Why has Michael Ashcroft become caricatured as a political devil by those in the

media and other political parties? By looking

at the Conservatives' funding of

marginal constituencies and the funding of

the party as a whole a better

understanding of money and its relation to

politics can be gleaned. This paper will

look at whether Ashcroft, the

Conservatives' and their candidates were

guilty of manipulating the 2010 General

Election or whether Lord Ashcroft is the

victim of a slander campaign.

The Ashcroft

'Affair'

Lord Ashcroft and the

opposition to the

Conservative parties'

funding of marginal

constituencies

Gareth Hunt

The Ashcroft 'Affair'

Contents

Section One

Introduction: Ashcroft, the Conservatives and the opposition to the targeting of marginal constituencies at the 2010 General Election...................................................................................................................................................................................................... 3

History of Party Funding: The controversy of donors………………………………………………………………………...............................4

A Margin of Error: The importance of marginal constituencies..........................................................................5 Section Two

Ashcroft: Was he „buying seats‟ for the Conservative party?..............................................................................................................7

Legislating the funding of political parties............................................................................ 9

Making Allowances: Ashcroft‟s reasons explained.........................................................................10

Political Rich List: Tories win again...................................................................................................................................................14 Section Three

The Guardians of Truth: Ashcroft‟s role „exposed‟………………….........................................15

What bearing did Bearwood have on the election ............................................................................................................................19

Mirroring an alternative reality: The morphing of the Ashcroft persona.........................................................................22

Conclusions: Ashcroft, the Conservative party and opposition media and politicians……………….........................................24

Bibliography...................................................................................................................................................................................29 Appendix .......................................................................................................................................................................................33 Reflective Log................................................................................................................................................................................34

Page | 2

The Ashcroft 'Affair'

Introduction: Ashcroft, the Conservatives and the opposition to the

targeting of marginal constituencies at the 2010 General Election.

The funding of marginal constituencies created controversy which

reached fever pitch during the 2010 General Election. This was primarily

due to the activities of Michael Ashcroft, a Conservative peer and

businessman. His role, as the Deputy Chairman of the Conservative

Party, involved focusing the Conservative party’s electoral machine on

130 target seats. These seats had small majorities which could be

overturned with the strategic use of financial or professional resources.

This operation was attacked as unfair. The charges were levied by those

in the media and other political parties who are predominantly on the left-

wing. Those against Ashcroft stated that the issues surrounded two

central premises: first, due to his non-domiciled tax-status Ashcroft

should not donate to the party and second, that this activity was ‘unfair’ to

other political parties.

This paper will investigate whether the Conservative party and Lord

Ashcroft through his company, Bearwood Corporate Services, was

involved in an electoral conspiracy or were the victims of a targeted

campaign of slanderous accusations. This paper will seek to determine

whether the Conservative operation to fund marginal seats was unfair and

if so by examining party funding regulations and donations, we will then

be able to determine whether the Conservative party were guilty of

manipulating the election in these constituencies. Following on from that

will be a second analysis. This will look at the Conservative party, Lord

Ashcroft and Bearwood Corporate Services as victims of slander. This

will be done by interpreting press reports and opposition speeches to

Page | 3

The Ashcroft 'Affair'

show how closely they relate to the facts of this case and understand the

reality behind the ‘spin’. The question is whether Ashcroft’s actions were a

concerted effort to ‘buy’ marginal constituency seats or was this furore

the result of sour grapes and jealousy because the opposition parties

could only look upon the targeting operation and the financial fundraising

with envy.

This paper will also seek to present the Ashcroft ‘affair’ as a unique

political event. The political donations scandals of the 90s surrounding

the Hinduja brothers or the Bernie Ecclestone donations to the Labour

party surrounded the acceptance and not the application or use of the

donated money. The Ashcroft ‘conspiracy’ or ‘affair’ is unique in that there are

no precursors to such a political event.

History of party funding: The controversy of donors

Before we can examine the actual charges of conspiracy it is worth

looking back at the history of donations, the political environment

between 1997 and 2005 and more importantly, to understand a little

more about Michael Ashcroft.

Michael Ashcroft is a businessman. He specialises in purchasing

companies which are in financial trouble and turning them around. Some

of the businesses he has turned around include the security firm, ADT,

Cleeneaze the cleaning company and Carlisle Group Limited, a holdings

firm. He is the founder of Crimestoppers and is a major contributor to his

old college, now University, Anglia Ruskin. He is an avid collector of

George and Victoria crosses and has donated his multi-million pound

collection to the Imperial War Museum along with funds to build a

dedicated wing. He is a staunch supporter of the Conservative party and

Page | 4

The Ashcroft 'Affair'

a major shareholder in Tottenham Hotspur Football Club. He spends half

his time in the UK and the rest in Belize where his businesses operate.

Married with two children, he has recently resigned as Chairman of the

Conservative party to become a Polling and Focus Group consultant for

David Cameron’s political policy unit at 10 Downing Street. In the run up to

the 2010 General Election Ashcroft was Deputy Chairman in charge of

marginal constituency targeting and polling and data gathering for the

party. His roles have resulted in him being caricatured as a political devil,

causing a “ wave of controversy.”

It has been argued that "throughout the history of political parties,

funding has always courted controversy."1 As such there has been a

legacy of funding rivalry between the main political parties. John Stafford

argues that throughout the history of the Conservative party "cash crises

have often brought about change and donors of large amounts of money

[have] demanded influence and power."2 The Conservative party’s

record on money and its relationship with constituency associations is a

rather bleak one. The 1940’s saw associations reluctantly pay a

percentage towards the upkeep of Central Office, but by the 1980’s this

was not enough to keep the party operationally in place. The

Conservative party, post 1985, became "reliant on the few wealthy

individuals [who donated] rather than the mass membership in

Conservative associations."3

The reckless greed of successive Conservative party treasurers came to

a head in 1997 after the General Election defeat. The splurge of cash

1

John E. Stafford Report on Party Funding available at http://www.public-

standards.gov.uk/Library/Party_Funding___E80___J_Stafford.pdf, p1 (accessed 22/02/2011): See also Charlies Pattie and Ron Johnston, 'Conservatives' Grassroots Revival', The Political Quarterly, Vol 80, No. 2, (Apr-June 2009), p193-195 2 3

Ibid, p2

Ibid, p4

Page | 5

The Ashcroft 'Affair'

spending for the election meant the Conservative party was once again

in a real financial mess.4 This was the environment which Michael

Ashcroft inherited as Treasurer - a party that was in need of a period of

financial rehabilitation.

