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Public Administration and Constitutional Affairs Committee

– in the House of Commons at 12:06 pm on 25th January 2018.

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Select Committee statement

Photo of Lindsay Hoyle Lindsay Hoyle Deputy Speaker and Chairman of Ways and Means, Chair, Panel of Chairs, Chair, Standing Orders Committee

We now come to the Select Committee statement. Mr Bernard Jenkin will speak on his subject for up to 10 minutes, during which no interventions may be taken. At the conclusion of the statement, I will call Members to put questions on the subject of the statement and call Mr Bernard Jenkin to respond to those in turn. Members can expect to be called only once. Interventions should be questions, and should be brief. Front Benchers may take part in questioning.

Photo of Bernard Jenkin Bernard Jenkin Chair, Public Administration and Constitutional Affairs Committee 12:11 pm, 25th January 2018

It is the role of the Public Administration and Constitutional Affairs Committee to oversee the UK’s changing constitution and the efficacy of the civil service and the machinery of government. Within that, PACAC covers matters of ethics and propriety in Whitehall, overseeing the work of the Committee on Standards in Public Life, the ministerial code, the special advisers code, the civil service code and the work of the Advisory Committee on Business Appointments, which oversees the rules governing departing Ministers and Crown servants when they take up outside appointments.

PACAC has defined its overriding purpose as being

“to conduct robust and effective scrutiny in order to help create conditions where the public can have justified confidence in public services/government.”

In that context, just before the election, in April 2017, PACAC published a new report on ACOBA, entitled “Managing Ministers’ and officials’ conflicts of interest: time for clearer values, principles and action”. That followed a report published in 2012 by our predecessor Committee, which recommended replacing the existing business appointment rules with a statutory system. The main recommendations of that report, and of our more recent 2017 report, have been flatly rejected by the Government. I am afraid that many people believe that to be hopelessly complacent. PACAC is therefore announcing in its supplementary report, published today, that we intend to hold a further inquiry into these matters.

The way we manage conflicts of interest arising where former Ministers and Crown servants leave the Government to take up jobs elsewhere really matters. There is a constant stream of embarrassing stories in the media about the so-called revolving door between employment in the public and private sectors, suggesting that people misuse the advantage of a job in Government to get lucrative jobs outside. Although many of these stories may be unfair, the situation is deeply corrosive of public trust in our system of democracy and Government because the present system of oversight fails to provide adequate assurance.

For example—I will name only one Department as an example, but this includes every Department—a constant flow of Ministry of Defence civil servants, and of senior officers from the armed forces, finish up working in the defence industry. A similar situation occurs in other Departments. No one should assume that there is automatically anything wrong with that, but there needs to be an adequate system of assurance that there is, indeed, nothing wrong, and that we are not fostering an over-permissive attitude. The expectation of many people—even of some Ministers—is that this is the new normal and that everybody does it.

We acknowledge, and I pay tribute to, the hard work of the ACOBA board—the chair and the secretariat—but PACAC’s 2012 and 2017 reports can be described only as excoriating. In 2017, PACAC concluded:

“ACoBA, in its current form is a toothless regulator which has failed to change the environment around business appointments.”

That is because ACOBA lacks power and resources, and its remit is much too limited. It is not a regulator—it is merely advisory, with no sanctions for non-compliance—and there are regular instances of the business appointment rules being ignored.

Furthermore, serious gaps exist in ACOBA’s monitoring process, so while we know about some high-profile cases, we have little idea about the scale of non-compliance. That has got worse since the Government removed ACOBA’s responsibility to monitor and report applications from Crown servants below SCS3 in 2010. Departments are meant to post half-yearly data on their websites to show when advice has been given to applicants at SCS2 and 3 levels, but this data has become patchy. We just do not know how many civil servants below SCS3 level who have performed important roles in respect of policy formation and commercial relationships end up in a position to draw on inside information or their Government contacts after they leave the civil service.

In the period between PACAC’s two reports, the challenge has escalated, with increased numbers of public servants and Ministers moving between the public and private sectors. There have also been a number of high-profile cases, leading to declining public trust in a system that was designed to promote public confidence. A personal observation is that the magazine Private Eye, from which we took evidence, frequently appears to do a better job of policing the business appointment rules than does the advisory committee itself.

It is essential that steps are taken to ensure that the ACOBA system is swiftly improved. In PACAC’s more recent report, we set out a number of new recommendations in relation to how that could be done without resort to statute, although we recommend that a cost-benefit analysis of statutory regulation should be conducted. The Government have rejected statutory regulation on the basis that it would be too costly, but they refuse to do the cost-benefit analysis.

PACAC recommended that the Government provide ACOBA with the powers and resources necessary to actively monitor and enforce compliance with the rules. There should also be a substantial increase in transparency regarding ACOBA’s decisions, and that should be done by Department. Applications should be published on receipt and not just when they are approved. That might reduce a lot of ACOBA’s unnecessary workload.

Most importantly, the business appointment rules should be fundamentally changed. A system to manage conflicts of interest needs to be more than just a code of rules and declarations. A principles-based system, if it is effectively taught by leaders and learned by everyone so that it is intrinsic to public service, would create a new and different expectation that individuals will act with integrity, encouraging people to regulate their own behaviour and attitudes according to those principles.

