1.Over the past decade or so, there has been increasing concern expressed about the effectiveness of the application of the Business Appointment Rules (The Rules) as applied by the Advisory Committee on Business Appointments (ACoBA). ACoBA is appointed by the Government to provide independent advice to senior Crown servants (civil servants at Director-General level and above, and their equivalents) 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 was established in 1975, by the then Prime Minister, the Rt Hon Harold Wilson MP.
2.The Rules, which are largely procedural, are set by the Government, have no statutory basis and there are no sanctions for non-compliance. They are intended to provide a framework in order to give the public confidence in the proper management of conflicts of interest arising from the acceptance of employment or appointments in the private sector by former Ministers and Crown servants (civil servants including special advisers, Diplomats, members of the Armed Forces and members of the Security Services). The Rules apply for up to two years after an individual leaves public office.
3.We launched this inquiry in response to the increasing concern that the present system is completely failing to address, and subsequently to allay, public concern about what has been described as “the revolving door”–people rotating between employment in the public and private sectors. Our recommendations are addressed directly to the Government, which is responsible both for the system that is run by ACoBA and for the Rules themselves. Since the launch of this inquiry, the current system’s failings have again been brought to the public’s attention by the decisions of the former Chancellor of the Exchequer, Rt Hon George Osborne MP, who only nine months out of ministerial office has accepted a number of external appointments, including two appointments at Black Rock and as Editor of the Evening Standard.
4.We explore the particular concern that public servants (Ministers, officials and members of the armed forces) may be conflicted while they are exercising their responsibilities in public office, as they might be contemplating potential employment opportunities after they have left public office. In this report, we make recommendations to address how public servants should be made more aware of these potential conflicts. PACAC regards it as our purpose to look at ways to improve public confidence in the public service. We reiterate our commitment to a comprehensive reform of the whole ACoBA system, and we set out how the Government should clarify not just the Rules, but the principles which underpin them and the values upon which they are based. When serving or former Ministers are confronted with these conflicts, the various codes of conduct and the Rules should enable them to judge much more readily what is or is not acceptable conduct both during their public office and after they leave. It is worth noting the concern that private sector workers, employed on secondment in Government, may develop policy which they later go on to use to their benefit when returned to the private sector. Steps must be taken by Government to ensure that the valuable transfer of knowledge and skills that can occur when seconding private sector workers into the public sector does not unduly disadvantage the Government through the formulation of policy intended to benefit the company in which the employee usually works.
5.Our predecessor Committee, the Public Administration Select Committee (PASC) examined the role of ACoBA and the effectiveness of the Business Appointment Rules several times over the past ten years. These reports have expressed mounting concern. published on 14 June 2007, followed a review of the Business Appointment Rules by Sir Patrick Brown and concluded that “the Advisory Committee on Business Appointments has operated effectively, and we see little benefit in changing its composition, or its way of working”. In 2008, recommended changes to the membership of ACoBA stating that it should “be strengthened and its membership refreshed, bringing in people who are more representative of society at large and better able to commit time to this work”. The Committee called for “consistent rules to be strictly applied so that former Ministers and other public servants are prevented for an extended period from using contacts built up in public office to further their own and others’ private interests”. Following PASC’s , the then Government refused to amend the ACoBA membership stating that “the Advisory Committee’s unique remit, which is narrowly focussed and confined to individual casework for a relatively small number of people, calls for a membership with first-hand experience and understanding of the Business Appointment Rules and procedures in order to have credibility in the areas on which they are advising”.
6.A further report, was published on 25 July 2012. It examined the broad themes of public confidence in the operation and purpose of the Rules and highlighted the benefits and risks of interchange between the public and private sectors. It noted the need for transparency in the ACoBA decision-making process. Most significantly, following study of alternative systems for the management of conflicts of interest in other countries, notably in Canada, PASC proposed the abolition of ACoBA in favour of a model of statutory ethics regulation, with a code of conduct and enforceable statutory penalties, to be overseen by an independent ethics Commissioner. This recommendation was rejected by the Government. In its 2012 report, PASC repeated criticism from its earlier (2009) report concerning the composition of ACoBA’s membership, which it argued was inadequate to inspire public trust.
7.On the 19 April 2016, the Public Administration and Constitutional Affairs Committee (PACAC) held a with the Chair of ACoBA, Baroness Browning, one year into her tenure, to explore the work of ACoBA and the effectiveness of the Rules. We were interested to identify how the concerns and recommendations raised in our predecessor Committee’s 2012 report had been addressed. It is clear, both from that evidence session and from recent events, that these increasing concerns have been ignored and that ACoBA remains inadequate and unable to inspire public confidence that conflicts of interest are being properly managed in the public service.
8.In her evidence to PACAC, Baroness Browning identified a significant increase in ACoBA’s workload, and an increasing trend in former Ministers accepting employment in sectors where they were previously responsible for policy. Reflecting the impact of its increased workload, ACoBA’s 2015–16 annual report, highlighted an increase in expenditure which was required to meet the Committee’s need for additional staffing following the 2015 General Election. Following this one-off evidence session, PACAC launched a new inquiry on 20 July 2016 to explore key challenges raised by Baroness Browning, including ACoBA’s increased workload and the resulting pressures.
9.The recent appointment of the former Chancellor of the Exchequer, Rt Hon George Osborne MP as adviser to the BlackRock Investment Institute on a salary considerably in excess of his previous salary as Chancellor of the Exchequer may have precedents, but it has increased concern about this trend (of Ministers accepting employment in sectors where they were previously responsible for policy). At the time of drafting this report, PACAC has not taken evidence on any particular case, but this report seeks to respond to the concerns highlighted by such cases.
