Fourth Special Report
The Public Administration and Constitutional Affairs Committee published its Thirteenth Report of Session 2016–17, Managing Ministers’ and officials’ conflicts of interest: time for clearer values, principles and action, as HC 252 on 24 April 2017. The Government’s response was received on 21 December 2017 and is appended to this report. The Committee considers that the Government’s response is inadequate given the seriousness of the issues raised in the report and their potential to undermine public confidence. It will therefore in due course open a new inquiry into this matter.
Appendix: Government Response
Introduction
The Government’s response to the Committee’s report Managing Ministers’ and officials’ conflicts of interest: time for clearer values, principles and action is set out below.
The Government is committed to maintaining the highest standards of conduct for Ministers and civil servants, including special advisers, and the Business Appointment Rules are an important part of the process for ensuring these high standards. The current system seeks to ensure that when a former Minister or civil servant takes up an outside appointment there should be no justified public concern about the appointment, whilst at the same time allowing movement between central government and the voluntary sector, the private sector and other parts of the public sector. This interchange of skills and experience is beneficial for our public service, in particular at a time when the capability and expertise of the Civil Service is critical to delivering the UK’s exit from the EU.
As noted in our evidence to the Committee, the framework we have in place to ensure propriety in this area is significantly stronger than elsewhere in the public sector, including local government, the police and the National Health Service. The Business Appointment Rules form part of civil servants’ contracts of employment, and as such are legally enforceable.
However, the Government accepts that there are certain areas in which it may be possible to strengthen current procedures and practices in order to raise awareness of the Business Appointment Rules, as well as strengthening incentives to comply, and we are working with the independent Advisory Committee on Business Appointments to implement a number of measures to strengthen processes.
In particular, we have agreed to the following:
- We will consider how the Civil Service Management Code can be updated to increase clarity around processes for civil servants on career breaks. Individuals who wish to take up an outside appointment while on a career break should follow an equivalent process to the Business Appointment Rules to ensure there is no impropriety or perception of impropriety when outside appointments are taken up. This is already the practice in a number of departments, but we will look to amend the Civil Service Management Code to make this clear and ensure consistency in approach. This information will be included in the quarterly transparency publications.
- We will also look to make clear in the Code that individual decision letters should be shared with a prospective employer as a matter of routine, to ensure the employer is aware of the requirements placed on the individual, and to ensure compliance with any conditions. This will be done by HR Directors, direct with the future employer.
- We will also seek to amend the Code to make clear that all applications from former permanent secretaries should be countersigned by the Cabinet Secretary. We will also seek to insert this requirement in the contracts of Permanent Secretaries.
- Individuals are reminded of their duties to comply with the Business Appointment Rules in their exit letters on leaving government. We also intend to make clear in these letters that non-compliance with the Rules may be a future consideration, should a former civil servant wish to return to the Civil Service.
- In addition, we have agreed that if a former Minister or senior civil servant is nominated for an honour, ACOBA will be consulted on an individual’s compliance with the Business Appointment Rules as part of the Honours and Appointments Secretariat’s existing vetting process. This will also be made clear in exit letters, and both the above points could be addressed as part of the proposed update to the Civil Service Management Code.
These clarifications will also be included in updated departmental guidance on administering the Rules for civil servants below SCS2. ACOBA will also update their guidance accordingly.
However, the Government strongly disagrees with any suggestion that either ACOBA or departments should make public details of appointments which are not taken up as a result of either formal or informal advice given to an individual. This runs contrary to the principles of the Rules and goes further than fair employment and privacy law and practice suggest is desirable. Further, maintaining a safe space for the free and frank exchange of information allows the potential for concerns about proposed appointments to be discussed and addressed at an early stage.
We address each of the Committee’s specific recommendations below.
Response to recommendations
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)
The Committee itself concedes that the assertion that there is an ‘increasing trend’ is not backed up by quantified evidence. Rather there is now a far greater degree of transparency about appointments, which has rightly resulted in increased accountability and public scrutiny.
The Government does not agree that an evaluation is necessary, or part of ACOBA’s remit. ACOBA publishes the advice it gives to former Ministers and senior crown servants on its website when an individual either takes up appointment or if the appointment has been publicly announced. The advice includes information relating to the consultation ACOBA has had with the individual’s former department (including on whether they were responsible for a certain policy), the facts provided to it by the individual making the application, the nature of the proposed role (and whether paid or unpaid), and the nature of the restrictions which ACOBA has advised should be imposed. This unprecedented level of information is made public, allowing people with an interest – including the Committee – to use the information as they wish.
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)
Departments already publish information relating to advice given under the Business Appointment Rules on gov.uk on a quarterly basis, including for their executive agencies, where that agency is staffed by civil servants. These summaries include details of the decisions taken on individual cases and any conditions applied. The Government believes that the publication of this information provides transparency around applications made under the rules, enabling public scrutiny of such applications.
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)
The Government agrees in principle. Departmental Boards, on which non-executives (NEDs) sit, should ensure that there are effective arrangements for governance and that these processes are operating effectively. Compliance with Civil Service processes is an important part of the good governance landscape, and this includes the Business Appointment Rules. Government will instruct departments to ensure that the Audit and Risk Committees, which are chaired by Departmental NEDs, monitor compliance issues relating to the Business Appointment Rules at regular intervals.
