Advisory Committee on Business Appointments

Bernard Jenkin Excerpts

Thursday 28th June 2018 Commons Chamber

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

I beg to move,

That this House has considered the Thirteenth Report of the Public Administration and Constitutional Affairs Committee, HC 252, Managing Ministers’ and officials’ conflicts of interest: time for clearer values, principles and action, on the role and effectiveness of the Advisory Committee on Business Appointments (ACoBA); notes that ACoBA regulates applications for business appointments by former Ministers and civil servants who have recently left the public sector; believes that ACoBA is an ineffectual regulator which fails to inspire public confidence or respect; expresses concern that the Committee’s inquiry revealed numerous gaps in ACoBA’s monitoring process with insufficient attention paid to the principles that should govern business appointments; agrees that failures of consecutive governments to address ACoBA’s deficiencies have damaged public trust in politics and public institutions and led to repeated scandals; calls on the Government to bring forward major reform by introducing a principles-based system to ensure that individuals act with integrity and behave according to those principles; and further calls on the Government to fund independent checks by ACoBA across all Government departments and executive agencies to reinforce those principles.

It is the role of the Public Administration and Constitutional Affairs Committee to oversee the UK’s changing constitution and the efficiency of the civil service and the machinery of government. Within that, PACAC covers matters of ethics and propriety in Whitehall, overseeing the work of the Committee on Standards in Public Life, the ministerial code, the special advisers code, the civil service code and the work of the Advisory Committee on Business Appointments, which oversees the rules governing departing Ministers and Crown servants when they take up outside appointments. PACAC has defined its overriding purpose, to quote from our website:

“to conduct robust and effective scrutiny in order to help create conditions where the public can have justified confidence in public services/government.”

In that context, just before the election, PACAC published a new report on ACoBA, entitled “Managing Ministers’ and officials’ conflicts of interest: time for clearer values, principles and action”.

In this House we do not work for ourselves. Our system of government relies on the principle that we who are intertwined with power act only when it is in the public and national interest. The vast majority of public servants do their best, and I certainly understand that. The business appointment rules exist to prevent the conflicts of interest that can arise when former Ministers, special advisers or officials—especially those with high-level Government experience—are looking to take up appointments in the private sector. I am afraid that there are rightly public concerns when senior officials move directly into sectors over which they had until recently had control and influence, including suspicions that the decisions they took may have been influenced by the hope or expectation of future employment or that a future employer could use official information that they had access to.

The Advisory Committee on Business Appointments—or ACoBA, as it is known for short—is appointed by the Government to advise on the implementation of these rules. The ministerial code requires former Ministers, for two years after leaving office, to consult ACoBA about any employment or consultancy they are looking to take up. ACoBA may recommend that an individual wait for up to two years before taking up a specific appointment, or that they do not undertake types of work falling into specific categories up to the two-year limit. However, the business rules themselves are largely procedural: they do not make explicit when or how former Ministers or officials can or cannot legitimately make use of their prior experience.

In 2014, the rules were updated so that only officials at director general, or equivalent, and above now need to apply to ACoBA. Senior grades below that level are now managed by individual Departments and agencies. There was also a change to retrospective applications, which are no longer accepted. Having to make a decision after a contract had been signed and an appointment taken up was seen as a possible constraint on ACoBA’s scope to advise, because how could it advise on something that had already happened? The updated rules also allowed Departments to continue to pay former officials and special advisers who are required to observe a quarantine period before taking up their new roles. ACoBA has stated that whether or not this pay is available, it will not affect its decision.