Ashcroft turned around the party’s finances. He did this by leading by

example, making major contributions to the party in order to entice other

leading businessmen and Conservative party members to donate

money. What Ashcroft did at a micro-level was to change the

relationship between Conservative associations, which had historically

been separate from the central party apparatus, and Conservative

Central Headquarters. This resulted in the opening up of resources -

money, manpower and equipment - which could be transferred from one

constituency association to another. The significance of this

understanding revolved around the broader importance of marginal

seats.

A Margin of Error: The importance of marginal constituencies

Marginal seats are constituencies where the incumbent has a majority

that is less than 10 per cent than that of his or her nearest rival.5 The

idea was that the Conservative party could win these seats by allocating

more resources. This could be done by transferring resources from a

‘safe’ constituency to one which needed them. But after the failure of the

2001 General Election, the then leader of the Conservative party,

William Hague, resigned. The two successive leaders, Iain Duncan

Smith and Michael Howard, were unsure of the validity of Ashcroft’s

warnings about the need to allocate and target resources at ‘marginal’

4

Peter Snowdon, Back from the Brink: The Inside Story of the Tory Resurrection, (Harper Collins, London,

2010), p169 5 Jonathan Tonge et al (Editors), British Elections and Parties Review: Volume 11, (Cass Publishing, London,

2001), p139

Page | 6

The Ashcroft 'Affair'

constituencies. The failure to target resources resulted in the 2005

General Election defeat which saw Tony Blair’s Labour party return to

Government. The rejuvenation of the Conservative party under David

Cameron was also the political rebirth of Lord Ashcroft. Ashcroft was at

this point languishing in Conservative Central Office as a deputy

treasurer. By 2005, Cameron understood the importance of targeting

resources on marginal constituencies: Ashcroft was made deputy

Chairman of the Conservative party responsible "for opinion research

and marginal seats."6 Now Ashcroft was able to do more than just

propose a targeting campaign. He had dabbled with association

donations to candidates in the 2005 election in which he used polling

data and canvas returns to discover a powerful shift in political support.

It was just that the Conservatives were not communicating their

message in a coherent way. The public were similarly asking the Tory

election slogan question ‘are you thinking what we’re thinking’ and the

incompetent 1997-2005 message from the Conservative party was a

resounding ‘no’.

Ashcroft knew he had to restructure the party’s campaign network; he

would also have to set up a better polling and analysis department along

with a reinforced financial backbone for the party. In the event, this

simple exercise resulted in Michael Ashcroft being accused of conspiring

to manipulate the outcome of elections. However, Ashcroft claimed that

the accusations against him were slanderous.7 We need to look at both

sides to understand the controversy.

6

Michael A. Ashcroft, Minority Verdict, (BiteBack, London, 2010), p7; (a note of caution regarding BiteBack

publishing - this company is owned by Michael Ashcroft and has links to right-wing blogs and news services like

ConservativeHome. I have taken this into account when reading BiteBack books on the whole Ashcroft affair.) 7

Ibid, p13-22 Page | 7

The Ashcroft 'Affair'

The criticisms allege that Ashcroft’s ‘donations’ to associations and

therein the application of resources in a targeted way was ‘unfair’ and

gave the Conservatives an inequitable advantage over the other political

parties. The second element of the conspiracy involves Ashcroft’s status

as a non-dom. He does not pay full UK tax on all his global earnings,

only his UK income and this should disqualify him on ethical and moral

grounds from donating to the Conservative party. These two inter-

connected arguments, along with the history of party donations, are

important in contextualising this conspiracy within the contemporary

politics of the period.

Ashcroft: Was he „buying‟ seats for the Conservative party?

To understand whether a conspiracy took place, we need to look at the

case against Ashcroft and find out whether he was ‘buying’ seats in

elections.8 These allegations have been made in the House of

Commons, for example, when John Mann MP bellowed from the floor of

the Commons that "Michael Ashcroft and his pals spent £250,000 trying to

remove me from my seat"9 The press allegations from the Guardian, the

Daily Mirror and Labour MPs show the extent of the Left’s opposition to

Ashcroft.

The other side of this debate surrounds the idea that this is a campaign

of slander against a member of Her Majesty‟s loyal opposition. Michael

Ashcroft is the target in a campaign to discredit the hard work of a team

of talented individuals who worked tirelessly to construct a better way of

operating and distributing resources nationwide. As Michael Ashcroft

8

Susie Boniface, 'Lord Ashcroft 'bought' 19 seats for the Tories', The Daily Mirror, 03/05/2010, available at

www.mirror.co.uk/news/top-stories/2010/03/06/lord_ashcroft_bought_19_seats_for_tories_115875_2.htm (accessed 02/02/2011) 9

John Mann MP reported in Hansard, 22 June 2010, Column 163 available at

http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm100622/debtext/100622-0004.htm (accessed 15/02/2011)

Page | 8

The Ashcroft 'Affair'

states, his opponents argue that "the absence of spending limits outside

election periods was a "loophole" in the law. But it wasn’t, it was just the law,

framed in Labour‟s own Political Parties and Electoral Registration Act

2000 and it applied to everyone. There was nothing stopping any other

party doing exactly what we did - indeed that is exactly what they ought

to have done."10 Ashcroft claimed that he has done nothing wrong but

followed every word of the law.

