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

Conclusions and recommendations

Changes to the Rules

1.We acknowledge the hard work of the ACoBA secretariat, and their efforts to improve the monitoring of post public employment of former public servants. However, ACoBA’s effectiveness remains restricted, by both its lack of powers and narrow remit. It is currently difficult to quantify and evaluate the increasing trend in Ministers leaving office to take up employment in sectors where they were previously responsible for policy. The Government’s response to our question on this issue was inadequate. The Government should ensure that ACoBA collate this data starting in 2017 as part of their annual reports. The failure of ACoBA to adequately distinguish between different types of post-ministerial appointments, for example, paid as opposed to unpaid work and an overreliance on standard template letters, fails to adequately inspire confidence in the ACoBA process. This should be refined. (Paragraph 30)

2.PASC examined the key issues concerning ACoBA and the operation of the Business Appointment Rules over four years ago. The Committee made several recommendations, some of which reinforced PASC’s previous recommendations. Nothing has significantly changed. Meanwhile, the problem has escalated, with increased numbers of public servants moving between the public and private sectors, and with declining public confidence in a system that was set up to command trust by mitigating any breaches of the Rules. The government must urgently review and address these longstanding and recurrent issues.(Paragraph 31)

Public servants not vetted by ACoBA

3.We are aware that, in many situations, civil servants in positions lower down the organisation perform significant roles in respect both of policy formation and commercial relationships, including some senior responsible officers for major projects. Currently these staff fall outside ACoBA’s remit. Government Departments currently have the responsibility to regulate their relationships with, and any moves to, the private sector. However evidence reveals that there is a clear lack of scrutiny and transparency in departments’ monitoring and reporting of civil servants below SCS 3. (Paragraph 40)

4.The Cabinet office must publish aggregated data on all applications of members of the Senior Civil Service below SCS 3, and the departmental decisions made on them, showing proportions approved without conditions, and, in the case of conditionality, the categories of decisions made. The data must also cover Executive Agencies. Publication should allow public scrutiny of practice across individual departments and Executive Agencies. The Government’s response on this issue was inadequate. All of the above data should be aggregated and available on the ACoBA website. (Paragraph 41)

5.The Government should nominate a departmental non-executive director on each government department board to take on responsibility for oversight of the Business Appointment Rules. He or she should ensure full compliance with the Rules by Crown servants below SCS 3 and greater transparency. The responsible non-executive director on each board should be identified and announced within the next three months.(Paragraph 42)

Lobbying rules

6.We welcome the Government’s recent action to extend the definition of lobbying, now covering informal social contact as well as formal lobbying, though we are somewhat dismayed about how long the Government took to respond to Baroness Browning’s proposals for change. The new lobbying rules will still never be effective without clear and transparent monitoring and reporting of lobbying contacts. Even for formal meetings between lobbyists and Ministers and Crown servants, there is only limited public information made available about the details of meetings. In their current form, the effectiveness of the Rules relies too much on individuals’ own willingness to abide by the Nolan Principles, which are much too broad for this purpose, and not specifically addressed to the problem of lobbying. The Business Appointment Rules are the responsibility of Ministers and we will hold Ministers accountable for their effectiveness and the way ACoBA administrates them. (Paragraph 50)

7.There should be nothing wrong with business and other interests making their case to government Ministers and civil servants. Indeed it is a right for people to do so and it should improve policy and administration. However, the Government must accept that the transparency of such exchanges is essential to avoid the perception that private interests are covertly capturing decision makers. (Paragraph 51)

Recruiting expertise externally

8.The current political climate poses ever greater pressures for the Civil Service to attract expertise from other sectors, particularly those which can support the post EU referendum workload and the requirement for new knowledge and skills, as well as for commercial, digital and other professional knowledge and skills. In addition to this, government reforms to the Civil Service continue alongside an increased reliance on the private sector in the delivery of public services. This shift in public-service delivery has brought recruitment of substantial numbers of contractors and temporary staff in to the Civil Service. Many of these people also contribute to strategy and policy development as well as managing major government contracts. They are gaining considerable inside Whitehall knowledge as they do so. (Paragraph 60)

9.The risk arising from the interchange between the public and private sector is the opportunity it affords to the less scrupulous to conduct themselves in public office in the hope that the people who they are regulating or contracting with, or the relationships they are managing, will somehow prove fruitful to them at a future date. (Paragraph 61)

10.While there is little hard evidence that the movement to the private sector is not conducted appropriately, the present ACoBA regime provides little, if any, assurance on this point. Parts of the private sector wish to recruit former public servants for their relevant knowledge and experience. But it is clearly unacceptable for public servants to use the contacts or experience they acquire in the public sector with the intention of securing a future private gain in this way. It is this possibility which opens them to the suspicion that they may have been conflicted during their time in public office. Nor should it be acceptable for private sector employers to recruit where there is a conflict of interest, since it may create an expectation in those still serving in the public sector that, all things being equal, they can anticipate that they will be treated in the same favourable manner at some future date as a consequence of the current office they hold. (Paragraph 62)

