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Parliamentary Commissioner for Standards Consultation Paper: Review of the Guide to the Rules relating to the Conduct of Members of Parliament Submission by Transparency International UK (TI-UK) April 2012

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Parliamentary Commissioner for Standards Consultation Paper: Review of the Guide to the Rules relating to the Conduct of Members of Parliament Submission by Transparency International UK (TI-UK) 1.

Introduction

1.1 TI-UK welcomes the Parliamentary Commissioner for Standards’ public consultation on the guide to the rules relating to the conduct of Members of Parliament. 1.2 TI-UK’s remarks are framed in the context of a report on Corruption in the UK, published in June 2011. Divided into three parts, entitled respectively National Opinion Survey ('the Survey'), Assessment of Key Sectors ('Key Sectors Assessment'), and a National Integrity System Assessment ('NIS Assessment'), the nature and extent of corruption in the UK was examined. The report assessed the strength of the UK’s ‘National Integrity System’ (NIS), using a standard methodology previously applied to more than one hundred countries to assess twelve institutions or pillars that are the safeguards of a state’s national integrity. The report noted that: “… a robust ‘national integrity system’ …provides checks and balances to those in power, whether elected representatives, economic power, or power in other forms. Tone from the top is particularly important: if leaders in government, politics, business and elsewhere are perceived as corrupt, this has a corrosive effect throughout the system.” 1.3 The research suggested that UK political parties and parliament were two of three areas in the UK that were particularly vulnerable to corruption. This was reflected in the public opinion survey that was commissioned as part of the research:

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1.4 TI-UK believes that the steady stream of political corruption scandals in recent years has eroded public confidence not just in individual politicians, but also in political institutions. There is a danger that the public will cease to regard decisions made by government and parliament as legitimate and fair. This represents a serious threat to our democracy and, ultimately, to the rule of law. 1.5 A feature of these scandals is that in many cases, the behaviour falls within the rules, even though they are at times stretched to breaking point. This suggests that the imposition of more rules may work to an extent, but at heart is a greater issue and a greater concern: the willingness and ability of UK politicians to act in an unethical manner and put their private interests ahead of the public interest, showing scant regard for the Nolan Principles of Public Life. 1.6 If politicians are to have legitimacy as lawmakers, they need to be exemplars of personal integrity. Rules must be complied with, not merely because there are penalties for not doing so, but because MPs are expected to have a system of values in which integrity is required for all aspects of their conduct. 1.7 Overall, there seem to be several things that are going wrong: weaknesses and ambiguities in rules are exploited; the rules are enforced too weakly; and at times there is a culture that leads politicians to make excuses to themselves that justify corrupt and unethical conduct. This is exemplified by some of the responses to the current consultation. 2.

General principles relating to Sections 1 and 2 – Registering and Disclosing Interests

2.1 TI-UK has identified seven general principles that it believes may help to inform answers to the majority of the questions in the consultation, particularly those regarding registration and declaration of interests, and should underpin revisions to the Guide to the Rules relating to the conduct of MPs. 2.2 These general principles are that: •

Most importantly, sitting above any specific rules that result from the consultation, there should be an over-arching rule that any MP should declare any interest or asset, financial or non-financial, that might reasonably be thought by others to influence, or be capable of influencing, his or her actions or words. Although clarification of rules is important, recent history suggests that rules can be exploited or ignored. Indeed the more complex rules become, the easier it can be to evade them or create loopholes. A principles-based system is therefore important to sit alongside the rules, based on the Nolan Principles. This may require additional effort to reinforce an ethical culture within parties, their leaders and individual MPs – for example by appropriate ethical training or mentoring. Transparency is an important feature of accountability and preventing corruption. Where there is doubt as to whether transparency is appropriate, the tendency should be to err on the side of increasing transparency. Non-financial interests and relationships, and indirect interests, can be as important as direct financial interests in influencing behaviour. Likewise, some business relationships in which the financial value is negligible, such as frequent low-level hospitality with an influential business person in a constituency, can be highly important. Therefore, financial value alone should not be the test of a rule’s relevance and the proposed minimum thresholds should take into account these other factors.

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• •

3.

