Public Administration and Constitutional Affairs Committee

Debate between Bernard Jenkin and Anna Turley

Monday 18th April 2016 Commons Chamber

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

I am grateful to have this opportunity to make a statement on the report by the Public Administration and Constitutional Affairs Committee entitled “Appointment of the Commissioner for Public Appointments”, which we published last week. The post of Commissioner for Public Appointments was established in 1995 following the recommendation of the Committee on Standards in Public Life in its first report, the Nolan report. The Nolan report recommended the creation of the post as a means of enhancing public confidence in the public appointments process and the quality of appointments made under it. The role of the Commissioner for Public Appointments is set out in the Public Appointments Order in Council 2015.

Since the post and office of the commissioner were established in 1995, there have been four Commissioners for Public Appointments. From 2011 to 2016, the post of CPA was held jointly with the role of First Civil Service Commissioner by Sir David Normington. However, with Sir David’s departure, the two posts of First Civil Service Commissioner and CPA were advertised separately. That was the result of a recommendation made to Ministers by Sir Gerry Grimstone prior to the publication of his review of public appointments. As indicated by the recruitment advertising for this post, the commissioner will be expected to work with the Government in implementing the Grimstone review’s recommendations. The Grimstone review, however, was published only in March this year.

After two hearings with the Government’s preferred candidate, the right hon. Peter Riddell, and after some discussion, we have given Mr Riddell a qualified endorsement as Commissioner for Public Appointments. He is well known to many in this House as a respected political journalist and commentator. He was appointed a Privy Counsellor for his work on the Gibson inquiry into the possible illegal rendition of UK detainees. He has also been chair of the Hansard Society and, most recently and perhaps relevantly, director of the Institute for Government.

PACAC remains concerned, however, that the changes proposed by the Grimstone review, as interpreted by the Government, alongside other changes, such as the introduction of enlarged ministerial offices—whereby Ministers, instead of the civil service, can themselves make appointments to their private offices—may be leading to an increasing politicisation of senior public appointments. We will report on our inquiry into the Grimstone proposals after the code of practice for public appointments and the new Order in Council have been published.

The proposals are controversial. They propose a significant removal of the powers exercised by the office of the CPA over the public appointments process. Ministers, instead of the CPA, would set the rules by drawing up the new governance code. Ministers could decide to run an appointment process without referral to the CPA. Ministers, not the CPA, could determine the membership of appointment panels, including the independent member. Ministers could include on selection panels an official acting as a Ministers’ representative without the consent of the Commissioner for Public Appointments. Ministers would have latitude to interview and appoint someone even if the selection panel had marked him or her below the line.

The new Order in Council and the new code of conduct for public appointments have yet to be published even in draft form. Publication of the Grimstone review was originally expected last year, but it was held back. There was a gap of only three days between the publication of the Grimstone review, along with the Government response, and Mr Riddell being named as the preferred candidate. That left us with no opportunity, by the time of Mr Riddell’s appearance before the Committee on 21 March, to consider the Grimstone review.

We concluded that it would have been inappropriate for us to make a report on the Government’s preferred candidate that could have been regarded as an implicit and unqualified endorsement of the Government’s interpretation of the Grimstone proposals. After our initial evidence session with Mr Riddell before Easter, we therefore issued a call for evidence on the Grimstone review. We took evidence from the outgoing CPA, Sir David Normington, from Sir Gerry Grimstone himself and from my right hon. Friend the Minister for the Cabinet Office and Paymaster General prior to concluding our pre-appointment scrutiny of Mr Riddell on 12 April. I am very grateful to the Government for delaying Mr Riddell’s appointment while we completed our pre-appointment scrutiny.

We intend to report on the implications of Sir Gerry Grimstone’s review shortly. We will welcome any further written evidence. The present Committee on Standards in Public Life has warned that this could

“all add up to a public perception of a system which was being operated under increased political patronage. It could also run counter to the intentions to increase transparency and diversity.”

