[Kaiserschmarrn]

China cash link to top Labour MP

£180,000 fund for pro-Beijing shadow minister

A shadow minister is being funded by a law firm with links to the Chinese state, an investigation by The Times has established.

Barry Gardiner, shadow international trade secretary, has received more than £180,000 in staff costs from the firm that acts as chief legal adviser to the Chinese embassy.

At the same time Mr Gardiner, 59, has been employing the son of the firm’s founder in his Westminster office. Parliamentary records show that the donations partly fund the son’s salary.

Mr Gardiner has generally taken a pro-Beijing stance in his shadow portfolios. In his previous role as shadow energy secretary, he supported Chinese involvement in Britain’s nuclear power industry. He has spoken out strongly in favour of the Hinkley Point power station, which is being built in financial partnership with a Chinese state energy giant.

Although the payments to Mr Gardiner from the law firm Christine Lee & Co were declared and there is no suggestion of impropriety, Labour sources expressed disquiet last night at the arrangement. They warned that it could give rise to allegations of a conflict of interest. “When you are in that kind of [shadow cabinet] role it is problematic,” one MP said. “Basically this woman is paying for her son to have a parliamentary pass.”

Sir Alistair Graham, former chairman of the committee on standards in public life, said: “It is very bizarre and there are clearly questions to be answered. You lay yourself open to the charge that you have got too familiar with one of the key players in an area where you are supposed to be representing the wider public interest.”

Mr Gardiner told The Times that Christine Lee’s son, Daniel Wilkes, had volunteered in his office for several months before he was paid and there had been “an open appointments process” in which Mr Wilkes was “appointed on merit”. The money is being used to fund Mr Wilkes, who is in his 20s, and another researcher in his office.

Mr Gardiner said that he had never been “improperly requested by, or influenced by” the law firm “in relation to the conduct of my parliamentary and shadow ministerial duties”. The Times contacted Ms Lee for comment but had not received a response at time of publication.

Mr Gardiner has been an enthusiastic supporter of the Chinese community in Britain. A Labour source said that he strongly opposed internal party criticism of Chinese involvement in the Hinkley Point project. He has also called on Theresa May to tell Beijing that Britain wanted strong Chinese investment in infrastructure projects.

The donations for staff costs began shortly after Mr Gardiner was made shadow minister for energy and climate change in September 2015. They carried on as he was promoted to shadow energy secretary and then became shadow international trade secretary. Since November 2015, he has declared non-cash donations of £182,284. Before this, his constituency party received cash donations from Christine Lee & Co of £22,500 between 2009 and 2015.

Ms Lee’s Birmingham-based firm is one of the leading solicitors representing Chinese companies and individuals who want to invest in Britain. It has offices in Beijing, Hong Kong and Guangzhou.

Ms Lee, 53, is an overseas member of the Chinese People’s Political Consultative Conference and a legal adviser to the Overseas Chinese Affairs Office. Her website shows her meeting President Xi of China. When Mr Xi visited Britain in 2015 Ms Lee’s firm paid for the security company G4S to provide 30 staff for “personal protection” for her staff during demonstrations in the Mall in favour of the visit.

In the same year The Times reported that military and intelligence figures had warned ministers that plans to give China a stake in Britain’s nuclear power industry posed a threat to national security. Mr Gardiner’s predecessor as shadow energy secretary, Lisa Nandy, took a hawkish line. The following year Ms Nandy resigned and Mr Gardiner was given her job as shadow climate change and energy secretary.

Theresa May then announced that she was putting the Hinkley deal on hold. Mr Gardiner issued a press release backing the Chinese ambassador’s warning over the suspension and accusing her of “closing UK Plc down”.

Last night Mr Gardiner said he was “certainly not a lone voice” in condemning the “politically foolish action” of delaying the Hinkley deal. He added: “I have spoken openly and critically of the Chinese government on many occasions, in particular with reference to illegal logging, forestry and land use change in Africa.”

He said he was aware that Christine Lee co-conducted “legal work for the Chinese embassy” but added his understanding was that this was “in relation to visa and immigration work, not in respect of trade relations”.

Parliamentary rules do not specifically forbid Mr Gardiner’s relationship with Christine Lee & Co, or the employment of Ms Lee’s son, but he could still be in breach of the MPs’ code of conduct. Mr Gardiner said: “I do not consider that I have ever put myself in a position where any outside individual or organisation might influence me in the performance of my public duties.”

The Times (paywalled)

I have no idea why anybody would be worried about China investing in UK energy infrastructure, especially nuclear power industry. The UK is free to do the same in China after all. Oh wait ...

[B0ycey]

Shock you publish this thread Kaiser. Not much money for oil giants in Nuclear power is there.

