15 January 2021

How powerful is big business in Britain? The answer may surprise you

By Tal Tyagi

In the popular imagination, lobbying is a career defined by shadiness and secrecy. In American movies, lobbyists are seen wining and dining politicians on-board private jets while shaping the agenda behind the scenes. In Britain, this couldn’t be further removed from reality.

Fundamentally, business lobbying in Britain is largely an insignificant industry. Corporate representatives may sometimes have a seat at the table when the direction of policy is being considered but their perspective is often no more valued than experts, NGOs or even trade unions. If this was more widely known, it might restore a little faith in the system.

A survey by Transparency International showed that 76% of the British public strongly believe that wealthy individuals exert undue influence on governments. David Cameron was reflecting these (largely unfounded) fears when he described lobbying as “the next big scandal waiting to happen” and pledged to shine “the light of transparency” on the practice so that politics “comes clean about who is buying power and influence”. But if this nexus that he described between “government, business and money” really exists, why isn’t lobbying more lucrative? The average public affairs professional makes less than £32,000, an average probably pushed up by those who lobby government on behalf of charities who often make more than those who represent commercial interests.

As the son of immigrants who built a company which was destroyed by one unfortunate regulation, I felt a calling in life to champion the concerns of those who innovate and generate jobs and tax revenue. This inspired me to become a lobbyist for a small business trade association in 2018. I can tell you what it’s like from the inside.

There was absolutely no glitz or glamour. On trips to party conferences, it would always be budget hotels. We certainly weren’t sipping champagne – just tea and coffee – and as a junior, it was my responsibility to serve the team and do the washing up. You may think of lobbyists as people who drive to work in convertibles and dine at the Ritz while wearing Harrods blazers. A more accurate picture would be travelling by bus, in a Primark suit with a packed lunch.

I can’t claim to speak for all lobbyists. I was representing the petite-bourgeoisie. Nevertheless, we sometimes fought from the same trench as those with much deeper pockets. Big Tobacco was something of an ally. Our position was straightforward: tobacco and e-cigarette sales made up over one-fifth of the sales of small stores – a greater source of revenue than anything else. Moreover, there’s a limit to the effectiveness of sin taxes. Inflating the price fuels the black market, creating a multi-billion pound black hole in what should be taken in by the Treasury and increasing the prevalence of an unregulated and therefore far more deadly product.

But ultimately the Government didn’t care about our side of the story. Instead, they always took the position of the country’s public health body who continuously called for more and more aggressive action to see a smoke-free country by 2030. Our efforts were largely a waste of time. Indeed, those who think the Government kow-tows to vested interests should note that Stopping Tobacco Organizations and Products (STOP), a global tobacco industry watchdog, has ranked the UK as having the least tobacco industry influence in policy making in the world.

Big business’ failed plot to stop Brexit

Brexit is perhaps the best illustration of the impotence of the business lobby. While there were some outliers such as Dyson, survey after survey showed that the overwhelming majority of businesses, big and small, supported the UK’s continued membership of the EU. Richard Branson, the Premier League’s chairman and the heads of various car companies warned that a Leave vote would lead to calamity. Goldman Sachs, JP Morgan and Morgan Stanley bankrolled the various Remain campaigns which far outspent those on the Leave side. But for all their money, they still couldn’t buy the referendum result.

By no means was business meek in accepting the result when it came. Some 170 business leaders signed a letter to The Times demanding a second referendum. But despite extensive lobbying efforts, the government refused to give in. Failing in their plot to stop Brexit, big business then tried to water it down. The CBI campaigned to remain in the EU customs union, something that would have prevented the UK from striking future trade deals with the rest of the world.

By the time Boris Johnson became Conservative leader, industry figures privately acknowledged that their lobbying efforts throughout 2018 and 2019 had largely been a waste of time. There was no way that the new Prime Minister, who had reportedly said “f*** business,” was going to yield to what they wanted.

True to form, he disregarded the concerns of corporate Britain, and as end of the transition period grew near Johnson announced that the country should prepare for what they feared most: no deal. Business, food and farming leaders implored him to reconsider, saying it would have “catastrophic” consequences on agriculture, supermarket supply chains and employment. “Either he doesn’t know or he doesn’t care. I suspect both,” were the words of one industry leader.

Just days before the deadline ending negotiations, a deal was finally agreed. However, this does nothing to allay the enormous anxiety that the banking industry has always had about Brexit: passporting rights. Since January 1, financial firms have lost their ability to sell their services into the EU from the UK without additional regulatory clearances, disrupting 40% of their exports. Though the agreement may be preferable to nothing, it still does little to address the many concerns companies across the country have about Brexit.

It’s difficult to imagine the banking industry would be in this position if financial lobbying was as influential as some believe. In fact, an independent review into financial lobbying in 2015 found the various trade associations for this sector were inefficient and often duplicated one another’s efforts. The report recommended “creating a more unified body to speak for this crucial area of the economy.” In response, in July 2017 six organisations merged together to form UK Finance – a new voice for the financial sector. Ironically, its own finances were precarious. In its first year UK Finance accounts revealed a loss of £15m. How could such an entity seriously be a major player in British politics?

Lockdown losers

Doing the opposite of what companies want may inspire some public confidence in politicians, but it should not necessarily be seen as a positive. Trade association representatives across sectors continue to feel that not nearly enough help is on offer during the pandemic. They feel completely locked-out of decisions. When Johnson U-turned on plans to loosen travel restrictions during Christmas, the CBI described it as “a kick in the teeth.” Adam Marshall, director-general of the British Chambers of Commerce, described the second lockdown as a “devastating blow to business communities”. In November, one in seven companies feared they would completely collapse. Debenhams, TopShop and Harvey’s Furniture are just some of the big brands that have now gone into administration. If lobbying were at all powerful, lockdowns would never be put in place.

On their own merits, there was a compelling case for both EU membership and for loosening lockdown restrictions. Regardless of one’s position on either of these issues, the government’s decision-making indicates that public opinion matters much more than who has the most money. Afterall, both Brexit and the lockdown enjoy majority support.

For better or worse, the UK is a country where the perspective of ordinary citizens at home in their living rooms is valued over the opinions of executives in boardrooms. Boris Johnson made this clear in a speech he delivered at the CBI conference during the 2019 election campaign. Rather than seeking their approval, he goaded his audience by announcing that plans to cut corporation tax would be cancelled. His rationale? “This saves £6bn that we can put into the priorities of the British people, including the NHS.”

While there may be incredibly dark and difficult times ahead, the British people can at least take some solace in the knowledge that they, not special interest groups, have the power to shape the future direction of their nation.

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Tal Tyagi is an independent journalist.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.