Written evidence from Unlock Democracy[1] and Spinwatch[2] (ACB 06)

Public Administration and Constitutional Affairs Committee

The role and effectiveness of ACoBA and the Independent Adviser on Minister’s interests

Unlock Democracy and Spinwatch would like to thank Josh Leeson for allowing us to use his PhD research which analysed all the publicly available data on the appointments that had been approved by ACoBa until April 2016.

Executive Summary

●       Unlock Democracy and Spinwatch believe that ACoBA is not effective as an advisory body. It continues to run the risk that public officials will not seek advice and it’s inability to monitor compliance mean it does not act as an effective deterrent.

●       There are few, if any, safeguards to prevent ex Ministers taking up appointments which are closely aligned to their previous official responsibilities. This is demonstrated by the fact that 2009-2015 sixty per cent of ministers and public officials who left government to take up roles in the private sector revolved into jobs in the same field as their ministry.

●       Unlock Democracy and Spinwatch recommend that ACoBA be scrapped and replaced with a statutory body with the ability to monitor compliance, and civil sanctions for non-compliance.

●       For ACoBA to be effective we believe it is essential that the definition of lobbying is extended so that it includes advising individuals on how to influence government and informal lobbying through social events.

●       In order to improve the representativeness of the committee and increase public trust, we propose that the committee be made more representative and include lay members.

●       Unlock Democracy and Spinwatch recommend that MPs also be covered by the Business Appointment rules. We also recommend that departments publish statistics on the business appointments of mid-ranking civil servants.

●       Unlock Democracy and Spinwatch recommend that the maximum waiting period and the maximum lobbying ban be extended to five years to be used in the most high risk cases.

1. The role of ACoBA

What should ACoBA's primary function be and how has it changed since our 2012 report 'Business Appointment Rules?

1. ACoBA’s primary function should be to monitor the movement of public officials into the private sector. It should ensure that all appointments are appropriate and do not compromise the principles of our democracy. In particular it should ensure public officials do not:

●       Exploit official government information for commercial or personal gain

●       Exploit their former position to influence the government for the benefit of their new employer

●       Let potential future employment prospects influence their decision making whilst in government

2. A number of external factors in recent years have reinforced the need for a body that fulfils these functions: the cyclical, but steady increase in traffic between the public and private sectors, and in particular, the increase in the number of Ministers revolving into private sector jobs in the same field as their ministry; changes in the nature of the roles being taken up by ex Ministers, such as the increase in ‘consultancy’ jobs; greater acceptance among some officials of a blurred line between the private and public sectors; and the continuing decline in public trust in government institutions.

3. As such, ACoBA has seen its workload increase, finds itself under greater scrutiny, and yet is hamstrung in its response. For example, the Committee’s chair has acknowledged that it does not have sufficient powers to police the system, and has recognised that the definitions it uses in its advice need to be expanded to reflect the actual nature of lobbying.

4. At the same time, the Committee’s remit has also been reduced. In a little noticed change before the last general election, the requirement for all special advisers to seek the advice of ACoBA was weakened so that only the most senior special advisers needed to go through the Committee, the rest needing only the permission of the permanent secretary of their former government department. It serves to undermine an already weak system.

In its 2012 report PASC recommended that ACoBA be "abolished". How effective is ACoBA as an "advisory" body, and should its remit be extended to allow the Committee to enforce compliance with its advice?

5. Unlock Democracy and Spinwatch consider ACoBA to be ineffective as an “advisory” body and would recommend that its remit should be extended to allow the Committee to enforce compliance with its advice.

6. As an advisory body it is clear that ACoBA is not always taken seriously. Ministers and Senior Civil servants are expected to seek advice. However, there have been many cases of individuals applying to ACoBA retrospectively or not at all.

7. For example Suma Chakrabarti, Permanent Secretary at the Ministry of Justice until 2012 announced he had taken up a role as President of the European Bank for Reconstruction and Development before the committee could advise on this appointment. The appointment was approved with no chastising.[3] Perhaps more concerningly James O’Shaugnessy, director of policy and special advisor to David Cameron until 2011 did not seek any advice when he took up a role as chief policy advisor at PR and lobbying consultants Portland Communications in January 2012. Once again there were no consequences to this failure to comply.[4] Another case that highlights the inherent weakness of the system is that of Fiona Hill, now joint chief-of-staff to Theresa May. In 2015, when Hill left her post as May’s special adviser to work for lobbying firm, Lexington Communications, she was required only to seek permission from the permanent secretary of the Home Office. This was thanks to the rule change, noted above, that required only the most senior special advisers to consult ACoBA. However, Hill did not even seek permission from the department before taking the lobbying role. Her failure to adhere to the rules only came to light after she revolved back into a high profile government position.

