Business Appointment Rules

124 Pages·2012·2.17 MB·English

House of Commons
Public Administration Select
Committee
Business Appointment
Rules
Third Report of Session 2012–13
Report, together with formal minutes, oral and
written evidence

Ordered by the House of Commons
to be printed date 17 July 2012

HC 404 [incorporating HC 1762-i-v, Session 2010-12]
Published on date 25 July 2012
by authority of the House of Commons
London: The Stationery Office Limited
£15.50
The Public Administration Select Committee (PASC)
The Public Administration Select Committee is appointed by the House of
Commons to examine the reports of the Parliamentary Commissioner for
Administration and the Health Service Commissioner for England, which are laid
before this House, and matters in connection therewith, and to consider matters
relating to the quality and standards of administration provided by civil service
departments, and other matters relating to the civil service.
Current membership
Mr Bernard Jenkin MP (Conservative, Harwich and North Essex) (Chair)
Alun Cairns MP (Conservative, Vale of Glamorgan)
Michael Dugher MP (Labour, Barnsley East)
Charlie Elphicke MP (Conservative, Dover)
Paul Flynn MP (Labour, Newport West)
Robert Halfon MP (Conservative, Harlow)
David Heyes MP (Labour, Ashton under Lyne)
Kelvin Hopkins MP (Labour, Luton North)
Greg Mulholland MP (Liberal Democrat, Leeds North West)
Priti Patel MP (Conservative, Witham)
Lindsay Roy MP (Labour, Glenrothes)

Powers
The powers of the Committee are set out in House of Commons Standing
Orders, principally in SO No 146. These are available on the Internet via
www.parliament.uk
Publications
The Reports and evidence of the Committee are published by The Stationery
Office by Order of the House. All publications of the Committee (including press
notices) are on the Internet at http://www.parliament.uk/pasc
Committee staff
The current staff of the Committee are Emily Commander (Clerk), Charlotte
Pochin (Second Clerk), Alexandra Meakin (Committee Specialist), Paul Simpkin
(Senior Committee Assistant) and Su Panchanathan (Committee Assistant).
Contacts
All correspondence should be addressed to the Clerk of the Public
Administration Select Committee, Committee Office, First Floor, 7 Millbank,
House of Commons, London SW1P 3JA. The telephone number for general
enquiries is 020 7219 5730; the Committee’s email address is
[email protected].
Business Appointment Rules 1
Contents
Report
Page
Summary 3 
1  Introduction and background 4 
Terminology 6 
2  Benefits and risks associated with interchange 7 
Impact of the Big Society and Civil Service reforms 8 
3  Public concern, and responsibility for monitoring interchange 10 
Proportionate coverage 10 
4  The existing Business Appointment Rules 13 
Clarity and consistency 13 
Retrospective applications 14 
5  Advisory Committee on Business Appointments 15 
Membership 15 
Resources 17 
Compliance and enforcement 18 
“Gardening leave” 19 
Length of restrictions 20 
6  Proposals for reform 22 
The Canadian Model 22 
7  The way forward 24 
Other powers 25 
Annex A: Regulation of conflicts of interest and business appointments in
Canada 27 
Conflict of Interest Act: Ministers and Special Advisers 27 
Conflict of Interest and Ethics Commissioner 28 
Statutory provisions 29 
Federal Public (Civil) Servants 30 
Conclusions and recommendations 33 

