Dark Money Investigations: Investigation

Inside the elite Tory fundraising machine

The Conservatives told openDemocracy they rely on "small-scale" funding. We explore the Tory donors' clubs and do the maths to find out if that’s plausible.

Seth Thévoz
9 December 2019
Prime Minister Boris Johnson (right) talks to guests during a reception at Buckingham Palace
Yours for £50,000
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Yui Mok/PA Wire/PA Images. All rights reserved.

The Conservatives have raised record sums in donations since this general election campaign began. But where does the party get its money from?

Recently an openDemocracy investigation suggested that an awful lot of the Tories’ funding comes from a few very, very rich individuals. Just one dining society, whose members are worth at least £45.7 billion, has donated over £130 million to the Conservatives this decade. They have raised between 58% and 67% of all Tory donations declared to the Electoral Commission this year.

In response to our findings, the Conservatives told us: “The Conservative Party is funded by membership, fundraising and donations, including over 600 local associations across the country and it is this small-scale, grassroots support which is the bedrock of the Party. The Electoral Commission figures exclude the significant sums we have received from small donations.”

Can it really be true that the Conservative Party depends on “small-scale, grassroots support”? It’s mathematically almost impossible for “small donations” to exceed the donations from major donors, as implied. And the relaxed rules that govern some Tory donor clubs means that there’s still considerable scope for some donations to not be disclosed.

To make sense of this, we have probed further into how the UK’s governing party raises funds. Ahead of the general election on 12 December, we have looked at how Conservative fundraising works, how it has changed in recent years and mapped who is paying for a seat at the party’s top table.

Earlier this year, the deputy chairman (now chairman) of the Conservative Party, James Cleverly, announced that membership had reached 191,000. By law, a political party must tell the Electoral Commission about any donation over £7,500 to its central organisation – for other party sections, such as local parties, the limit drops to £1,500. If by some astonishing chance all 191,000 members donated £7,499 each, the party could raise £1.4 billion without naming a single donor. But none of the party’s accounts suggest this is happening.

The last set of Conservative central party accounts filed show that the party received a total of £22.9 million in donations in Great Britain in 2018, and the Electoral Commission’s records of donations over £7,500 for that same period record £16 million going to the central party. That leaves just £6.9 million which could have been raised in smaller donations from grassroots members – 30% of the total – in the way that the Conservative Party’s statement suggested.

Similarly, if we look at the year before, the party’s central accounts show a total donation income of £34.2 million in 2017; the Electoral Commission’s records for the same period show donations of £46.5 million to the central party in that election year, offering little scope for grassroots donations. (The two figures are complicated by spending in an election year.)

And the year before, 2016, has Conservative accounts showing a total donation income of £18.7 million, while the comparable Electoral Commission records show donations of £17.8 million. Less than a million pounds (5%) could have been raised ‘under the radar’ from grassroots members.

If “small-scale, grassroots support” really “is the bedrock of the Party”, we would expect to see less than half the central party’s funding showing up in the Electoral Commission’s big-donor filings. The numbers above show that isn’t happening. The big donors dominate.

It’s true that some money may be held in local parties, and that could push up the overall amount the Conservatives get in small donations. However, a previous openDemocracy study of donations and spending found that across a five-year electoral cycle, the central party received 7.1 times as many donations as local Conservative Associations. So if there are armies of phantom small donors in the Conservative Party, there is little evidence of them.

The 80/20 rule

All this confirms that the true “bedrock” of Conservative Party fundraising is a small number of donor clubs. That should come as no surprise. Five years ago, Lord Razzall, a former treasurer of the Liberal Democrats, spilled the beans on one of the best-kept secrets of funding British politics: “You are also subject to the 80/20 or even 90/10 rule: 80 to 90 per cent of your money will come from 10 to 20 per cent of your supporters. So a mass mailing campaign will be effective with the 80-90 per cent and bring in 10-20 per cent of the money.”

