Fourth Report - Propriety of Governance in Light of Greensill

The Cabinet Secretary denied that there is a lack of resource dedicated to compliance issues in Government but admitted that there is a “brigading issue” of making them work together. We accept that Nigel Boardman’s proposal for a Compliance Function might create difficulties by cutting across current compliance operations located in existing Functions. However, other means of addressing the “brigading issue” are required. We were told work has been conducted to address this. In its response to this report, the Government should include an update on this and its next steps.

The threat of legal action and the resulting sanction for breaching the Business Appointment Rules would, in our view, be a sufficient deterrent to ensure that such action would be needed only rarely.

The Government has told us that it is exploring contractual mechanisms to ensure that the Business Appointment Rules are legally enforceable. We support this. In its response to this report, the Government should outline the form that this will take and the sanctions which will apply. It should also outline the timeline for implementation.

Enforcement and the ability to sanction those that breach the Rules is fundamental to ensuring a regulatory regime that commands public confidence. This could be achieved by the Government pursuing those who do not comply with their obligations under the Business Appointment Rules through the courts.

Putting ACOBA on a statutory basis is not a prerequisite for the Rules to be legally enforced and should not delay it being put into operation. Nonetheless, to reflect the importance of its role and to clarify the status of it and the Rules, we recommend that ACOBA should be placed on a statutory basis as soon as possible.

The Government should implement the CSPL’s recommendation to extend the scope of the Business Appointment Rules to prohibit employment in sectors where the applicant has had “significant and direct” responsibility for policy, regulation or the award of contracts rather than only with firms they have had a relationship with. Such a measure should be applied to Ministers as well as SpAds and Officials at SCS3 and SCS4 grades. Moreover, the implications of this should be made more prominent to prospective hires prior to commencement.

We do not think that a system based solely around voluntary compliance with general principles is sufficient to maintain public confidence in the integrity of the system regulating the ‘revolving door’ and have recommended that the Business Appointment Rules are legally enforced and that their content is strengthened. Nonetheless, the need for those subject to the Rules to consider narrow compliance with them when considering future employment Propriety of Governance in Light of Greensill 39 opportunities, alongside exercising judgement about what is appropriate, is evident. Neither is such judgement limited to the two-year window in which the Business Appointment Rules apply.

Those who seek only to comply with the Rules sensu stricto and do not apply their own “smell test” when considering future opportunities will continue to risk significant personal reputational damage. (Paragraph 39) Appointments

The Commissioner for Public Appointments should be placed on a statutory basis in an Act of Parliament at the earliest opportunity. The legislation should make clear that the Commissioner’s role is to ensure that public appointments made by Ministers are in compliance with the Governance Code. It should also detail the process by which the Commissioner is appointed, the term of office, and their role in revisions to the Governance Code for Public Appointments.

The system of public appointments is predicated on the principle that such appointments are the responsibility of the relevant Minister and it is they that should be held accountable for them. On this basis, we endorse the recommendation of the Committee on Standards in Public Life that Ministers wishing to appoint a candidate deemed unappointable for a role or, if the competition is being rerun, who was previously deemed unappointable, should have to appear before the relevant Select Committee to explain their decision and to do so before the appointment is confirmed. The Governance Code should be updated accordingly.

Rather than only raising concerns, Senior Independent Panel Members should report to the Commissioner for Public Appointments on the conduct of all significant public appointments processes. The Governance Code should be updated accordingly.

We have seen the extensive scope for Ministerial discretion in the public appointments process and that, in addition to the self-restraint of Ministers, the role of the Commissioner has been vital in ensuring that the principles in Governance Code have been adhered to. The Chairs of the other ethics watchdogs play a similar role in safeguarding the integrity of public life. The independence required for these roles is analogous to that of the Chair of the Office of Budget Responsibility and should be treated as such. Given this, Ministers’ nominated candidates for these roles should require the endorsement of the relevant Select Committee. Candidates that are not endorsed by the relevant Select Committee for these posts should not be appointed.

This Committee, alongside other Select Committees, has tried to accommodate the Government when pre-appointment hearings have needed to be completed urgently, scheduling them at short notice and reporting almost immediately. However, this has now become routine. Our predecessor Committee was assured that this would be addressed, yet no improvement has been evident. This has given rise to the assumption that the Government has intended to press on with the appointment, regardless of the view of Select Committees. (Paragraph 65) 40 Propriety of Governance in Light of Greensill

Too often, the Government has appeared to approach the pre-appointments process as a tick box exercise rather than an important component in the public appointments process. The Committee’s patience in this respect is not limitless. We are aware that this frustration is shared by other Select Committees. When making appointments that require a pre-appointment hearing, sufficient time must be allowed for this stage to be completed.

To improve transparency, Cabinet Secretary Simon Case told the Committee that he considered the suggestion that a register of direct appointments be maintained and published as “an obvious thing to do”.167 We agree and recommend that departments begin to compile and publish such registers immediately and that they are kept updated contemporaneously.