8. Without enforceable sanctions for those who fail to comply with ACoBA, its legitimacy as the moral authority on appropriate employment for former politicians is seriously undermined. It will continue to run the risk that those who want to can simply ignore it, opening up the potential for the abuse that it exists to prevent.

9. ACoBA lacks the power and resources to effectively monitor potential breaches of its conditions. ACoBA can recommend restrictions such as a ban on direct lobbying or using insider information, but they have no way of ensuring that applicants comply. Michael Prisk, former Minister for Housing in the DCLG until 2013 took a role advising property developers Essential Living Ltd. on current and upcoming laws affecting the private rental sector.[5] Despite ACoBA advice, there are no regulations in place which could effectively prevent Prisk from using valuable information gained while in government to help his clients make profit. This issue is especially problematic as departments with the most sensitive information such as the MoD, the FCO and HMT are also those with the highest number of staff joining the private sector.[6] This leaves former public officials open to the accusation that they may be exploiting privileged knowledge for private profits. This is bad for democracy and also public trust.

10. ACoBA’s weakness is also damaging to those who do follow the rules. Public officials for whom integrity is of utmost importance are vulnerable to accusations of conflicted interests due to the failure of appointments to be properly investigated. Because of this all former public officials who move into the private sector are subject to the same mistrust and suspicion.

11. Unlock Democracy and Spinwatch recommends that ACoBA should be replaced by a statutory body with mechanisms to enforce compliance. There should be civil sanctions for breaches of rules, including potential sanctions for employers who knowingly employ former office holders against the rules.

In its 2012 report, PASC expressed concerns about the “low level of awareness of the Business Appointment Rules amongst relatively senior public servants". How should ACoBA deal with individuals who are not aware of, or do not consult ACoBA before taking up outside appointments?

12. Unlock Democracy and Spinwatch recommend that every effort should be made to ensure that senior civil servants are aware of the Business Appointment Rules. Those who do not comply should be subject to civil sanctions. Furthermore the Business Appointment Rule that ‘retrospective applications will not normally be considered’[7] should be properly enforced. In 2011-12 a quarter of cases ACoBA dealt with were retrospective applications.

13. In addition to the case Suma Chakrabarti detailed above, Rohan Silver special advisor to the Prime Minister, took up a role in 2013-14 as entrepreneur in residence at Index Ventures without applying to ACoBA first.[8] Similarly, Baroness Thornton of Manningham, parliamentary under-secretary in the DoH until May 2010 applied to ACoBA retrospectively for the role of senior associate at Social Business International.[9] Despite the committee noting she had already taken up the role at the time of her application, it was approved. Currently ACoBA’s response to retrospective applications is to send a letter stating it’s displeasure. In order to provide an effective deterrent there needs to be provisions for stronger punitive actions.

In its 2012 report, PASC recommended that "the membership of ACoBA be reconsidered entirely, to ensure that it is able to command public trust and confidence in its decisions." Is ACoBA’s membership sufficiently reflective of our society?

14. Unlock Democracy and Spinwatch believe ACoBA is not sufficiently representative of our society. It is dominated by political appointees and former civil servants. Whilst we recognise that a level of technical understanding of the Civil Service is required, outside perspectives are necessary to maintain public confidence.

15. One mechanism for doing this would be to include lay members on the committee. This is common practice in committees that regulate professional groups conduct including lawyers, doctors, dentists and opticians.  They have an independent lay chair and they have a majority of lay voting members on the committee, supplemented normally by one or two people from the profession itself.  For disciplinary or fitness to practice panels they have a very large pool of members both so that it doesn’t become too burdensome but also so that lay members don't become institutionalised. Complaints about doctors for example are initially investigated by a team of 1 lay member and 1 professional member. Building the principle of lay membership into both the organisation’s governance and disciplinary functions fundamentally changes the power dynamic of the committee and sends a clear message to the public that it is not a closed shop.

2. The Business Appointment Rules

In 2012 PASC concluded that the Rules are not "clear about the principles and considerations which should guide the advisory committee's decision."

16. Unlock Democracy and Spinwatch agree with PASC’s conclusion that the Rules are not sufficiently clear. The rules outline criteria which will be considered when reviewing an application, however, there is no indication of any thresholds of appropriateness in each of these areas. The rules state that these points will be balanced against the need for public officials to pursue their own career. This makes the judgment entirely subjective, which without detailed justifications, makes public or parliamentary scrutiny difficult. We recommend that principles governing approval of business appointments should be make clearer. They should also be communicated to applicants and to the public.

