The Influence of the City in public life – why we need an inquiry

Today I’ve joined with other MPs and activists in writing to the Committee on Standards in Public Life calling for an inquiry into the influence of The City in Parliament.

The full text of the letter is below:

Renewal of the relationship between Parliament and the City of London.

We the undersigned write to draw to your attention, and that of your committee, to the relationship between the British Parliament and the City of London Corporation. It has become a matter of serious concern to us.

Given the three identified areas of concern and associated evidence outlined below (and elsewhere) we suggest that the relationship between Parliament and the City Corporation, in its particular capacity as “lobbyist” alongside its other capacities, may compromise the Nolan principles of public life.

We are formally requesting, therefore, by means of this letter that your Committee investigates our concerns by commencing the appropriate consultative process[1] to this end. Concurrently with this letter we are publicly petitioning the leaders of the main political parties and the speakers of both Houses of Parliament to promote and facilitate any such process.

The City uses various, unparalleled means at its disposal to shape the UK policy environment that may impact the life of the financial services or the City.  It does this, for example, by employing a public affairs consultant (such as Lord Cunningham of Felling from 2006 to 2009 at a cost of £36,000 p.a.[2]) or through the strategic use of “ceremonial”, where the aim is “to increase the emphasis on complementing hospitality with business meetings consistent with the City Corporation’s role in supporting the City as a financial centre.”[3]

More recently public attention - via the national media and mass public advocacy campaigns such as the “Avaaz” network[4] - is now being drawn to the exceptional role and activities within the Parliamentary estate and the chambers of both Houses of Parliament of the “City Remembrancer” and his office.

The role of the City Remembrancer was created in 1571 in order that “he shall gather together and keape all the Bookes of the Cittye and reduce the same into Indices, Tables or Kalenders”[5].  This administrative role expanded into the running of a Parliamentary office, scrutinising and shaping all legislation that may impact upon the City of London. Here we see the way a lobbying role hides within a constitutional role.

In the context of wider awareness of the levels of lobbying of Central Government openly conducted by the City of London Corporation and closely associated bodies – including the recent estimation of an enormous annual “£93 million lobbying war chest[6]” and the volume of Parliamentarians in direct remuneration from City companies[7] - it is surely the time to review how appropriate it is for the City of London to retain dedicated, unfettered, un-monitored institutional access to all parliamentarians in a manner that is unrecorded and hidden from public scrutiny.

It is noteworthy that, despite his daily, un-monitored access to the very highest levels of the British legislature, the City of London Corporation rejects any media interview request outright with the Remembrancer. A recent response to requests made (under the Freedom of Information Act) to list the number of meetings with parliamentarians of all levels states:

“This request does not fall within the scope of the Freedom of Information Act as it does not relate to the discharge by the City of London Corporation of its functions as a local authority, police authority or port health authority (the functions specified in Schedule 1, Part II, paragraph 9 of the FOIA) …The Remembrancer will have regular informal contact with Secretaries of State, Ministers, Members of Parliament or Members of the House of Lords either in the parliamentary estate or at events in the City of London.”

Here we see an occasion where the City, in separating its lobbying role from its function as a local authority, removes itself from the scope of the FOIA. Given recent reports stating that the office of the Remembrancer: “has a budget of £5.3million, a staff bill of £500,000 – including a team of six lawyers – and he represents bankers’ interests at the heart of our democracy[8]” and the significant public reaction to similar stories, it now seems advisable to review this matter.

We are further concerned that the “Lobbyists (Registration of Code of Conduct) Bill 2013-14[9]” currently in parliamentary passage will not include any measures to monitor or make publicly transparent the constant lobbying activities of the office of the Remembrancer and his staff; indeed, it appears that his office will remain exempted from this legislative device, should it receive royal assent.

In light of this we suggest that the continuing presence of the Remembrancer in Parliament in his role as agent for the City may offend (at the very least) the Nolan principles of integrity, accountability and openness.

In the same context as outlined above  - that is to say the extremely high levels of central government lobbying known to be “openly” conducted by the City of London Corporation – attention should be given to the volume of lobbying (including ministerial meetings) conducted by the “independent” body “City UK”[10].

An inspection of department by department cabinet office transparency data[11] reveals extremely high levels of meetings between representatives of City UK and central government ministers and senior departmental civil servants. Upon further examination, the frequency and patterns of these meetings and the close symmetry with City of London Corporation meetings reasonably suggest co-ordination between the Corporation itself and that “independent body”.