All parties like to pay tribute to the role of small donations from armchair members – it makes party members feel better about themselves. But throughout political history, few parties have been able to go on for very long without falling back on a small number of major donors – the Conservatives in particular.

80 to 90 per cent of your money will come from 10 to 20 per cent of your supporters

Lord Razzall, former Liberal Democrat treasurer

The Labour Party has long depended on trade union donations, representing many workers, but often effectively controlled by a small number of trade union bosses – although this is complicated by the option of union members to opt out of the Trade Union Political Levy. The week before last, for example, the pre-poll donations report put the Labour Party first in that week (even though it is lagging well behind the Tories overall for the whole year), with £3.5 million in donations. Most of that was made up of just two donations: a £3 million donation from Unite and £425,000 from the Communication Workers’ Union.

Throughout the Blair/Brown years, however, Labour assiduously courted rich donors to supplement its traditional trade union base: donors like Lakshmi Mittal, one of Britain’s richest men. Mittal donated £4 million to Labour between 2005 and 2010 – but this year, he and his son-in-law each donated £10,000 to Boris Johnson’s leadership campaign, and during this general election campaign Mittal and his wife have each given £75,000 to the Conservatives. Other major Labour donors, like Sir David Garrard, have deserted the party over claims of anti-Semitism. Without these big donors, it is Labour’s massive reliance on a few trade unions that has proved an effective bogeyman for Tory party fundraisers to deploy when wooing Britain’s super-rich as potential donors.

A brief history of Tory donors

While the Conservative Party has long presented itself as the party of business, some businesses have donated more than others to the Tories over the years. This reflects major changes in the composition of the UK’s super-wealthy: the early-1970s asset-strippers who championed Ted Heath’s leadership were very different from the privatisation-focused City of London millionaires who bankrolled Margaret Thatcher in the 1980s. Those were the days when the late Lord McAlpine revolutionised Tory fundraising, reputedly turning up in the City with a large sack and asking for bundles of cash to fill it – something that would have been entirely legal at the time.

The very first Sunday Times ‘Rich List’ from 1989 still showed a strong element of old money, with landed gentry and aristocracy balancing out new money from the City. Since then, old money has sharply declined, even if it saw a small resurgence during the Cameron years.

Reality TV star Georgia Toffolo arrives for the Conservative Party Black & White Ball at Battersea
Reality TV star Georgia Toffolo arrives for the Conservative Party Black & White Ball at Battersea | Dominic Lipinski/PA Archive/PA Images. All rights reserved.

Strikingly, the Conservative Party’s lists of major donors look like a representative cross-section of each year’s ‘Rich List’ . Today, that means more money from those with extensive overseas business interests (typically dual-nationality citizens), more money from the investment and wealth management sectors (especially hedge funds), and less money from traditional manufacturing and export-based industries.

In recent years, it has also meant more donations from those championing Brexit. In the Leaders’ Group – the most expensive of the Tory donors’ clubs – export-oriented members from the Cameron years, like Remain-backing paper exporter Ranjit Baxi, have fallen away. A fresh intake of hedge-fund managers has replaced them.

What do donors get out of it all? It is a good question, with several possible answers: philanthropy, partisanship, patriotism, networking, or even, in some cases, self-advancement. Others want to promote a political climate conducive to their business interests – and that probably does little harm to the Conservative Party, as it cements the ‘party of business’ reputation.

Loyalty not required

Donors don’t have to be party members. That’s good for the parties in one way: they can easily tap new sources of cash without bureaucracy or commitment. The flipside is that donors can be fickle: there is nothing to stop them from giving to other parties as well.

For instance, two members of the premier Tory donor club, the Leader’s Group, have also donated to the Brexit Party this year – £3.2 million from aeronautics CEO Christopher Harborne and £200,000 from City trader George Farmer, the son of former Tory treasurer Lord Farmer. For rank-and-file party members, this kind of support for another party would be grounds for swift expulsion. But party donors who have not paid for membership are not bound by these rules.