PACAC, which I chair, has concluded that ACoBA is a “toothless regulator”. There are serious problems with the system as it currently operates. A number of these problems are institutional, deriving from ACoBA’s structure and the practical realities of how it must function. I wish to make it absolutely clear in this debate that I am not making any personal criticism of the chair or any members of ACoBA. The committee comprises both political appointments and independent members. However, despite Baroness Browning, its chair, telling PACAC that she wanted

“every bus driver and hairdresser…to apply”

to be an independent member of ACoBA, its composition remains dominated by the great and the good. This is unsurprising given that the criteria for the role include senior level experience in the civil service, the military or business, which is hardly something possessed by most bus drivers or hairdressers. Furthermore, independent members also hold senior posts in the sorts of companies in which those applying to ACoBA may well be seeking to gain employment. There are notable examples of when these independent members have failed to recuse themselves, despite what would appear to be obvious conflicts of interest when considering cases.

Moreover, for lower grades of civil servant—their applications are managed not by ACoBA, but by their own Departments or agencies—what is known as the revolving door is essentially self-regulating. It is not impossible that civil servants, knowing any precedent they set by judging on a particular case might have an impact on their later careers, could unintentionally or otherwise approve appointments that perhaps deserved more scrutiny. However, civil servants in lower grades can still have significant influence in areas where potential conflicts of interest could arise, such as policy development or procurement decisions. Some may have had senior responsible owner roles, where they have taken responsibility for the management of substantial projects with sizeable budgets, and the private sector finds such experience very valuable. With the increasing interchange between Whitehall Departments and the private sector, this problem is growing.

Putting the problems of scope and propriety to one side, ACoBA simply lacks the powers to allow it to do its job effectively. As the advisory part of its name suggests, ACoBA cannot prevent an individual taking up an appointment, and it has no power to sanction anyone who ignores its recommendations. It makes a recommendation only when an appointment has been accepted, and does not make ex ante stipulations about the types of employment an individual may or may not engage in. It therefore relies on individuals coming to it for advice or with an application. It has very little capacity to investigate those who do not do so or to monitor non-compliance. We were told that ACoBA found that LinkedIn was a more comprehensive source of the employment histories of former officials than the disclosures of those officials themselves.

With resources failing to keep pace with ACoBA’s increased caseload, this embarrassing state of affairs is unlikely to change, meaning that a body intended to improve public trust in government will have to continue to trawl social media for vital information. Evidence shows that ACoBA is simply not being taken seriously. Frequently, applicants have taken up their role before ACoBA has considered their case and made any recommendations, and sometimes these recommendations are simply ignored. We were told that too many former Ministers and officials viewed ACoBA as a rubber stamp before pursuing a lucrative corporate career that might be perceived to conflict with their previous public responsibilities.

Departments take responsibility for those below ACoBA’s threshold, but we were told that monitoring was inconsistent and some agencies failed to publish the required data completely. There is evidence that this can result in too close a relationship between certain Departments and the companies working in related industries. Freedom of information requests in 2012 found that more than 3,500 former senior military officers and Ministry of Defence officials had been approved for arms company jobs since 1996. There might be nothing intrinsically wrong with those appointments, but the failure to have any sanction over them results in a lack of public confidence.

In the absence of a robust system of regulation, high-profile cases, such as that of the former Chancellor of the Exchequer, George Osborne, threaten public confidence in the integrity of government. I make no comment about Mr Osborne, but after leaving government he accepted a post with the BlackRock Investment Institute, part of the investment management company the BlackRock Investment Group. As Chancellor, he had had contact with BlackRock and its competitors in the field. Significantly, as Chancellor, he had introduced the Taxation of Pensions Act 2014, which materially benefited BlackRock.

Our report made no comment on Mr Osborne’s conduct, except to document that he had taken up the appointment, but it raises questions about how effective the system of regulation is, because it does not inspire public confidence. He complied with the business appointment rules for former Ministers, and ACoBA considered his case, but because the current process commands so little confidence, its decision to approve the appointment has been questioned, and it has done little to enhance his reputation to have ACoBA as a protection. Among Mr Osborne’s other post-ministerial appointments is his editorship of the Evening Standard, a position he accepted without waiting for ACoBA to reach a decision at all. This might have been for perfectly understandable reasons.

