Tories lose corporate support

More companies are axeing party donations. Paul Farrelly reports; Battered by depressed car markets, Inchcape is turning its back on the Tories

THE decision by Tate & Lyle's chairman, Neil Shaw, to cut his company's donation to the Conservative Party last week is the latest in a long line of corporate desertions. Disillusion with the Tories, specific grouses about tax and plain old-fashioned cost-cutting have all led blue- chip companies to drop their support.

News that the car importer Inchcape and the engineer Lucas Industries have now joined the growing list of such companies halting contributions altogether will worry party managers struggling with an pounds 11.4m overdraft - with a costly general election in prospect.

Disillusionment across a wide spectrum has done the damage - at anything from Tory squabbling to Euro-scepticism and drinks duty, rather than widespread defections to Labour.

Plain old hard times in many sectors of a now slowing economy also make donations less of a priority to an ad- ministration facing likely electoral defeat.

Inchcape, one of the most blue-blooded of old overseas trading companies, was one of the few firms actually to lift its contribution last year - to pounds 40,000 from pounds 28,000.

But battered by depressed car markets and a strong yen, it is now turning its back on the Tories completely.

"Basically we've looked at budget cuts across the business. We've lost 2,000 jobs. All discretionary expenditure has been examined, including political donations," said a spokesman."We have informed Conservative Central Office we will not be making a donation for 1995," he added.

Lucas's decision, to be unveiled in its accounts later this month, is also largely down to cost-cutting. The group announced exceptional charges of pounds 95m out of profits of pounds 135.8m last Monday and made it clear no incidentals would escape the axe, not even the pounds 25,000 it usually donates. This is enough to put Lucas in the top 25 of Tory corporate donors but hardly huge in its pounds 2.9bn turnover.

Changing philosophy also played a part, however, as did management changes at the top, a pattern evident in other blue-chip defectors. Lucas chairman, Sir Brian Pearse, who joined last year, is a former chief executive of Midland Bank, and none of the clearers are Tory contributors.

Lucas, he also stresses, makes 70 per cent of its sales overseas and now has 37 per cent of its manufacturing base in continental Europe.

"We're a global company. We don't give any money to other political parties elsewhere. It's shaping the company for future requirements," he said.

United Biscuits, once the largest donor at pounds 130,000, cited similar reasons for stopping gifts in January. The former cabinet minister, Lord Prior, stepped down from the board a month earlier.

Glaxo Wellcome, the world's largest drugs company and sixth biggest sponsor, stopped its pounds 60,000 this year after a change of chair.

Others have vented more obvious spleen. British Airways turned off the tap in 1992 after a row over Heath- row landing slots.

Buildings and the "beerage" have also turned their backs on the Conservatives. Brewer Whitbread withdrew its pounds 30,000 in a fit of pique at Chancellor Kenneth Clarke's extra 26p duty on spirits and a penny on beer last December. It spoke for much of a sector already hit by vast changes in pub ownership.

"We are suffering enormous problems in an industry that is a major source of employment," said David Thompson, managing director of Midlands-based Wolverhampton & Dudley Breweries, which cut funding two years ago. "On the basis that there's not likely to be a cut in duty levels, it's highly unlikely we'll be contributing again to the Conservative Party."

After all the defections, it is easy to exaggerate the Conservative crisis. Most stalwarts - including the top five: Hambros, Hanson, P&O, Forte, Robert Fleming - have stayed loyal.

And pounds 7,500 to Labour from Tate & Lyle, or pounds 25,000 from Pearson, are just drops in the ocean of the pounds 2.1m that quoted companies gave to the Tory Party last year.