Political and Constitutional Reform CommitteeWritten evidence submitted by Transparency International UK (TI-UK) (GLB 09)

Summary

1. TI-UK is concerned that democratic processes in the UK face an increased risk of corruption. It should not be possible for an individual or organisation to buy favourable laws or regulation.

2. The Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill, as proposed, is inadequate and needs to be replaced by a Bill that is fit for purpose.

3. Lobbying is one of a number of areas in which special interests, backed by money, can subvert democracy. Others include the revolving door and party political funding. They need to be considered collectively otherwise the tightening of regulation in one area will lead to the exploitation of loopholes in another.

4. All political parties seem to be in denial about the public perception that they, and parliament, are corrupt. Though political leaders may dispute whether it is fair, such perceptions themselves damage democracy, and an adequate response is required.

5. There needs to be, among other actions, a cap on donations to political parties; regulation of lobbying that extends beyond the proposed register; proper regulation of the revolving door of employment; reform of the honours system; a renewed emphasis on ethical conduct, with stronger sanctions for breaches.

6. Regulation needs to address both those who seek to influence inappropriately and those who are being lobbied.

7. In each of these areas greater transparency is required; but in many of them, transparency must be supplemented by other measures.

Introduction

1. Transparency International UK (TI-UK) research indicates that there are serious and systemic problems with access to politics and policy-making in the UK; in practice, in oversight and in public trust. Lobbying cannot be considered in isolation. It is one of a number of ways in which democracy can be subverted by those with large financial resources at their disposal. According to TI research, the British public perceive the government’s response to these problems to be inadequate. TI’s overall assessment is that recent proposed reforms, including the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Bill, fail to address the scale, nature and breadth of the problem.

2. The 2013 Global Corruption Barometer, published by Transparency International, revealed that:

90% of UK respondents believe that the UK Government is “run by a few big entities acting in their own interest”.

67% of UK respondents polled in the survey said they thought political parties in the UK were corrupt or extremely corrupt.

55% felt that the UK Parliament is corrupt or extremely corrupt.

62% of UK respondents think that the Government’s actions in tackling corruption are ineffective.

3. In 2010–11, TI-UK carried out a comprehensive survey on corruption in the UK. In a Report divided into three parts, entitled respectively National Opinion Survey, Assessment of Key Sectors, and a National Integrity System Assessment (“NIS Assessment”), the nature and extent of corruption in the UK was examined. The Report was accompanied by an overview entitled Overview and Policy Recommendations. The research indicated that UK political parties and parliament were two of four areas that were particularly vulnerable to corruption —alongside sport and the prison service.

4. Weaknesses and ambiguities in rules are exploited and the rules are poorly enforced. The proposed legislation does not address the scale of the problems of corrupt and untransparent influence in British politics and policy.

Question 1. Is the definition of “consultant lobbyist” in clause 2 of the Bill likely to lead to a register that enhances transparency about lobbying?

1.1 TI-UK assesses that the definition of the “consultant lobbyist” in clause 2, given schedule 1 part 1 exceptions,1 will not provide greater effective transparency about lobbying.

1.2 Regarding a statutory register, which TI-UK believes is only one small component required to address the challenge to public trust in politics, the Bill falls short. At a basic level, considering the Bill as a register of consultant lobbyists only, it exempts the vast majority of lobbyists. Indeed there are strong arguments that that the Bill, because of its minority coverage of the public affairs industry, would result in less transparency than the current self-regulation arrangements, which are themselves inadequate. The Bill does not even address the nature of the most recent scandals, which did not involve consultant lobbyists but did involve unethical politicians and conflicts of interest.

1.3 The definition of what is used as the basis for regulated lobbying should be expanded. TI-UK recognises that the definition of lobbying and of lobbyists is a complex issue. Any definition should be simple, capture the broad range of lobbying activity, not disincentivise citizen lobbying and be easy to implement in practice. Based on these criteria, a definition might include anyone paid to: (i) arrange or facilitate contact with policy makers, legislators or their advisors; (ii) communicate with policy makers, legislators or their advisors to influence legislation, regulation, or government policy, and for government contracts and grants; and (iii) work in support of (i) and/or (ii).

1.4 The definition should capture the range of individuals that are liable to be lobbied, including Ministers, Parliamentarians, their advisors and civil servants, regulators, local authorities and those in other public services.

1.5 Any definition used for the purposes of identifying a threshold for lobbying reporting requirements should minimise the barriers to access to politics and participation from a citizen or constituent point of view. TI-UK is not against trade unions, think tanks and charities being covered by the definition, but notes that the barriers should also be minimised for groups operating in the public interest with small resources.

Question 2. Are the definition of “consultant lobbyist” in clause 2 of the Bill and the list of exceptions in schedule 1 of the Bill likely to have any unintended consequences?