Our report made a number of recommendations that would improve the confidence ACoBA commands but crucially without recourse to a statutory system. These related to the availability of data for those below the threshold for ACoBA review, the transparency of the lobbying process and the need for ACoBA to be adequately resourced. Crucially, underpinning all this, we concluded that there needed to be a clear statement of values and a clear setting out of principles to be talked about, taught and discussed, to inform and guide behaviour and to make it clear when behaviour falls below those standards.

I am very disappointed that in their response the Government rejected all but some minor procedural recommendations and even denied the seriousness of the problems we are confronting in the House of Commons today. We agreed with ACoBA when it said there should be a single collated list of decisions taken by Departments and agencies so that at least the self-regulated departmental aspect might be more exposed to public view. The Government rejected even this minor suggestion.

PACAC—and before it the Public Administration Select Committee—has returned to the subject of ACoBA and will keep returning to it, because the system remains ineffective and fails to command public confidence. The problems it is supposed to address have only escalated over this period. Governments have failed to address our concerns and public trust in the system has continued to decline. To restore public trust, it is crucial to stamp out not only impropriety by senior Ministers and officials, but the appearance of impropriety. ACoBA, although well intentioned, lacks the resources and structures to achieve that.

I hope the Government will pay attention to this. I do understand that this is a very difficult matter to address. The Committee on Standards in Public Life, I believe, should be having a look at this. As the Government consider the appointment of the Chair of the Committee on Standards in Public Life—I may have a role in that —I hope that it will be made clear to the new Chair that this is an issue that should be looked at. Perhaps the Committee on Standards in Public Life will conclude, in the same way as the Government, that there is no need for any significant change, but I think the matter deserves scrutiny.

One detects a kind of squeamishness in Whitehall among Ministers and senior officials, whom this question directly affects because they will soon, in their careers, be leaving public office and moving to the private sector. One detects that there is a reluctance to confront this issue, perhaps for the worst of reasons, which rather undermines public confidence in the system as it exists today. I am afraid it is an ineffective and poorly trusted regulator, which is probably worse than no regulator at all.

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[Christian Matheson (City of Chester) (Lab)]

I congratulate the hon. Member for Harwich and North Essex (Sir Bernard Jenkin) on his recent knighthood, richly deserved after many years’ service in this place, and on the work of the Committee and the dogged way in which he and his Committee have gone after this particular issue. It is a lesson to all in the House about the value and the strength of Select Committees when they are well led and follow the evidence with robust questioning. I pay tribute to him and his Committee.

[Sir Bernard Jenkin]

I am most grateful to the hon. Gentleman for his tribute, but may I echo the comments of the hon. Member for Inverclyde (Ronnie Cowan)? We really do owe much of our work to the persistence of our absent friend, the hon. Member for Newport West (Paul Flynn), who has always contributed and motivated the Committee on this matter.

[Christian Matheson]

I am most grateful for that clarification and the House will have noted it.

The Advisory Committee on Business Appointments is entirely necessary, but, to use the phrase of the moment, not at all fit for purpose. The clue is in the name. The A in ACoBA stands for “advisory” and it is clear that the committee is just that: it has no teeth and if its harshest sanction is to embarrass—well, that is scarcely a sanction at all. I wonder whether, as currently constituted, it is even designed to make a difference with a very narrow remit. As far as I can tell, ACoBA has never actually refused an appointment.

ACoBA is appointed by the Government to provide independent advice to senior Crown servants and to all former Ministers of the UK, Scottish and Welsh Governments on any appointments they wish to take up within two years of leaving public or ministerial office. ACoBA applies the business appointment rules, which are largely procedural and set by the Government. They have no statutory basis and there are no sanctions for non-compliance. The rules apply for up to two years after leaving office and they are applied with inconsistency.

It is a clear failure of ACOBA that it cannot adequately distinguish between different types of post-ministerial appointment, for example paid as opposed to unpaid work. One former senior civil servant recounted to me the story of when they left the civil service. They took a position on the board of trustees of a community group. It took months upon months for this voluntary position to be approved. Part of the delay was down to due diligence, because the trust was a charity. If charities and the Charity Commission can undertake due diligence and prevent an appointment pending such checks, why can ACOBA not do that?