11.The Rules currently do not define when and how a former public servant’s knowledge and experience is considered to be used improperly, and whether or not certain appointments will be acceptable. It has become part of the culture in public life that individuals are entitled to capitalise on their public sector experience when they move into the private sector–the “new normal”–but there is a lack of clear boundaries defining what behaviour is or is not acceptable. The Rules should be amended to include a clearly defined principle that at a minimum, public servants should avoid taking up appointments within a two year time period that relate directly to their previous areas of policy and responsibility when they have had direct regulatory or contractual authority within a particular sector. (Paragraph 63)

12.It is obvious that consultants and temporary staff in Whitehall departments may have access to information which could be of use to private sector employers. The Government’s response to us on this matter is unclear and does not confirm if consultants and temporary workers are subject to the ACoBA rules. The Government must be transparent about how such conflicts of interest are to be managed. If the ACoBA rules are not to be applied, then the Government should publish a code of conduct and a clear set of rules that will apply to temporary workers and consultants working in the public service. (Paragraph 65)

Public trust

13.PACAC makes no judgement of the conduct of any of the individuals we mention in this report. However, the cases cited illustrate the point that, as it currently operates, neither the ACoBA process nor the Rules it administers, are sufficiently robust to command public confidence in its advice and decisions, or capable of protecting the reputation of those who have complied with its rules and followed its processes.(Paragraph 73)

14.We disapprove of the announcement of Mr Osborne’s appointment as Editor of the Evening Standard without waiting for ACoBA’s advice. This demonstrates disrespect for ACoBA and for the Business Appointment Rules and sets an unhelpful example to others in public life who may be tempted to do the same. (Paragraph 75)

15.It is of great concern to the Committee that websites like LinkedIn may be providing the public with a more accurate record of the “revolving door” than ACoBA. This reinforces the impression that the regulatory system for monitoring post public employment of former public servants allows, and even approves of, appointments being taken up in pursuit of personal gain and contrary to the public interest. This must change. While ACoBA is constituted on the present basis, it should carry such information on its website so it can command public confidence that it knows what is going on. (Paragraph 80)

16.In its current form, ACoBA does not have the remit or resources to investigate those who do not seek their advice or to monitor non-compliance of the Rules. Consequently the system is open to abuse, where former public servants may potentially evade the Rules. In the absence of other reforms, the Government should at the very least furnish ACoBA with sufficient additional resources to investigate and monitor non-compliance with ACoBA rules including those who do not approach ACoBA in the first instance. (Paragraph 81)

Transparency of ACoBA’s decision making process

17.We commend the Chair of ACoBA for taking steps to improve the transparency of the Committee’s work. However ACoBA does not engender public trust and transparency by publishing its advice to applicants only once appointments are taken up. The advice given can seem opaque and bears little relation to the perceived conflict being addressed, as far as the public is concerned. It is not known how many appointments are not taken up as a consequence of its advice. This is a perverse shortcoming of the whole concept of ACoBA that it’s visible work is seen as giving permission to individuals to take up employment, rather than as enforcing high standards of conduct by being seen to advise against it. It is damaging to the reputation of the public service and of those who subject themselves to the system. (Paragraph 87)

18.The Rules state that retrospective applications will not normally be accepted but it is clear from press coverage that this element of the Rules is meaningless. ACoBA can choose not to accept an application but this does not stop individuals taking up the post regardless of the lack of advice from ACoBA about its propriety. Currently, the only action that the Committee can take in response to a retrospective application is to send a letter conveying its displeasure. This does not instil public confidence in a system that was established to prevent any perceived or actual impropriety that may result from moving between the public and private sector. Ministers and senior civil servants seem complacent about the effect that this has on public confidence in the values of people who lead in politics and in Whitehall. (Paragraph 88)

Transparency in the media

19.Whilst Lord Nolan was right to suppose that transparency of breaches in the Rules could and should be exposed by using “fair techniques of investigate journalism”, the media cannot report accurately without access to detailed and accurate information from ACoBA. Nevertheless, it is completely unacceptable to continue to rely on media coverage to expose perceived or actual breaches of the Business Appointment Rules, where all discussions are conducted in public and no sanctions are seen to be imposed. This continued trial by media only serves to further weaken public confidence, and runs the risk of being unjust. The media also have regard to their own commercial interests in pursuing such stories, and therefore cannot themselves claim to be unconflicted. Nor is the “court of public opinion” impartial or objective about such matters, and therefore it cannot be a fair means of applying what should be a matter of public policy. (Paragraph 93)

