Managing Ministers’ and officials’ conflicts of interest: time for clearer values, principles and action Contents

6Revisiting statutory enforcement of the Business Appointment Rules

116.In 2012, PASC proposed that ACoBA should be abolished in favour of statutory ethics regulation with a code of conduct and enforceable statutory penalties, overseen by an independent ethics Commissioner. The Government rejected this on the basis that there was “already a good level of compliance and did not believe the introduction of a Commissioner would provide any “tangible increase in compliance”.146

117.The Government remains firmly against statutory regulation of ACoBA. Chris Skidmore MP, Minister for the Constitution explained: “What I do not want to happen is that we move away from public service and end up with public serfdom, which is the risk if we create a statutory body and we turn around to people and say, ‘I am sorry, but once you are here, it is a job for life’”.147The Committee too is against serfdom, but does not believe the alternative is a free-for-all. It believes that much more needs to be understood about the extent of flows between the private and public sectors (in both directions) and this requires fine-grained analysis of not just the benefits of interchange but also their costs. In her evidence, Baroness Browning said that “a cost-benefit analysis should be undertaken of a statutory scheme with a prohibited period at the end of public service/ministerial office”.148 Until such analysis is undertaken she suggests it will be “difficult to judge the merits of a move from an advisory committee to a statutory one”. As an alternative, Baroness Browning would like to see a “more flexible system” to enable ACoBA itself to propose and “consider enhancements to the Rules”.149 This chapter examines the benefits and risks of statutory regulation of ACoBA.

118.Lord Bew, Chair of the Committee on Standards in Public Life suggested that there was “room for a debate about statutory status of ACoBA and for a debate about the Canadian model”.150 However, he emphasised that it is a complex area to get right.151 Similarly, Sheila Drew Smith said that although “statutory footing may signal change” the challenge of codification still remains. She questioned for example how “lobbying”, “transfer of information”, and “inappropriate personal gain” would be defined.152 In recent correspondence (29 March 2017) to the Chair of PACAC, Lord Bew reaffirms his support for ACoBA and the possible need for statutory intervention if ACoBA Is not given the “respect and time it needs to fulfil its role”.153

119.There are two aspects to the question of statutory status. The first is the merit of giving a statutory footing to an agency that currently is simply an advisory non-departmental government body: a matter of status alone, irrespective of whether changes were made to the standard restrictions as they exist in current ACoBA advice. The second concerns the restrictions themselves, a matter that can be sub-divided into various parts: whether the range of powers a new statutory agency uses should be different from those currently employed by ACoBA; whether the current powers should simply be used more flexibly; or whether the change in powers should include wider powers of follow-up and investigation, and the power to impose penalties for non-compliance.

120.We continue to see merit in a statutory scheme on both fronts. ACoBA’s current status, and its power only to give “advice” self-evidently weakens the authority of its judgements. Statutory status, even without enhanced powers, could bring significant gains in terms of status and visibility, perceptions of independence, and moral leadership. If statutory status were accompanied by enhanced powers as regards the length of prohibited periods and the powers of ACoBA to investigate breaches of the conditions it imposes, as well as powers to penalise non-compliance with the Rules, the gains could be even more significant. There could also be sufficient penalty for failure to comply with these principles. The current system fails to a large extent due to the knowledge that there is limited, if any, penalty for non-compliance with the Rules.

121.The precise form of these additional powers requires further consideration. We asked our Special Adviser, Professor Hine, to consider how evidence for any particular set of statutory powers might be assembled.154 On the matter of enhanced powers, his view is that such an analysis would probably show that legislation should not seek to lay down any form of single statutory condition such as a one-year prohibited period for those who have previously worked as regulator, contractor, or policy-maker in the area in which they seek to work after leaving public service, since this is likely to prove inflexible and costly. Rather the Committee believes the powers should include a “norm” (which itself might be a standard one-year period), but also the discretionary power to vary the norm up or down depending on how seriously the statutory agency viewed the ethical risk involved in the particular case. This follows the current ACoBA practice, and would include the flexibility, as now, to approve the immediate acceptance of a post accompanied by conditions surrounding such matters as lobbying contact or the use of inside information. However the decision might be increased to a two-year or longer prohibited period. If that power of extension were used sparingly, and associated in some cases with compensation arrangements, there should be no question of a widespread perception of “public serfdom”.155

122.A further strengthening of current powers could be achieved by extending the period during which a former public servant should seek permission to hold any post. And in some cases restrictions may need to be strengthened by the possibility of absolute bans, to prevent the damaging and egregious cases that have been made public in recent years. Increased investigative powers are also required to check that the procedures are followed both in terms of initial applications and adherence to any conditions imposed. As ACoBA has repeatedly told us and our predecessor committee, it has no resources or powers to pursue this.156

123.As for eventual sanctions for non-compliance, it may be appropriate initially to limit such penalties to the reputational cost of having defied the authority of a statutory regulatory agency. That, and the possibility of the heightened exposure risk if it is understood that enhanced powers to investigate are being used, may be sufficient to assure compliance. If that fails, it may also be necessary to consider more tangible penalties.

124.PACAC recognises that further investigation needs to be undertaken before the adoption of a statutory scheme. It supports Baroness Browning’s proposal that a cost-benefit analysis of a statutory scheme should be undertaken.

125.The Government should undertake a cost-benefit analysis, in the manner explored in Professor Hine’s evidence as supported by the Chair of ACoBA, to establish the basis on which there can be further discussion as to whether a statutory regulator is the most appropriate way forward. This analysis should be completed and sent to our successor Committee by the end of 2017.

148 ACoBA (ACB08), point 4.

149 ACOBA (ACB08), points 4; 7– 8.

152 Q 112 [Sheila Drew Smith]

154 Professor David Hine (ACB14).

155 Q259 [Chris Skidmore MP]

21 April 2017