[Kaiserschmarrn]

I'm not subtle enough it seems. You've exposed my shilling for the oil industry again, B0cey.

But more seriously, I support nuclear power. This was on the front page of The Times yesterday and I thought it was an interesting bit of news. What do you think about foreign governments - especially if they are not necessarily friendly - or corporations close to them buying stakes in the UK's energy or other key infrastructure?

[Decky]

The right always sell industries built by the British people to foreign millionaires. There are no bigger traitors than the centre right, they hate this county and they hate its people.

[B0ycey]

What do you think about foreign governments - especially if they are not necessarily friendly - or corporations close to them buying stakes in the UK's energy or other key infrastructure?

In an ideal world, it is better to fund your own key infrastructure. In essence, the UK could do it but their welfare (mainly pension) bill is excessive. And currently the treasury is not running a surplus. So the UK government have a choice, either accept foreign investment and fund such projects, slash the welfare bill and fund such projects or not fund such projects and not modernize.

If it was up to me (and the reason I wouldn't last five years as PM if elected), I would slash the pension bill by 30% and alter how we give aid away by changing to a system where the UK gives 20% of the surplus the treasury makes the previous year (ie give nothing in aid if the UK was in a deficit) into the aid pot (and also allow people to volunteer to put a percentage of their earning into the aid pot). But these are not vote winning policies. And while pensioners vote in mass (and also why I explain to people why voting really does matter), no government will even consider much needed pension reforms.

So do I think foreign investment is a good idea? Well 'yes' and 'no'. It is more ideal to fund your own projects however it is better to have foreign investment than not have the project at all.

[Kaiserschmarrn]

In an ideal world, it is better to fund your own key infrastructure. In essence, the UK could do it but their welfare (mainly pension) bill is excessive. And currently the treasury is not running a surplus. So the UK government have a choice, either accept foreign investment and fund such projects, slash the welfare bill and fund such projects or not fund such projects and not modernize.

If it was up to me (and the reason I wouldn't last five years as PM if elected), I would slash the pension bill by 30% and alter how we give aid away by changing to a system where the UK gives 20% of the surplus the treasury makes the previous year (ie give nothing in aid if the UK was in a deficit) into the aid pot (and also allow people to volunteer to put a percentage of their earning into the aid pot). But these are not vote winning policies. And while pensioners vote in mass (and also why I explain to people why voting really does matter), no government will even consider much needed pension reforms.

So do I think foreign investment is a good idea? Well 'yes' and 'no'. It is more ideal to fund your own projects however it is better to have foreign investment than not have the project at all.

FDI is generally a good thing, but in my view there are two important criteria which need to be taken into account. First, who is the investor and second, what is the target of the investment.

The epitome of detrimental foreign investment is the Hinkley project, where the UK government in 2013 guaranteed a megawatt per hour price of £92.50 to EDF (France) and CGN (China), which was based on the assumption that wholesale energy prices would go up. Lo and behold, exactly the opposite has happened, and now the National Audit Office estimates that the difference between the guaranteed and actual price could amount to a "subsidy" by British consumers to EDF and CGN of £30 billion, which excludes the billions of pounds profits that they are likely to make anyway. And that's on top of the issue of key energy infrastructure being owned by foreign governments. France is perhaps not so much of an issue, but I would strongly object to the notion that the Chinese state is a desirable investor in that area.

Further, I fail to see the rationale behind privatisations if this results in foreign state-owned companies taking up the slack. How is that consistent with the reason for privatisation, i.e. the idea that government is inefficient?

As for financing, the outrageous amount of money wasted on foreign aid would go some way in covering parts of this expense. From a recent article in The Times:

UK ‘dumps’ billions in bid to meet aid target

Cash sits unused in obscure World Bank funds

Britain is “dumping” billions of pounds in overseas aid money into obscure World Bank trust funds in an apparent attempt to meet the country’s controversial annual target, The Times can reveal. The government is the second largest contributor to the funds, which were set up to distribute finance to the developing world but have been repeatedly criticised for a lack of transparency and effectiveness.

Over the past five years, Britain has channelled at least £9 billion into 219 different trusts, more than any country apart from the United States. The World Bank charged British taxpayers at least £241 million in administration fees over that period.

Aid insiders claimed that the Department for International Development (Dfid) was transferring money into the trust funds to fulfil Britain’s requirement to spend 0.7 per cent of national income — or £12.2 billion — a year on aid. “Dfid dumps large sums into trust funds and accounts for it as spent against a given year’s UK aid budget,” James Morton, a senior consultant who has carried out numerous evaluations for both the World Bank and Dfid, said. “Judging by the large balances the World Bank and the United Nations hold, some of the money then sits there for years.” About £17.5 billion is sitting in World Bank trusts to which Britain has contributed. Of this, Britain’s share is about £4 billion, according to an analysis of its accounts.

