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Starmer’s Labour quietly resumes taking free staff from PwC [1]
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Date: 2023-06
Labour went cap-in-hand to two scandal-hit consultancy firms that its own shadow chancellor said should be broken up, openDemocracy can reveal.
The party has quietly accepted more than £230,000 worth of free staff from ‘big four’ accounting firms PricewaterhouseCoopers (PwC) and Ernst & Young (EY) since Keir Starmer took over as leader in 2020.
It comes four years after an inquiry chaired by Rachel Reeves, now Labour’s shadow chancellor, recommended the accounting giants be broken up and a new independent regulator be established. The government notionally accepted the suggestions but neither was acted on, and PwC is now in the midst of an Australian scandal, having been accused of misusing confidential government tax plans.
“We can’t rely on you to do the right thing, and legislation is needed,” Reeves told the company bosses in 2019 as she chaired the Commons Business, Energy and Industrial Strategy (BEIS) Committee. “We need tougher regulation because your industry is not willing to make the changes needed. Reform is long overdue.”
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Taking staff from PwC was once standard practice for Labour, which borrowed more than £1m worth of the firm’s workforce between 2010 and 2016, according to disclosures made to the Electoral Commission.
But it broke ties with PwC in 2015 after veteran Labour MP Margaret Hodge, then the chair of the Public Accounts Committee, said the company was “selling tax avoidance on an industrial scale”.
No further PwC staff were seconded to Labour under Jeremy Corbyn’s leadership but the party resumed taking donations-in-kind of workers from PwC in 2021, accepting the equivalent of £141,555 by the end of 2022, as well as the £89,106 in human resources from EY – which has been fined more than £4m for accounting fraud or deficiencies since 2015.
Labour would not tell openDemocracy what the staff have been doing, but PwC said it was providing the party with “technical support” for policy development and denied they were involved in policy development.
PwC has been fined £41m since 2015 for 11 instances of “accounting fraud or deficiencies” in the UK, according to Violation Tracker UK.
While Ed Miliband was at the helm, PwC staff were seconded to both Labour HQ and individual shadow ministers, including Reeves, to help form policy on tax, business and welfare, according to the Guardian.
Reeves accepted the support of an analyst from the firm, worth a value of £63,045, to support her work as shadow work and pensions secretary in 2014.
Hydrogen lobbyists
Labour has also taken staff worth the equivalent of £18,000 from hydrogen lobby group Beyond 2050 Limited. The firm’s clients include Cadent Gas, which runs the largest natural gas distribution network in the UK, and the UK Hydrogen and Fuel Cell Association, which counts big oil companies like BP among its members.
The association’s chair Chris Jackson resigned in 2021, saying he could “no longer in good conscience” remain in post because he would be “betraying future generations by remaining silent on [the] fact that blue hydrogen is at best an expensive distraction, and at worst a lock-in for continued fossil fuel”.
Jackson claimed oil companies had won over the Treasury and accessed billions in taxpayer-funded subsidies using false claims about the cost of producing fossil fuel hydrogen.
Beyond 2050’s ‘Making Hydrogen Happen’ campaign is also backed by BP and Norwegian state oil firm Equinor.
The party has appeared to embrace the hydrogen industry despite climate campaigners questioning whether the technology can help the UK reach its long-term decarbonisation goals.
‘Not in the public interest’
Labour also accepted staff worth £13,801.66 from NatWest in 2022. Shadow business secretary Jonathan Reynolds declared in the Register of Members’ Financial Interests that he had accepted a parliamentary assistant from the bank to “lead on stakeholder management”.
Andrew Fisher, Labour’s Corbyn-era policy director, said he understood that free support from consulting firms was tempting but came with risks.
“The opposition have got a limited pool of Short money and it’s difficult to get the sort of capacity that the government has with the entire civil service working for it,” he told openDemocracy. “So the temptation is to take these sorts of people on – but obviously they will lobby for their own interest.
“And sometimes there is a very sharp difference between what is in the interest of accountancy firms, or the banks, or hydrogen lobby groups, and what is in the public interest and what is the best policy in the round.”
Labour recorded a £4.8m deficit in 2021 after a drop in membership and a series of ongoing legal battles with former staff members, as well as a round of redundancy payouts.
The party did not respond to requests for comment.
A PwC spokesperson said: “We consider requests for non-cash support from the main political parties. Demand for secondees tends to come from opposition parties which don’t have access to the same resources and expertise as the government. “These are generally junior staff who provide limited and technical support. We have no political affiliation and don’t develop policy on their behalf.”
EY declined to comment.
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[1] Url:
https://www.opendemocracy.net/en/labour-pwc-ey-big-four-natwest-hydrogen-keir-starmer-secondment-staff/
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