To understand the nature of the ‘Ashcroft’ conspiracy I conducted an

interview with Gavin Barwell, MP for Croydon Central and former deputy

Campaign strategist for Lord Ashcroft’s targeting operation. He stated

that there were two central issues surrounding the ‘Ashcroft’ affair; first,

fairness and second, who should give money to political parties. Mr

Barwell, in regards to the first point, argues that pre-2005 elections saw

all parties target money from the centre to key marginals through

‘internal cash transfers’. The public did not see this - the change

occurred when Ashcroft as a third-party individual acted outside the

official auspices of the Conservative party during the 2005 election and

donated directly to constituencies and candidates. This changed the

game plan. According to Mr Barwell the individual "culture of entitlement

was something we [Ashcroft, Mr Barwell and Stephen Gilbert (Ashcroft’s

number two)] wanted to end and to start making candidates think for

themselves but more importantly we wanted them to pick and choose

how they spent their money - once they realised the importance of

targeting resources it would better help them campaign in the

constituency."11 Conservative associations, due to their own donations to

Central Office, believe they are entitled to a return on investment which

10 11

Ashcroft, Minority Verdict, p85 Interview with Mr Gavin Barwell, MP for Croydon Central on Wednesday 16th of March 2011 at 15:22 his

direct line at the House of Commons is 0207 219 7044

Page | 9

The Ashcroft 'Affair'

disregards the idea of fairness. These associations give a percentage of

their membership fee to the central office and when an election comes

around they want some of that back as central office cash. This is what

Mr Barwell meant by wanting to end the culture of entitlement. Mr

Barwell concluded the interview by discussing the importance of

‘capping’ donations and that David Cameron’s forward thinking idea of

capping donation to the party at £ 50,000 was Cameron’s

acknowledgment of the fact the Conservative party had been too reliant

on wealthy individuals.

Legislating the funding of Political Parties

The Political Parties, Elections and Referendums Act 2000 was seen as

the Labour party’s response to the possibility of political parties "buying

political influences."12 Historically, the targeting of resources at marginal

constituencies was avoided by both the Conservatives and Labour

parties. The Liberal Democrats did undertake a limited targeted

operation. The big two decided to play the ‘long’ game and avoided a

targeted marginal constituency to marginal constituency battle. This zero

sum game approach was taken for the overall UK constituency map -

but by the 1990‟s the Labour party realised that targeting marginals

would result in electoral success. The 1997 General Election was

testament to this What New Labour did in the 1997 election was similar

to the targeting of resources of the 2010 Conservative election

campaign. Belatedly, the Conservative party realised their mistake and

12

Ron Johnston and Charles Pattie, 'Conservative Constituency Parties': Funding & Spending in England and

Wales, 2004-5, The Political Quarterly, Vol. 78, No. 3 (July-Sept 2007), p392

Page | 10

The Ashcroft 'Affair'

slowly started focusing on both the national battle and the constituency

battle working in synergy.

A little historical background on candidates and constituency funding

would help here. The funding debates go back to the Ballot Act in 1872,

which introduced the secret vote into British politics, and altered the way

Britons voted in elections, thus changing them from a public to a private

affair. Corruption was now more difficult, but not impossible. As a result

the Government, in 1883, strengthened the rules against funding/and or

corruption loopholes and practices by passing the Corruption and Illegal

Practices Act. This ended the ability of wealthy candidates to simply buy

seats at elections with funded festivities and offers of goods or money.

This legislation ensured that elections had spending limits at the

constituency level so wealthy individuals could not simply buy the

constituency seat.14 These limits were subsequently revised in 1918

when the Lloyd George Government passed the Representation of the

People’s Act which made it clear that elections had spending limits and

bribery or corruption was illegal. This law was amended and

strengthened in 1949. After that the spending limits at general elections

were reviewed before an election and arbitrarily set. The changes in the

laws on party financing has brought about the transformation from

funding by private individual to funding by organisations, like trade

unions and businesses, which required a different kind of legislative

response. The 2000 Political Parties, Elections and Referendums Act

was an acknowledgment that the 1883 Corruption and Illegal Practices

Act was useless in the current climate of political party financing. The

limits set in the 2000 Act, though, make Ashcroft’s donations permissible

14

B. Clift and J. Fisher, Comparative Party Finance Reform: The Cases of France and Britain, Party Politics, Vol.

10, No. 6, 2004, p10

Page | 11

The Ashcroft 'Affair'

under the law. The reviewing of caps was important and an

understanding of capping is now required.

These pre-election reviews agreed a cap and an additional sum allowed

for each voter in the constituency. For example, at the 2010 general

election the spending cap was £25,000, plus 5p (in a borough or burgh)

or 7p (in a county) per voter, in the five months leading up to a General

Election. Let us look at Amber Valley, a constituency in Derbyshire and

one of Ashcroft’s target seats. The constituency had 70,171 voters. This

meant the entitlement was £25,000 maximum spend plus the application

of 5p per voter, giving an additional figure equalling £3,508.55. This

gave a legal total of £28,508.55 available to the candidates to spend if

they could raise the money.15

Making allowances: Ashcroft’s reasons exposed?

The constituency of Amber Valley was a seat where the incumbent

Labour MP, Judy Mallaber, had a majority of 5,275.16 Her Conservative

opponent succeeded in overturning Mallaber‟s majority and gained a

narrow majority of 536.17 Financially speaking, Amber Valley candidates

spent in total (Fig. 1):

Candidate Name Party Total Donations

Judy Mallaber Labour £18,007.22

Nigel Mills Conservative Party £ 21,709.51

Thomas Snowdon Liberal Democrats £ 956.97

Figure 1 - Candidate Funding Totals - Amber Valley

15

Information available at http://www.electoralcommission.org.uk/elections/results/general-election/uk-

general-election-2010/amber-valley.htm (accessed 22/02/2010) 16

Information available at http://www.electoralcommission.org.uk/elections/results/general-

election/uk/general-election-2005/amber-valley.htm (accessed 20/03/2011) 17 Information available at http://www.electoralcommission.org.uk/elections/results/general-election/uk-

general-election-2010/amber-valley.htm (accessed 22/02/2010)

Page | 12

The Ashcroft 'Affair'

All three candidates were within the legal boundaries of election

spending rules that applied between the calling of the election and the

previous five months.

