The bottom line on lobbyists and influence

6 December 2011

Claims of influence and access by lobbying firm Bell Pottinger have been met by an astonishing denial from Downing Street, the prime minister's official spokesman telling reporters today:

“It simply isn't true to say that Bell Pottinger or any other lobbying company has influenced government policy... I am challenging this idea that this company or any other lobbying company have influenced policy.”

It’s in the interests of lobbyists to advertise their influence on politicians, and in politicians’ interest to deny it. But is there any truth in the government’s claim; should lobbying firms just shut up shop and go home?

Leaving aside the too-many-to-mention UK government policies covered in the fingerprints of lobbyists, and the obvious truth that companies wouldn't pay for lobbying if it didn't work, there are a number of studies that explain why companies invest in lobbying. (Most are from the US, which says a lot about the transparency they have in lobbying stateside, and how little knowledge we have of our industry here, clothed as it is in secrecy).

  • American corporations currently spend about $3.5 billion/year on lobbying.  It has been estimated by the right-wing Cato Institute that the value of the resulting corporate welfare is about $90 billion/year.
  • A recent study shows that the rate of return for money spent on lobbying for corporate tax benefits alone is between 6 and 21 times.
  • Another study demonstrates that firms which lobby ‘significantly outperform non-lobbying firms with respect to increased market value of equity'.  This can be as high as adding another 2% per year to returns.    
  • Related to this, the Economist reports that an index based on the amount of lobbying that American firms do has outperformed the broader market since its creation in 2008. “The results have been stunning,” reports the Economist, “comparable to the returns of the most blistering hedge fund".
  • According to a study on the connections between lobbyists and politicians in the US, it’s been found that the most 'politically connected' lobbyists, those with the closest relationships to senators, suffered a 24% fall in revenues when 'their' senator left office. The value of direct access to influential Cabinet ministers has been estimated at £112,000.
Lobbying is a tactical investment by companies, and let's be clear, it is corporate money that makes up the vast majority of the UK’s £2billion industry. To claim that these companies reap no benefit from their investment is to mislead the public.