The City of London towers over British politics. (www.shutterstock.com)

The British financial services industry spent more than £92m last year lobbying politicians and regulators in an ‘economic war of attrition’ that has secured a string of policy victories.

As the industry prepares to fight off renewed calls for root-and-branch reform in response to the Barclays rate-fixing scandal, an investigation by the Bureau has revealed the firepower of the City’s lobbying machine, prompting concern that its scale and influence puts the interests of the wider economy in the shade.

The Bureau’s four-month study also gained previously undisclosed documents that show how finance lobbyists won a host of important policy changes in Whitehall and Westminster. These include:

• The slashing of UK corporation tax and taxes on banks’ overseas branches, after a lobbying barrage by the City of London Corporation, the British Bankers’ Association (BBA) and the Association of British Insurers. The reform will save the finance industry billions.

• The neutering of a national not-for-profit pension scheme launching in October that was supposed to benefit millions of low paid and temporary workers.

• The killing of government plans for a new corporate super-watchdog to police quoted companies.



I do worry that Britain’s financial sector, particularly the banks, is too dominant and is too easily assumed to represent the national interest.’

Vince Cable, business secretary

An extensive trawl of registries, consultations and hundreds of interviews has identified 129 organisations engaging in some form of lobbying for the finance sector, with over 800 people employed directly and at a cost of £92.8m. Lobbyists include in-house bank staff, public affairs consultancies, industry body representatives, law firms and management consultants.

Related article: Get the data – The financial lobby

‘Disproportionately influential’

The findings sparked a renewed attack on banks from business secretary Vince Cable.

‘The banking sector is disproportionately influential,’ he said, ‘In terms of its contribution to the economy, the financial services sector – widely defined – is comparable to manufacturing and a little bigger than the creative industries. It is important for rebalancing the economy that these sectors grow in relative importance,’ Cable said. ‘Yet I do worry that Britain’s financial sector, particularly the banks – as opposed to more successful and less problematic financial services like insurance – are too dominant and is too easily assumed to represent the national interest. Its interests are often not the same as those of the real economy.’

He continued: ‘If Britain is going to grow on a sustainable basis we need smaller banks and more competitive banking focused on supplying credit to British business. Yet there has been strong resistance to bank reform.’

Labour’s leader, Ed Miliband, weighed in yesterday by calling on the big five banks to sell 1,000 branches in order to encourage more competition. He said the banking industry had become ‘economically damaging and socially destructive’.

The Bureau’s investigation found that the City of London Corporation – the Square Mile’s local authority – is the lobby outfit with the deepest pockets. Bureau estimates, which have been reviewed by academics, suggest that the City of London Corporation spends over £10m on public affairs advocacy and secures remarkable access to Treasury ministers.

Freedom of Information documents obtained as part of the investigation show the recently departed leader of the Corporation, Stuart Fraser had contact with the chancellor, George Osborne, and other senior Treasury ministers and officials 22 times in the 14 months up to March this year.

Secret City of London documents also show that the millions lavished on banquets in honour of politicians and state leaders are designed ‘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’.

Beyond the Corporation are at least 26 industry bodies lobbying government and regulators based in the UK with an advocacy war-chest of at least £34m.

Related article: Streets paved with gold – The local authority working for the banks



People have long understood the power the finance sector has over British politics. Here, for the first time, we can now see something of its scale and firepower.’

Tamasin Cave, Spinwatch



A total of 38 public affairs consultancies and public relations firms earn fees worth an estimated £15.8m from banks, insurers, hedge funds and private equity firms.

Some 124 Lords, equivalent to 16% of the House of Lords, have direct financial links with financial services firms. On Lords committees scrutinising last year’s Budget, peers who were paid by finance firms formed the majority.

Political donations by firms and individuals connected to the City contributed £6.11m in 2011 to the Conservative, Labour and Liberal Democrat parties.

Related story – Hedge funds, financiers and private equity make up 27% of Tory funding

Tamasin Cave, director of Spinwatch and head of the Alliance for Lobbying Transparency, said: ‘People have long understood the power the finance sector has over British politics. Here, for the first time, we can now see something of its scale and firepower. To spend such enormous sums of money to influence our government, its decisions, and the way this country is run is shocking.’

Andrew Simms of the New Economics Foundation thinktank said: ‘This looks like full-scale mobilisation for an economic war of attrition in which the finance industry is on one side, and the rest of the society, business and industry on the other.’

We do NOT “lobby” for individual firms, deals or people. We are in contact with all political parties… and act rather like a trade body but across a broader range.’

City of London spokesman

But Dame Angela Knight, the outgoing chief executive of the BBA, denied that her 200-strong bank trade body lobbied the government.

‘We represent a range of banks in a variety of different fora. Of course where we are successful is in “operationalising” the policies made by others,’ she said.

Related article: BBA’s ‘secret’ meetings with ministers

A spokesman for the City of London Corporation disputed the figures and characterisation of its work as lobbying instead suggesting it ‘argues the case for London’. The spokesman that the City of London Corporation makes no apology for ‘promoting the competitiveness of (finance) as a whole so that this industry will thrive globally – and underpin jobs, prosperity and tax revenue’.

‘Crucially,’ the spokesman added, ‘we do NOT “lobby” for individual firms, deals or people. We are in contact with all political parties – both in and out of office and act rather like a trade body but across a broader range.’

Thierry Philipponnat, secretary general of Finance Watch, the Brussels-based advocacy group, said: ‘We all have different outlooks and the job of policymakers is to listen to all sides and find the right balance for society. The problems arise when policymakers hear only one side of the argument and special interests are allowed to dominate.’

Related article: How we calculated the size of the finance lobby