2.1 See answer to question 1. TI-UK assesses that the schedule 1 exemptions and the limited and narrow nature of the legislation risks creating less transparency not more and does not address the key problems of corrupt access and influence in British politics.

Question 3. Is the information that the Bill requires to be listed on the register sufficient to enhance transparency about lobbying?

3.1 No. The Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Bill information requirements2 are inadequate as a means to restore public trust in politics and government. Based on the scale of its shortcomings, TI-UK believes the government should replace the Bill with a more satisfactory Bill after engaging in a thorough review of access and transparency in British politics, responding to public disaffection with the political process and its vulnerability to abuse.

3.2 TI-UK believes that lobbying legislation should not solely consider a statutory register. However, any legislation that includes a register should:

Apply consistently to lobbying of the UK Government, Parliament, devolved legislatures or administrations, regional or local government or other public bodies.

Cover all organisations and self-employed persons that engage in substantial lobbying activity targeted at public officials. This includes organisations that are not specialist lobbyists but have in-house lobbying capacity and engage in lobbying activity.

Require that registration should include information such as lobbyists’ names, their client list (where appropriate), the subject of their lobbying (respective to their client where appropriate); details of any advisors or practitioners who have held any public office during the previous five years and their expenditure on lobbying (respective to their client where appropriate) on a quarterly basis.

Be maintained and monitored by an independent body that is empowered to carry out investigations and audits of the information it receives and to maintain a whistleblowers’ hotline to receive complaints about violations of the rules.

Failure to disclose accurate information should be a criminal offence, as is the case in the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Bill.

3.3 TI-UK notes that the costs of the register could be met by a system for fees proportionate to the annual lobbying budget of organisation, with an exemption for organisations whose spend is below a certain threshold or that are demonstrably operating in the public interest (for example, registered with the Charity Commission).

3.4 However, a register is not enough to meet the scale of the problem. Even if a statutory register of lobbying activity with the above features were to be implemented it would not be sufficient to curb abuses of entrusted power for private gain that take place through other means. The recent scandals on lobbying have provided evidence of politicians willing to stretch or break the rules, something that the proposed lobbyist register would do very little to counter. In the US where a register of lobbyists exists, by the admission of the several Presidents and Presidential candidates, a desirable level of transparency and control of the influence of lobbying has not been achieved.

3.5 The end objective should be for money not to be a distorting factor in forming policy or gaining access to decision makers, and for lobbying on any particular issue or decision to be visible, have an audit trail and for the information to be presented in a manner that is accessible and comparable for the public, media and civil society to scrutinise.

3.6 Both the practices of lobbyists and those being lobbied are unsatisfactory. For both lobbyists and those being lobbied the following reforms need to be considered:

Conduct guidelines and transparency reporting requirements need to be strengthened;

Counter-corruption awareness training needs to be made obligatory;

Independent authorities should be resourced to audit, investigate and initiate sanctions for breaches of guidelines; and

Sanctions should be put in place that provide a meaningful deterrent to unethical behaviour.

3.7 Further, lobbying must be considered within a broader framework of transparency and ethical shortcomings in order to tackle the problems of opaque “access” in UK politics and policy and to address the widespread public dissatisfaction with the political process. Required broader reforms to the governance of political access in the UK include:

The revolving door of employment between Whitehall, Westminster and the private sector.

Political Party Funding.

The granting of honours.

Public information on Ministerial meetings.

All-Party Parliamentary Groups.

3.8 Regulation will only be part of the solution; it will also rely on good practice and leadership from the public affairs industry. Organisations are exposed to reputational risk in terms of the potential for their activity to be perceived as unethical. TI-UK believes that all organisations that lobby should aim to perform their lobbying activities to a high ethical and transparency standard, putting pressure on those who do not welcome transparency into their lobbying strategies. Organisations that wish perform lobbying at a robust ethical level should meet at least the following standard:

Publish membership of trade associations and other representative bodies;

Publish details of the issues on which it lobbies;

Publish details of its lobbying expenditure;

Report on its participation in registers of lobbyists (globally);

Publish the internal oversight mechanism of the organisation’s corporate political activities and reputational risk;

Publish whether outside auditors or independent experts provide periodic review of the company’s political activities;

Publish how the organisation’s controls to ensure that political financial contributions (globally) are not a subterfuge for bribery;

Publish details of policies and procedures to ensure that those lobbying on the company’s behalf are required to comply with the company’s policies on political contributions and responsible lobbying (globally); and

Have in place a specified committee that reviews the company’s memberships of and payments to trade associations and other organisations.

Question 4. Are there any potential problems with the role envisaged for the Registrar?

4.1 As above, any oversight body should have the funding and resources to take forward investigations.

Question 5. Does the absence of provision for a statutory or hybrid code of conduct in the Bill present any problems?