Several questions relate to the extension of registers of interest to third parties, including children, siblings and close associates. The presumption should be that such categories of person are included within the rules, just as such a presumption is made when dealing with ‘politically-exposed persons’ overseas in, for example, anti-money laundering regulations. Overseas assets, income and activity are equally relevant and should be included in the revisions of the appropriate rules. Although it is understandable that there is a reluctance to impose new administrative burdens on the relevant people and institutions, more reporting or administration may be a necessary step in the re-building of public trust in politicians. It is important that the growing deficit in public trust is weighed against the views of those who oppose additional administration. Responses to specific questions in relation to Section 3 - Lobbying

3.1 TI-UK has recently made a submission to the Cabinet Office consultation on the introduction of a statutory register of lobbyists. This is attached as Annex II, as being relevant to several of the questions in Section 3 of this consultation. TI-UK does not see the clear distinction that the consultation document seeks to draw between a) an MP who is lobbied and b) an MP who engages in lobbying. In reality, a) often leads to b), and so they must be considered together. 3.2 Question 35 Do respondents agree that the fuller guidance on foreign hospitality and visits outside the UK should be retained in the Guide? Yes. This is an area open to abuse and therefore high levels of transparency and accountability are desirable. 3.3 Question 36 Should the current lobbying rule be maintained, made more restrictive or relaxed, and if so, taking account of the options suggested, how? TI-UK believes the rule should be made more restrictive along the lines suggested in option a) of para 101. 3.4 Question 37 Should there be a restriction on the lobbying activities of former Members? Question 38 If so, which of these options or combination of the options would be preferable, or is there a better way? Yes. There should be post-public employment rules for MPs taking into account differences in the incidence of conflict-of-interest risk between various roles, and being sensitive to the job insecurity that elected MPs face. Consideration of this issue should be linked to an examination of the remuneration of MPs.

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Annex I Transparency International UK (www.transparency.org.uk), the UK national chapter of TI, fights corruption by promoting change in values and attitudes at home and abroad, through programmes that draw on the UK’s unique position as a world political and business centre with close links to developing countries. TI-UK: • • • •

Raises awareness about corruption; Advocates legal and regulatory reform at national and international levels; Designs practical tools for institutions, individuals and companies wishing to combat corruption; and Acts as a leading centre of anti-corruption expertise in the UK.

TI-UK’s vision is for a world in which corruption is greatly reduced and the UK has zero tolerance for corruption both at home and abroad. Contact: Chandrashekhar Krishnan, Executive Director Transparency International UK 32-36 Loman Street London SE1 OAU chandu.krishnan@transparency.org.uk www.transparency.org.uk

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Annex II

Introducing a Statutory Register of Lobbyists Consultation Paper by Cabinet Office Submission by Transparency International UK (TI-UK) April 2012 Introduction 1. TI-UK welcomes the Government’s public consultation on the introduction of a statutory register of lobbyists. 2. In a healthy, liberal democracy, a wide range of interest groups such as companies and industry associations, think tanks, charities and other interest groups need to be informed about the process of changing or making public policy. Equally, they need to be able to express their views about what shape policy should take and they should also be able to influence policy by convincing MPs or the government about the merits of particular points of view or amendments during the passage of legislation. 3. Interest groups should be able to put forward their points of view, provided they exert their influence through lawful and ethically defensible means. However, problems can arise when the political process is influenced in improper ways. Those who are able to buy greater levels of access, or store up favours through the provision of hospitality or implied offers of future employment, can have a disproportionate and distortive influence. 4. The fact that lobbying does not always live up to ideal standards has been illustrated many times in recent years: •

In March 2012, the Sunday Times revealed that the Conservative Party’s coTreasurer had been filmed offering its undercover reporters posing as representatives of a foreign hedge fund, access to the policy committee at No 10 Downing Street in exchange for a £250,000 donation.1

In January 2009, a Sunday newspaper published allegations that four peers had told its undercover reporters that they were willing to use their influence to help to amend legislation, for money. One of them bragged that he had already changed legislation for a company to which he was a paid consultant.2

In early 2010, a Channel Four Dispatches programme revealed secretly recorded discussions in which six MPs, who thought they were attending an interview for a job with a communications company, had offered to use information or contacts gained in their political roles in order to lobby on behalf of corporate clients. One former cabinet minister described himself as being like “a cab for hire”.3

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Heidi Blake & Jonathan Calvert, ‘Tory Treasurer charges £250,000 to meet PM’, The Sunday Times, 25th March 2012. 2 Claire Newell, Jonathan Calvert,& Michael Gillard, ‘Revealed: Labour Lords change laws for cash’, The Sunday Times, 25th January 2009. 3 ‘Dispatches’, Channel 4, 22nd March 2010.