What this table does not include is the amount of money the sitting MP

spent on expenses. Between 2005 to 2009, Judy Mallaber had in total

£17,317 in Communications Allowances, which was a parliamentary

allowance which MPs could use to promote themselves to the electorate

during the length of the parliament. The second available allowance was

the Incidental Expenses Proportion allowance, an allowance which paid

for websites and extra costs, against which Mallaber claimed a total of

£2,056. Mallaber also transferred funds from her £46,666 Office and

Staffing allowances in which she could use 10% towards

communications which meant a further £4,666 was available to her for

spending on election campaigning. So between 2005 and 2009, Judy

Mallaber MP used £24,039 in public money to communicate her platform

to the electorate. If we include this we see that in reality Judy Mallaber

spent £42,046.22 between 2005 to 2010. Whereas her rival Nigel Mills

spent, between 2006 to 2010, only £ 21,709.51. Mallaber therefore had

a £ 20,336.7 advantage over ALL other candidates in the 2010 General

Election.18

This is reflected in other so-called ‘Ashcroft target seats’. We can see

the same pattern in Dover, Kent. The incumbent, Gwyn Prosser MP,

between 2005 to 2010, had £ 30,189.27 in expenses, along with

donations totalling £ 21,660.97. Prosser therefore had a combined grand

total of £ 51,850.24 and as a result was £ 15,063.31 richer than his

18

For candidate spending between 2005-2010 visit http://registers.electoralcommission.org.uk/regulatory-

issues/regdonregulateddonee.cfm; for information on Judy Mallaber MP expenses please visit either www.theyworkforyou.com/mp/judy-mallaber/amber_valley#expenses.htm or http://mpsallowances.parliament.uk/mpslordsandoffices/hocallowances/allowances-by-mp/judy- mallaber.htm (accessed 14/02/2011)

Page | 13

The Ashcroft 'Affair'

nearest rival Charlie Elphicke, the Conservative candidate, who during

2005-2010 spent the sum total of £ 37,126.46 on campaigning.19

This pattern can be seen across the 117 seats that Ashcroft targeted. An

excellent example of incumbent MPs „expenses‟ being a problem can be

seen in Gloucester where Labour MP Dhanda Parmjit Singh was

involved in the parliamentary expenses scandal and asked to repay

£2,202.38 to parliament. His spending was incredible when compared to

his opponents during the 2005 to 2010 parliament, especially when we

look at his spending in comparison to his rival Richard Graham, who

received £ 4,848 in Ashcroft money. Parmjit Singh between 2005 to

2010 received allowances worth £67,803.00 towards communicating

with the public along with political donations totalling £35,371.65. This

resulted in a grand total of £103,174.65 to spend between 2005 to 2010

to reach the wider electorate in Gloucester. The Conservative, Richard

Graham, received a grand total of £33,537.67, meaning that the

incumbent MP, Mr Dhanda Parmjit Singh, had a £ 69,636.98 advantage

over his rivals. 20

The expenses scandal in fact helped Ashcroft‟s targeting operation

primarily because the new Liberal or Labour candidate sitting in Labour

or Liberal held seats were not allowed access to the expenses of the

exiting MP. The expenses scandal resulted in the ‘retirement’ of

members of parliament right across the political divide. People were

retiring because of duck houses, switching second homes or claiming to

19

http://registers.electoralcommission.org.uk/regulatory-issues/regdonregulateddonee.cfm (accessed

14/02/2011) 20

Information available at http://www.parliament.uk/documents/commons-finance-

office/hocallowances0809.pdf and http://mpsallowances.parliament.uk/mpslordsandoffices/hocallowances/allowances-by-mp/parmjit-dhanda/ (accessed at 03/03/2011)

Page | 14

The Ashcroft 'Affair'

be living in London when they did not.21 This behaviour tarnished the

entire system and resulted in the general public’s growing contempt for

politicians.

The flipside for the Ashcroft team was that retirees were not allowed to

use their allowances to help fund the campaign of their replacements as

candidates. This was regardless of the fact they were members of the

same party attempting to become MPs in the same constituencies.

Therefore, many predominantly Labour candidates had to conduct their

spending on the basis of fundraising for donations and did not have

access to public money. This starkly emphasised the disparity between

Conservative and opposition candidates.

If we look at constituencies where the incumbent was resigning we can

see that Conservatives now outspent their Labour opponents. In

Cannock Chase, Tony Wright the Labour MP retired and Labour’s new

candidate, Sue Woodward, failed to outspend her Conservative

opponent Aidan Burley. Woodward raised £8,069.33 during the

campaign whereas Burley raised £25,979.33. The same economic might

can be seen in Carlyle, Sherwood and Erewash.22 The most spectacular

example of Conservative spending was in the constituency of Keighley.

The incumbent MP Anne Cryer was standing down, possibly something

to do with the £ 1,595.25 she was forced to repay to the House of

Commons for over-claiming on her expenses,23 her replacement Labour

candidate was Stephanie Jane, who received £ 19,275.67 in donations.

