KPMG has quietly abandoned a longstanding practice of making donations in kind to MPs and political parties by providing researchers to help in formulating policy and legislation.
The decision by the accounting giant, which has been criticised for its role as auditor to the collapsed construction giant Carillion, comes after figures released by the Electoral Commission in March showed that donations by the big four auditors tumbled by 91% during the 2017 election campaign compared to that of 2015.
KPMG told the Guardian that although it had “historically provided secondees to the three main parties” in non-political and back office roles, it had in 2017 “changed our policy and no longer offers secondments to political parties”, joining Ernst & Young, which has not done so for years.
Donations in kind from KPMG, PricewaterhouseCoopers and Deloitte were widespread in the 15 years running up to the 2015 election, with KPMG making £198,093 worth of donations in kind in 2015, falling to £40,575in 2017.
The practice has been criticised by outsiders, who argue that it helps secure long-term political influence, although the firms say they are politically neutral. Prem Sikka, a professor of accounting at the University of Sheffield, said: “The firms don’t make donations. The money is an investment to secure desirable outcomes.”
He cited as an example the abolition of the Audit Commission under the coalition government, which allowed the big four firms into the £100m-a-year local government market for the first time from 2015.
However, such political donations have tumbled after the Labour leader, Jeremy Corbyn, decided to abandon them. Secondments have traditionally been provided to opposition parties, sometimes in considerable numbers, because they do not have the same access to the civil service as government.
In aggregate, KPMG, PwC and Deloitte provided a little over £1m worth of support services and other donations during the 2015 election campaign, falling to just over £111,000 in the 2017 campaign, according to the Electoral Commission. That followed on from £4.9m of party donations made between 2005 and 2015.
Labour took more than £736,000 of donations in kind from the big four firms during Ed Miliband’s losing 2015 campaign, by far the largest of any party at that time.
Individual MPs, including then frontbenchers Ed Balls, Chuka Umunna and Rachel Reeves, shared a further £614,000 in 2014/15, in the run-up to the election. However, in the 2017 campaign Labour did not take any donations in kind from any of the major accountancy firms.
PwC has traditionally been the heaviest donor. The firm provided £668,369 of donations in kind in the run-up to 2015, mainly to Labour, and £70,075 in run-up to the 2017 election. PwC said it stood by the practice. A spokesman said the firm did consider requests for non-cash support, noting that the demand “has tended to come from opposition parties”. It said it provided junior people in areas where their expertise was relevant but added “we have no political affiliation and don’t develop policy”.
Deloitte said it was appropriate to maintain “constructive and balanced relationships” with each of the main political parties and that it had in the past made available staff and technical information. It made donations in kind of £185,765 in the 2015 election campaign. It did not do so at all during the 2017 campaign, although the company did not say it had abandoned the practice.
Instead, political donations by the big four firms have become increasingly concentrated on paying former ministers to speak at corporate events. George Osborne, the former chancellor who now edits the Evening Standard, reported in April 2017 that he expected to be paid £65,901 for giving a speech to PwC in Ireland; Nick Clegg, the former deputy prime minister, received £18,000 in December 2016 for giving a speech to PwC. Ken Clarke received £11,500 in fees for giving speeches to KPMG in Leeds and Manchester in May 2016 while Michael Gove collected £5,000 from PwC in December 2016 and £4,000 from Ernst & Young in May 2017, again for speeches.
The big four came under fire earlier this month as part of a highly critical report by MPs on the business and work and pensions committees on the collapse of the construction giant Carillion. Rachel Reeves, the business select chair, said they had a “parasitical relationship” with companies, getting paid even if they went under and called for the Competition and Markets Authority to look at breaking them up “to increase competition and deal with conflicts of interest”.
Benefits in kind and donations received by political parties from the big four firms 2015-2017:
General election 2015
Con £67,714
Lab £736,587
LD £247,926
Total £1,052,227
EU referendum
Con £36,070
Lab £19,320
LD £48,022
Total £103,412
General election 2017
Con £15,669.00
LibDems £94,981.00
Total £110,650.00
Source: Electoral Commission
General election 2015
KPMG £198,093
Deloitte £185,765
PWC £668,369
EY nil
EU referendum
KPMG £35,474.00
Deloitte nil
PWC £67,938.00
EY nil
General election 2017
KPMG £40,575.00
Deloitte nil
PWC £70,075
EY nil
Source: Electoral Commission