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In July 2011, it was revealed that Prime Minister David Cameron had met key executives of Rupert Murdoch’s News Corporation 26 times during his first 15 months in office. In December 2011, the Cabinet Office admitted that this had included one private meeting with Murdoch at a time when he was bidding to take 100 per cent control of Sky television.4

In October 2011, Defence Secretary Liam Fox resigned after the press reported that he had allowed a lobbyist friend of his, Adam Werritty, to gain access to the Ministry of Defence without clearance and to accompany him on 18 foreign trips. Werritty had reportedly been present at many meetings where Fox had met military figures, defence contractors and diplomats, and had presented himself as an adviser, despite having no official role.5

5. These examples suggest that UK politicians fail to see the risks of close relationships with lobbyists, and in particular business lobbyists, and are not able to maintain the safeguards that are essential to ensuring integrity. Politicians appear far too willing to accept corporate and media hospitality, refusing to acknowledge that, even if they are not engaged in anything untoward, such behaviour fails to meet the ‘appearance standard’ and thus erodes public trust. 6. Relations with the media industry have recently been a source of particular concern.6 The reliance of governments, political parties and individual politicians on the media to promote their messages in a manner that is attractive to the electorate appears to have a deleterious effect on politicians and their commitment to act in the public interest. In some cases, it appears to have distorted government policy, possibly in key areas such as press regulation and regulation of media ownership. 7. There are also concerns about the role of All-Party Parliamentary Groups, which are semi-official entities around particular subjects or groups. Businesses and interest groups donate large amounts to these groups and there is a danger that some may be using donations to provide hospitality to MPs and thereby buy influence. 8. The coalition government has taken some steps in the right direction. It has changed the ministerial code to require ministers to declare all meetings with lobbyists and it has banned lobbying by former ministers for two years after they leave office. The next step should be to enact legislation in 2012/13 that would introduce a robust statutory register of lobbyists. A new regulatory regime for lobbying will help to ensure there is greater transparency and reduce the risk of corrupt lobbying activity. This will require full disclosure by lobbyists of their meetings/communications (hereafter all references to ‘meetings’ should be understood to include communications since a telephone call could also be used for lobbying) with public officials. As an important counterpart requirement, it will also require full disclosure by public officials of all meetings held with individuals and organisations for the purpose of lobbying by the latter. 9. TI-UK’s responses to the specific questions/issues raised in Section 5 of the Consultation Paper are set out below. Definitions • What definition of lobbying should be used? 4

Prime Minister’s meetings with proprietors, editors and senior media executives, The Prime Minister’s Office, 15th July 2011. http://www.cabinetoffice.gov.uk/sites/default/files/resources/media-engagements-may-2010-present.pdf 5 Nick Hopkins & Simon Bowers, ‘Not Just Dubai: Liam Fox met Adam Werritty 18 times around the world’, The Guardian, 10th October 2011. http://www.guardian.co.uk/politics/2011/oct/10/liam-fox-met-adam-werritty-around-world

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How should lobbyists be defined?

10. TI-UK recognises that the definition of lobbying and lobbyists is a complex issue. TI-UK notes that the Consultation Paper does not actually propose a definition of lobbying. TI-UK believes that any definition should be simple, capture the widest possible range of lobbying activity and be easy to implement in practice. Based on these criteria, TI-UK tends to agree with the definition proposed by the Alliance for Lobbying Transparency, which defines a lobbyist as anyone paid to: (i) arrange or facilitate contact with officials; (ii) communicate with officials to influence legislation, regulation, or government policy, and for government contracts and grants; and (iii) work in support of (i) and/or (ii)7. 11.

TI-UK believes that a statutory register should: o

apply to lobbying (as defined above) of the UK Government, Parliament, devolved legislatures or administrations, regional or local government or other public bodies;

o

apply to organisations/individuals who engage in lobbying either as selfemployed individuals, as employees of an organization or on behalf of third parties. The Government’s proposal to exclude in-house lobbyists would result in a very weak regime for regulating lobbying because in-house lobbyists are said to make up the vast majority of the lobbying industry8;

Scope • • •

Should lobbyists or firms acting on a pro bono basis be required to register? Should organisations such as Trade Unions, Think Tanks and Charities be required to register? How can public participation in the development of Government policy best be safeguarded?