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)
The Government shares the Committee’s view that there is nothing wrong with business and other interests making their case to Government Ministers and civil servants. Indeed as the Committee points out it is right for people to do so and it should improve policy and administration. The Government makes an unprecedented amount of information available to the public, including Ministers’ and permanent secretaries’ external meetings, and also their hospitality and gifts received. In addition, the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Act 2014, which complements the Government’s transparency initiatives, has increased transparency by requiring people who are paid to lobby the Government on behalf of others to disclose their clients on a publicly available register. It has also enhanced scrutiny by requiring consultant lobbyists to declare whether or not they subscribe to a code of conduct.
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)
We consider that the current framework is sufficient to manage any potential conflicts between two roles. An overly rigid approach will deter people from coming into the Civil Service which will be to the detriment of taxpayers and the Civil Service. This is even more important today given the challenges of implementing the decision to leave the European Union where it is essential we have the skills and capability within the Civil Service to deliver a successful exit, as well as ensuring the Civil Service has the skills to secure future trade deals on an unprecedented scale.
The Government is confident that the current rules strike the right balance between preventing conflicts of interest, whilst recognising the common law freedoms of individuals to get a job and earn a living without unreasonable restraint of trade. Civil servants and former ministers should not be unreasonably barred from changing job or career and working in the voluntary sector, private sector or another part of the public sector.
Applying the restrictions advocated by the Committee risks imposing a covenant in restraint of trade which is unenforceable. It would also make it highly unlikely that individuals would take a risk and join the Civil Service with such uncertainty for their future employment after leaving. We have to be mindful that individuals will have on-going financial commitments (household bills, mortgages) and would not want to be in a position where they might struggle to pay those bills in the future.
In the private sector, often staff who leave to join a competing employer within a set period are subject to “gardening leave”, to wait out a period before they can take up their new post. Whilst this would avoid the unreasonable restraint of trade issue, the Government does not believe it would be a good use of taxpayers’ money to adopt gardening leave as a widespread practice across the Civil Service. Indeed, the Government has sought to reduce the cost of exit payments in the public sector.
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)
Civil servants appointed on a temporary basis are subject to the Business Appointment Rules in the same way as permanent civil servants. Upcoming plans to amend guidance will ensure this is clear. Consultants employed by their consultancy organisation are subect to the company’s codes of conduct and rules as well as contractual arrangements with employing departments, and any other (non-Civil Service) staff who carry out work for government departments are also subject to specific contractual arrangements which address conflicts of interest and ensure confidentiality. All these relationships are carefully managed on a case by case basis depending on the nature of the role.
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)
ACOBA and departments are more transparent than ever about the information they publish on individual applications under the Business Appointment Rules, which the Government believes provides the public with the information it needs.
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)
The Government notes this recommendation. The Cabinet Office sponsor team is in regular communication with the Committee’s secretariat to ensure it has the resources it needs to carry out its remit efficiently and effectively.
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)
ACOBA already publishes information regarding their procedures in their annual report and on their website. Individual applications contain personal data submitted on a confidential basis which it would not be appropriate to publish.
Individuals have a right to expect a degree of privacy when making job applications that reveal a significant amount of personal data. Again, we believe that the current publication arrangements strike the right balance between an individual’s expectation of privacy and the public interest in the transparency of decision making. It is right that the expectation of privacy is respected until until an appointment is taken up, at which point details are published.
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)
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)
PACAC recommends the Government should adopt the principles and incorporate the following text into the Civil Service Code:
“You must:
- take decisions in the public interest alone
- never allow yourself to be influenced in contracting, procurement, regulation or the provision of policy advice, by your career expectations or prospects if you leave the public service
- always report to your line managers any offers of jobs or other rewards, or any informal suggestions of such rewards, that may have, or be reasonably seen to have a bearing on your role as a public servant
- take particular care in your relations with former colleagues who may seek to influence your decisions as a public servant
“You must not:
- take up any post outside the public service in businesses or [commercial] organisations operating in areas where you have been directly responsible in the previous [currently] two years for any form of contracting, procurement or regulation.” (Paragraph 105)
Equivalent text should also be included in the Ministerial Code. (Paragraph 107)
The Civil Service Management Code should also be amended along the lines set out in Appendix 2. (Paragraph 108)
The principles set out in the Civil Service Code and the Ministerial Code already capture the essence of what the Committee is recommending here. The Government does not consider that setting this out in further detail in these Codes is necessary. Moreover, as noted above, we will be looking to make amendments to the Civil Service Management Code to ensure that individuals are clear on their obligations. This document, which underpins civil servants’ terms and conditions of service, is a more appropriate vehicle for such guidance, and we will look at the Committee’s recommendations as part of this review.
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)
The Government agrees. The guidance is being updated and will be published shortly.
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)
The version of the Ministerial Code published in December 2016 included for the first time, the full Business Appointment Rules. A further update to the Code will be published shortly, and will include wording to require that no new appointments are announced or taken up before the Committee has been able to provide its advice.
We intend for the guidance and clarifications referred to above, to be included in an update to the Civil Service Management Code, which is a detailed management document underpinning civil servants’ terms and conditions of service. Government has no plans to include any additional guidance in the Ministerial Code.
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)
The Civil Service offers a wide range of comprehensive training, including on the principles of public life and the Civil Service Code and Civil Service Management Code, which include the requirement to comply with the Business Appointment Rules.
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)
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)
The Government notes this recommendation. However, it does not feel that such a anaylsis is needed at this time or that it would be a good use of public money to do so. A considerable amout of information is now published by both ACOBA and departments on the applications it receives and the Government believes this is sufficient to ensure the public has the information it needs for transparency and accountability.
23 January 2018