Third Report - Propriety of Governance in Light of Greensill: An Interim Report

This is an interim report only and we are continuing with our inquiry into this area.

We had expected to see Nigel Boardman’s report before we concluded this phase of our inquiry. It was promised at the end of June though, at the time of writing, it has still not been published. In conducting his review, Mr Boardman has had the cooperation of Government and access to people and material that we have not had. We have had to complete this report without having had the benefit of seeing the Boardman Report. Once his report is published, we intend to hear from Mr Boardman at the first available opportunity.

The House has the power to issue summons requiring individuals to attend a Select Committee. However, the process takes time and our timetable was pressing. The fact that we did not initiate this process should not in any way be seen as an acknowledgement that Mr Greensill’s decision to decline our invite to give evidence was accepted or acceptable. Moreover, given the media coverage of the collapse of his company and the related issues, we find it surprising that he did not feel that it would have been beneficial to give his version of events, particularly if he felt he had nothing to hide. In this instance, we chose to continue our inquiry in spite of his refusal to attend. Should the next phase of the inquiry require it, he will be asked to give evidence again. Should he decline to do so, the Committee will take this further.

We are at a loss to explain Mr Gove’s decision not to allow Ms Gray to give evidence to the Committee, particularly given her willingness to do so. The Osmotherly Rules have never been recognised by Parliament, which maintains its right to call for any individual. However, even if Parliament were to accept the Rules, we can see no grounds within them for Ms Gray not to give evidence to our inquiry. As we made clear, the nature of the questions we wished to put to Ms Gray was to establish matters of fact. The Minister has denied Ms Gray the opportunity to give her version of events and to clarify her role. Moreover, the intervention of the Minister to prevent her from answering these will surely add to the suspicions surrounding this episode.

It is unacceptable for Ministers to hide behind the Osmotherly Rules to prevent Select Committees from carrying out legitimate inquiries. We will be writing to the Chair of the Liaison Committee to consider ways in which we can clarify the responsibility of officials to appear before Select Committees. (Paragraph 23) Lex Greensill and the Cabinet Office

The appointment of Lex Greensill as a “Senior Adviser on Supply Chain Finance” in the Cabinet Office, including the means by which he was managed and his conduct regulated, are key areas about which we would have been particularly keen to hear from Sue Gray. Had she not been prevented from giving evidence to our inquiry, Propriety of Governance in Light of Greensill: An Interim Report 25 amongst other things, we would have liked to have asked her about the way Lex Greensill was managed, any limits on the types of work he could do as a consultant, and his relationship with the Civil Service, including whether he had any formal authority over them. We would also have asked her whether it was normal for an unremunerated consultant in the Cabinet Office to have been given unescorted access to Downing Street, as well as a business card and email address for the Prime Minister’s Office. We would also have wished to explore the issue of his apparent endorsement by Lord Heywood. Her evidence on these matters would have been particularly valuable as we were told that she became “uncomfortable” with Lex Greensill’s position and that part of the motivation behind his move to become a Crown Rep was to resolve the issue of his status.

As we have noted, the Chancellor of the Duchy of Lancaster did offer to appear in Ms Gray’s place after preventing her from giving evidence to us. However, he would clearly have been unable to add anything of consequence in this regard.

This Committee has previously raised the issue of consultants and the sorts of work they are hired to perform in Government. There is nothing unusual in a large organisation hiring external consultants to fulfil specialist roles or provide expertise in supporting the work of the Civil Service. Lex Greensill was recruited to provide advice on an area of prospective policy in which he could legitimately claim expertise and which the Civil Service lacked.

Nonetheless, there are aspects that would appear to suggest that Mr Greensill’s role was not truly reflective of his status as consultant. He appeared to operate with far greater autonomy than we would expect. And we would not normally expect a consultant under contract to the Cabinet Office to be given a business card describing them as a Senior Advisor in the Prime Minister’s Office or a pass to access Downing Street. This is not the only occasion where this Committee has questioned the appropriateness of the use of consultants. The way they are used is something the Committee will consider further in the next phase of the inquiry.

At least some of the criticism of the appointment of Lex Greensill to advise on the use of Supply Chain Finance is made with the benefit of hindsight and knowledge of events that were to take place some years later. His appointment appeared to entail the usual declaration of interests and there were no obvious conflicts at that time. The Pharmacy Early Payment Scheme appears to have been compliant with normal commercial practice by Government. That Lex Greensill had been involved in the design and implementation of the scheme might raise eyebrows. Indeed, we recognise that the public perception of this may give rise to legitimate concerns regarding the robustness of the existing arrangement relating to conflicts of interest. However, it was compliant with his contractual obligations as an adviser and, had they been applicable, would also have been compliant with the Business Appointment Rules. Whether the Business Appointment Rules are sufficiently broad or stringent is a theme we shall be considering in the next phase of this inquiry. (Paragraph 45) 26 Propriety of Governance in Light of Greensill: An Interim Report Lord Heywood’s involvement

In our view, there has been insufficient consideration of the policy context in which Lex Greensill was brought in to advise on Supply Chain Finance. Consideration of its potential was the policy of the Government at the time. Whilst the Minister for the Cabinet Office may have been unconvinced, there was evidently support for it within Number 10.

The impression might also be drawn that Supply Chain Finance was entirely the responsibility of Lord Heywood and Lex Greensill. Whilst the then Minister for the Cabinet Office and Prime Minister may have given the impression that they were not involved in its development, both gave speeches endorsing it at the time. Moreover, whilst the Prime Minister may not have been actively involved in exploring its potential, the initiative came from his office and with his approval, either tacit or, in some places, expressed.

These are matters to which we shall return later in this inquiry and upon which we shall call for further evidence. (Paragraph 64) Bill Crothers

The revelation that one of the most senior civil servants held a part-time position with a private company has unsurprisingly led to considerable criticism. That the company was later to go on to hold government contracts, become embroiled ill- advised lobbying activities involving a former Prime Minister, and to collapse in controversial circumstances, unsurprisingly added to the intensity of that criticism.

Bill Crothers’ move to Greensill Capital was a part of his transition out of the Civil Service and was sanctioned by both his Permanent Secretary and by the then Head of Propriety and Ethics. Greensill Capital’s public sector practice was also still some way in the future. However, even if no conflicts of interest were apparent at the time in this position, the perception created by a very senior official simultaneously holding a private sector post does carry reputational risk. Subsequent events have demonstrated this very clearly.

The implementation of the Business Appointment Rules would appear to be more complex than it should be. If an official is seeking to leave the Civil Service, it should be clear and obvious to them and to their Permanent Secretary whether an application to ACOBA is required. If there is any doubt, an application to ACOBA should be the default position. If this impacts on ACOBA’s limited resources, then these should be increased to reflect the extra workload. This is in area the Committee intends to consider in more detail.

We would like to have discussed these matters with Sue Gray but were prevented from doing so by the intervention of the Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office, Michael Gove. (Paragraph 80) Propriety of Governance in Light of Greensill: An Interim Report 27