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Public Administration and Constitutional Affairs Committee

Part of the debate – in the House of Commons at 12:11 pm on 25th January 2018.

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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.