Research by Mirko Draca and colleagues on Washington's 'revolving door' lobbyists gives an indication of the value of political connections in the UK.

Christian Fons-Rosen

Jordi Blanes i Vidal

Mirko Draca

English

Research Papers in Economics

CentrePiece Winter 2011/12 
16
The returns to lobbying
Last autumn’s resignation of Liam Fox, the UK’s defence minister,
put lobbying back in the spotlight. Research by Mirko Draca and
colleagues on Washington’s ‘revolving door’ lobbyists gives an
indication of the value of political connections in the UK.
in brief...
The resignation of cabinet minister Liam Fox in October
2011 was yet another challenge to public confidence in
the UK’s political system. It followed revelations about the
expenses of members of parliament (MPs), controversy
over the political power of Rupert Murdoch’s News
International, and severe criticism of former Labour
cabinet ministers over the ‘cabs for hire’ lobbying scandal.
But what can we feasibly say about the returns to
lobbying activity in the UK? Our study of the value of
political connections in Washington looked at the
revenues of US lobbyists who were previously employed
by senators. These ‘politically connected’ lobbyists suffered
a 24% fall in revenues when the senator that they used to
work for left office. This fall in revenue was worth about
$177,000 in business and represents the value of a
connection to a sitting legislator. 
This figure can be used as something of a benchmark for
calculating the value of being connected to a serving UK
cabinet minister. Like senators, cabinet ministers have a
lot of strategic power in policy-making and they
seem to be the main target of lobbying
activity in the UK political system.
Applying our US estimates directly
suggests that the median return to
a high-level UK connection could be
around £122,000 per year. But it has
to be said that our estimate is
speculative. This is because there is no
serious, publicly reported data on
lobbying in the UK. We cannot
conduct the same type of research here
because there is no UK equivalent of
the US Lobbying Disclosure Act.
In practice, the UK lobbying industry is likely to be much
smaller than the US industry, which is worth $3 billion
annually. This is partly because there is less voting along
party lines in the US Congress and representatives are
therefore more open to influence from lobbyists. In the
Connections to a UK
cabinet minister could be
worth up to £122,000 a year
for a working lobbyistCentrePiece Winter 2011/12 
17
‘Revolving Door Lobbyists’ by Jordi Blanes i Vidal,
Mirko Draca and Christian Fons-Rosen is
forthcoming in the American Economic Review.
It was published as CEP Discussion Paper No. 993 
in August 2010 (http://cep.lse.ac.uk/pubs/
download/dp0993.pdf).
Jordi Blanes i Vidal is a lecturer in LSE’s
management department and a CEP research
associate. Mirko Draca is a CEP research economist.
Christian Fons-Rosen is an assistant professor at
Universitat Pompeu Fabra.All are part of CEP’s
research programme on productivity and innovation.
Transparency in the UK needs to embrace
the US model, where each lobbying
contract is reported on a quarterly basis
UK, cabinet ministers (rather than non-cabinet MPs) are
the focus of lobbying because of their direct
decision-making power.
The types of returns to connections seen in the United
States are therefore most likely to be concentrated at the
cabinet level. The figure of $177,000 also relates to
middle ranking lobbyists. At the upper end of the US
industry, ‘superstar’ lobbyists will have practices worth
about $1.5 million per year and a single senate-level
connection would then be worth $370,000.
The scale of the business dealings of Adam Werritty, Liam
Fox’s associate, suggests that the return to cabinet-level
access in the UK could also be very high. That said,
Werritty’s case is unusual because it appears that he was
functioning as a lobbyist and as a political adviser at the
same time. This would have been difficult to achieve in
the more transparent US and Canadian systems.
This underscores the need for a UK Lobbying Disclosure
Act. Furthermore, transparency in the UK needs to go
beyond a simple ‘register’ of lobbyists – the main current
proposal – and embrace the US model, where each
lobbying contract is reported on a quarterly basis.

The returns to lobbying

http://cep.lse.ac.uk/pubs/download/cp360.pdf

The returns to lobbying

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