Formal Minutes 38 
Witnesses 39 
List of printed written evidence 39 
List of Reports from the Committee during the current Parliament 40
2
Business Appointment Rules 3
Summary
The Government proposes reforms to the Civil Service which will see public servants
working increasingly closely with the private and voluntary sectors. Changes to public
service delivery—including the outsourcing of formerly public sector functions and the
active promotion of “interchange” between sectors—are likely increasingly to blur the
boundaries between the public sector and other organisations. This could present greater
opportunities for public officials to use their position for personal gain, and may give rise
to public anxiety about the probity of former, and serving, public officials, which is
damaging to the individuals concerned and to wider public trust in Government.
We share the view expressed in Reports by our predecessor Committee that interchange
between sectors is in the public interest, but we believe that the current Business
Appointment Rules system, as administered by the Advisory Committee on Business
Appointments, does not command public confidence and needs to be reformed.
The current Advisory Committee on Business Appointments (ACoBA) lacks adequate
powers and resources, and its membership is not in keeping with its role. The way ACoBA
operates makes the process opaque to applicants and does nothing to deter misleading and
damaging mis-reporting of individual cases. When misleading reports appear, the
Government is neither quick nor robust enough in responding to them, often leading to
reputations being damaged unfairly.
We are persuaded that the existing Advisory Committee is not well suited to taking on this
role, and so we recommend that it be abolished. The Government should bring forward
new legislation to establish statutory ethics regulation in the UK, which would reflect the
importance that the UK attaches to the ethical conduct of its public office holders. We
propose a model based on the Canadian system of combined legislation and codes of
conduct, and overseen by an independent Commissioner, who would also take over the
role of the Prime Minister’s Adviser on Ministers’ Interests and have the power to initiate
investigations into the Ministerial Code on his or her own initiative. We recommend that
enforceable statutory penalties be introduced for failing to comply with the
Commissioner’s recommendations.
4 Business Appointment Rules

1 Introduction and background
1. The Business Appointment Rules govern the take-up of employment or appointments
by former Ministers and Crown servants (civil servants including special advisers,
diplomats, members of the Armed Forces and members of the security services) within two
years after they leave public office.
2. The Rules are prepared by the Cabinet Office and approved by the Prime Minister: they
have no statutory basis and include no sanctions for non-compliance, although compliance
with the Rules forms part of the Ministerial Code and the terms and conditions of
appointment of civil servants and special advisers.
3. The Advisory Committee on Business Appointments (ACoBA) was established in 1975
to advise the Prime Minister and government departments on the application of the
Business Appointment Rules to the most senior public servants. ACoBA now advises on
applications by all former Ministers and former special advisers, and former civil servants
at Director General or Permanent Secretary level. Applications by more junior public
servants are handled by the department for which they worked. In most cases, ACoBA
provides its advice to the Prime Minister (or Foreign Secretary in respect of former
diplomats), although it advises former Ministers directly.
4. Those to whom the Rules apply are expected to seek advice before accepting any new
employment or appointment, whether paid or unpaid. ACoBA (or the department) can
recommend that a waiting period of up to two years be observed before the appointment is
taken up, or that restrictions be imposed on the types of activities which the former public
servant may undertake in a particular role. These often include prohibitions on lobbying
the Government, or on the use of information to which the public servant may have had
access while in office. ACoBA can also advise that it considers a particular appointment
“unsuitable”, but it cannot prevent appointments being taken up. Once it is notified that
an appointment has been taken up, ACoBA publishes its advice, and any restrictions that it
recommended. Individuals can also seek speculative advice, but this is never published.
5. In January 2012, we announced our intention to examine the effectiveness of the
Business Appointment Rules in ensuring propriety in the future employment of former
Ministers and senior Crown servants; and to consider the potential of the Big Society
agenda to increase traffic through the “revolving door” between the public sector and
business and the voluntary sector.
6. The Government’s proposed reforms to the Civil Service and public sector delivery are
likely to increase the numbers of civil servants moving between Whitehall and the private
sector:
• There is a growing demand for civil servants with external expertise, as reported by
former Ministers, during our inquiry into Change in Government: the agenda for
leadership.1

