Business and politics shouldn’t mix
Once companies gave money to the Conservative party as freely as trade unions funded Labour. But whereas workers could opt out of their political donation, investors’ only choice was to vote out the motion at the annual meeting or to sell out of the shares.
Yet many trade unionists belonged to pension funds that owned shares in companies and objected to their money being diverted to a party they opposed. Indeed, the wider share ownership brought about by demutualisations and privatisation created an investor base that believed in business rather than capitalism and did not share the all the Conservative party’s beliefs.
So it was quite right that during the 1990s corporate donations to political parties almost disappeared – helped by business’s disillusion with the governing Tory party.
The payments by Caledonia Investment thus stand out as a rare exception. The company is asking shareholders at its annual meeting at the end of July to raise its donation to the Conservatives from £60,000 to £75,000. Investors should oppose the proposal.
Political donations stemmed not only from the affiliations of the captains of industry but also from the threat of nationalisation from the 1930s to 1970s. Companies targeted for state ownership paid up to fight for their own survival.
Caledonia has no such defence however: it is an investment trust. What would its directors think if a company in which it invested donated money to a political party that could have gone to shareholders? And what if that party was Labour? Would it respect the directors’ choice, sell on principle or consider the performance of the underlying investment?
Caledonia shareholders, or those who might want to become investors, should not have to make that choice. It could be argued Caledonia should be free to spend its cash as it and its shareholders want: if some investors shun the company and depress its share price, that is the choice of those who do buy.
But if shareholders want to support a party they should do it from their own pockets. People should be free to invest a company without having to buy its politics too.