20.ACoBA should disclose full information about its procedures for assessing applications and the reasons for its judgements. The Committee should also publish applications on receipt, and ahead of the judgements it issues on them, to enable journalists, those who may have had official dealings with the individual, and relevant others, to draw any misrepresentation to the Committee’s attention. ACoBA would then be seen to be doing its job and this would reinforce public confidence in ACoBA and its processes. This would also deter people from making some more tendentious applications, and potential employers from making more tendentious job offers, for fear of the reputational consequences. (Paragraph 94)

Chapter 5: The importance of values and of the principles behind the Rules

21.In an age where a certain set of shared values can no longer be assumed to be embedded in our society, the Government must set out clear values and a clear set of principles to define how public servants should think about their future career moves and their subsequent career outside of the public sector. These values and principles need to be made explicit and understood by public servants, in order to foster an improvement in attitudes and behaviour, in order to challenge what has become the established culture–the “new normal”. As such they should be included in amendments to the Ministerial Code and the Civil Service Code. This is a pre-requisite for strengthening public confidence, which is lacking in the current operation of ACoBA and the Business Appointment Rules. (Paragraph 103)

22.The key principles should be that no one takes a job for a specified period, currently two years, in which there is a perceived conflict of interest with their past employment in the public service, and no one should have a job in the public service in which there could be a perceived conflict with their past career in the private sector. This would address the concern that a public servant’s conduct in public office is being compromised by their hope of gaining employment from the companies they deal with in their work. The head of the Civil Service and the Prime Minister are personally responsible to Parliament for ensuring that Ministers and civil servants follow such a set of principles. At present this responsibility is not being adequately fulfilled. (Paragraph 104)

23.PACAC recommends the Government should adopt the principles and incorporate the following text into the Civil Service Code:

“You must:

“You must not:

24.These principles (also set out in out in Apendix 2 to this report) set out how public servants should behave in respect of private sector interests while conducting their work in the public sector, and how they should therefore conduct themselves in respect of any move or potential move to the private sector. As well as informing the purpose and scope of the ACoBA rules, leaders in the public sector must impress upon all public servants, the need to reflect these principles in their attitude and behaviour, in respect of potential private sector employers. Without greater clarity and understanding of what moral behaviour is expected of public servants, the culture that has become established in public life that individuals are entitled to capitalise on their public sector experience when they move into the private sector without clear boundaries–the “new normal”–will become ever more entrenched, and public confidence in the effectiveness of ACoBA’s advice to former Ministers and civil servants will diminish further. (Paragraph 106)

25.Equivalent text should also be included in the Ministerial Code. (Paragraph 107)

26.The Civil Service Management Code should also be amended along the lines set out in Appendix 2. Only by reinforcing these principles while civil servants are in office will it be possible to inculcate a strong public-service ethos that continues to influence the behaviour of office-holders once they have departed public service. At that career point, other than through post-employment enforcement, which presents difficulties of its own, principles can only affect behaviour if they have already been very strongly internalised. In the Committee’s view this makes it all the more urgent that the Government moves quickly to revise both the Civil Service Code and the Civil Service Management Code in the way we propose. (Paragraph 108)

Making Ministers and civil servants aware of the rules

27.The guidance to civil servants and departmental managers which has for some reason been removed from the Civil Service Management Code should be reincluded in a prominent position. It is reproduced at the end of this report as Appendix 1. We believe this is important for all civil servants, including those below the level of SCS 3 who on transfer out of public service, will have their post-employment requests dealt with by their departments. It also needs to be reinforced in respect of departmental officials who deal with such requests. It is vital that the principles are clearly defined in the Civil Service Management Code, which is in matters of procedure, just as important as the ethical guidance contained in the shorter and more generic Civil Service Code. (Paragraph 111)

Embedding ethical standards

28.We welcome the Government’s action to append in full the Business Appointment Rules to the Ministerial Code. We believe this will help to ensure that Ministers are fully aware of the Rules and hence what is expected of them if they move into the private sector. We recommend that the statement on principles to be used in handling applications for post public employment, as included in the 2006 Civil Service Management Code (CSMC), also be attached as an annex to the Ministerial Code. We also recommend that this is reincluded into the CSMC itself, as used to be the case. (Paragraph 114)

29.A principles-based system, if it is effectively taught by leaders and learned by everyone to be intrinsic to the public service, creates an expectation that individuals will act with integrity and regulate their own behaviour and attitudes according to those principles. If people are expected to be alive to conflicts, actual, potential and perceived, and that they will exclude themselves from decision-making where such conflicts arise, they are far more likely to behave accordingly. We commend the research undertaken by the Committee on Standards in Public Life to address how principles can be embedded into public service. The Government must ensure that compulsory training on the principles of public ethics and standards are provided as part the induction process for any new public servant, including for new Ministers. This must be reinforced in leadership training provided to public servants, whenever they are moved to a new appointment and again on departure from public office. (Paragraph 115)

Chapter 6: Revisiting statutory enforcement of the Business Appointment Rules

30.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. (Paragraph 120)

31.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. (Paragraph 124)

32.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. (Paragraph 125)

21 April 2017