Windfall for Tories as firms eye £4bn contracts

Accountancy giants channel £500,000 in resources and staff to Conservatives ahead of election

By Michael Savage
Sunday 23 October 2011 07:18

Britain's top accountancy firms are channelling resources and staff worth hundreds of thousands of pounds into the Conservative Party ahead of an anticipated Tory government after the general election.

Analysis by The Independent has revealed that leading companies including PricewaterhouseCoopers (PwC) and KPMG, have given the Tories nearly £500,000 since the start of last year as they attempt to build ties with the party that has a double-digit lead in the polls.

The firms involved already hold government contracts worth millions of pounds between them. More consultancy contracts would be on offer for auditors and consultants as the party would be forced to grapple with making vast savings across the public sector should it form the next government.

Some estimates put the amount to be spent on consultancy over the next three years as high as £4bn. The Home Office alone spent £96m on consultancy contracts last year.

The donations were not made in cash but through the use of staff and services, allowing the firms to build up a relationship with the party. PwC has handed the Tories staff "technical support" and "professional advice" worth more than £290,000 since March 2008. There are no records of any previous donations to the party, according to the Electoral Commission.

KPMG, which also holds many public sector contracts, gave the party donations-in-kind worth more than £100,000 since the start of last year. A single KPMG consultant working in the Department for Children, Schools and Families costs the taxpayer £1.35m over three years, a parliamentary inquiry found. The company said it donated to all three main parties and had done so for many years. However, its gifts to the Tories were up in value from £17,200 in 2007 to £74,500 last year.

"For many years, the Government has encouraged the exchange of people and experience between it and the private sector," a KPMG spokesman said. "We believe this benefits both parties by enabling the sharing of skills, which in turn contributes to modernisation and efficiency improvements in public and private organisations alike."

The Independent has learned that Ernst & Young is to pay one of its staff a wage of £50,000 to work in Oliver Letwin's influential policy unit from August until the end of May 2010. A spokeswoman for the company said: "Like our competitors, Ernst & Young run an extensive programme of secondments to and from organisations in both the public and private sectors."

Boston Consulting Group, a management consultancy firm, has also given the party "technical support" worth £69,900 since the start of 2008. It has provided support for the shadow Chancellor, George Osborne, and also provided support to the offices of shadow Cabinet Office minister Francis Maude and the shadow Schools Secretary, Michael Gove. No other parties registered donations from the firm.

Labour and the Liberal Democrats also receive donations and services from auditors. However, there are signs that some firms have shifted their funding significantly in recent years. While the Tories have received £106,103 from KPMG since the start of 2008, it received just under £45,000 from the company in 2002-03. Meanwhile, donations from the firm to Labour have fallen from £90,000 in 2002-03 to £61,000 since the start of 2008.

The making of these donations-in-kind has raised concerns among some MPs that the companies are attempting to position themselves for more government contracts. "This is quite undesirable," said the Liberal Democrat MP, Norman Baker. "These auditors are not making these donations out of the goodness of their hearts. They will want a return for it. The return is contact with a future Conservative government. These people are omnipresent across government in terms of contracts."

However, he was accused of hypocrisy by the Tories as the Liberal Democrats also benefit from donations-in-kind from auditors, including more than £300,000 from KPMG since 2002. "The Conservative Party is no different from the other main political parties," a Tory spokesman said. "Like them, we accept donations from businesses and like them we have staff seconded from business."

PwC also provides support for Mr Osborne, and two of its staff worked part-time with the Tories on their work and pensions proposals last year. This month, the party revealed that the firm also provided specialist advice and a member of staff for the party's shadow Treasury team. "The firm does not make any cash donations to any political party or other groups with a political agenda," a PwC spokeswoman said. "However, in the interests of the firm and its clients, we seek to maintain constructive and balanced relationships with the main political parties."

KPMG sent an analyst to complete work for shadow Home Secretary Chris Grayling and a member of staff was seconded to the Tory policy unit.

Businesses are queueing up to build their contacts with an incoming Tory government. One lobby industry source said the Conservatives had become "the only party in town". The amount handed to the Tories by private firms has increased sharply since the party was in the wilderness in 2001. Since then, donations from businesses have increased from around £2.5m in 2001 to more than £6m last year.

Doing the Tories a favour

KPMG £106,103 since 01/08 for "provision of staff".

PricewaterhouseCoopers £292,697.68 non-cash donations since 03/08 for "provision of staff", "technical help" and "professional advice".

Boston Consulting £69,852.78 since 01/08 for "technical support" and "provision of staff".

Ernst & Young £50,000 to cover wages of staff member sent to work for Tory policy unit from August.

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