How effective are the Business Appointment Rules – for example is there sufficient clarity with regard to the definition of lobbying?

17. Unlock Democracy and Spinwatch believe that the Business Appointment Rules are not effective due to their ambiguous nature.

18. As has been acknowledged by ACoBA chair, Baroness Browning, the definition of lobbying is particularly problematic as it leaves room for interpretation which would permit the use of contacts to further the aims of former public official’s current employers. It does not specifically include, for example, ‘informal lobbying’ through, say, social events. It also omits the significant role that lobbyists, ex Ministers included, play in providing advice to companies on who to approach in government, and how best to make their case.

19. We believe that the definition of lobbying should be expanded to reflect what happens in practice. It should include any activity by ex Ministers or civil servants, the purpose of which is either to influence government, or to advise others on how to influence government. This would bring it in line with definitions used in lobbying transparency regulations in countries around the world (note, though, that the UK’s widely-criticised lobbying register, introduced last year, has a particularly narrow definition of lobbying). It would also conform to the lobbying industry’s own definition of lobbying activity, which was developed in the context of the UK government’s pledge to open up lobbying to public scrutiny.[10]

20. By contrast, Lord Whitby was told that “advising on bids is not considered to be lobbying.”[11] Stephen Hadrill was only told not to initiate contact with the government for lobbying purposes, but if he was approached he may join the conversation[12]. Recently, William Hague, former First Secretary of State and Leader of the House of Commons was given permission to take up a post as Non ­Executive Director of Intercontinental Exchange, Inc. (ICE) and Chair of ICE Futures Europe (IFEU)[13]. Although he was banned from lobbying directly for two years he is not prevented from advising his employers on how to influence government.

21. The current definition cannot prevent former public officials gaining privileged access to the government. Unlock Democracy and Spinwatch believe that individuals and groups should have equal influence in the political decision making process. The revolving door threatens this basic democratic principle.

Should the Business Appointment Rules be better integrated into the Ministerial Code?

22. If this would increase awareness of the rules, yes.

With increasing annual numbers of former civil servants seeking permission to take up outside appointments, how can we ensure that the Business Appointment Rules are fit for today's purpose?

3. The "revolving door" between the public and private sector

Why is there still a prevalent negative public perception of former Ministers taking advantage of their previous positions?

23. There is public perception that a ‘cosy club’ exists in the top ranks of government and the private sector. This is epitomised by the revolving door. The public fear that former public officials may use their connections or insider knowledge to further private interests at the expense of the public interest. Public servants may also appear to use government as a stepping stone for more lucrative careers. This can give the impression that politicians and civil servants or motivated by money, success or power rather than a genuine commitment to public service.

24. In its 2012 report PASC suggested that the negative public perception of former Ministers taking advantage of their previous positions could in part be attributed to negative media coverage. It argued that significant media attention was given to controversial cases, and the majority of straightforward cases were largely ignored. It suggested that this misleads the public and gave an unbalanced perception of the issue.[14]

25. The central role of the media in holding former public office holders to account can in part be attributed to failure of ACoBA to properly investigate the risk of business appointments and monitor compliance. In the absence of robust governmental oversight of the revolving door, it falls to the media to fill the vacuum. Unless stronger safeguards are put in place to prevent individuals exploiting their connections and knowledge there will continue to be scandals. These will taint all those who move from public to private sector.

26. The lack of strong government regulation of business appointments can make it seem like the government is complicit in public officials exploiting positions . There are no tangible consequences for those who do use their former government positions to gain benefit for themselves or their new employers. This idea of complicity is further exacerbated by the fact that ACoBA has be seen to be simply ‘rubber stamping’ applications. Of the 367 jobs for which public officials have sought clearance for since 2010 ACoBA has not publicly refused any[15]. This may in part be attributed to the fact that ACoBA only published its advice once positions have been taken up. However, this lack of transparency further fuels public perception that the government lacks the will to take action. We recommend that ACoBA publish all details and reasoning for decisions taken on both accepted and rejected applications.

In its 2012 report, PASC acknowledged the likely increase in "numbers of civil servants moving between Whitehall and the private Sector". Is ACoBA equipped to address the growing concerns about the operation of the revolving door between the public and private sector?