1 Public Administration Select Committee, Thirteenth Report of Session 2010-12, Change in Government: the agenda
for leadership, HC 714
Business Appointment Rules 5
• Structural reforms to the Civil Service as part of the Government’s deficit reduction
plans seem likely to mean a significant number of individuals will be leaving the Civil
Service and looking for outside appointments within the next three years.
• The Government’s Big Society policy calls for a greater diversity of providers of public
services, which will increase the potential for movement of employees between the
traditional public, private and voluntary sectors, as well as potentially blurring the
boundaries between sectors and increasing the potential for conflicts of interest within
a single role.
7. The call for evidence listed the following questions:
a) How can Government draw in and benefit from external expertise without giving rise
to concern over propriety and undue influence?
b) Does the Big Society model of government, under which officials will increasingly
procure public services from the private sector and civil society, require a change in
approach to business appointments after employment in the public services?
c) Do the Business Appointment Rules work against recruitment of experts into
ministerial and official ranks?
d) Whose responsibility should it be to monitor the contact between Government and
outside interests for signs of undue influence, and how could this be achieved in a
proportionate manner?
e) How effective is the Advisory Committee on Business Appointments?
i. Should the membership of the Advisory Committee on Business Appointments be
revised to better reflect the make-up of society?
ii. Is the current structure of Advisory Committee on Business Appointments ready
to handle a short-term rise in civil servants leaving the service, and in the longer
term a growing traffic between the Civil Service and private/third sector?
iii. Should the remit of the Advisory Committee on Business Appointments be
extended to allow the Committee to enforce compliance with its advice?
8. The effectiveness of the Advisory Committee on Business Appointments (ACoBA) and
the Business Appointment Rules were considered by the previous Public Administration
Select Committee (PASC) in the last Parliament. In its First Report of Session 2008–09,
Lobbying: Access and Influence in Whitehall, our predecessor Committee concluded:
We also call for ACoBA to be strengthened and its membership refreshed, bringing
in people who are more representative of society at large and better able to commit
time to this work, and we call for consistent rules to be strictly applied so that former
Ministers and other public servants are prevented for an extended period from using
contacts built up in public office to further their own and others’ private interests.2

2 Public Administration Select Committee, First Report of Session 2008-09, Lobbying: Access and influence in
Whitehall, HC 36-I, Summary
6 Business Appointment Rules

9. The appointment of the former Conservative Minister and businessman, the Rt Hon
Lord Lang of Monkton DL, as Chair of ACoBA was scrutinised in a pre-appointment
hearing by the then PASC, which reported in November 2009.3 We took further oral
evidence from Lord Lang in February 2011 as part of our annual scrutiny of ACoBA.4 We
would like to thank Lord Lang for helping with this inquiry, and to underline that our
conclusions and recommendations imply no criticism of him or the conduct of his role.
10. We received nine written submissions to this inquiry, and held five oral evidence
sessions during March and April 2012. We found many witnesses and potential witnesses
to be at first reluctant to give evidence in public for fear of attracting or reviving unfair or
hostile media coverage. Although select committees do have the power to compel
witnesses to attend and give evidence, we did not need to resort to these powers, and we are
grateful to all those who gave evidence to the inquiry.
11. We held two meetings in connection with this inquiry during our visit to Ottawa in
February 2012, and we are grateful to Mary Dawson, Canada’s Conflict of Interest and
Ethics Commissioner, and Karen E. Shepherd, Canada’s Commissioner of Lobbying, for
giving up their time to meet with us during our visit.
Terminology
12. Throughout this Report, references to the “Business Appointment Rules” include those
versions of the Rules applying to both former Ministers and former Crown servants unless
otherwise specified. We include all such people within the general term “public servants”.
When referring to regulations such as the Business Appointment Rules in general terms,
we have adopted the OECD’s term of “post-public employment regulations”, although the
Canadian system discussed in Annex A refers simply to “post-employment regulation”.
13. For the sake of brevity, we have often referred simply to interchange or movement
between the public and private sectors, although the Business Appointment Rules apply to
any subsequent employment or appointment, paid or unpaid, and in any sector or
industry.