21

Martin Bell, A Very British Revolution: The Expenses Scandal and How to Save our Democracy, (Icon, London,

2010), p1-26 22 Information available at http://registers.electoralcommission.org.uk/regulatory-

issues/regdpoliticalparties.cfm?ec={ts%20%272011-03-03%2013%3A39%3A43%27} (accessed 20/02/2011) 23

Daily Mirror Article entitled 'MPs Expenses: How much does your MP need to pay back?' available at

http://www.mirror.co.uk/news/top-stories/2010/02/05/mps-expenses-how-much-does-your-mp-have-to-pay-back- 115875-22020053/ (accessed 20/02/2011)

Page | 15

The Ashcroft 'Affair'

But her Conservative rival Kris Hopkins received a donation on the 19th

July 2005 - after the General Election from Bearwood Corporate

Services totalling £ 14,842.57.24 Plus, during the long/short campaign he

received extra donations totalling £ 15,404.42 which meant that he had a

£30,246.99 war chest at his disposal. He outspent Jane by over ten

thousand pounds. This meant he was able to present himself in a more

professional manner to the electorate. But, as Ashcroft himself argues,

the "disquiet over our targeting campaign was the idea that we had an

advantage in marginal constituencies. In fact we were struggling to keep

up with the edge already enjoyed by incumbent MPs. It has long been

the case that sitting MPs have a head start over their challengers."25 The

previous incumbent, Ann Cryer, spent £ 14,200 of her communications

allowance on non-personality dependent literature which meant, whether

she herself was sitting, or not, it would resonate with labour

sympathising voters. So in reality, and if we factor this element into the

picture, we can argue that the Labour candidate Stephanie Jane had a

bigger direct and indirect financial war chest than Conservative

candidate Kris Hopkins.

Political Rich List: Tories win again!

But this makes it sound as if the Labour party had more money than the

Conservative party. In reality the Conservative party was the wealthiest

party in the 2010 general election. In fact, the Conservative party has

historically been the wealthiest party and in the 1992, 1997, 2001 and

2010 general elections they were the biggest spenders, only beaten by

Labour, by £ 85,727, at the 2005 general election. Half of those elections

were Conservative losses, and major losses at that. Perhaps this means

24

Information available at http://registers.electoralcommission.org.uk/regulatory-

issues/regdpoliticalparties.cfm?ec={ts%20%272011-03-03%2013%3A39%3A43%27} (accessed 20/02/2011) 25 Ashcroft, Minority Verdict, p89

Page | 16

The Ashcroft 'Affair'

that money does not necessarily win elections. This is not the general

argument that opposition media and parties employ. In fact, they

highlight higher spending as a factor in winning elections. If this were

true, in all probability John Major would have won the 1997 election,

William Hague would have remained Welsh Secretary and John Major

would have won the 2001 election, but would have lost to the Labour

party in 2005 because they spent more money. Now this virtual history

seems to suggest that money wins elections. The reality is very different

and this needs to be examined further. The media and press reportage

of Ashcroft and his ‘buying of elections’ needs to be placed within the

realpolitik of the modern day financial realities of political parties.

The Guardians of Truth: Ashcroft‟s role exposed?

Gordon Brown, in an interview with The Observer, told the paper that the

funding of the Conservative party by a billionaire tax-dodger was "a

scandal."26 The thrust of the article was that Gordon Brown highlighted

the scandal of the Conservative party’s biggest backer. This article is full of

inconsistencies and if we break it down we can investigate these

claims by looking at the facts. So let us look at the article in detail.

The Observer article was a precursor to another in-depth interview with

the then Prime Minister Gordon Brown. The premise of the article was

that the prime minister was about to make his ‘strongest comments’ on the

Ashcroft Affair. Brown stated that "it was now the duty of journalists and

opposition politicians to "press these people for answers."27 He

continued "it’s a scandal that we haven’t had proper answers about

26

'Gordon Brown attacks 'scandal' of Lord Ashcroft Donations', by Toby Helm and Rajeev Syaal, Sunday 7th of

February 2010, The Observer, p1, also available online at http://www.guardian.co.uk/politics/2010/feb/07/gordon-brown-ashcroft-donations-scandal (accessed 20/03/2011) 27

Ibid, p1 Page | 17

The Ashcroft 'Affair'

where [Ashcroft’s] money has come from and what the status of this

person is"28 The Observer states that "Ashcroft has generated

controversy because he has become the Tory party’s biggest donor."29

And he has done this "without clarifying his British tax status."30 They go on

to state that "the Belize-based Billionaire is pumping money in to help Tory

candidates overturn Labour majorities in swing seats."31 They go

into detail stating that:

"Donations worth millions from his company, Bearwood Corporate Services, are under

investigation by the Electoral Commission, following allegations that the company was not

eligible to give money because it was not „carrying on‟ business in the UK."32

The case being made is that Ashcroft‟s donations are seedy. This is

because of his tax status and the fact that the money is going towards

the unwholesome act of overturning majorities in Labour seats. The

broader theme is that his businesses are ‘off-shore’ and avoid UK tax.

Linking this to the ‘fact’ that he is the party’s biggest donor is, in some

way, illegal and suspect. The charge is that his donations are invalid

because of his tax status. Let us now investigate this further.

Michael Ashcroft was appointed to the House of Lords in 2000 as a

working peer sitting on the Conservative benches as one of William

Hague’s opposition appointments. This was approved by the House

Scrutiny Committee in 2000 and then signed-off by 10 Downing Street

before being stamped by the Queen at Buckingham Palace. Ashcroft

himself states that the process of securing ennoblement required inter-

government approvals:

28 29

30 31 32

Ibid, p1-2 Ibid, p2 Ibid, p2 Ibid,

p2 Ibid, p2

Page | 18

The Ashcroft 'Affair'

"Under the unwritten conventions of the British constitution, the leader of the opposition is

permitted by the Prime Minister of the day to nominate a small number of people for a working

peerage. At the time, each nominee was, in turn, considered by the Honours Scrutiny