Priti Patel, the international development secretary, will face questions from MPs today over how British aid money is spent. An investigation by The Times revealed this month that Dfid’s spending on consultancy services had doubled to £1 billion a year.

Following the unprecedented analysis of more than 72,000 aid transactions, which revealed that some Dfid contractors were quoting £10,000 to produce a single blog post, Ms Patel wrote to dozens of British foreign aid contractors asking for assurances that money was being spent effectively. “This has been brought into sharp relief by recent allegations in the media,” she said. Aid tenders were suspended for two weeks before the letter was sent out on Friday. Contractors now have 30 days to reveal the precise proportion of revenue coming from British taxpayers. It is not clear whether this will cover the billions of pounds in British aid distributed to these companies indirectly, through third party organisations such as the World Bank and the UN.

Members of the international development committee are expected to press Ms Patel today on how to increase transparency over aid money spent through the World Bank, which last year received £3.3 billion from Britain, a quarter of the aid budget. Many trusts run by the bank continue to accept donations despite retaining a large proportion of their funds, an analysis shows. In 2004, Britain gave $15 million to a trust set up to fund small businesses in Iraq, while the US gave $10 million. More than a decade later, half of the funds remain in the trust with no money having been paid out for at least five years. Dfid said most of its own contribution was returned in 2010 after security in the country broke down. Funds which are not handed out are invested by the World Bank. However, the money has earned on average less than 1 per cent interest per year over the past five years, which is reinvested into the funds. Meanwhile, World Bank officials are charging an average of £176 million a year in fees to administer the funds. As the second largest contributor, Britain has paid approximately £241 million in fees over the last five years.

Trust funds were first set up by the World Bank in the 1960s. They operate separately to the bank’s main activities and each is governed by bespoke agreements between donors. The fractious nature means that administration fees range from 2 per cent to up to 10 per cent of the fund’s value. In 2011 the World Bank’s independent regulator warned of “significant shortcomings” in the way trust fund resources were distributed. Evaluators said that while some trusts were effective, many “lacked clear objectives”. Often funds were allocated “using a lengthy and unpredictable process” that generated “inefficiency and weak accounting for results”.

They reported that Britain was among countries that contributed to the funds to maintain its “high target for aid” while holding down “their [own] aid administration budget.” A year later, Britain’s own aid watchdog lambasted Dfid for “allocating a significant amount of resources to trust funds on a fragmented basis with no overarching strategy and limited oversight”.

The Independent Commission for Aid Impact (ICAI) found that trusts could be set up by small divisions within Dfid with “limited scrutiny”. A later ICAI report found that Dfid had developed a coherent strategy to deal with trusts and there was “early evidence” to show that staff attitudes towards managing trust funds was changing.

Last week The Times revealed that Dfid did not hold information on how at least £274 million of money given to the Strategic Climate Fund, a major World Bank trust fund, was spent. Dfid said it approved every project that the SCF invested in. Many other funds do not disclose the final recipients. A Dfid spokeswoman said that the World Bank had the “reach and expertise to reduce poverty around the world”. However, she added: “It must work harder and smarter to achieve maximum impact for UK taxpayers.” A World Bank spokesman said that multi-year funding was “crucial for effective development”. From January 2016, he said that the bank had charged fees only when funds were disbursed.

The lack of transparency of and often idiotic projects funded with foreign aid has always been a problem. It's only been exacerbated by the introduction of the target, i.e. the UK must spend a certain percentage of GDP on foreign aid. This almost always leads to massive waste and misallocation of funds on top of what is already happening.

So while I agree that pensions are a significant expense and we do need to think about how to reduce costs in that area, especially in the long term, they are hardly the most wasteful and are at least in part based on the contributions made by the recipients. I'd rather start with reining in frivolous spending than going after pensioners.

[B0ycey]

The epitome of detrimental foreign investment is the Hinkley project, where the UK government in 2013 guaranteed a megawatt per hour price of £92.50 to EDF (France) and CGN (China), which was based on the assumption that wholesale energy prices would go up.

But the value of sterling to the dollar has gone down. So the government have actually got a better deal. But I agree its still a shit deal to the UK tax payer. Nonetheless unless the UK government finally sees sense and curps foriegn aid, pensions or vanity projects like renting misguiding nukes spending, they haven't got much choice. As for China, they are investing everywhere. We all know that through their wealth they are influentually strong. But this isn't a UK only problem. But lucky, unlike the US, China aren't interested in flexing their power to control government's. If they were, they would already be able to do it and doing it now. China aren't interested in outside politics unless the outside inferers with theirs. That is why human rights violations in China are never uttered by foriegn leaders now.

Further, I fail to see the rationale behind privatisations if this results in foreign state-owned companies taking up the slack. How is that consistent with the reason for privatisation, i.e. the idea that government is inefficient?