27. Unlock Democracy and Spinwatch believe that ACoBA does not currently have the resources to deal with increasing concerns about the revolving door between the public and private sector. In 2015-16 one quarter of applications were not dealt with by the deadline[16]. Whilst this is an improvement on the previous year, it remains inadequate. In order to be able to thoroughly investigate the risks of business appointments and potential breaches of conditions for an increasing number of applicants ACoBA requires significantly more resources. One way of increasing the resources at ACoBA’s disposal would be to introduce a fee towards the costs of the scrutiny process to be paid by companies wishing to employ former public officials within the advisory period.

28. We recommend too that MPs should also be covered by the rules for business appointments tailored to the specific circumstances of their work. Currently, MPs taking up jobs after public office are not required to apply to ACoBA. The Dispatches investigation into Jack Straw and Malcolm Rifkind highlighted this issue and public trust in the government’s ability to regulate the revolving door was damaged by it.

29. Departments should also publish statistics of business appointments for mid-ranking officials to ensure that lower level civil servants moving between the public and private sector are also subject to scrutiny.

What safeguards exist to ensure that ex Ministers do not take up senior external appointments which are closely aligned to their previous official responsibilities?

30. Currently there are few, if any, safeguards to ensure that ex Ministers do not take up senior external appointments which are closely aligned to their previous official responsibilities. Between 2009 and 2015 sixty per cent of ministers and public officials who left government to take up roles in the private sector revolved into jobs in the same field as their ministry[17]. The 2015-16 ACoBA annual report noted an ‘increasing tendency for individuals to seek to take up appointments in business or other sectors with which they have had dealings in public office’[18].

31. Many public officials went to work for employers with whom they had contact whilst working for the government. For example, Adam Smith, former special advisor to the secretary of State in the DCMS took up a job as head of external affairs at Paddy Power. He had previously been involved in legislation that regulated the entire gambling industry, nonetheless ACoBA approved the appointment.[19] Nick Gibb was the Minister of State for Schools in the DfE 2010-12 and 2015-present day, he was also minister for school reform 2014-2015. He applied to sit on the advisory board for the think-tank Civitas’ Curriculum Project, the group to which he had awarded the contract to conduct a curriculum review. His application was accepted.[20] Former public officials can be accused of making important political decisions with their future careers in mind.

32. A number of public officials have also taken up roles which require contact with their former departments. Lieutenant-General Sir Mark Mans, Adjutant-General to the Forces from 2009-2012 applied to ACoBA for approval to take up posts with Allocate Software and Capita Defence Services. Both have contracts with the MoD and would require contact with his former department[21]. This represents a serious conflict of interest. Although ACoBA may prevent former public officials from lobbying, the Business Appointment Rules state that ‘the lobbying ban need not prevent communications with government’[22]. The line between communication and lobbying can be fine and the presence of contacts and the ‘friendly faces’ of former colleagues could prevent neutrality in dealings regarding contracts. As well as improving ACoBA’s definition of lobbying, we recommend extending the maximum lobbying ban period to five years, to be used in the most high-risk cases.

33. Public officials who take up jobs related to their field after the two year period are not subject to any safeguards. There have been cases of individual’s waiting to accept appointments for this reason. Former chief operating office at the DECC, Wendy Barnes, became a non-executive director of Scottish Power Energy Works 2 years and one month after she left office[23]. She was not required to consult with ACoBA despite the fact this appears to be a conflict of interest. We recommend that the maximum waiting period period should be increased to five years.

What has been the impact of the Government not taking forward PASC's key recommendations in their March 2012 report and July 2012 report?

34. The lack of action on the part of the government has only reinforced the widely held view that there is in the UK ‘a cosy club at the top making decisions in its own interest’, as David Cameron put it in 2010.

35. There is also a danger that inaction emboldens anyone who might be tempted to break the rules, for example, by lobbying within the ‘cooling off’ period imposed on them by ACoBA.

What institutional, or other barriers exist, which prevent the Government from accepting PASC's key recommendations?

36. A key barrier to the Government accepting PASC’s recommendations is a lack of political will. Issues such as the revolving door are often only put on the political agenda following a scandal. Even in these circumstances, Politicians will often pay lip service to the issue, but it will fail to translate into meaningful action. Even with sustained public, parliamentary, and media scrutiny, the government has been reluctant to take action.

37. This inaction could simply be due to self-interest. Ministers may themselves wish to take up posts on leaving office, and may not wish to introduce a tougher system prior to them passing through the revolving door.

38. The problem is exacerbated by budget concerns. During this period of austerity, the government is reluctant to provide ACoBA with the extra funding and resources it would require to carry out the PASC’s recommendations.

September 2016