3 Public Administration Select Committee, Third Report of Session 2009–10, Selection of a new Chair of the Advisory
Committee on Business Appointments, HC 42-I
4 Oral Evidence taken before the Public Administration Select Committee on Tuesday 8 February 2011, HC 780-i
Business Appointment Rules 7
2 Benefits and risks associated with
interchange
14. The Business Appointment Rules for Civil Servants state that:
It is in the public interest that people with experience of public administration
should be able to move into business or other bodies outside central Government,
and that such movement should not be frustrated by unjustified public concern over
a particular appointment. It is equally important that when a former civil servant
takes up an outside appointment there should be no cause for justified public
concern, criticism or misinterpretation.
The aim of the Rules is to avoid any reasonable concerns that:
a) a civil servant might be influenced in carrying out his or her official duties by the
hope or expectation of future employment with a particular firm or organisation,
or in a specific sector; or
b) on leaving the Civil Service, a former civil servant might improperly exploit
privileged access to contacts in Government or sensitive information; or
c) a particular firm or organisation might gain an improper advantage by
employing someone who, in the course of their official duties, has had access to:
i. information relating to unannounced or proposed developments in
Government policy, knowledge of which may affect the prospective
employer or any competitors; or
ii. commercially valuable or sensitive information about any competitors.5
The Business Appointment Rules for Ministers open with similar statements.6
15. The Minister for the Cabinet Office, the Rt Hon Francis Maude MP, told us that the
UK has “a poor record in this country of making a success of people coming into, for
example, the civil service from outside and then being able to leave it” and that he wants
“the best people to be encouraged to do that”.7 Chandrashekhar Krishnan, Executive
Director of Transparency International UK, agreed saying that “there is a lot of benefit to
be gained from having very competent people moving back and forth between the public
and private sectors, and I personally do not see anything wrong with that. I think it is
healthy, but the system to control it needs to be much more robust”.8
16. The Campaign Against the Arms Trade also acknowledged the “undoubted benefits”
from interchange between the public and private sectors, but did not agree that the public

5 Business Appointment Rules for Civil Servants (February 2011) paragraphs 2 and 3
6 Business Appointment Rules for former Ministers (May 2010)
7 Q 452
8 Q 147
8 Business Appointment Rules

interest in movement from the public to the private sector was “self-evident”, and referred
to a potential “threat to the public interest mainly coming from the prospect of future
employment and the lobbying of former colleagues”.9
17. The potential benefits, and the risks, associated with widespread interchange
between the public and private or third sectors are clear. We share the view that
interchange between sectors is in the public interest but, if public confidence in public
servants is to be maintained, the risks associated with interchange must be openly
acknowledged and seen to be managed effectively. Any organisation or system which is
put in place to manage those risks must command the public’s respect and confidence if
its decisions are to be trusted.
Impact of the Big Society and Civil Service reforms
18. Lifetime careers in the Civil Service are becoming the exception rather than the norm.
The growing use of short-term contracts rather than recruitment of career civil servants
has been a live issue for more than a decade, and was identified as a potential challenge to
the application of the Rules by ACoBA as long ago as 1999.10
19. The current Government is committed to further fundamental reform of public service
delivery. In its proposals for Civil Service reform, published in June 2012, the Government
says that “the old binary choice between monolithic in-house provision and full scale
privatisation has been replaced by a number of new ways of delivering services—joint
ventures, employee-owned mutuals and entering into new partnerships with the private
sector”.11 This approach will inevitably increase the number of officials who have regular
and direct contact with organisations outside the public sector, and who also have the
opportunity to influence, or be influenced by, the interests of those organisations.12
20. Sir Christopher Kelly, Chairman of the Committee on Standards in Public Life, said “it
is certainly the case that as interchange increases there will be more issues where a balance
has to be struck between preserving the public interest and the desire to promote
interchange”.13
21. The Government pointed out that:
waiting periods are now applying in circumstances when individuals leave the service
mid-career, sometimes as a result of an enforced departure, or on completion of a
fixed term appointment of just a few years‘ duration and with no severance or other
compensatory payment. 14 […] [There] is a real danger that business appointment
requirements can act as a disincentive in attracting good quality candidates because
of concerns that they may not be able to return unconditionally to a job in their
sphere of expertise at the end of the fixed term.

9 Ev 63
10 The Advisory Committee on Business Appointments Second Report (1998–99), paragraph 19, p 9
11 Cabinet Office, The Civil Service Reform Plan (June 2012) page 8
12 Ev 75
13 Q 30
14 Ev 75