Meanwhile, as we have heard, the former Chancellor George Osborne can take a job with BlackRock in the City of London and not even tell ACOBA that he was taking a job editing the London Evening Standard. I understand the same applies to the former head of GCHQ, Robert Hannigan, who was appointed to the European advisory board for a new US cyber-security firm, BlueteamGlobal, and did not even tell ACOBA. Because it is set up as an advisory and non-statutory committee, ACOBA finds enforcement difficult. I suspect that this is the reason it does not attempt to enforce. Indeed, it may be the reason it was set up in this way in the first place.

In addition to ACOBA’s toothlessness, there are further problems, for example with conflicts of interest. There are numerous, multiple examples of members of the committee declaring interests in firms to which the applicants were being appointed, but not recusing themselves from those cases. This included Mary Jo Jacobi, who has financial interests in BP but did not recuse herself from Vernon Gibson’s application, and John Wood, who has interests in BT, did not recuse himself from Keith Bristow’s commission with them.

ACOBA was also criticised by the former Public Administration Committee for having an “establishment” make-up—the hon. Member for Harwich and North Essex raised this point. ACOBA is chaired by a Baroness and former Conservative Minister, who also works as a consultant for a company that looks very much like a lobbying firm. Other members of the committee include two Lords, a knight, a former general secretary of the First Division Association, lawyers and former senior civil service grandees. I go back to the evidence cited by the Chair of the Public Administration and Constitutional Affairs Committee about bus drivers or hairdressers. As he says, there seems to be no sight of them.

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[Chloe Smith]

I hear and respect the hon. Gentleman’s view and I am grateful to him for taking the trouble to repeat it.

One of the other principles at stake is that we do not want to deter talented people from entering government service. I suspect that the Committee also recognised that principle, quite rightly. In the Government’s view, that could result from having an over-rigid system that could prevent or restrict people from returning to the sectors in which their expertise lies appropriately following a period of public service. Now, more than ever, with some major challenges in view for the public sector and for the civil service, we need to be able to attract the best skills and talent and to benefit from those who have capabilities and experience from outside the civil service—let us not forget this argument works two ways.

In order to deliver for the public and for taxpayers in the way in which they expect of their civil service, we need to be able to maintain a confident, professional and expert service when we are looking at such important and critical matters in the public sector.

[Sir Bernard Jenkin]

My hon. Friend knows that the PASC report of 2012 recommended a statutory scheme. In this later report, having listened to the Government’s objections about the cost-effectiveness of a statutory scheme, we invited the Government to produce a cost-benefit analysis, which indeed even the chair of ACoBA said would be a good idea. However, the Government have declined to produce even a cost-benefit analysis of having statutory rules, or enforceable rules of some kind. Will she revisit that recommendation and look at the question of a cost-benefit analysis? We are constantly told that rules would have a very negative effect on the public sector, but there is no evidence to support what she is claiming—although I understand that there is a perfectly legitimate concern.

[Chloe Smith]

I thank the Chairman of the Committee for that intervention. He gives me the opportunity to note that these arguments have been put back and forth a number of times over the years. It is my great pleasure to come to the House today and take up those arguments. However, it is still the Government’s case that a statutory system is not the right way forward. That is a matter of principle as much as of practicality, for the reasons I have set out. We do not therefore think it is right to go ahead and do a cost-benefit analysis, which, in itself, would take time and money, for something that, in principle, we are not convinced of the case for. It is question of principle and practicality.

We need to be able to attract capable people from a range of backgrounds, and I reiterate the commitment to being able to recruit fully externally to do that. It is therefore important to have an interchange of skills and experience between the public sector and elsewhere. That is good for our national life. It is also a matter of fairness to individuals who will wish to continue their careers in various ways. We need to strike that balance.