As has been revealed in a new documentary on the subject[12] the “City UK” was established by the City of London Corporation in 2008, at a time when the banking crisis had erupted and major financial services identities fully realised their activities would be under greater public and media scrutiny that at any time in modern history.

Documentation revealed for the first time by the film shows that five years ago the City of London Corporation assigned “City UK” an annual grant of £500,000 (now estimated at £800,000 annually).

Chair of the City UK Advisory Council[13] is the Lord Mayor of London (City of London Corporation) and Deputy Chair of its Board of Directors[14] is Mark Boleat (Chairman of Policy, City of London Corporation) and both bodies contain a number of City of London Corporation figures, as well as many commercial identities directly associated with some of the more controversial activities directly connected to the City, including systemic global tax avoidance. 

Here the direct relationship between the City of London and global tax evasion and tax avoidance is absolutely central to the public interest. A recent report in the Economist stated[15]:

“Although Britain likes to lecture the world’s tax havens on their need for transparency and reform, its own financial sector owes its modern success to the country’s willingness to host an opaque, tax-evading capital market”

The enlargement and promotion of the tax avoidance industry within the square mile, and the live role of City UK in this respect[16] (widely recognised by independent experts and senior academics) calls into question the level of influence and lobbying conducted by this indirect City of London identity, protected as it is from any FOIA scrutiny by virtue of being a private body.

The national and international ramifications for sovereign economies and populations of the enlargement of these offshore networks – most topically in Nairobi, Kenya - are of course, very negative indeed.

Given the range and reach of its lobbying effort and the City UK’s institutional association with the City of London, not to mention its reliance on such financial support from the City of London, we believe that this relationship compromises those who are party to it and similarly breaches the Nolan principles of integrity, accountability, openness and honesty.

Given the reach that the City of London enjoys in the UK and internationally through the Lord Mayor’s foreign visits, and given the resources at its disposal, we need also to look at the extent to which the City of London, as a democratic body, is accountable to its own constituency.  In whose interests is the City acting? Who votes in the elections and on what basis?

The reason that this is a matter for Parliament is that the City gave quite specific undertakings to Parliament during the passage of the City of London (Ward Elections) Act 2002  - a piece of legislation intended to reform the franchise. The City may not currently be meeting these undertakings to Parliament. Following the elections in the City of London of March 2013 questions have emerged which suggest that the City of London Corporation is failing in its duty to satisfy the provisions of the Act, particularly Clause 4, which requires that voting “appointments” should reflect the composition of the workforce as far as is practicable.

The most concerning findings are set out in the letter dated 15 June 2013 from the City Reform Group to the Lord Chancellor[17] which suggests that “qualifying bodies commonly appoint their board of directors, senior management team or partners” to vote, effectively disqualifying employees on lower pay grades. Moreover, according to Bloomberg News[18], certain qualifying bodies within the City of London are only selecting male employees to vote.

Clause 7 of the Act allows Parliament to require a report from the City on the progress of the report.  Despite a statement to Parliament of 25^th May 2006 by the former Lord Chancellor Lord Falconer, who acknowledged the possible necessity for a further report on the City of London Corporation’s compliance with the 2002 Act, no such report has been required by Parliament.

The changing demands of our global economy and the transnational powers that operate within the City’s jurisdiction mean that we need to reimagine the role that the City of London Corporation plays within our polity.

Above all we wish to see it ensure that the financial services provide a high level of product for their customers and that, taken together, their operation serves the common good and the consumer. There is much in the City that we wish to celebrate.

However, taken together, it seems to us that these three areas of City life indicate a problematic arrangement that has built up within our democratic institutions.  This relationship has been left unexamined. Public confidence in Parliament is key. However, disregard for Parliamentary statute, the need for public accountability and disproportionate levels of influence over central government will only serve to weaken public trust in our national institutions.

We hope that you place this relationship between the City of London Corporation and yourselves in an open, independent, authoritative forum - to isolate any imbalance or unacceptable culture inherent in the relationship between Parliament and City of London Corporation. We look forward to the advance of a new relationship mediated, in part, through Parliamentary statute.

We wholeheartedly recommend the engagement of your Committee - either via open consultation, public hearing or the commission of independent research - to this important end.

We firmly believe a transparent process of scrutiny driven by widespread and growing civic concern and conducted within the auspices of the Committee would very clearly serve the public interest and greatly improve the quality and transparency of our democratic processes.

Yours faithfully,