Recent months have seen pro-European former Tory donors decamping to the Liberal Democrats. Tim Sainsbury, a former Tory MP and trade minister under Margaret Thatcher, has made a donation to the Lib Dems that the party called “substantial". Electoral Commission filings also show an attempted donation by Laidlaw Estates UK Ltd, a company controlled by Monaco-based millionaire Lord (Irvine) Laidlaw, the former Conservative peer who quit the Lords over his tax status. Laidlaw tried to donate £100,000 to the Lib Dems earlier this year. However, the donation is labelled as being from an “impermissible donor”, and marked as having been “returned for political reasons”. Laidlaw had previously given £3 million to the Conservative Party, including £25,000 to Boris Johnson’s 2008 mayoral campaign.

Not the widow’s mite

What do you do when you have a lot of demand for your product – an iPhone, say, or a pair of headphones – and some people are ready (or able) to pay more than others for that product? What many companies do is to sell differently priced versions of the same product, offering slightly different experiences. This is called a ‘discriminating monopoly’ (or ‘versioning’ in tech circles), and the Conservative Party operates one in its donor clubs.

Here, the ‘product’ is the experience of being in a donor club – the sheer success of Conservative fundraising in recent years shows a clear, popular appetite to be part of a Tory donor club.

The party advertises eight very differently priced donor clubs, pitched at different audiences, with different rewards promised in exchange for your money.

For £300 a year you can be a member of the entry-level Fastrack: you’ll probably be under 40 and you’ll be invited to “Members-only formal discussions, panel events and informal drinks receptions, often hosted by key figures in politics, business, industry, the arts and beyond.”

Climb higher and, if you stump up £5,000 a year, you can be part of The Front Bench Club and get to “meet and debate with MPs at a series of political lunches and receptions”.

Right at the top of the Tory tree, though, is The Leader’s Group. For a minimum of £50,000 a year you “are invited to join the Leader and other senior figures from the Conservative Party at dinners, post-PMQ lunches, drinks receptions, election result events and important campaign launches”.

The versioning of Tory donor clubs provides supporters with a vast range of disposable incomes the opportunity to interact with the party and with each other, while reserving the most desirable rewards to those who pay most. It has another important function, though: it acts as a ladder that helps the party move donors up to higher levels of giving.

Very few complete strangers turn up at a party headquarters out of the blue saying, “Let me give you half a million pounds.” Donors tend to have been wooed and cultivated for years. Typically, they will have gone along to a drinks party, perhaps held by their local party. Then they’ll be tapped to come to an intimate local party dinner with a VIP guest, who will talk them into making a four-figure donation to the constituency association. Then one of the people there will invite them to a reception held by one of the more junior donor groups. Then they’ll join that club, as a semi-regular attendee, and after a while, they may move up the ladder to another donor club. At each step, their donations will increase, leaving the party a trail of money over the years.

The useful UAs

The eight Conservative donor clubs are not the only groups dedicated to funding the party. For at least two centuries, the Tories have depended on a little-regulated grey area of political organisation: unincorporated associations (UAs).

UAs are some of the oldest common-law structures in England and Scotland. They are relatively informal groups of people and so do not have any of the normal disclosure requirements that an incorporated company has to meet, such as publicly filing accounts with Companies House. Deftly handled, they can also produce significant tax advantages for their members.

UAs are modelled on private members’ clubs, as were the UK’s earliest political parties. The premier legal textbook on the topic says that: a UA must be made up of two or more people “voluntarily bound together for an agreed and common purpose”; its purpose has to be something other than “trade or making a profit for its members”; it can’t be temporary; it needs a set of rules (however brief); there needs to be a process for admitting (and excluding) members; and there needs to be a decision-making process. That’s all it needs.

