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Should Labour have declared Saatchi work as donation?

• Michael Crick
• 29 Feb 08, 03:20 PM

It's a great mystery. You'll recall that last summer the Labour Party announced - with some glee - that they'd recruited the advertising agency Saatchi and Saatchi to work on the next election campaign. It was heralded as a great coup for Gordon Brown at the time - Mrs Thatcher's favourite advertising agency was now working for Labour. And Saatchi and Saatchi worked frantically for their new political clients in late August, September and early October. The account manager Robert Senior and his colleagues came up with the clever slogan, "Not Flash, Just Gordon". And you can imagine the intense frustration and dismay amongst the Saatchi and Saatchi team in their offices in Charlotte Street when GB suddenly decided there wouldn't be an autumn election after all.

The big question remains as to how much all Saatchi's work had cost Labour. Not much, I was told. It seems Saatchi had pretty much done their work for Labour for next to nothing. I don't have the figures, but I think we can assume that the work they have done for Labour since last August is worth many tens of thousands of pounds commercially, if not hundreds of thousands. So at the end of November I asked my Newsnight colleague Hugh Milbourn to ring Saatchi's and get this confirmed or denied. He left a message and their director of Communications Eleanor Conroy rang back and told Hugh that Saatchi's had done their work for Labour at a "less than a fifth of a normal fee" charged to a commercial client. Ms Conroy said their work for Labour was "not at commercial rates". She added, it was "two fifths of f*** all", and said, "we do it for love and PR".

It was treated as a "prestigious" account, she explained, similar to cut-price work that Saatchi's often does for charities, such as the NSPCC. And Ms Conroy went into some detail about how the arrangement had worked. Saatchi's initial pitch for the contract had been done for free, as usually happens in the advertising industry. But she then explained that their subsequent work for the Labour Party was done at a considerable discount.

One big problem

But there's one big problem with this. By law, nowadays, if any organisation works for a political party at significantly less than commercial rates - which is deemed to be a discount of more than 10% - that has to be publicly declared as a political donation (the donation is the difference between what they are charged and what they would be charged if it were a commercial arrangement). Now the "less than a fifth of a normal fee" mentioned by Ms Conroy last November suggests the discount Saatchis gave Labour was indeed more than 10%. And her specific mention of the work Saatchi does for charities strongly suggested there was an element of "donation" to the arrangement.

I looked on the Electoral Commission website for donations received by the Labour Party for the period July to September 2007, and found no mention of Saatchis. And there was nothing either in the recently published returns for the period October to December 2007.

How come? Has Labour again failed to declare substantial political donation as required by law?

When Newsnight rang Ms Conroy today she'd rather changed her tune. She insisted that according to Robert Senior, Saatchi's relationship with Labour is purely commercial and Labour do pay commercial rates.

It's all very strange. When Eleanor Conroy spoke to us last November she clearly wasn't speaking off the top of her head, she rang back then to respond to our query, and had ample time to check the facts.

A Labour Party spokesman told me today that their relationship with Saatchi and Saatchi was a "commercial arrangement" based on paying the agency a monthly retainer and therefore there is no need to register it with the electoral commission as a party donation. "Contractual commercial arrangements are not donations," they said.

Why then, I asked the Labour spokesman, has Eleanor Conroy compared it to the cut price work that Saatchi does for charity?

"You'll have to ask Eleanor Conroy that."