The letters of engagement issued to direct appointments are tantamount to a contract of employment. They state the purpose for which the appointment is being made, the term length, and their accountability. These letters should be shared with the Chair of the relevant Select Committee when the appointment is made. (Paragraph 73) The Ministerial Code

Recent events have demonstrated the impact of the perceived lack of independence and authority of the Independent Adviser on Ministers’ Interests on public confidence in the integrity of the conduct of Ministers. In addition to advising on mitigating Ministers’ conflicts of interest, the Independent Adviser plays a crucial investigatory role when Ministers are suspected of having breached the Ministerial Code. To this end, former Prime Minister Boris Johnson was required to strengthen the independence of the role. Following the equivocation of the previous Prime Minister, we welcome that the Government has now confirmed that it plans to appoint a new Independent Adviser.

Following the resignation of Rt. Hon. Suella Braverman MP as Home Secretary for leaking restricted material and her subsequent reappointment only a few days later, the Government has said the new Independent Adviser will not investigate matters surrounding her resignation as they took place under the previous Prime Minister. Determining what a new Independent Adviser can or cannot investigate would appear to call into question whether the apparent authority of the Independent Adviser to initiate their own inquiries, which we discuss in this chapter, is as extensive as it appears. It would also suggest that the inquiry into allegations of racism made by former Transport Minister Nusrat Ghani MP against a ministerial colleague that Lord Geidt had not completed when he resigned also will not be concluded as it too took place under a different Prime Minister. This situation is unsatisfactory. Primary legislation should be introduced at the earliest opportunity to establish the Independent Adviser as a statutory position to end the uncertainty about whether future appointments will be made at all. This should not, however, delay the appointment. We expect the new Independent Adviser to retain the greater powers and that they will complete any legacy inquiries they inherit. (Paragraph 81) 167 Q528 (Simon Case) Propriety of Governance in Light of Greensill 41

Concerns about the process for appointing the Independent Adviser are longstanding. The independence and integrity of the postholder are fundamental to their ability to carry out the role. As with the other standards watchdogs, the power of the Prime Minister to appoint the Independent Adviser should be balanced with a robust and transparent appointment process that allows the candidate to demonstrate their qualities for the role rather than their name being ‘alighted upon’, as is currently the case. The Independent Adviser should be subject to the Commissioner for Public Appointments process applicable to Significant Appointments. In addition, in accordance with our recommendation in this report concerning revisions to that process, the Independent Adviser’s appointment should be subject to a pre-appointment hearing with the relevant Select Committee and should require its endorsement.

We welcome that the Terms of Reference for the Independent Adviser now effectively include the authority to initiate inquiries. We would expect the requirement that Prime Ministers’ consent be given beforehand to be used in extremely limited cases, such as where matters of national security or legal privilege are involved. Further to our recommendation above, we expect the next Independent Adviser to retain this power in the Terms of Reference applicable to their appointment.

If the introduction of graduated sanctions to the Ministerial Code is to be effective, it cannot be used as a means to avoid significant sanction for serious breaches. The Government should outline the range of sanctions and indicative examples of breaches to which they might apply. Without this, the suspicion is that the only determinant of the level of sanction will be political expediency. The reappointment of the Home Secretary sets a dangerous precedent. The leaking of restricted material is worthy of significant sanction under the new graduated sanctions regime introduced in May, including resignation and a significant period out of office. A subsequent change in Prime Minister should not wipe the slate clean and allow for a rehabilitation and a return to ministerial office in a shorter timeframe. To allow this to take place does not inspire confidence in the integrity of government nor offer much incentive to proper conduct in future.

The position of the Prime Minister in relation to their compliance with the Ministerial Code is a complex one. Whilst the Independent Adviser can initiate investigations into any suspected breach of the Code and should be able to issue private advice on appropriate sanction, it is ultimately for the Prime Minister to decide the response to any breach of the Code they may have made. (Paragraph 99) Conclusion

The landscape of standards regulation is a patchwork, with individual watchdogs with different powers, legal basis, and appointments processes.168 Placing on a statutory basis those that are not already is an opportunity to regularise them to some extent. However, whilst all have responsibility for overseeing standards, 168 See CSPL Upholding Standards in Public Life November 2021, p.43–44 for a table that illustrates this patchwork nature of standards regulation in the UK. 42 Propriety of Governance in Light of Greensill each has a distinct role and involves very different relationships.

The various ethics regulators should continue to be separate and should not be consolidated into a single ethics regulator. Nonetheless, coordination is to be encouraged. Current informal coordination could be firmed up by establishing a committee comprising the heads of the various bodies. Placing them on a statutory basis provides an opportunity to regularise aspects of their operation, including the means of appointment for their heads and the status and application of the Codes and Guidance that they oversee, but it should recognise that one size does not fit all and the differences in their functions should be maintained.

The purpose of a stronger means of enforcing standards should not be seen by those in public life as a substitute for values, nor codes of conduct as the only guide to acceptable behaviour for 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. (Paragraph 108) Propriety of Governance in Light of Greensill 43