The outgoing CPA, Sir David Normington, has expressed his opposition to the proposals as a reversal of the Nolan reforms of 20 years ago. Sir Gerry Grimstone has made it clear that transparency rather than the direct powers currently held by the commissioner would enable the commissioner to remain a powerful regulator. However, the Minister for the Cabinet Office has made it clear that the CPA would be consulted by Ministers, but the CPA would no longer have the power to direct an independent appointment process, as now.

PACAC will therefore closely monitor how Mr Riddell works with Ministers to implement the Grimstone review’s recommendations, and how he responds to the recommendations that PACAC have yet to make on the Grimstone review. PACAC will underwrite Mr Riddell’s authority and independence as the Commissioner for Public Appointments, and we will make use of our ability to carry out follow-up scrutiny, if necessary, to make sure that any concerns we have are heard. We agree with Sir Gerry Grimstone that the role of the CPA should be robust and authoritative, and should not be undermined.

Furthermore, in the light of the Grimstone review’s proposed changes to the public appointments process and in line with other roles, such as those of the Parliamentary and Health Service Ombudsman and the chairs of the Office for Budget Responsibility and the UK Statistics Authority, PACAC recommends that future appointments of the Commissioner for Public Appointments should be subject to a resolution of both Houses of Parliament. This will be an additional safeguard, and act as a public reassurance that the independence and status of the Commissioner for Public Appointments is not threatened. We also recommend that a similar procedure should apply to the post of First Civil Service Commissioner. I am very pleased to present this report to Parliament.

[Anna Turley (Redcar) (Lab/Co-op)]

I commend the Chair of the Public Administration and Constitutional Affairs Committee for his report and today’s statement.

Sir David Normington, the outgoing Commissioner for Public Appointments, said that the Government’s proposals put at risk 20 years of progress and risk ushering in

“a return to the days of political and personal patronage”.

Indeed, he said that as the commissioner, he would be contacted once a month by the Prime Minister or other Ministers, asking why party donors, office holders or former MPs had not been shortlisted or recommended for posts.

In the light of those concerns, does the hon. Gentleman share our fear that dismantling the powers of the independent Commissioner for Public Appointments will open the door to political cronies being gifted public service jobs either as a reward for donations or to create an army of political enforcers in the public sector? Rather than appointment being made on merit or according to skills or public service ethos, are not the Government putting themselves at risk of accusations of cash for jobs?

[Mr Jenkin]

I think the danger is not that those things will happen, but that people will say that they may seem to be happening. Curiously, it might make it harder for the Government to put a friend or supporter into a public appointment job if the Minister is more directly involved. The current arrangements were created to protect Ministers.

If Ministers are frustrated that the wrong people are being interviewed, that people are being appointed according to the wrong job specifications or that people with the right skills are not being given an interview, it is up to them to make sure that the job specification for a job is as they think it should be before the recruitment process starts.

I will not defend the public appointments process in total. The Grimstone review has started a much-needed debate about public appointments, but before my Committee and I give a definitive view of Sir Gerry Grimstone’s proposals, we want to consider all the arguments and all the evidence.

Public Administration and Constitutional Affairs committee

Debate between Bernard Jenkin and Anna Turley

Thursday 4th February 2016 Commons Chamber

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

I am grateful to the Backbench Business Committee for the opportunity to make this statement on our report entitled, “The collapse of Kids Company: lessons for charity trustees, professional firms, the Charity Commission, and Whitehall”.

We found that an extraordinary catalogue of failures of governance and control had taken place in the charity. It is obvious that many will feel blamed by our report. However, we very deliberately set about investigating the matter with a view to find lessons to be learned, not to find blame. Unless we can learn lessons, there will be an increased likelihood that such events will be repeated.

First, on the question of professional firms, the charity’s auditors repeated in every audit letter their concern that reserves in the charity were very low. The charity never acted on that advice. Instead, it was all too keen to trumpet the fact that it had received what it called a “clean audit” in every year of its existence. Under questioning, the auditor said that the charity had been living permanently “on a knife edge”. That sense of urgency was not communicated in formal advice to the charity. He also candidly admitted that the auditors should have notified the Charity Commission of their concerns about the charity, in accordance with the duty placed on auditors of charities under section 156 of the Charities Act 2011. That is a lesson that I hope all auditors will learn.

