In May 2013, the Financial Times reported on “the symbiotic relationship between government and the companies at the centre of recent tax avoidance rows”. According to publicly available data, eighteen former ministers of state and senior civil servants had moved to KPMG, Deloitte, or PwC in the previous decade. Paul Kirby, policy advisor to Cameron at No10, had come from KPMG and recently returned to KPMG, where he would rejoin recent Home Secretaries Charles Clarke and Jacqui Smith. Within the previous week, PwC had announced it had hired former Health Secretary Alan Milburn “to advise on changes to the NHS”.
The impending end of New Labour’s term clearly prompted former ministers to seek employment, or at least income, based on their roles in office. Adam Ingram (Armed Forces) was caught offering his former Whitehall contacts for £2.5K a day. Richard Caborn (Sports) offered a network of inside information for a similar rate should he be made a Peer. Former Secretaries of State Stephen Byers (Transport), Geoff Hoon (Defence) and Patricia Hewitt (Health) were all caught in the same ‘sting’ operation, offering influence for hire.
Less than two years on and we are reminded that Dave Hartnett left his role at HMRC to work for Deloittes and to be a consultant for HSBC. His successor at the “reformed” HMRC would be Ian Barlow, a senior partner at KPMG, who now sits on that board with John Whiting (formerly PwC). KPMG, tax expert Richard Murphy assures us, has a presence in every tax haven in the world. In 2005, KPMG “admitted that it engaged in a fraud that generated at least $11 billion dollars in phony tax losses which, according to court papers, cost the United States at least $2.5 billion dollars in evaded taxes.”
KPMG, with PwC, also gave the thumbs-up to the PFI deal which has devastated the cash flow of Peterborough Hospital.
KPMG now “dominates the board room” at state-owned HBOS. With others in the Big4 it provides staff to work for the three main political parties, and secondments from the Big4 to civil service departments – and vice versa – are routine. There used to be a revolving door: now its a shared, virtual office.
What makes ministers and mandarins so attractive to the “Big 4” consultants? Inside knowledge of government and party, presumably: but most certainly and perhaps more valuably, personal contacts and networking access. Which brings us to KPMG’s latest investment, Stephen Dorrell: a sitting MP, ex-chair of the Commons Health Select Committee and another former Health Secretary.
Dorrell, like all the ministers mentioned above, is doing nothing contrary to the rules of behaviour set down for him. He has been in parliament since being elected 35 years ago. He seems to have served honourably. There was an expenses issue of course, where he was reported to the standards commissioned for the sale of flat to friends who owned a chain of nursing homes, then claimed the rent. His record is that of a loyal party man. He voted strongly for this government’s NHS ‘reforms’ and throughout his parliamentary career very, very rarely rebelled against his party.
Off to make his fortune in The City. Why shouldn’t he?
There are a number of reasons he shouldn’t be, none of which depend on Mr Dorrell being anything other than virtuous (the nature of his new employer is beyond such classification). They are issues of the governance of government, conflict of interest, and of public trust.
The rules related to sitting MPs holding outside jobs and directorships in the UK are particularly lax. Members declare financial interests, but that’s all. According to the register, Mr Dorrell provided over 1000hrs management consultancy services in just over 12 months from Oct 2013. MPs are paid a generous full-time salary (plus expenses), and many complain of long and anti-social hours, yet 1000hrs in a year is half of every normal working day. Perhaps “in respect of” means he organised, rather than personally provided the consultancy.
It shows a lack of respect for the role, and disdain for the public, for MPs not to commit fully to being MPs. MPs, once elected, should end other employments until they physically leave Parliament for the last time. For an MP to pick up new jobs or remuneration while being an MP looks like exploitation of their position and with it the public trust; which brings us to the question asked by Clive Peedell of the National Health Action Party (and by the signatories to a petition raised by a small group of pensioners in his Charnwood constituency): why is Stephen Dorrell still an MP?
If Dorrell’s new role with KPMG is incompatible with his role as MP – as he himself reportedly admits – then why didn’t he resign his seat the day he signed the contract with KPMG? It may be party political, but it may be the most useful six months he provides to KPMG. Again, he is playing by the rules and demonstrating that the rules are woefully inadequate. Were he moving from one commercial organisation to another, he wouldn’t be working on site, as normal, any more. He would be gone or gardening.
And that isn’t a false premise that KPMG and Government are not competing, as two commercial entities are. It is absolutely the prevailing political ideology that government has usurped what should be private enterprise: rolling back the state is rolling forward the corporation.
Dorrell’s move to KPMG must therefore be looked at from the perspective of confidentiality. As Chair of the Health Committee and a former government minister, he has knowledge not just of policy, but of who wields influence in policy-making, and how policy can be influenced. He has a clear conflict of interest.
This is inequality: an unequal access to the way government – and party – policy is shaped. The public is excluded where the politician,(MP, minister or mandarin) is also working for the private corporation on whose behalf he can provide or supply influence. It is also an issue of lack of transparency, as the politician’s meetings with his employer will not be public knowledge. The public can have no trust in policy.
We need to re-establish the boundaries between public and private sector, public servant and commercial entity, mandarin and private consultant: and to do this for the good of both public sector and private business. The way to do this is firstly to institute confidentiality agreements on leaving public office, to reduce the value of ex-public servants to private companies. Secondly, it is to regulate the employment of MPs and civil servants upon leaving office by organisations with clear commercial interest in their previous area of responsibility. A sliding scale, perhaps, of time where an ex-MP or mandarin can be employed: no limit where an MP with no committee or ministerial role is unaffected; two years for a Committee member, five for a committee chair, ten for an ex-minister, twenty for an ex-secretary of state.
To the public – however inaccurately or unjustly – Stephen Dorrell may just appear to be the latest ex-minister who has used public office and public trust to secure a nice little earner for himself by enhancing the role of a commercial corporation in the future of our health service.
It is time to put a solid door back between public and private office, to secure its opening and closing, and check carefully who it allows to pass.