Committee to ensure that all nominees were fit and proper people to hold a seat in the upper

house."33

Ashcroft’s ennoblement did not actually occur in such a co-ordinated

way. His first two peerage applications, by William Hague, were

dismissed by the Honours Scrutiny Committee on the grounds that his

businesses were under investigation. They surrounded his interests in a

maritime accident in 1997 and whether he knew operationally what was

going on. An international maritime organisation investigation

exonerated Ashcroft, but his second peerage was blocked by Blair. His

third attempt resulted in Hague complaining to Blair directly, stating that

Blair was hampering the operational integrity of Her Majesty’s Loyal

Opposition, in the face of such a charge Blair backed down and on the

30th of March 2000 the London Gazzette published that "to be a Baron

Michael Ashcroft, Chairman of Carlisle Holdings Ltd."34

According to the Information Commissioner, Michael Ashcroft gave

"clear and unequivocal assurances that he will be taking up permanent

residence in the United Kingdom."35 The issue here is about

transparency - according to the information commissioner the leader of

the opposition, the Honours scrutiny committee and the Prime Minister

did not know what form this undertaking would take36 - and privacy is an

interesting point here. Ashcroft believes he, like any other citizen, has a

right to privacy, but this privacy has damaging consequences for trust

and having transparency with privacy within these processes perhaps

33 34

Michael Ashcroft, Dirty Times Dirty Politics, (BiteBack, London, 2009), p80 The London Gazette, Thursday 30th of March 2000 available at http://www.london-

gazette.co.uk/issues/55806/supplements/3657 (accessed 20/02/2011) 35

Information Commissioner: Freedom of Information Request Confirmation Reply; available at

http://www.ico.gov.uk/upload/documents/decisionnotices/2010/fs_50197952.pdf (accessed 10/01/2011) 36

Ibid, p2-3 Page | 19

The Ashcroft 'Affair'

might help the broader political community better understand these

events.

Because of this lack of transparency, Ashcroft was allowed to take up

UK residency, but as a non-domiciled UK resident, which meant he

would only be taxed on ALL UK income as oppose to a domiciled UK

resident who pays tax on ALL international and UK income. The problem

here is that Ashcroft ‘forgot’ to fill in certain forms which shows he was

willing to avoid tax as a perk of the job37. But there is a deeper issue at

stake here which surrounds the ‘tax’ issue but in a wider political context.

For example, Harriet Harman, the former Deputy Prime Minister, was

asked by BBC journalist Andrew Marr why Ashcroft had to give

assurances but Labour donors like Lord Paul or Sir Ronald Cohen

didn’t? Harman replied that "there wasn’t any [political] doubts about him

[Lord Paul]."38 Harman argued that, because of Ashcroft’s role and

political support for the Conservatives, he was forced to make

assurances. This is an important context which the media furore around

Ashcroft and his tax-status ignored.

So looking back at the Guardian article we can now say that the then

Government, along with the opposition and Lords committees failed to

manage Ashcroft‟s ennoblements in the correct fashion. It can be

equally argued that he was forced to make concessions which other

Lords did not. This seems to indicate that bad governance and bias was

at play here. Ashcroft cannot be made to look like the innocent party in

this, because he was aware of his deal and waited nearly 8 years before

filling out forms and thus denied the treasury millions of pounds in tax

37 38

Michael Ashcroft, Dirty Politics Dirty Times, p173-195 Andrew Marr Show transcript available at

http://news.bbc.co.uk/1/mobile/programmes/andrew_marr_show/8554254.stm (accessed 15/03/2011)

Page | 20

The Ashcroft 'Affair'

revenues. This fact aside, he was still legally allowed to donate to the

Conservative party. This was investigated by the Electoral Commission

because of his donations through Bearwood Corporate Services to the

Conservative party.

What bearing did Bearwood have on the election?

Bearwood Corporate Services is a small company that has 7 employees

in Wokingham, Reading. It serves as a business agency whereby people

can sell their businesses to other people and Bearwood act as the

middle man. The company is owned predominantly by Astral Holdings a

company that Ashcroft retains 70 per cent stock control. There are

arguments being made that money is being filtered into Bearwood from

off-shore companies. This is a legitimate query and one that should be

investigated in full. Between 2009-2010 Bearwood donated £ 587,951.73

to the Conservative party.39 The reason behind Bearwood’s donations are

more to do with tax loopholes and loop holes in the Political Parties,

Elections, Referendums Act 2000 which allows companies which are

listed on Companies House database and who pay full UK corporation

tax to donate to British political parties. Ashcroft is then allowed to

transfer money between companies. This is legal, every major company

does it. Tesco stores Ltd transfers payments to Tesco wholesale Ltd and

Tesco finance Limited all separate entities but owned by a parent

holdings

39

Companies House WebCheck on Bearwood Corporate Services issued on 28/03/2011 available at

http://wck2.companieshouse.gov.uk/63b50752c36e45e72d09464d675062bb/wcprodorder?ft=1 and for Conservative donations by Bearwood Corporate Services which are available at http://registers.electoralcommission.org.uk/regulatory-issues/regdpoliticalparties.cfm?ec={ts%20%272011- 03-03%2013%3A39%3A43%27} (accessed at 27/03/2011)

Page | 21

The Ashcroft 'Affair'

group called Tesco plc. This is what Ashcroft did and It’s legal and

above board. The electoral commission investigated Ashcroft and

Bearwood and concluded that the donations were permissible and

legal.40 So if tax-status and impermissible donations are the main

accusations then Ashcroft is not guilty and thus the Guardian’s article is

incorrect.

Let’s now look at the second bulk of grievances raised by the article by

The Guardian. The funding of constituencies and the millions he has

donated. We need to firstly look at the state of Conservative party

funding during this period.

Ashcroft, through Bearwood Corporate Services (BCS), has donated a

total amount of £ 991,134.77 in cash donations and £ 3,710,958.34 in

non-cash donations, which paid towards advertising, focus groups and

polling. In total between the second quarter of 2005 to the second

quarter of 2010 BCS donated £ 4,702,093.11.41 The Conservative Party

as a whole received, in all donations, a total of £ 147,105,904.8642 which

means Ashcroft, as a percentage of the total, donated 3.1 per cent of

Conservative party funds. 43 That’s a lot of money but not a commanding

amount because they got 96.9% of their money from other sources.

