Election 2013: Reforming the City of London Corporation

In March, elections to the City of London Corporation take place. They could be used to challenge the unaccountable power wielded by this state-within-a-state.

On the 21st March the City of London Corporation will hold elections for its ‘Common Council’, the democratic component in its ancient system of local government. To understand why elections to this small, historic local authority matter it is necessary to appreciate the role that the Corporation plays in the life of the United Kingdom. For, as understanding of the importance of the Corporation grows, so does the case for using the 2013 elections to campaign for its reform.

The Corporation in history

The City of London Corporation is the only local government body on mainland Britain whose activities and governance are not defined and limited by statute. It is a local authority and is bound by the legislation that prescribes the functions of a local authority. But it is many other things as well. Ask how it can be a private corporation as well as a local authority or how it came to be the self-styled ‘Voice of the City’ and the answer is simple; because it chose to be and Parliament has not legislated to prevent it. Ask why Parliament has allowed this anomalous body to flourish at the heart of the unitary state and the answer revealed by history is that the wealth and power of the Corporation has always been such that the English and then British state has found it necessary to reach accommodations with the city-state in its midst.

In the high Middle Ages the City of London’s struggles for independence from the English Crown were resolved through a compromise in which the City promised loyalty to the King who, in return, promised not to interfere in its affairs. This distance from the feudal Crown enabled the City to grow into one of Europe’s most important financial and trading centres and the Corporation that governed it developed into a dense patchwork of rival institutions and offices that was the closest that pre-industrial Britain came to possessing an open, democratic public life.

By the 17th century the Corporation’s constitution had assumed the shape that it retains today: at its heart were the guilds, the most powerful of which were the ‘livery companies’, which represented and regulated the trades that practiced in London, were responsible for selecting the Alderman and from whose number the Lord Mayor was selected. The final component in its system of government was the Common Council directly elected by the commoners as it remains today.

The modern Corporation

The modern Corporation has retained these ancient forms but it was changed utterly in the industrial age. As London was transformed into the modern metropolis, the site of the historic city became a business district: its guilds and offices increasingly occupied by the financial services industry.

The Corporation became a bastion of conservatism; fighting off attempts by national politicians to subsume it into a system of local government that was fit for the industrial age; retaining, as it retains today, its own special duties and privileges amid the structures of modern municipal government that were constructed around it; maintaining a franchise in which the electorate were not only City residents but also those who had property within the City (a franchise that Parliament extended in 2002 to Corporations located in the City, providing them with a number of votes, based on company size, to be allocated amongst the workforce). Unsurprisingly, its Common Council elections are the only local government elections in which modern party politics have never gained a foothold.

The Voice of the City

When the financial services industry was transformed in the 1980s, the Corporation re-rebranded itself as ‘the Voice of the City’; a sleek representative body for an industry re-born. Its ability to do so rested on two advantages. First, it’s already influential place at the heart of the British state and establishment. Second, it had ‘The Cash’.

The City Cash is the money that the Corporation has built up over centuries as a private corporation. Recently revealed as amounting to well over a billion pounds, it is spent on a variety of projects and investments including many in which there is a clear public interest (the upkeep of Epping Forest and Hampstead Heath) others in which the public interest is debatable (funding the independent, fee-paying schools in the City, investing in property around the capital). Much of it is spent on promoting the interests of London’s financial services industry, not simply in the United Kingdom but also throughout the world, through its Lord Mayor whose principle role is as ‘ambassador for the UKs financial and professional services’ and through its offices in Brussels, Beijing, Shanghai and Mumbai.

The Corporation’s activities generated little public concern until the City lost its aura of competence and invincibility in the latest financial crisis. It may now have entered another era of responding to and seeking to placate its critics.

Calls for reform

In the autumn of 2011 ‘Occupy the London Stock Exchange’ brought their demands for greater transparency of the Corporation to the doors of St Paul’s Cathedral. In November 2012 the City Reform Group was launched. Its aim is to reform the Corporation through debate and democratic competition. It is not a political party and was launched with support from across the political spectrum, from former Occupiers to the Conservative MP David Davis. It seeks to encourage and support candidates who are not from traditional City backgrounds to stand in the 2013 election and asks all candidates to sign up to a series of broad pledges for improving the Corporation that would, in place of a party manifesto, provide a yardstick to measure the performance of those elected to office.  

One of these pledges is to work to ensure that the Corporation publishes the accounts for the Cash. Only a few weeks after the launch, the Corporation published a document entitled ‘The City’s Cash Overview: Summary of Performance 2011-12’. As the title indicates, this document was not a detailed account of the Corporation’s spending decisions. The battle for transparency goes on.

Reform of the Corporation should not of course be confused with reform of the financial services industry. However, the 2013 elections will be a test of whether the desire for reform is sustained enough to bring democratic challenge and debate to the institution that represents that industry in the UK. On the other hand, if the attempt to turn a ‘buggin’s turn next’ election into a genuine contest fails, it will be seen within the Corporation and sections of the City as yet another signal that it can return to business as usual.

This, despite the skewered franchise, is reason enough to engage in the election. But there is also the serious job of debating what sort of institution the Corporation should be.

What sort of Corporation?

Transparency is the most urgent demand. A detailed breakdown of the City Cash should be regularly published, and publically debated. It should voluntarily subject all its activities to the requirements of the Freedom of Information Act. There is growing understanding of the need for private corporations to be subject to transparency laws: the case for bringing transparency to this particular private corporation could not be more compelling. Indeed, it is essential in order to offset the dangerous combination of public duties and private interests that lies at the heart of the Corporation.

The Corporation’s own limited exercise in transparency has revealed that is one of the few local government bodies with money to spend. So, how should it spend it? There are at least  three areas to consider.

First, the Corporation does, through its City Bridge Trust, provide substantial donations to good causes throughout London. However, at a time when the budgets of other London authorities are being cut, it is important to consider whether the Corporation can better use its resources to support the public services of the London Boroughs on its doorstep, who provide much of its workforce. 

Second, with the legacy of the guilds in mind there is a good case that it should use its resources to promote higher standards of ethical conduct within the City. The promise of better self-regulation is, of course, a useful tool for those who wish to see off the threat of more stringent external regulation and the City should be encouraged to put resources into meaningful improvements rather than the ethical whitewash that characterised much of the Lords Mayor’s 2010-2011 ‘Initiative to Restore Trust to the City’ (access the report here).

Finally, there is a strong argument that it should place its resources at the disposal of civil society and consumer groups with an interest in understanding and reforming a particular aspect of the financial services industry. If the Corporation were to move from being simply the ‘voice of the City’ to enabling other sectors of our society and economy to understand and speak to the financial services industry it would be providing a valuable public service.

Whether any of these themes will be taken up by candidates, or strike accord with the Corporation’s narrowly drawn electorate, remains to be seen. On the 14th February (Valentine’s Day) St Paul’s Cathedral will host a public meeting on the future of the Corporation, organised by the City Reform Group, at which proposals for reform will be discussed and debated with a representative from the Corporation. Nominations for the Common Council election open on the 16th March.

The opportunity to debate the future of the Corporation that the election offers is too important to ignore. The vote may be restricted to those within the City itself but it is an election in which not only all Londoners have an interest, but through the City’s power and influence, affect the British public and the wider world. It should be used to let the Corporation, the City and Westminster know that the reform of this untouchable state-within-a-state is a demand that will not be allowed to die.

Those who are interested in standing for the Common Council election or who simply wish to find out more about the election can find details on the City Reform Group website or the Corporation’s own website.

About the author

Daniel Jones is a barrister practicing in national and international public law.