Elections watchdog examining Labour drinks receptions with businesses

The Electoral Commission is making enquiries into whether Labour should have declared sponsorship from a series of drinks receptions with businesses under the UK’s political donation rules.

Since the party took power last July it has organised at least seven social functions with companies including Mastercard and the housebuilder Vistry, attended by MPs and ministers at the company’s headquarters or development. 

Labour classes such events as “commercial partnerships which are purchased on a standard commercial basis”, arguing that any income or benefit in kind is therefore not a donation and does not need to be declared. 

It did not state the value of any such partnerships and it is unclear, in each case, exactly what the companies provided in terms of hospitality, money or venues.

The Electoral Commission has confirmed that it is looking at whether the law has been correctly applied by Labour. 

The regulator said it was “considering the matter” and confirmed it was gathering information about any relevant events, but said it was “not able to comment at this time as it may impact our [enquiries]”.

If deemed necessary, the Electoral Commission can open a full investigation into a suspected breach and has the ability to issue fines of up to £20,000.

A Labour spokesperson said such commercial partnerships “are a well-established practice”, adding: “We comply with all rules when making these arrangements.”

Steve Goodrich, UK director of the anti-corruption organisation Transparency International, said the law regarding political parties was “clear” that “significant amounts of money or in-kind support for party events must be reported to the Electoral Commission”.

“If Labour has accepted contributions for receptions without proper declaration, that’s a serious compliance failure,” he said.

Under the Electoral Commission’s definition, “sponsorship” is support — including money or benefits in kind, such as a venue — given to a party to help it meet the cost of any event, publication or piece of research. Any support to the value of £500 or more must be declared. 

Some exemptions apply, such as events at party conferences, where packages are regularly agreed with businesses at commercial rates of between £20,000 and £50,000. None of the events in question were held at party conferences.

Labour did not clarify in what way each of the drinks receptions was a commercial arrangement, or state their monetary value to the party.

The regulator’s inquiries come after a series of uncomfortable headlines for Labour in relation to donations and party finance.

A year ago the prime minister repaid £6,000 in undeclared clothing and gifts provided by party donor Lord Waheed Alli. The same month, energy secretary Ed Miliband urged his party to stop selling access to ministers, after it emerged that companies had been offered breakfast with business secretary Jonathan Reynolds for up to £30,000.

Ahead of the summer recess, the party’s parliamentary and regional offices sent MPs a series of invitations to “partnered” drinks receptions. 

Mastercard’s July event at its London headquarters was referred to as a “kickstart economic growth” reception and was attended by the prime minister. The company declined to comment.

Some companies that have been partners for such events have had a particular interest in policymaking at the time in question. Vistry, which hosted a reception over the summer, has since benefited from two government affordable housing policy announcements.

A Vistry spokesperson said it regularly engaged with parliamentarians “across the political spectrum”.

“The Labour party approached us with an opportunity to partner on their PLP reception for London MPs, which we accepted as a commercial arrangement,” they added.

“While Vistry, as one of the UK’s largest housebuilders, routinely engages with government officials across Whitehall to support affordable housing delivery initiatives, this reception was entirely separate from those policy discussions.”

North-west MPs and council leaders attended a Labour North West summer drinks reception in July at Salford’s Embankment Exchange development, built by Liverpool developers Legacie. MPs and council leaders were offered the chance to “relax in a private setting with senior party figures”.  

The annual event was described in this year’s invitation as “partnered” with Legacie and the Chartered Institute of Housing. It included a tour of the site with Legacie’s chief executive John Morley as well as a ribbon-cutting by then-ministers Lucy Powell, who is now the deputy leader of Labour, and Jim McMahon. 

It featured speeches from Morley and Powell, according to an agenda drawn up by the regional party, in which Powell was due to call Legacie a “powerhouse in property and construction across the north-west”. 

Gavin Smart, chief executive of the CIH, said in the video: “We were delighted to be a sponsor.”

No sponsorship declarations have been made by Labour in relation to any of the events.

Legacie and the CIH did not respond to requests for comment.