5.1 Yes. A feature of recent scandals is that in many cases, the behaviour falls within the existing rules, even though they are at times stretched to breaking point. This suggests that the imposition of more rules may work to an extent, but at heart is a greater issue and a greater concern. This is the willingness and ability of UK politicians to act in an unethical manner and put their private interests ahead of the public interest, showing scant regard for the Nolan Principles of Public Life (these are: Selflessness, Integrity, Objectivity, Accountability, Openness, Honesty and Leadership).

5.2 If politicians are to have legitimacy as lawmakers, they need to be exemplars of personal integrity. Rules must be complied with, not merely because there are penalties for not doing so, but because public servants are expected to have a system of values in which integrity is required for all aspects of their conduct.

5.3 Overall, the rules relating to the ethical conduct of policy makers and legislators therefore need to be revised, and such revisions should consider the following issues:

Whether there should be an over-arching rule that any public servant should declare any interest or asset, financial or non-financial, that might reasonably be thought by others to influence, or be capable of influencing, his or her actions or words.

Although clarification of rules is important, recent history suggests that rules can be exploited or ignored. Indeed the more complex rules become, the easier it can be to evade them or create loopholes. A principles-based system is therefore important to sit alongside the rules, based on the Nolan Principles. This may require additional effort to reinforce an ethical culture within parties, their leaders and individual MPs—for example by appropriate ethical training or mentoring.

Disclosure of financial interests and relationships, and indirect interests, which can be as important as direct financial interests in influencing behaviour. Likewise, some business relationships in which the financial value is negligible, such as frequent low-level hospitality with an influential business person in a constituency, can be highly important. Therefore, financial value alone should not be the test of a rule’s relevance and the proposed minimum thresholds should take into account these other factors.

The inclusion, as a default option, of third parties, including children, siblings and close associates within the rules. This would be similar to the presumption when dealing with “politically-exposed persons” overseas in, for example, anti-money laundering regulations.

Inclusion of overseas assets, income and activity in the revisions of the appropriate rules.

Guidance on foreign hospitality and visits outside the UK.

Although it is understandable that there is a reluctance to impose new administrative burdens on the relevant people and institutions, more reporting or administration may be a necessary step in the re-building of public trust in politicians. It is important that the growing deficit in public trust is weighed against the views of those who oppose additional administration.

Sanctions, including consideration of the right to recall, must be considered with penalties for non-compliance with the law/rules. Punishment of offenders is critical to help to deter attempts to circumvent the rules. An oversight body with investigative powers should be in a position to designate or initiate the sanctions process and have the resources to investigate claims.

Annex 1

Transparency International UK (www.transparency.orq.uk), the UK national chapter of TI, fights corruption by promoting change in values and attitudes at home and abroad, through programmes that draw on the UK’s unique position as a world political and business centre with close links to developing countries.

TI-UK:

Raises awareness about corruption;

Advocates legal and regulatory reform at national and international levels;

Designs practical tools for institutions, individuals and companies wishing to combat corruption; and

Acts as a leading centre of anti-corruption expertise in the UK.

TI-UK’s vision is for a world in which corruption is greatly reduced and the UK has zero tolerance for corruption both at home and abroad.

August 2013

1 Transparency International “2013 Global Corruptions Barometer”, UK specific data. The Bill (http://www.publications.parliament.ukipa/bills/cbill/2013–2014/0097/14097.pdf) exemptions include: That “A person does not carry on the business of consultant lobbying if—(a) the person (or, where the person is an employee, the person’s employer) carries on a business which is mainly a non-lobbying business, and (b) the making of communications within section 2(3) on behalf of another person or persons in return for payment is an insubstantial proportion of that business.

2 The Bill (http://www.publications.parliament.uk/ba/bills/cbill/2013–2014/0097/14097.pdf ) as presented requires:

  “(2) The entry for each registered person must include:
    (a) in the case of a company:
      (i) its name, its registered number and the address of its registered office, and
      (ii) the names of its directors and of any secretary or shadow directors;
    (b) in the case of a partnership (including a limited liability partnership), the names of the partners and the address of its main office or place of business;
    (c) in the case of an individual, the individual’s name and the address of the individual’s main place of business (or, if there is no such place, the individual’s residence);
    (d) in the case of any other person (including persons outside the United Kingdom), the equivalent information as specified in regulations;
    (e) any name or names, not Included under paragraphs (a) to (d), under which the person carries on business as a consultant lobbyist;
    (f) such other Information regarding the identity of the person as may be determined by the Registrar;
    (g) such other information as may be specified in regulations.
  (3) Each entry must also include:
    (a) the registered person’s client information for every quarter in which the person has been entered in the register (see section 5(3)), and
    (b) if the person received payment in the relevant pre-registration period to engage in lobbying, the name of the person or persons on whose behalf the lobbying was or is to be done.

Prepared 18th September 2013