This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.
Date Published: 2 December 2022
The Committee undertook this inquiry in the wake of the collapse of financial services firm Greensill Capital and revelations about its closeness to Government and its lobbying activities. The Committee set out its initial findings in an interim report in July 2021. In the light of these initial findings, in this report, we consider in more detail the propriety of governance in the areas of public life impacted by the Greensill affair and the role of the ethics watchdogs charged with oversight of standards in public life.
The involvement of individuals who had been at the top of Government with Greensill Capital drew attention to the way in which the employment of former Ministers and senior Officials is regulated, especially as no significant breaches were found to have occurred in these instances. This so-called ‘revolving door’ from the public to the private sector is regulated by the Business Appointment Rules (“the Rules”) which are overseen by the Advisory Committee on the Business Appointments (“ACOBA”). Whilst most comply with the Rules and the advice and the decisions of ACOBA, failure to do so currently attracts only negative publicity at worst. A regulatory regime which holds no possibility of sanction for those that do not comply with it is clearly flawed. Consequently, the Committee argues that the Business Appointment Rules must be enforceable, legally if necessary. ACOBA must also be placed on a statutory basis.
The discovery that Greensill Capital’s founder Lex Greensill had spent time working in Government raised questions about the way in which public appointments are regulated. The Commissioner for Public Appointments oversees the appointment to certain positions in public life. But many do not fall within the Commissioner’s remit, and a whole class of “direct Ministerial appointments” appear to have been made entirely at Ministers’ discretion, without being subject to any proper process or consideration of merit, and seem to operate outside any existing Code of Conduct. The need for Ministers to be able to make appointments was stressed to us. Such appointments may be key to delivering Government policy and Ministers are ultimately accountable for them, yet this Ministerial discretion is balanced by minimum requirements of merit and independent oversight of due process. To ensure this balance is maintained, the Commissioner for Public Appointments should become a statutory post. For those ethics watchdog appointments, the endorsement of the relevant Select Committee should be required. For direct appointments made by Ministers outside the Commissioner’s remit, a letter of engagement, including statement of the terms of their appointment, their remit, their management, and tenure should be shared with the Chair of the relevant Select Committee.
During the course of the inquiry, several other issues emerged that further challenged the current means by which standards and ethics in public life are upheld. These included:
Consequently, the report also covers the Ministerial Code and the role of the Independent Adviser on Ministers’ Interests. Given the importance of the role in maintaining public confidence in the propriety of governance, and recent equivocation over whether an appointment will be made at all, the report argues that it should become a statutory position and the appointment subject to oversight by the Commissioner for Public Appointments. The statutory role should preserve the recent increase in powers for the Independent Adviser, notably the authority of the post holder to initiate their own investigations rather than waiting for instruction from the Prime Minister. Any decisions about appropriate action following an investigation must, however, remain the Prime Minister’s. This creates a tension regarding the outcome of any investigation into the Prime Minister themself. We found no easy resolution to this and conclude that the Prime Minister must ultimately decide on the appropriate action should they themselves be found in breach of the Ministerial Code.
In calling for a more robust regime for regulating ethical conduct in public life, we fall short of calling for greater external regulation in the form of a statutory ethics commission or commissioner. Such are the differences between the various watchdog bodies and their roles that we do not consider it appropriate to merge them into a single entity.
In calling for more statutory oversight of propriety of governance, we would not want to undermine the continued importance of self-restraint on the part of those in public life. Individuals in public life must recognise the importance of personal restraint and responsibility and act to regulate their own behaviour accordingly.