UAs do have some serious limits: they can’t own property and they can’t hire staff of their own – everything has to be done through the members. But by appointing officeholders and trustees, they can appoint individuals who can personally own property and employ staff on behalf of the UA. Meanwhile, the UA can quite legally funnel large amounts of cash, with little or no need for disclosure.

The unincorporated association remains a popular way of organising fundraising within the Conservative Party, and nine active UAs are registered with the Electoral Commission because of the size of their donations, including the ultra-establishment Carlton Club, founded in 1832, and the curiously named No Balls Ball, which has donated to only two Somerset MPs. A full listing can be read below.

A key figure in the world of Conservative unincorporated associations is Lord Smith of Hindhead, otherwise known as the ‘King of Clubs’. Lord Smith serves as chief executive of the Association of Conservative Clubs Ltd, which connects Conservative-affiliated private members’ clubs around the country. There appears to be some uncertainty over precisely how many unincorporated associations Lord Smith’s organisation spans – his entry in the House of Lords Register of Members’ Interests states that he is a trustee of “up to 200 Conservative Clubs throughout the UK”.

More importantly, Lord Smith is chairman of the highly lucrative National Conservative Draws Society. This is a weekly, private lottery for the party faithful, in which some 20,000 members chip in £1 each week, easily generating a turnover of £1 million a year. All major UK parties operate a similar fundraising lottery, but the scale of the Conservative draw dwarfs the others.

Lord Smith has attended the Leader’s Group as a nominee of the National Conservative Draws Society. An openDemocracy analysis of donations from the Leader’s Group found that the donations of the two organisations he leads makes him responsible for the largest donations of any member of the Leader’s Group – some £8.7 million since 2010. These are larger sums than the more widely publicised hedge-fund donors or Russian-linked donors.

There is no suggestion that the sums given by the National Conservative Draws Society and the Association of Conservative Clubs Ltd were Lord Smith’s own money – they represent the contributions of Conservatives subscribing to additional services. The proceeds of these profitable lottery and leisure ventures represent the closest we can find to meaningful sums raised by the party’s actual members. The organisations he runs have been able to generate these large sums, funnelling profits into the party, and it is this unique structure which has enabled the party to benefit to the tune of £8.7 million.

The Conservative Party goes into next week’s election with a vast 'war chest' that dwarfs all rival parties. Its secret weapon in all of this is the quiet efficiency and dependability of Tory fundraising. But our analysis suggests it is not the small contributions of ordinary members which make up the backbone of this, but the £132 million raised by the elite Leader’s Group this decade, and a plethora of donor clubs, injecting vast quantities of cash on campaign trails.

The Conservative Party, the Association of Conservative Clubs, the National Conservative Draws Society, and Lord Smith of Hindhead were all invited to comment, but no comment has been received.

The donor clubs in full

Name of scheme

Annual cost

Theme/core audience

What the party promises you in return for your money

Fastrack

£300

Young professionals under 40

“Members-only formal discussions, panel events and informal drinks receptions, often hosted by key figures in politics, business, industry, the arts and beyond.”

Party Patrons

£500

“Committed supporters with a desire to help us fight Labour”

“Supporters meet key politicians at two Party Patron events each year.”

The Chairman’s Club

£2,000

“The principal group of donors who support and market the Party’s policies in Government”

“The Leader and key Conservative politicians…[attending] a lively programme of drinks receptions, dinner and discussion groups.”

Business and Entrepreneurs’ Forum

£3,000

“A network of business leaders that support the Conservative Party”

“Members are invited to a series of exclusive events including lunches and briefings with politicians and thought leaders.”

Chairmen: Aamer Sarfraz and Marcus Booth

The Front Bench Club

£5,000

“Those with a deep interest in politics and current affairs”

“Members have the opportunity to meet and debate with MPs at a series of political lunches and receptions.”

Chairman: Michael Slade, OBE

The Renaissance Forum

(embedding the former Number 10 Club)

£10,000

“Our closest supporters”

“Dinners and political debate with eminent speakers from the world of business and politics. Members are invited to all Party Patron events.”