Our report recommends a substantial change of emphasis in the ministerial code and the civil service code to highlight the values and principles that should guide attitude and behaviour. We need to instil an expectation of integrity in individuals’ decisions. That, combined with independent checks, could effectively foster a substantial improvement in attitudes and behaviours. Evasively, the Government responded that the essence of those principles and values is already embedded in the code, but they are not explicit enough. We need a change of heart, and we need a stronger system—otherwise public confidence will continue to be eroded.

Photo of Chris Matheson Chris Matheson Shadow Minister (Cabinet Office)

I thank the hon. Gentleman and his Committee for their powerful report and for the statement he has just made. The Opposition are committed to bringing this issue to the top of the political agenda and to seeking reform, as not a week seems to go by without the exposure of some conflict of interest in the heart of Government. Bearing in mind his statement and his report, does the Chair of the Select Committee agree that the report raises serious questions of governance and confirms that this is a Government of the few, by the few and for the few?

Photo of Bernard Jenkin Bernard Jenkin Chair, Public Administration and Constitutional Affairs Committee

I will leave aside the soundbite that came at the end of the hon. Gentleman’s question, but the substance of his remarks is correct. The system is inadequate and needs to be strengthened and reformed, and I am delighted that Her Majesty’s official Opposition are taking an interest in the matter.

Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Cities), Shadow SNP Spokesperson (Treasury)

It is very good to see you in the Chair, Mr Deputy Speaker.

I thank Mr Jenkin for his statement. The SNP agrees that the business appointments rules should be strengthened, and we are disappointed with the Government’s response to the report. As Burns might have said, “I wad na gie a button for it.” Does the hon. Gentleman agree that the public and the press, specifically Private Eye, recognise that the Government’s response to the evident revolving-door problem smacks of complacency and self-interest? Does he agree that the actions of the former Chancellor demonstrate how little respect there is for ACOBA? Does he also agree that, if the Government and this House do nothing to strengthen the business appointments rules, we risk further undermining trust and integrity in politics?

Photo of Bernard Jenkin Bernard Jenkin Chair, Public Administration and Constitutional Affairs Committee

Our report mentions George Osborne in two respects. First, we state that it was striking and startling that ACOBA appeared to give the former Chancellor a blank cheque in allowing him to join BlackRock on an inflated salary so shortly after he left his office. Secondly, George Osborne also completely bypassed the appointment rules prior to accepting his appointment as editor of the Evening Standard. We regard that as a glaring example not necessarily of any particular dishonour by any particular individual, but of how the system absolutely fails to command public confidence.

Photo of Chloe Smith Chloe Smith The Parliamentary Secretary, Cabinet Office, Assistant Whip

I join others in welcoming you back to your place, Mr Deputy Speaker, and I thank my hon. Friend Mr Jenkin for his work in bringing these affairs to the House’s attention today. If Members present have not already taken a look at the Government response to the Public Administration and Constitutional Affairs Committee report, I encourage them to do so. We clearly state that the Government are committed to maintaining the highest standards of conduct for Ministers and civil servants, including special advisers, and we believe that the rules and procedures in place are proportionate and adequate. We look forward to working with the Committee to do more, however, and I put on the record my willingness to work with its Chair to do so.

Photo of Bernard Jenkin Bernard Jenkin Chair, Public Administration and Constitutional Affairs Committee

I welcome my hon. Friend back to the Front Bench in her new position at the Cabinet Office, to which she brings considerable experience, including of this issue. However, I have to express my disappointment at the Government’s response. Some minor amendments were accepted, but it regards the system as the highest example of regulation and openness when it simply does not deliver the public confidence that we want. I appreciate that this is a vexed issue and that we do not want to deter people from coming into the public service for fear of being treated unfairly on the way out, but the present arrangements are inadequate. The response even refused to put more explicitly into the ministerial code words such as

“You must… take decisions in the public interest alone” and

“You must… 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” and

“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”.

I do not understand why those things cannot be put explicitly in the ministerial code so that they are talked about and understood, which would begin to change the attitudes that unfortunately pervade many of the Ministers, special advisers and civil servants in Whitehall.

Photo of Paul Flynn Paul Flynn Labour, Newport West

The Government’s conduct in responding to the report reinforces the public’s view that we here are acting in our own private interests, not in the public interest. Is it not significant that a Prime Minister who did not lift a finger during his period in office in answer to pleas for reforms to jam the revolving door has now taken advantage of that period of office to take a job in China, with which he worked when in Government? Will the Chair of the Public Administration and Constitutional Affairs Committee explain to us why George Osborne did not come to the Committee to explain why he had five meetings with BlackRock, why he altered the law in its favour and why, after losing office, he took a job with them on £650,000 a year for one day’s work a week? If that is not an egregious example of the abuse of the revolving door, it is hard to see what is. We have a shameful record, and perhaps the Chair will agree that the public will rightly regard us with contempt and as unfit to police our own affairs.

Photo of Bernard Jenkin Bernard Jenkin Chair, Public Administration and Constitutional Affairs Committee

Sadly, I agree with the hon. Gentleman. As a member of my Committee, he has been instrumental in drawing the Committee’s attention to these issues. I would almost describe him as the conscience of the Committee on the issue, and long may he continue to encourage us in this work. As he knows, it is not the practice of the Committee to prosecute individual cases, and we should resist that because it would divert attention from the substance of the work that we need to undertake. I am actually quite pleased about how obviously carefully drafted the Government’s response is to our report because the points we are making in our report are having a telling effect. We have a long way to go, however, and that is why the hon. Gentleman has been one of those encouraging the Committee to continue pursuing the subject with a further inquiry. I thank him for his work for the Committee.