10.Our inquiry and this report does not address conflicts of interest that may arise from MPs having outside paid employment. This does not fall into PACAC’s remit, but falls under the jurisdiction of the Parliamentary Commissioner for Standards, and the Committee on Standards. We are however mindful of the Committee on Standards in Public Life’s (CSPL) interest in this inquiry, and we may well take further evidence from the Chair of the Committee on Standards in Public Life’s, Lord Bew. In follow up correspondence (29 March 2017) to the Chair of PACAC, Lord Bew said, “The current system relies on transparency and media scrutiny to ensure compliance with the Government’s Rules and the Committee’s advice, and on ACoBA being given the respect and time it needs to fulfil its role. If this does not happen, it is likely that there will be growing pressure for some form of statutory intervention”.
11.As well as looking at the Business Appointment Rules, and the operation of ACoBA, we have turned our attention to what happens before Ministers and civil servants leave public service. We have asked ourselves: what values are promoted to Ministers and officials to encourage awareness of conflicts of interest, and how to manage them according to the values, principles and Rules which the public would regard as acceptable. We therefore make recommendations for changes to the Ministerial Code and to the Civil Service Code. We also make recommendations that these values, principles and Rules should form part of the induction and ongoing training for Ministers and civil servants.
12.We held three oral evidence sessions (on 11, 25 and 26 October 2016) with Alexandra Runswick, Director at Unlock Democracy; Professor Hine, University of Oxford (who PACAC subsequently appointed as an adviser to this inquiry); Ian Hislop, Editor at Private Eye; Richard Brooks, a former civil servant with HMRC and now a senior journalist at Private Eye; Baroness Browning, Chair of ACoBA; Sheila Drew Smith OBE, Member, Committee on Standards in Public Life; Lord Bew, Chair of the Committee on Standards in Public Life; and Chris Skidmore MP, Parliamentary Secretary at the Cabinet Office. We thank all of those who gave written and oral evidence to this inquiry. A full list of witnesses is included at the back of this report.
13.Chapter 2 sets out the background and context of the work of ACoBA, the Business Appointment Rules, and the Civil Service Code. It also illustrates that the monitoring of the appointment of individuals who are not currently vetted by ACoBA is inadequate. Chapter 3 examines how effective the current iteration of the Rules is in regulating the post public employment of former Ministers and Crown servants. Chapter 4 evaluates the so-called “revolving door” and particularly the benefits and risks of interchange between the public and private sectors. It explores how public confidence is being undermined by ACoBA’s inability to prevent any perceived or actual impropriety that may result from such interchange. Chapter 5 examines the importance of the values and principles behind the Rules and how these can be embedded into public service attitudes, behaviour and culture. In the final Chapter we revisit the merits of statutory enforcement of the Business Appointment Rules recommended by PASC in 2012.
1 The Business Appointment Rules regulate the appointment of former senior Crown servants and former Ministers to posts in the private sector. ACoBA reports to the Prime Minister on applications from former senior civil servants and advises former Ministers directly.
2 Business Appointment Rules for former Ministers. Accessed 30 November 2016; The Business Appointment Rules for Civil Servants, including Special Advisers, October 2014.
3 See paras 31 and 52 of this report– which set this out in more detail.
4 Advisory Committee on Business Appointments, Decision: Summary of business appointments applications - Rt Hon George Osborne MP, January 2017.
5 In 2004, the then Prime Minister, Tony Blair, commissioned Sir Patrick Brown “To review the Business Appointment Rules to ensure that they are compatible with a public service that is keen to encourage greater interchange with the private and other sectors which is essential for effective delivery in today’s public service”, ; Public Administration Select Committee, The Business Appointment Rules, Sixth Report of Session 2006–07, HC 651, para 40.
6 Public Administration Select Committee, Lobbying Access and Influence in Whitehall, First Report of Session 2008–09 HC 36–I, p.4.
7 Public Administration Select Committee Lobbying: Developments since the Committee’s First Report of Session 2008–09: Government Response to the Committee’s Fifth Report of Session 2009–10 , Third Special Report of Session 2009–10 HC 393, p.3.
10 The Government rejected this proposal as it believed that ACoBA was effective in its role of advising on the Rules and that there was already a good level of compliance. It believed that proposals to increase transparency would mitigate the other issues identified with current arrangements. Business Appointment Rules: Government Response to the Committee’s Third Report of Session 2012–13, para 33.
11 The Public Administration Select Committee, First Report of Session 2008–09, Lobbying: Access and Influence in Whitehall,HC 36–I para 192; The Public Administration Select Committee, Third Report of Session 2009–10;
Lobbying: Developments since the Committee’s First Report of Session 2008–09: Government Response to the Committee’s Fifth Report of Session 2009–10 HC 393 p.2 (ACoBA); The Public Administration Select Committee, Third Report of Session 2009–10, Selection of a new Chair of the Advisory Committee on Business Appointments, HC 42–I para 11; Public Administration Select Committee, Third report of Session 2012–13, Business Appointment Rules, HC 404 [incorporating HC 1762–i–v, Session 2010–12] para 48.
12 Oral evidence taken before the Public Administration and Constitutional Affairs Committee, Tuesday 19 April 2016, .
14 ; In January 2016 the reported that 25 former Ministers in the coalition government had taken paid roles in sectors they once oversaw. See paras 6 and 69 which set this out in more detail. Concerns have also been raised in relation to senior civil servants see: and
17 , the guide to propriety for Ministers, sets out the requirement for Ministers to consult with the Independent Adviser for advice on avoiding a conflict, or the perception of a conflict, with the Code. See Cabinet Office, Ministerial Code, October 2015, para. 7.2; is a high-level statement outlining the Civil Service’s core values, and the standards of behaviour expected of all civil servants in upholding these values.
21 April 2017