Advisory Committee on Business Appointments

Chloe Smith Excerpts

Thursday 28th June 2018 Commons Chamber

[The Parliamentary Secretary, Cabinet Office (Chloe Smith)]

I thank all the Members who have spoken today. I am, obviously, particularly grateful to my hon. Friend the Member for Harwich and North Essex (Sir Bernard Jenkin), and, through him, I thank his Committee for its examination of this issue over time. Obviously, the Government welcome the opportunity to respond formally to its most recent report on this subject. That report stands. I trust that Members have had a chance to read it in detail today. I have also been able to listen to the points that have been made during the debate. Let me now set out how the Government see ACoBA, and, in doing so, try to address some of those points.

ACoBA fulfils a specific remit: to supply independent, impartial advice on the business appointment rules to former Ministers and civil servants on proposed new appointments of people who have left Government service. It supplies its advice directly to former Ministers and, in the case of civil servants, to either the Prime Minister or the relevant permanent secretary. It remains the Government’s view that it fulfils its remit effectively, efficiently and with professionalism. It comprises nine very knowledgeable individuals, independent of Government, who bring with them a wealth of experience from the public, private and third sectors.

The business appointment rules system itself is a set of principles which seeks to ensure that, when a former Minister or civil servant takes up an outside appointment, there is no justified public concern about that appointment. We do think, though, that people have a right to earn a living after leaving Government, perhaps in areas in which they have established expertise. When applying the rules, the system should strike a balance, ensuring that there is public confidence, but also ensuring that the conditions do not amount to an unlawful or unenforceable restraint of trade.

[Kelvin Hopkins]

It is fair enough that, when people leave the House, or leave Government jobs, they should be able to earn a living, but not necessarily in the area in which they previously worked, from which they could benefit through their inside knowledge, or in which they might even have influenced policy in the expectation of a subsequent reward. That is what is wrong. If someone who was in the MOD then gets a job as a schoolteacher, that is not a problem; if they get a job ordering supplies for the military, that is a different matter.

[Chloe Smith]

I think that the hon. Gentleman and I are in agreement, because that is the guiding principle of this structure. There should be able to be public confidence that abuses are not occurring. There was a clue, I think, in his choice of words. He may have involuntarily used the words “not necessarily”, but there is something rather important in that. We have a flexible system that means that there is the ability to make a decision not necessarily in one fashion or another. That is one of the advantages of having a non-statutory body —it can be a little more flexible, in a way that is different from something that is encased in legislation, where the words “necessarily this” or “necessarily that” may apply.

[Kelvin Hopkins]

I hope that the hon. Lady is not reading too much into my words. In my short speech, I said that I wanted strong rules, rigidly enforced. That is the way it should be. There should be an entire separation between what a Minister does in government and what they do after they leave Parliament.

[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.

--- Later in debate ---

[Chloe Smith]

My hon. Friend raises an important point, which is, I suppose, at the other end of the process. Although it is ACoBA’s remit to look at the exit end of the process, the entry end is also bound around with codes of conduct—the ministerial code and the codes of conduct expected of civil servants. Crucial to those are of course the principles of public life. While we are on the subject of principles that govern what we are talking about here, I should say that we expect a high degree of principles and of ethical behaviour from anybody who comes in to work for the public sector—that is the least that both their employer and the taxpayer expect. However, I wonder whether it would ever be feasible to systematise that and have someone checking every dot on the i and cross on the t of how that could be done. That is a slightly different part of the process from the one we would be looking to ACoBA to deal with.

I did want to talk about transparency, because it is one way in which we can also look to gain accountability in the area of appointments after public service. ACoBA publishes a considerable amount of information on the applications it receives, and Departments do the same where it is their responsibility to do so. That advice is published online, in full, once an appointment is taken up, and Departments publish summary information regarding civil servants’ applications on a quarterly basis. What those methods do is very important. They provide a reputational check and balance. Hypothetically speaking, if I were a future employer of somebody and I felt they had not been honest about something which I could very easily scrutinise, I might think twice about employing them. We have a clear and open system, and it has a very human point at its heart. The Government believe that is helpful and sufficient to ensure that the public have the information they need for transparency and accountability purposes.

We have noted in our responses to the Public Administration and Constitutional Affairs Committee’s previous reports on this issue that there are certain areas where the current system may be tightened, and I would like to go into those now in order to outline to Committee members and others who are here this afternoon the changes we have made. First, the ministerial code is clear that Ministers of the Crown are expected to behave in a way that upholds the highest standards of propriety. The code contains an explicit prohibition on former Ministers from lobbying Government for two years following their departure from office, and they must also seek advice from ACoBA about any outside appointments and abide by that advice. To reinforce that requirement, the most recent version of the code appends a full version of the rules and includes new wording to make it clear that new appointments should not be taken up or announced until ACoBA has had the opportunity to provide its advice. Hon. Members will find that important in the context of examples they have given this afternoon.

In addition, the Minister for the Cabinet Office has recently written to ministerial colleagues reminding them of the importance of the business appointment rules in maintaining public confidence in the integrity of our public servants. We have also taken steps to improve awareness of our compliance with the rules at departmental level and to improve Departments’ monitoring of compliance issues. These actions are largely in response to recommendations made by my hon. Friend’s Select Committee in its latest report on this issue, and I thank him and the Committee for their continued interest. I particularly wanted to be able to set out today how we have made those changes and the way in which they take the issue forward.

The Cabinet Office has also recently issued updated guidance to Departments on administering the rules on working with ACoBA. This guidance includes a number of new points, including increasing clarity on how the rules apply to civil servants on career breaks, ensuring that all applications from former permanent secretaries are countersigned by the Cabinet Secretary and encouraging Departments to consider an individual’s compliance with the business appointment rules in the future, should they wish to return to Government service. [Interruption.] Dangerously, Madam Deputy Speaker, I am now going to pause for a glass of water. I await a heavyweight intervention from the Chair of the Select Committee. However, none is forthcoming. [Interruption.] I shall now complete my remarks, so that the House can move on to the important matters that await it in the next debate.

In addition, if a former Minister or senior civil servant is nominated for an honour, ACoBA will be consulted on an individual’s compliance with the business appointment rules as part of the honours and appointments secretariat’s existing vetting process. Finally, the chief executive of the civil service and the Government lead non-executive have written to the chairs of each of the departmental audit and risk committees, requiring them to monitor on a quarterly basis a Department’s performance on ensuring compliance with the business appointment rules. In our view, the amendments that I have listed for the House today, which will also be incorporated into the civil service management code in due course, will help to tighten and strengthen the processes that underpin the subject of today’s debate. They will also raise awareness and improve compliance with the rules.

In summary—[Interruption.] All I need is for some scenery to begin to collapse behind me; then I would have had the perfect afternoon in the Chamber. In summary, in the Government’s view, ACoBA’s primary role is, and should remain, to provide independent advice on the application of the business appointment rules on outside appointments to Ministers and the most senior Crown servants after they leave office. The Government’s view remains that the current rules strike the right balance between preventing conflicts of interest and recognising the necessary freedom of individuals to earn a living without unreasonable hindrance after they leave public service.