House of Commons - Business Appointment Rules - Public Administration Committee

Business Appointment Rules - Public Administration Committee Contents

5 Advisory Committee on Business Appointments

Membership

42. The members of ACoBA are appointed by the Prime Minister, comprising three senior Parliamentarians nominated by the leader of each of the three main political parties; and five independent members with "experience at a high level in the Civil Service, the Diplomatic Service, the Armed Forces and in Business".[42] The current members are:

The Rt Hon Lord Lang of Monkton (Chairman)
The Rt Hon Lord Macdonald of Tradeston CBE
The Rt Hon Lord Dholakia OBE DL
General The Lord Walker of Aldringham GCB CMG CBE DL
Sir Colin Budd KCMG
Sir Hugh Stevenson
Mark Addison
Mary Jo Jacobi

43. Our predecessor committees expressed concerns about the "establishment" nature of the membership of ACoBA, and we specifically sought evidence on this point.[43]

44. If the public are to have confidence in the system, then the "man on the street" needs to feel confident that the Advisory Committee would have understood his perceptions and concerns in relation to any given case. As Transparency International explained:

the current composition of ACoBA leaves it open to criticism that it is not representative of UK society. This is highly unfortunate for an institution charged with a scrutiny role.[44]

This view was shared by Spinwatch, which said:

We believe the Committee's current cross-party membership of four peers and two knights is too elitist and should be broadened to include a wider cross section of civil society. Some commentators and politicians have suggested the inclusion of lay members, which we would support.

With public trust in politicians and government officials at an all time low, the 'Establishment' makeup of ACoBA and its choice of chairman does little to instil confidence in the impartiality and independence of a 'watchdog' tasked with the scrutiny of former public servants to ensure there is 'no suspicion of impropriety' when they join the corporate world.[45]

45. Sir Christopher Kelly said:

One of the striking things about ACoBA […] is that, with the exception of the representative from business, they are all members of the tribes to whom they are providing advice. Although I have no reason in the absence of evidence to think that they are not giving entirely independent, objective advice, I would feel more comfortable if there were more people on ACoBA who belonged to different tribes and might provide more grit in the oyster.[46]

46. Despite reiterating that its membership was not a matter for him, Lord Lang defended ACoBA's membership.[47] He explained that:

[Those] members are not there because they are peers or knights but because they have experience in the areas from which our client group comes. It is a legitimate view that that client group should not be represented at all, but it seems to me there are certain obvious advantages of having it that way and it is counter-intuitive to say that they should not be on the committee.[48]

47. During the course of this inquiry, the Prime Minister appointed two new members to ACoBA to fill the vacancy left by Dame Juliet Wheldon, who stepped down in July 2011, and another long-standing vacancy which had been unfilled since Sir Denys Henderson stepped down in 2001. The appointments were made following an open public competition, held in accordance with the Code of Practice of the Commissioner for Public Appointments.[49] In written evidence, the Cabinet Office defended the continued appointment of three political nominees to the Advisory Committee, stating that this was "appropriate" because of the Advisory Committee's role in "providing advice direct to former Ministers".[50]

48. We are not persuaded that the appointment of political nominees to ACoBA is necessary purely because of its role in "providing advice direct to former Ministers": the membership of ACoBA included three political nominees from its inception in 1975, twenty years before it was given responsibility for considering applications by former Ministers in 1995. Moreover, the majority of applications considered by ACoBA come from former civil servants and special advisers, not from former Ministers, yet the three political appointees make up nearly half of the Committee. The recent appointments made under the Commissioner for Public Appointments' Code of Practice are a welcome step in the right direction, but we recommend that the membership of ACoBA be reconsidered entirely, to ensure that it is able to command public trust and confidence in its decisions. Rather than appointees representing different "client groups", we recommend that a pool of people with a wide range of experience and backgrounds be appointed—after open competition and in accordance with the Commissioner for Public Appointments' Code of Practice—from which a different panel could be drawn to consider each application. This proposal would have the advantage of increasing the capacity of the Advisory Committee to deal with short-term increases in workload.

Resources

49. As well as increasing direct contact between officials and the private sector, Civil Service "downsizing" and changes in working practices also have the potential to increase the number of people moving between the public and private sectors.[51]

50. In its first Report, in 1995, the Committee on Standards in Public Life (the "Nolan Committee") recommended that the Government should "monitor the workload of the advisory committee [on business appointments] and put in place contingency arrangements for its staffing to be augmented to deal with the aftermath of any change of administration".[52]

51. In its 2011 Annual Report, covering the period following the 2010 General Election, ACoBA acknowledged that it had only met its target of providing advice to former Ministers within 15 days in 55% of cases.[53] Despite this, in written evidence the ACoBA Secretariat said that:

ACoBA believes that its current structure allows it to handle a short-term rise in civil servants leaving the service. Following the change of government in 2010 the Committee saw a sharp rise in the number of applications from former Ministers. The number of cases advised upon during 2010/11 (95 appointments) was over double that usually considered during the course of a year. ACoBA was able to cope with this short term rise with over half of applications being advised upon within the published target of 15 working days or less.[54]

52. Lord Lang denied that the committee had been "overwhelmed" but confirmed that no additional resources had been made available to ACoBA in the period following the 2010 General Election.[55] In supplementary evidence he provided further figures for 2011-12:

During the year we considered 26 applications from former Ministers and 56 from civil servants, and I am pleased to say that the Committee met both [timeliness] targets in 77% of cases, with the average completion time being 11 days for former Ministers' cases and 18 days for civil servants. These are a marked improvement on the figures for the previous year which we reported on in our last annual report. The earlier figures obviously reflect the significantly higher number of cases handled by the Committee after the General Election.[56]

53. Sir David Bell KCB, whose application was considered by ACoBA in the 2011-12 reporting year, and on whose case ACoBA eventually "declined to advise" because his acceptance of the appointment was announced before the Advisory Committee had issued its advice, told us in written evidence that it was:

clear from the outset that the ACoBA arrangements were not designed to deal with a situation where a prospective new employer, not unreasonably, wanted to move at a pace in confirming a decision. In these circumstances, I felt that I could not be bound by a process that would have put me in a difficult position with [my new employer].[57]

54. The Government told us that the recent changes to the Rules to make departmental Permanent Secretaries responsible for more senior civil servants' applications had "freed up the Advisory Committee to focus on applications from staff at SCS3 (Director General) level and above (and equivalents) […]This has meant that the increase in numbers of people leaving Crown service has not so far had a marked impact on the Advisory Committee's workload, but there may be a future impact".[58]

55. The ACoBA Secretariat told us that, "in order to meet its contribution to administrative cost savings", it had recently started sharing resources with the Secretariat to another non-departmental public body, which would give it "access to additional resources during temporary surges in its work".[59] The recent filling of the long-vacant eighth place on the Advisory Committee may also help slightly to increase its capacity and flexibility.

56. We were not impressed by ACoBA's record of processing "over half of applications" in 2010-11 within its published deadlines, although it is somewhat reassuring that more flexible staffing arrangements are now in place, and that the Government recognises that ACoBA may need more resources in future. It is disappointing that ACoBA and the Cabinet Office failed to anticipate the entirely foreseeable rise in applications following both the General Election and reductions in Civil Service numbers in the subsequent Spending Review. This potential problem was foreseen by the Committee on Standards in Public Life as long ago as 1995, and failure to heed its advice has led to a year of sub-standard service which has had a direct impact on applicants.

Compliance and enforcement

57. The current Business Appointment Rules apply to former Ministers and civil servants for two years after they leave their public role. During this time, ACoBA can recommend restrictions on the types of work which may be undertaken, or a waiting period of up to two years before an appointment is taken up. All former Ministers are given a standard ban on lobbying the Government for the full two years on leaving office, and departing permanent secretaries are usually advised to wait at least three months before taking up new appointments. These provisions are, however, largely unenforceable. The Government explained that:

[For] the Rules to be enforceable, they have to be shown to have been incorporated into the relevant terms and conditions of service. It would be difficult to invoke sanctions for non-compliance with the Rules, as they will tend to be individuals no longer in our employment. In extreme cases, it may be possible to seek legal injunctions to prevent an individual taking up an external appointment or employment, although such an injunction has never been sought.[60]

"GARDENING LEAVE"

58. The practice of imposing a waiting period of paid "gardening leave" on departing employees can be used by employers to enforce contractual terms of employment (such as confidentiality agreements etc.) during the notice term after the effective end of a person's employment, by retaining them on the payroll. Finland's Guidelines for the Transfer of an Official to the Service of Another Employer (2007) provide for a maximum of one year of "non-availability" after public sector employment, during which the official cannot work at all for another employer, but continues to be paid the equivalent of their former salary under Section 44 of the Finnish State Civil Servants' Act (750/1994).[61]

59. In written evidence, the Government asked for PASC's views on whether there should "in exceptional circumstances be provision to continue to pay individuals who are required to observe a waiting period before they take up outside employment and are not in receipt of any other compensatory payment from the public purse".[62] The Minister expressed his strong support for such an approach, saying:

If people are in the middle of their working life—if they have come into public service and they are leaving public service—and are told by one part of the state that they may not take another job, it is a matter of absolutely basic fairness that a civil servant who is in that position and is told, "You may not take another paid role for which you are suited" should be paid. That is universal practice in the private sector. If there is a conflict of interest and a previous employer says, "You may not take up your new employment because of the conflict point," then there is an absolute moral obligation to continue to pay that person during the period in which you have said that they may not take up new employment.[63]