The Guardian‟s charges were that he was the Conservative party‟s

biggest donor. Really someone who donated 3 per cent is their biggest

40

Electoral Commission findings on Bearwood Corporate Services Limited available at

http://www.electoralcommission.org.uk/news-and-media/news-releases/electoral-commission-media- centre/news-releases-donations/bearwood-corporate-services-limited (accessed 20/02/2011) 41 Electoral Commission register of donations available at

http://registers.electoralcommission.org.uk/regulatory-issues/regdpoliticalparties.cfm?ec={ts%20%272011- 03-03%2013%3A39%3A43%27} (accessed at 12/01/2011) 42 Ibid, (accessed at 12/01/2011)

Page | 22

The Ashcroft 'Affair'

donor? We need to look at Conservative party donors and who makes

up the rest of the 97 per cent.

So let‟s see who funds the Conservative party. The Conservative party

received £ 4,65 million from Sir Anthony Bamford and family owners of

JCB but the biggest donor by far was Stanley Fink the "godfather of

Hedge Funds."44 Fink donated nearly £ 5 million between 2005 to 2010

and became the Conservative party’s biggest donor. Therefore, the

Guardian

arguing that Ashcroft was their biggest donor was a gross

misrepresentation of the truth and the arguments therein surrounding

eligibility, tax-status and behaviour as we have seen are incorrect.

Ashcroft was legally allowed to donate and donated only a nominal

amount compared to other donors. We have been able to look at the

facts and break down the article claim by claim and discovered, in

reality, Ashcroft did not behave in a ‘scandalous’ way.

But taking one article to pieces is not indicative of the wider reportage of

events. This paper cannot deconstruct all 1,282 reports which include

Ashcroft written before the 2010 General Election.45 But it can illustrate

this continuous usage of ‘Ashcroft’ as a caricature to portray wrong

doing and unfairness.

44 45

2http://wwwtimesonline.com/22/02/2011/fink_28282.htm (accessed 22/02/2011) Lexis Nexis search results number as of the 01/11/2010

Page | 23

The Ashcroft 'Affair'

Mirroring an alternate reality: The morphing of the Ashcroft

persona

If we look at the The Daily Mirror at a published article entitled ‘Fatcats

United: £45m from just 15 donors kept Tories afloat for 10 years’ by Tom

Mctague written on the 22nd of December 2010. This article argues that

the "Conservative party has been kept going for 10 years by just 15

super rich donors - fuelling accusations it is out of touch with ordinary

people."46 The reality is that these donors who gave £45m are still giving

less than the £ 145 million the Conservative party received overall. This

means more than just a few families make up the Conservative party

funding structure. The Daily Mirror in two other articles entitled ‘Lord

Ashcroft „bought 19 seats for the Tories’ written by Susie Boniface dated 6th

of March 2010 which argued that Bearwood Corporate Services bought

glossy leaflets for the Tories which "sparked a switch of tens of

thousands of voters from Labour to Tory."47 The premise here is that

voters changed their voting allegiance because of glossy leaflets and not

the track-record of the incumbent government. This belittles the

electorate and misses the point by not asking why they’re switching in

the first place? The final Daily Mirror article is entitled ‘Conservative

party links to fat cat banks revealed by Daily Mirror investigation’ by

James Lyons dated 10th of January 2011. The premise of the article is

that the Tories let the banks off the hook by imposing a small banking

levy because "the Tory-led government is deliberately giving its friends

46

Tom Mcteague, 'Fatcats United: £ 45m from just 15 donors keeps Tories afloat for 10 years', Daily Mirror,

22/12/2010 available at http://www.mirror.co.uk/news/top-stories/2010/12/22/fatcats-united-45m-from- just-15-donors-kept-tories-afloat-for-10-years-115875-22800476/ (accessed 02/02/2011) 47

Susie Boniface, 'Lord Ashcroft Bought 19 Seats for the Tories', Daily Mirror, 06/03/2010, available at

http://www.mirror.co.uk/news/top-stories/2010/03/06/lord-ashcroft-bought-19-seats-for-tories-115875- 22090680/ (accessed 22/01/2011)

Page | 24

The Ashcroft 'Affair'

in the city an easy ride."48 This article is a great way of finishing off the

broader reportage by the Daily Mirror and is a theme that has been

broadly copied in other newspapers which we will explore further.49

Ashcroft, in media reportage from the Independent, the Mirror to the

Guardian, has been caricatured as a tax-dodging Billionaire who is

unfairly destroying the democratic foundations of this country. But once

the election was won, and a Conservative-led government was in place,

Ashcroft was forgotten about. A Guardian article of February 2011

argued that "the city accounted for £ 11.4 million of Tory funding -

50.79% of its total haul - in 2010, a general election year."50 Ashcroft is

not even discussed as „a major Tory donor‟. The reason is because

Ashcroft-bashing isn’t politically expedient at this moment in time -

Banker bashing is the current media fixation - and Ashcroft is old news.

But this in itself illustrates the reportage of events surrounding the

Ashcroft ‘conspiracy’ as being a politically expedient attack upon an

opposition party with a good chance at winning an election. By looking at

the reportage and cross-analysing their allegations with the facts we can

come to a conclusion that the left-wing media did participate in a

campaign of slanderous attacks upon Lord Ashcroft and the

Conservative Party.

48

James Lyons, 'Conservative Party links to fat cat banks revealed by Daily Mirror investigation, Daily Mirror,

10/01/2011, available at http://www.mirror.co.uk/news/city-news/2011/01/10/conservative-party-links-to- fat-cat-bankers-revealed-by-daily-mirror-investigation-115875-22838080/ (accessed 09/01/2011) 49

See Guardian article dated 08/02/2011 by Nicholas Wall and Jill Treanor, 'Revealed: 50% of Tory Funds come

from the City', available at http://www.guardian.co.uk/politics/2011/feb/08/tory-funds-half-city-banks- financial-sector (accessed 03/03/2011) 50

Ibid, (accessed 03/03/2011) Page | 25

The Ashcroft 'Affair'

Conclusions: Ashcroft, The Conservatives and the Opposition

media and politicians

In conclusion, arguments that the Conservative marginal constituency

operation was unfair are a gross misrepresentation of the truth. The

Labour government had a majority of MPs who were fighting, albeit with

a smaller donor pot but still with ample public funds at their disposal.