We also cross-examined Pannell Kerr Forster, which did an investigation into the governance and controls of the charity, on behalf of the Cabinet Office. We were concerned about how it evolved the remit of its report into being an investigation into governance controls rather than governance and controls. The report ended up being of rather limited value in the Cabinet Office, although it was read as what it was originally intended to be. That gives rise to the question of how the Government manage professional firms, as well as of how professional firms conduct themselves in respect of their responsibilities.

The charity also commissioned advice from PricewaterhouseCoopers, but it had so little time to produce anything in the run-up to the collapse of the charity that what it produced was of extremely little value. The Government took too much comfort from that report as well, and PwC should have been more candid and direct with the Government about how valuable its work could be to them.

The Charity Commission has a statutory duty to prevent, detect and tackle abuse and mismanagement in charities. It did not do so with Kids Company. Prior to 2015 the Charity Commission did not engage with Kids Company, because it received very few complaints. Why did so few people complain to the Charity Commission, given that this was, for a long period, a charity with a mixed reputation that excited a lot of public comment? In order to attract complaints, the Charity Commission should have a much higher profile as an avenue for complaints. It needs to be much more proactive in responding to concerns that are raised in public about a charity. In the case of high-risk charities with many employees and dependent beneficiaries, it should be equipped and funded to do more to provide scrutiny and, more importantly, advice and support to struggling trustees.

The Government need to reverse cuts to the Charity Commission to enable it to carry out its statutory function. We also recommend that the Charity Commission take new powers to hold hearings and to produce reports and recommendations about charities. It really should not fall to a Select Committee of the House to produce reports on the activities of individual charities. Kids Company received more than £42 million in grants from central Government across several Administrations, and it has not had to compete for a grant since 2013. Other charities have voiced bitter discontent at the unfairness of that. Government will need to work hard to restore faith in the grant-giving system of Whitehall.

Kids Company enjoyed unique, privileged and significant access to senior Ministers, and even to Prime Ministers and Leaders of the Opposition, throughout successive Administrations. Some witnesses stated that they were intimidated by that high-profile support, and questions have been raised about whether it affected funding decisions; it certainly discouraged people from raising concerns. Government lacked any objective assessment of Kids Company’s activities and outcomes, and the effectiveness of its governance. Government must improve their capability so that they are less reliant on external reviews when making assessments about charities.

The civil service should be commended for resisting the hold that Kids Company seemed to have over so many others, but the advice of the civil service was, in the end, overridden. Ministers should not allow charity representatives to exploit their access to Government in a way that might be construed to be unethical. Ministers should not override, or risk creating the perception that they are overriding, official advice to hand over funding to charities on the basis of personal prejudice or political considerations. That raises questions about how conflicts of interest for Ministers are addressed in Government with respect to charity funding. The awarding of commercial contracts could never have been conducted on the same basis.

The real message of the report is about charity trustees. It is the same as the message in our report about charity funding last week, in which we found that trustees of some of the most famous charities in the country had failed to understand what was being done in their name. Both reports highlight the role of trustees of charities. The primary responsibility of trustees is the good governance and the maintenance of the reputation of their charities. The primary responsibility for Kids Company’s collapse rests with the charity trustees, who failed in their duty concerning the governance of the charity. I do not for a moment doubt the good faith of every trustee who served the charity, and I have evidence that some tried very hard to do the right thing. The only conclusion that anyone can reach is that either they did not know or understand the implications of what was going on in the charity, or they knew and failed to act.

The Charity Commission’s guidance requires trustees to

“make decisions solely in the charity’s interests. They should not allow themselves to be swayed by personal prejudices or dominant personalities.”

That seems to be exactly what happened in Kids Company, however, and it must be in danger of happening in every large charity that has been built up by a powerful and influential founder. The lesson is a universal one for all trustees. The trustee body of Kids Company did not have the necessary knowledge or experience of, for example, psychotherapy or youth services to be able to interrogate the operating model and safeguarding procedures.