The Number 10 Club, founded by former Treasurer Richard Harrington, charged £10,000 a year, while the Renaissance Forum used to charge £15,000 a year, until the price was lowered when they merged.

Chairman: Lord Borwick

The Treasurers’ Group

£25,000

“Supporters predominantly employed in the financial services and business sectors”

“Members will be invited to discuss topical issues of the day with the Chancellor and other senior figures, attend fiscal event briefings and receive updates on the economy.”

Chairman: Lord Leigh of Hurley

The Leader’s Group

£50,000

“The premier support group of the Conservative Party”

“Members are invited to join the Leader and other senior figures from the Conservative Party at dinners, post-PMQ lunches, drinks receptions, election result events and important campaign launches.”

Chairman: Lord Leigh of Hurley

Tory unincorporated associations registered with the Electoral Commission

  • The National Conservative Draws Society, as well as its Scottish offshoot, the Scottish Conservative Prize Draw Society, are among the most generous donors to the Conservative Party. Its Leader’s Group nominee, Lord Smith of Hindhead, has accounted for some £8.7 million in donations since 2010, including some £852,000 from the Association of Conservative Clubs – the largest sums donated within the Leader’s Group. (£7.9 million since 2010.)
  • The United and Cecil Club has received extensive press coverage in recent years, and appears to be less active than it once was, but is still very much a going concern. I was first made aware of it when speaking to the organisers at a late-night drinks party in Mayfair’s upmarket Arts Club a decade ago, when they claimed that the group had been going since the 1830s (which appears to have been an embellishment), and that it formed a central pillar of Conservative Party fundraising. The club meets as a dining society, both within the Conservative-affiliated Carlton Club in St James’s and across a range of private hotels in London’s West End. Members pay dues of £100 into its political fund, which fall below the legal threshold for mandatory declaration of donations to the Electoral Commission – so it is impossible to know who all of its donors are, especially as the club is famously secretive as to its membership list. (Its chairman said it had 400 members in 2007.) Once the subscriptions are aggregated with donations and profits from dinners, the club then makes donations of its own, under its own name, to selected Conservative constituency associations across the UK, concealing the identity of the original donors (unless they wish to be identified). (£1.1 million since 2010.)
  • The Spring Lunch is a fundraising lunch group meeting at luxury London hotels such as the Dorchester, attended by MPs and peers, which raises money for the Conservatives’ marginal seats, and their Women2Win campaign to promote women candidates. (£1.0 million since 2010.)
  • The Leamington Fund is a rather secretive Midlands-based fund, founded in 1950. The last time it drew press attention, over a decade ago, it was for its Masonic links, including then being chaired by the West Midlands’ most senior Freemason. (£382,000 since 2010.)
  • Both the Carlton Club, and the Carlton Club Political Fund, continue to operate. The Carlton was founded in 1832 as the premier Conservative gentlemen’s club in St. James’s. From its foundation it has sponsored Tory candidates and elections around the country, although a recent historical study found its reputation to be somewhat exaggerated, only donating to a handful of seats close to London. Its Political Fund continues to donate to Tory candidates. (£319,000 since 2010 – sharply reduced from the £1 million it donated at the start of the century.)
  • Businessfore which has split its donations between the Watford local party, and the local party and private office of scandal-hit Burton MP Andrew Griffiths. Its most recent donation to Griffiths’ office was in September 2019. (£125,000 since 2010.)
  • No Balls Ball has donated to two Somerset Conservative MPs, James Heappey (Wells) and David Warburton (Somerton & Frome). (£65,000 since 2010.)
  • Trevelyan Campaign Fund, a Northumberland-based UA, has received £15,000 in donations from Leader’s Group member Gary Lydiate, and a further £12,500 from Conservative peer Lord Vinson. (£64,000 since 2010, including non-cash gifts – all donated to the previously-marginal constituency of Berwick-upon-Tweed.)
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