12. TI-UK believes that lobbyists or firms acting on a pro bono basis should be required to register, because their lobbying could have a significant influence on public policy and the public therefore has a right to know about their activities. However, TI-UK agrees with the Alliance for Lobbying Transparency that unpaid lobbying by a member of the public and lobbying of an MP by a constituent should be exempt. 13. TI-UK believes that trade unions, think tanks and charities should be required to register since it is in the public interest to have full disclosure of the lobbying efforts of such organisations. 14. Public participation in the development of Government policy can best be safeguarded by introducing a robust statutory register of lobbyists in 2012/13. If a register along these lines were to come into effect it should be obligatory for all public officials to require any person/organisation seeking a meeting for the purpose of lobbying to confirm that they are on the register. Information to be included in the register

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‘Bringing Transparency to Lobbying’, Briefing Note by Alliance for Lobbying Transparency, February 2012. 8 Ibid.

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Should the register include financial information about the cost of lobbying and about any public funding received?

15. TI-UK believes the register should include financial information about the cost of lobbying and about any public funding received. The system for reporting financial information should be simple but robust. Although financial reporting may be regarded as burdensome by some organisations and individuals, the disclosure of such information is important to enable citizens to see how lobbying power is distributed among organisations/individuals. 16.

TI-UK also believes the register should include information on the following:

o o o

the subjects on which public officials are being lobbied; the names of the public officials and public institutions that are being lobbied; and information on any public office held previously (during the past five years) by any employees who are engaged in lobbying.

Frequency of returns •

Should returns be required on a quarterly basis?

17. TI-UK agrees that returns should be required on a quarterly basis. However, this could be changed to biannual or annual reporting for smaller organisations and businesses (defined in terms of a threshold related to annual income), in order to reduce the administrative burden on them. Additional functions •

Should the register’s operator have any additional functions besides accurately reproducing and usefully presenting information provided by the registrants?

18. TI-UK believes it is essential for the register’s operator to be empowered to carry out investigations and audits of the information it receives. The operator should maintain a whistleblowers’ hotline to receive complaints about violations of the rules. Otherwise, the statutory register would be toothless and vulnerable to abuse by unscrupulous lobbyists. Funding •

Should the lobbying industry meet the costs of the register and any associated functions?

19. TI-UK believes that the costs of the register should be shared equally by the public and private sectors. A tiered system could be introduced that makes fees proportionate to the annual income of organisation, with an exemption for organisations whose income is below a certain threshold. Sanctions 

Should penalties for non-compliance apply? If so, should they be broadly aligned with those for offences under company law?

20. TI-UK believes it is essential to provide for criminal and civil penalties for noncompliance with the law/rules. Punishment of offenders will help to deter attempts to circumvent the rules.

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The register’s operator 

Who should run the register – a new body or an existing one? What sort of a body should it be?

21. TI-UK believes that the register should be run by an independent body. In order to reduce costs, an existing body such as the Electoral Commission could be assigned responsibility to run the register.

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3.2 Lobbying In a liberal democracy, a wide range of interest groups such as companies and industry associations, human rights NGOs and local pressure groups need to be informed about the process of changing or making public policy. Equally, they need to be able to express their views about what shape policy should take and they should also be able to influence policy by convincing MPs or the government about the merits of particular points of view or amendments during the passage of legislation. There is nothing wrong in principle with interest groups putting forward a point of view, as long as influence is exerted through lawful and ethically defensible means. However, there is also a risk that politics will be influenced in improper ways, and that those who are able to buy greater levels of access, or store up favours through the provision of hospitality or implied offers of future employment, will have a disproportionate and distortive influence. The fact that lobbying does not always live up to ideal standards has been illustrated many times in recent years: •

In March 2012, the Sunday Times revealed that the Conservative Party’s coTreasurer had been filmed offering its undercover reporters posing as representatives of a foreign hedge fund, access to the policy committee at No 10 Downing Street in exchange for a £250,000 donation.9

In January 2009, a Sunday newspaper published allegations that four peers had told its undercover reporters that they were willing to use their influence to help to amend legislation, for money. One of them bragged that he had already changed legislation for a company to which he was a paid consultant.10