This did not make election spending an equal playing field but that is not

the point of the current British political system. Parties are charged with

raising money to fund their own operations - there are freebies paid for

by the state, for example each candidate at an election gets one mail

shot to the entire constituency - and these operations are costly affairs.

TV airtime, billboards, sending out millions of direct mail leaflets, all cost

money. The candidates need to raise funds at a constituency level. The

parties need to raise funds at a national level and the decline in political

party membership has resulted in political parties being sycophantically

close to their main donors. In the case of the Conservative party this

means predominantly big business. With the Labour party it is

predominantly big trade unions and for the Lib Dems it is between

wealthy individuals within the party and public money for research and

other costs. This has resulted in elections being fought in a very stage-

managed manner. So when Ashcroft decided to try something new and

fresh it was obvious he would be attacked. But more importantly, the

opposition argument that Ashcroft and his cronies in the Tory party were

manipulating elections, is as we have already seen, a gross

misrepresentation of the truth. The arguments around fairness are about

how much money parties spend and how parties should raise that

money. The biggest problem with Ashcroft detractors is that they do not

take the Ashcroft conspiracy to its logical conclusion. Whilst this paper

Page | 26

The Ashcroft 'Affair'

has identified a slander campaign directed towards an individual with

key responsibilities within the Conservative party by opposition media

and politicians this does not excuse the fact that Ashcroft gave an

excessive amount of money. The Ashcroft „conspiracy‟ in reality is about

fairness and who should donate to a political party. And this is actually

an argument around capping general or council election spending. There

are a myriad of problems here. The Conservatives receive half their

money from business. The Labour party receives half its money from

trade unions. The Lib Dems receive one third from wealthy individual MP

or councillors and a vast supply of public money makes up another one-

third. This means the big three political parties are closely connected to

their funding and this is not good for our democracy. We need to look at

funding caps because donations, regardless of any assurances given

buy access which in turn gives wealthy people a chance to influence

policy. Capping funding, though, could break political parties. Whilst the

Conservative party would probably remain the strongest, the Labour

party would lose millions and the Lib Dems would be crippled and

smaller parties could be wiped out! But something has to be done

because the Ashcroft „Affair‟ is not too dissimilar to the Ecclestone ‘affair’ or

any other financial donation which is suspected of resulting in

policy/election changes. The majority of parties will survive nevertheless:

They will learn to adapt to the changing nature of funding and fund-

raising.

This project has looked at the media, the opposition parties, the

Conservatives and Lord Ashcroft and as such has come to the

conclusion that Ashcroft and the Conservatives are not guilty of

perpetrating a manipulation of the 2010 General election by funding

marginal constituencies. Rather, Ashcroft and the Conservatives are the

Page | 27

The Ashcroft 'Affair'

victims of a targeted campaign of slander by left-wing political and media

groups who are attacking the unfairness they see in the „Ashcroft‟

millions. Instead of actively thinking of ways to construct their own

targeting operation and strategically invest their resources accordingly,

they simply shouted as loudly as they could that Ashcroft was conspiring

to rig the election. The Ashcroft ‘Affair’ was a defining example of

political sour grapes; a left-wing media/political intrigue against a

rejuvenated Conservative party which was finally on the verge of

regaining political power.

Page | 28

The Ashcroft 'Affair'

Bibliography

Primary Sources

Government and Non-Governmental Organisations Websites &

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Electoral Commission PEF Database

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issues/regdpoliticalparties.cfm?ec={ts%20%272011-03-03%2013%3A39%3A43%27}

They Work for You

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Standards in Public Life Committee - Sir John Stafford Report of

Constituency Funding

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Page | 29

The Ashcroft 'Affair'

Houses of Parliament Allowances and Expenses Data

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Lyons, J., „Conservative Party links to Fat Cat Banks revealed by Daily

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City‟, The Guardian, 08/02/2011

McTeague, T., „Fatcats United: £ 45m from just 15 donors keep Tories

afloat for 10 years‟, The Daily Mirror, 22/12/2010

Boniface, S., „Lord Ashcroft bought „19‟ seats for the Tories‟, The Daily

Mirror, 06/03/2010

Page | 30

The Ashcroft 'Affair'

Moodey, J., „Stanley Fink: The Godfather of Hedge Funds‟, The Times,

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Telephone Interview with Mr Gavin Barwell MP for Croydon Central on

Wednesday 16th of March 2011 at 15:22 his direct line telephone number

is 0207 219 7044

Page | 31

The Ashcroft 'Affair'

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Page | 32

The Ashcroft 'Affair'

List of Appendices

'Ashcroft's election war-chest targets marginals', The Independent, by N. Morris, A. Grice

and S. Morris, Saturday, 27th of February 2010

'Leading Article: How money can distort the democratic process', The Independent,

Saturday 27th of February 2010

'Ashcroft' Money cast a long shadow over rivals', The Independent, by A. McSmith,

Saturday 27th of February

'Private funding of Tory contenders in marginal seats is insidious', The Guardian,

by B. Rammell, Thursday 25th of October 2007

'Minefields in the marginals', The Guardian, by M. White, Thursday 23rd of October

2007

'Lord Ashcroft cut back on Conservative donations in marginal seats', The Guardian, Friday

7th of May 2010

'Lord Ashcroft 'bought' 19 Seats for Tories', Daily Mirror, by S. Boniface, 6th of March 2010

'Conservative party links to fat cat bankers revealed by Daily Mirror investigation', The Daily

Mirror, 10th of January 2011

'Fatcats United: £45m from just 15 donors kept Tories afloat for 10 years', The Daily Mirror,

by T. McTague, 22nd of December 2010

Email to Gavin Barwell's Office

Page | 40