cameron became a major shareholder and advisor to Greensill capital. During the COVID-19 pandemic he used his contacts within Government to try to secure valuable contacts for company:

Messages sent by David Cameron to senior politicians and Civil Servants.

Doing so would likely see the share price rise dramatically, and therefore, Cameron himself would make significant money. As he was working for Greensill, and not for a lobbying firm, he was not breaking and rules. However, his behaviour was deeply unsettling and he had to acknowledge this in an embarrassing appearance in from of the Treasury Select Committee:

  • They may own significant proportions of the media
The Sun switched its support to Tony Blair in 1997.

It is important to note that most of the British media is made up of private corporations (only the BBC and Channel 4 are publicly funded). Media companies therefore have their own political positions through which they may try to influence government. Most famous for this is Rupert Murdoch who owned The Sun, The Times, The Sunday Times and the News of the World (commonly known as the Murdoch Press). Murdoch supported the winning PM in every General Election since 1979. Most notably, in 1997 the paper switched their support to Tony Blair. Throughout the 1980s, 1990s and 2000s, Rupert Murdoch had unprecedented access to British Prime Minister and may have been a key determinant in David Cameron’s decision to hold a referendum on the EU.

Is the role of corporations in the political system justified?

There are competing arguments as to whether the prominent position of corporations in the political system is justified. On one hand, large corporations are significant employers and (at least in theory) pay significant amounts of tax. Given they play such an important role in the economy it is arguably essential that their voice is loudly heard. Notably, businesses are often represented collectively through organisations like the Confederation of British Industry (CBI). These organisations pool their expertise when advising the government. Alternatively, it can be argued that the money that corporations are able to spend on politics gives them a disproportionate influence. Since the 1970s the influence of individual workers through trade unions as undoubtedly declined, however, at the same time the influence of businesses has grown. It ma be argued that this creates a situation where corporate rights are prioritised over workers’ rights.

Article Summary

There can be no doubt that corporations have a huge influence in British politics, much of which is enabled by the money they can spend and the lobbying they can carry out. However, there is an argument that as employers this is essential. However, many would argue that the impact major corporations have is disproportionate and comes at the expense of ordinary voters.

Key Terms

Lobbying – The process of trying to influence the government or politicians towards a particular policy outcome.

Lobbying Act (2014) – An Act of Parliament that sought to bring more transparency to lobbying in the UK but has not gone far enough to address key issues.

Electoral Commission – The independent body that monitors elections and party funding in the UK.

Corporations – Private companies not owned by the government.

Revolving Door – The process whereby Ministers and Civil Servants leave office or their role in order to become lobbyists.

Murdoch Press – The collective name for the papers owned by Rupert Murdoch: The Sun, The Times, The News of the World and the Sunday Times.

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