In early 2010, a Channel Four Dispatches programme revealed secretly recorded discussions in which six MPs, who thought they were attending an interview for a job with a communications company, had offered to use information or contacts gained in their political roles in order to lobby on behalf of corporate clients. One former cabinet minister described himself as being like “a cab for hire”.11

In July 2011, it was revealed that Prime Minister David Cameron had met key executives of Rupert Murdoch’s News Corporation 26 times during his first 15 months in office. In December 2011, the Cabinet Office admitted that this had included one private meeting with Murdoch at a time when he was bidding to take 100 per cent control of Sky television.12

In October 2011, Defence Secretary Liam Fox resigned after the press reported that he had allowed a lobbyist friend of his, Adam Werritty, to gain access to the Ministry of Defence without clearance and to accompany him on 18 foreign trips. Werritty had reportedly been present at many meetings where Fox had met military figures, defence contractors and diplomats, and had presented himself as an adviser, despite having no official role.13

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Heidi Blake & Jonathan Calvert, ‘Tory Treasurer charges £250,000 to meet PM’, The Sunday Times, 25th March 2012. 10 Claire Newell, Jonathan Calvert, & Michael Gillard, ‘Revealed: Labour Lords change laws for cash’, The Sunday Times, 25th January 2009. 11 The episode of Dispatches was called ‘Politicians for Hire’ and was broadcast on Channel Four, 22nd March 2010. For more details and clips of the programme see: http://www.channel4.com/programmes/dispatches/episode-guide/series-57/episode-1 12 th ‘Prime Minister’s meetings with proprietors, editors and senior media executives’, The Prime Minister’s Office, 15 July 2011. http://www.cabinetoffice.gov.uk/sites/default/files/resources/media-engagements-may-2010-present.pdf 13 Nick Hopkins & Simon Bowers, ‘Not Just Dubai: Liam Fox met Adam Werritty 18 times around the world’, The Guardian, 10th October 2011. http://www.guardian.co.uk/politics/2011/oct/10/liam-fox-met-adam-werritty-around-world

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These examples suggest that UK politicians fail to see the risks of close relationships with lobbyists, and in particular business lobbyists, and are not able to maintain the safeguards that are essential to ensuring integrity. Politicians appear far too willing to accept corporate and media hospitality, refusing to acknowledge that, even if they are not engaged in anything untoward, such behaviour fails to meet the ‘appearance standard’ and thus erodes public trust. Relations with the media industry have recently been a source of particular concern. The reliance of governments, political parties and individual politicians on the media to promote their messages in a manner that is attractive to the electorate appears to have a deleterious effect on politicians and their commitment to act in the public interest. In some cases, it appears to have distorted government policy, possibly in key areas such as press regulation and regulation of media ownership. There are also concerns about the role of All-Party Parliamentary Groups, which are semiofficial entities around particular subjects or groups. Businesses and interest groups donate large amounts to these groups and there is a danger that some may be using donations to provide hospitality to MPs and thereby buy influence. The coalition government has taken some steps in the right direction. It has changed the ministerial code to require ministers to declare all meetings with lobbyists and it has banned lobbying by former ministers for two years after they leave office. The Government proposes to regulate lobbying through introducing a statutory register of lobbyists and ensuring greater transparency. It has initiated a public consultation on its proposals. TI –UK recommends that legislation should be enacted in the 2012/13 session of Parliament to implement a statutory register of lobbying activity. This statutory register should have the following features: 

It should cover all organisations and self-employed persons that engage in substantial lobbying activity targeted at public officials. This means that organisations that are not specialist lobbyists but have in-house lobbying capacity and engage in substantial lobbying activity would also have to register.



It should require organisations/individuals to disclose:  their expenditure on lobbying;  the subject on which public officials are being lobbied;  the names of the public officials and public institutions that are being lobbied; and  information on any public office held previously by any employees (during the past five years).



It should be maintained and monitored by an independent public body.



It should provide for criminal and civil penalties for non-compliance with the law/rules.

If a statutory register of lobbying activity with the above features were to be implemented, it would go a long way towards promoting transparency in ways that would inhibit corrupt behavior. However, a statutory register will not be sufficient to curb abuses of entrusted power for private gain that may take place through the revolving door between government and business. Other reforms to tackle those abuses are needed and these are discussed in TI-UK’s separate paper on the revolving door.

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TI-UK Submission on parliamentary code of conduct