In conclusion, it would be wrong to scapegoat any single individual for what occurred in the charity, but there are lessons that the House, the Government, the Charity Commission and professionals should draw from the situation. Most importantly, the Government need to understand what went wrong and how it can be rectified in future.

[Anna Turley (Redcar) (Lab/Co-op)]

I pay tribute to the hon. Member for Harwich and North Essex (Mr Jenkin) and the members of the Select Committee for this important report. It has shone a light on what is a very sorry saga for all concerned, not least the vulnerable children who turned to Kids Company in their hour of need. I also pay tribute to the thousands of volunteers and workers in the sector who do so much to support vulnerable young people, usually without the same levels of funding and freedom that Kids Company clearly enjoyed. It is a deep shame that so much good work is at risk of being tarnished by this unique, high-profile failure. Having read the report, particularly the evidence given to the Committee by the senior civil service, I want to ask the hon. Gentleman about the way in which grants were administered, and whether he feels anything has changed since his report.

The Government have just passed the Charities (Protection and Social Investment) Bill, which was supported by Labour, to beef up the Charity Commission’s regulation of the sector, particularly when it comes to trustees. Does the hon. Gentleman feel that the Government have learned their own lessons? For example, it is clear that rules applying to other charities did not apply to Kids Company. As he said, it had not had to compete for a grant from central Government since 2013. The Committee was told by a former Conservative Minister that Kids Company

“appeared to have a lower threshold of proof in order to get money from public funds”

and that its chief executive

“was almost the poster girl at the Big Society summit”.

I ask the Minister whether the Government—both Ministers and civil servants—have actually acknowledged their role in this sorry saga, and whether they have taken any concrete steps to ensure that they are never complicit in such a tragedy again.

[Mr Jenkin]

I am grateful to the hon. Lady for her comments. Let me emphasise, as she did, that it is plain to see that there was much good work going on in the charity, and that has been lost; that many vulnerable young people were dependent on the charity, and they have been left forlorn and bereft; that many of the employees and volunteers were deeply committed to the charity’s work, and they feel deeply betrayed and let down by what has happened; and that this has caused a great deal of distress. I am pleased to be able to inform the House that there is already evidence of things being salvaged from Kids Company and of things being rebuilt in the sector. We wish every success to those who are going to fund and support those things, because there is a gap, which the charity was seeking to fill, in meeting the needs of our society.

Yes, we are recommending even more powers for the Charity Commission than those in the Charities (Protection and Social Investment) Bill. We very much want the Charity Commission to recommend courses for charity trustees, so that they have somewhere to go to learn. The Institute of Directors runs courses for non-executive directors. Where is the equivalent for charity trustees, who have just as onerous a set of responsibilities? It is not the executives and the chief executive who are responsible for the conduct of a charity, but the trustees, who are jointly and severally liable, and it is not just the chairman who is responsible, but all the trustees.

We want the Charity Commission to have the power to hold legally privileged hearings, like those of a statutory inquiry, so that it can hear and receive evidence that cannot be impugned in the courts. That would mean that people with concerns about charities could go to the Charity Commission without the fear of losing their job, of reprisals or of being traduced in the press. The Charity Commission would be able to hold proper hearings and people could speak to it without fear or favour, as they do before Select Committees.

The hon. Lady raised the question about conflicts of interests that Ministers did not quite understand and that the system has not quite grasped. If the senior executive of a charity appears on a public platform with someone who then becomes the Prime Minister or is photographed in the Cabinet room with the Prime Minister at the launch of a Government initiative, they have a mutual interest, and that was not reflected in the way decisions were made in this case. If the political interests or the financial interests of the charity become aligned with the political interests of certain Ministers, those Ministers should recuse themselves from those decisions, as they would in any commercial arrangement. There is going to be a new arrangement. We are going to require the Government to think about this very seriously and possibly even amend the ministerial code accordingly.