As I said, we remain of the view that a statutory system with enforcement powers but without the flexibility of the current arrangements to take account of the particular circumstances of individual cases would not be beneficial. As I have just said to my hon. Friend the Member for Harwich and North Essex, we do not consider carrying out that cost-benefit analysis on the introduction of such a system to be a good use of public money at this time.

[Sir Bernard Jenkin]

My hon. Friend is being very patient, but unfortunately for her she has a lot of time. If she is going to refuse a cost-benefit analysis, will she at least accept this? ACoBA seems to be very preoccupied by what candidates might do after they have left the public sector in the context of their employers, and it often puts a lobbying ban on the person moving into the private sector. What regard should ACoBA have for the fact that the lobbying has already probably taken place and the granting of employment is just the implicit reward for having been lobbied when the candidate was working in the public sector? No regard seems to be paid to that potential conflict of interest in the way the ACoBA rules are applied.

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[Sir Bernard Jenkin]

I am grateful for the attention that my hon. Friend has given this matter. I know that it is a matter over which to agonise, because it contains a lot of dilemmas. She has put forward extremely powerfully all the countervailing points about how to attract people into the public service and how not to punish them in the afterlife for giving up the salary and perks of the private sector to work in the public service, and so on.

The Minister has also talked a lot about processes and transparency, and I suggest that there is one process that would really open this up. That process would involve applications being published at the outset. I know that this is an advisory committee and that people go there for advice, but it really is ridiculous that they can go there on a fishing expedition. The advisory committee could tell someone that they could not possibly take a certain job because of what might happen, but nothing would ever appear in the public domain to indicate that that person had no moral compass of their own. Let them go and take advice from a lawyer about how the rules would be applied, but once they have applied to ACoBA, let it be transparent that they have applied. Let us find out what sort of person they are and whether they are applying for a job in a way that should not be allowed.

My second point is more about principles. In paragraph 105 of our report, we recommend a change to the civil service code, which should also be made to the ministerial code. Our recommendation is quite simple, and it is that these words should be included:

“You must: take decisions in the public interest alone; never allow yourself to be influenced in contracting, procurement, regulation or the provision of policy advice, by your career expectations or prospects if you leave the public service; always report to your line managers any offers of jobs or other rewards, or any informal suggestions of such rewards, that may have, or be reasonably seen to have a bearing on your role as a public servant; take particular care in your relations with former colleagues who may seek to influence your decisions as a public servant. You must not: take up any post outside the public service in business or [commercial] organisations operating in areas where you have been directly responsible in the previous [currently] two years for any form of contracting, procurement or regulation.”

We believe that that would provide a framework for people to think about what they are doing in the public service and at least some basis for discussion about how we expect people to behave. Sadly, leaving a Government Department, whether as a Minister, official or member of the armed forces, and, in time, finding oneself in related work in the private sector, has become something of a way of life. It is the new normal.

Unless we can find a way of providing reassurance about such behaviour, we will finish up with a statutory system in the end. I invite the Minister to reconsider that particular recommendation. I appreciate the opportunity to raise these matters this afternoon. They will not go away, I am afraid—they will be back, unless the Government take action.

Question put and agreed to.

Resolved,

That this House has considered the Thirteenth Report of the Public Administration and Constitutional Affairs Committee, HC 252, Managing Ministers’ and officials’ conflicts of interest: time for clearer values, principles and action, on the role and effectiveness of the Advisory Committee on Business Appointments (ACoBA); notes that ACoBA regulates applications for business appointments by former Ministers and civil servants who have recently left the public sector; believes that ACoBA is an ineffectual regulator which fails to inspire public confidence or respect; expresses concern that the Committee’s inquiry revealed numerous gaps in ACoBA’s monitoring process with insufficient attention paid to the principles that should govern business appointments; agrees that failures of consecutive governments to address ACoBA’s deficiencies have damaged public trust in politics and public institutions and led to repeated scandals; calls on the Government to bring forward major reform by introducing a principles-based system to ensure that individuals act with integrity and behave according to those principles; and further calls on the Government to fund independent checks by ACoBA across all Government departments and executive agencies to reinforce those principles.