He went on:

There are plenty of circumstances where it is completely proper, when a person leaves to go to another job, to say that there is a waiting period before they can take that job up. That is completely proper and would happen in many other circumstances, but in those circumstances if we, the state, are saying, "You may not, when you leave the state's employ, take up another job," we have an absolute moral obligation […]to continue to pay people while we are denying them the opportunity to be paid somewhere else.[64]

60. Sir Christopher Kelly, however, drew a distinction between enforced unemployment and restrictions on particular appointments:

I don't think it is within ACoBA's remit to say that anyone should do nothing, but it is certainly within their remit to refuse permission for up to two years to do something that they believe would be wrong.[65]

61. We consider that it is an unfit reward for public service for individuals to be left by Government without any means of financial support for a period of up to two years. This would not occur in the private sector, and we agree with the Government that, in exceptional circumstances, it may be appropriate to continue to pay former public servants who are required to observe a waiting period before taking up another. Allowing former public servants to take paid "gardening leave" before beginning in their new roles does, however, mean that they may remain on the public payroll for a significant period after they have left public service. The cost to the public purse of extended paid "gardening leave" has to be proportionate to the real risk of hardship to the individual, and the avoided risk of impropriety from letting an individual take up alternative paid employment.

LENGTH OF RESTRICTIONS

62. Giving evidence to PASC in February 2011, Lord Lang told us that:

If we were to seek to impose a longer term [than two years] […] we would then be open to charges of acting in restraint of trade and charges under the Human Rights Act of removing an individual's right to pursue their career in freedom.[66]

63. Other countries, including some within the EU, do have stronger enforcement of post-employment restrictions than the UK. Transparency International's report Cabs for Hire? (2011) points to a number of other jurisdictions within which these issues are governed by statute law:

Some countries have primary legislation prohibiting and restricting forms of post-public employment, usually as part of a general law on the civil service. To this end, Belgium and France have the General Statute of Officials, Austria and Germany have Acts on Federal Civil Servants, and Japan has a National Public Service Act.[67]

In France, "having left civil service or public office to assume a private-sector position in an industry over which they had previously exercised influence as a public servant" within a period of three years is a crime punishable by two years imprisonment and a fine of up to 30,000 Euros.[68]

64. There is also a precedent for statutory regulation of post-public employment regulation in the UK. Section 15 of the Budget Responsibility & National Audit Act 2011, which received Royal Assent on 22 March 2011, prevents former holders of the office of Comptroller & Auditor General from working for, or providing services to, any body which is subject to audit by the National Audit Office. Former Comptrollers must also consult the "specified person" (ACoBA) before taking up certain posts within the two years following the end of their term in office.[69] It is not clear, however, whether this approach could be applied generally to Crown servants who do not hold a specific statutory office, such as civil servants, special advisors or military personnel, nor whether to do so would be proportionate to the actual risks of impropriety.

65. As the 2010 OECD report explains:

An attractive feature of primary legislation is that it provides strict standards for sanction and can, therefore, be a more effective deterrent than other instruments. However, while primary legislation may be a powerful deterrent to post-public employment conflict of interest, it can also be a strong disincentive to prospective public officials who may view these prohibitions and constraints as unduly restrictive of their rights.[70]

66. In written evidence, ACoBA cautioned that:

While ACoBA remains an advisory, non-statutory committee it is difficult to see how it could operate as an enforcement body. Considerable change in its legal basis, structure and resourcing would be required to enable it to undertake the necessary investigatory, inquiry, judicial and enforcement functions. Effective enforcement would also require a range of legal or contractual sanctions to be provided for. ACoBA is a small organization with a small Secretariat; it is not clear how and whether it would deal with such a significant change in its remit as currently constituted.[71]

42 Advisory Committee on Business Appointments, Annual Report 2010-11, paragraph 2 Back

43 Public Administration Select Committee, Third Report of Session 2009-10, Selection of a New Chair of the Advisory Committee on Business Appointments, HC42-I, paragraph 11; Public Administration Select Committee, First Report of Session 2008-09, Lobbying: Access and influence in Whitehall, HC36-I, paragraph 191 Back

44 Ev 68 Back

45 Ev 71 Back

46 Q 104 Back

47 Oral Evidence taken before the Public Administration Select Committee on Tuesday 8 February 2011, HC 780-i [Lord Lang of Monkton DL] Q5 Back

48 Q 320 Back

49 Ev 75 Back

50 Ev 76 Back

51 Ev 67 and 70 Back

52 Committee on Standards in Public Life, First Report, (1995) Recommendation 20 Back

53 Advisory Committee on Business Appointments Annual Report 2010-11 paragraph 26 Back