Nobody, including the government, really likes privatisation. Privatisation was a Thatcher phenomenon to make a quick buck for the UK purse. And until the public are prepared to pay more taxes or are willing to tolerate a reduction in benefits or services, privatisation will alway be the governments prefered option to fund key infrastucture. So really it's the public who make privatisation happen. The government have no other option... unless they want to be voted out.

The lack of transparency of and often idiotic projects funded with foreign aid has always been a problem. It's only been exacerbated by the introduction of the target, i.e. the UK must spend a certain percentage of GDP on foreign aid. This almost always leads to massive waste and misallocation of funds on top of what is already happening.

Don't worry Kaiser, it won't be long until the UK government are forced to reduce their foriegn aid bill. They'll have to if they want to create a surplus within the next ten years. Voters are already outraged with the cuts in public services now and the cuts are still not deep enough. Foriegn aid is likely to cause less anger to voters than NHS cuts.

So while I agree that pensions are a significant expense and we do need to think about how to reduce costs in that area, especially in the long term, they are hardly the most wasteful and are at least in part based on the contributions made by the recipients. I'd rather start with reining in frivolous spending than going after pensioners.

The triple lock needs to be scraped TODAY!!!. The pension bill far outweighs any other benefit. Unless you are prepared to tackle this issue, the UK government will always have to find money from somewhere. And that somewhere is usually public services.

[Kaiserschmarrn]

But the value of sterling to the dollar has gone down. So the government have actually got a better deal.

I don't see how this changes anything for the British consumer. As far as I can see, if the price was agreed in sterling the deal would remain the same and if it was agreed in a different currency it would make the deal worse.

But I agree its still a shit deal to the UK tax payer. Nonetheless unless the UK government finally sees sense and curps foriegn aid, pensions or vanity projects like renting misguiding nukes spending, they haven't got much choice. As for China, they are investing everywhere. We all know that through their wealth they are influentually strong. But this isn't a UK only problem. But lucky, unlike the US, China aren't interested in flexing their power to control government's. If they were, they would already be able to do it and doing it now. China aren't interested in outside politics unless the outside inferers with theirs. That is why human rights violations in China are never uttered by foriegn leaders now.

I'm always a bit baffled by people declaring that China aren't interested in outside politics. They clearly are, although currently they have confined themselves to flexing their muscle mostly regionally. The way they will go about it obviously won't be the same as the US or the west. I agree that human rights won't play a role, and why should they? They and their universality are a western concept after all. If China consider that interfering in other countries will do more benefit than harm to it, then they are very likely to do so if they can/are not prevented.

I'm sure you know that the US was once isolationist. Based on what you say above, it should still be the same. While it makes sense to take past behaviour into account to some extent, this logic can quickly break down, especially in what is basically anarchy in the international arena.

The triple lock needs to be scraped TODAY!!!. The pension bill far outweighs any other benefit. Unless you are prepared to tackle this issue, the UK government will always have to find money from somewhere. And that somewhere is usually public services.

How much of the pension bill is above the contribution that pensioners have made during their working lives? That's the number we should base any decisions on, I think.

[B0ycey]

I don't see how this changes anything for the British consumer. As far as I can see, if the price was agreed in sterling the deal would remain the same and if it was agreed in a different currency it would make the deal worse.

Let me explain. Two reasons. Firstly because with a declining currancy, the value per K/W was going to go higher anyway (making the percentage of profit for the invester lower with a fixed price) and second sterling's value is a benchmark. Nothing more, nothing less. If the value of sterling goes down, wages in sterling will have to go up to compensate. And that's when this becomes a better deal for the consumer. After all, there is a reason why I genuinely believe sterling's decline is a blessing in disguise. It hasn't done Germany any harm with having the Euro during the Greek crisis's has it? With a declining currancy, UK goods become competitive. The UK also have quite alot of debt and it's in sterling. If the value goes down, that's good for the treasury if it doesn't have an impact on your export/inland economy in relative terms. People buy more homemade products (as they are cheaper than their foreign competitors) and deals such as this become less abhorrent. And most peoples expenditures (bills) are in sterling (like rent, council tax, loans etc) so inflation will never go too high, regardless the fact sterling has lost 20% in value.

[Kaiserschmarrn]

I'm not sure I agree that wages will have to go up to as a compensation for the drop in sterling. Since you mention Germany, it did not happened there after the euro was introduced. Perhaps if inflation persists at a higher level (I presume some inflation would have been priced into this), but then you have inflation's negative effect on savings in addition to the low interest rate environment, which makes people poorer .

I agree with the rest of your post or at least I don't see the drop in the pound as a great calamity. It is useful for the reasons you mention at least in the short and medium term.