| Standards of Conduct in the House of Lords | ||||||||||
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LOBBYING AND THE BAN ON PAID ADVOCACY 6.1 The question whether Members of Parliament should be permitted to act as paid parliamentary consultants, advisers and lobbyists for outside clients has been one of the central, recurring themes in the work of this Committee. The First Report described this issue as the "greatest current concern about the independence of the House [of Commons]." 1 In the light of allegations that a small number of MPs were failing to uphold the public interest, while holding consultancies, the Report recommended to that House a number of rule changes, with the intention of confirming that "paid advocacy" -- promoting the interests of a client for a fee in the House -- was prohibited.2 The House made significant changes to its rules following the Report, although it took a different approach from the Committee on certain aspects.3 6.2 Another recommendation of the First Report, aimed at increasing transparency, was that the House should "require agreements and remuneration relating to Parliamentary services to be disclosed".4 The House agreed with this and resolved that Members should deposit with the Parliamentary Commissioner for Standards any such agreement, indicating, in a range of bands, the fees or benefits payable. 6.3 In our Sixth Report, published in January 2000, we concluded that the situation had improved in the House of Commons in the period since the implementation of the new rules.5 The former Parliamentary Commissioner for Standards, Sir Gordon Downey, said in 1998: "To the best of my knowledge the financial links with lobbyists have now been broken ... the spectre of cash for influence through this route has fallen away".6 6.4 Our Sixth Report also set out two principles which have governed, and continue to govern, our approach to this question:
6.5 This chapter examines the present rules in the House of Lords in the light of these considerations, while taking into account the differences between the two Houses. We bear especially in mind the need for rules that are proportionate to the circumstances of the House. Few members of the House of Lords hold paid consultancies by which they provide parliamentary advice or services, and even fewer have connections with parliamentary lobbying businesses.8 The current situation in the House of Lords 6.6 The House of Lords has long endorsed the principle that financial reward should not influence the activity of peers in the House. The Sub-Committee on Registration of Interests, for instance, reporting in 1974, found it
6.7 This basic principle was restated by the House in a Resolution on 7 November 1995 which followed the debate on the Griffiths Report. This Resolution stated that "Lords should never accept any financial inducement as an incentive or reward for exercising Parliamentary influence." The detail of the guidance is that "Lords who accept payment or other incentive or reward for providing Parliamentary advice or services, or who have any financial interest in a business involved in Parliamentary lobbying on behalf of clients, should not speak, vote, lobby or otherwise take advantage of their position as members of the House on behalf of their clients." It continues, "This restriction does not extend to matters relating to Lords' outside employment or directorships, where the interest does not arise from membership of the House. Lords should, however, be especially cautious in deciding whether to speak or vote in relation to interests that are direct, pecuniary and shared by few others". 10 6.8 Category (1) of the Register, which is mandatory, requires the registration of "consultancies, or any similar arrangements, whereby members of the House accept payment or other incentive or reward for providing parliamentary advice or services." Category (2) of the Register (which is also mandatory) requires the registration of: "any financial interests of members of the House in businesses involved in parliamentary lobbying on behalf of clients." 6.9 The general prohibition on the exercise of "Parliamentary influence" in return for "financial inducement" applies to all members of the House of Lords. The more specific prohibition set out in the guidance, however, only applies to that small number of members of the House who include themselves under categories (1) and (2) of the Register. There is no requirement on peers with consultancy agreements to deposit a copy of the agreement with staff of the House or disclose them publicly. 6.10 The Clerks of the House of Lords, who administer the current system and advise on how the rules should be applied, make a clear distinction between the giving of advice by members acting as consultants (permitted) and paid advocacy (not permitted). The Clerk of the Parliaments explained it thus:
(A) The information which the client might expect to receive would include:
(B) The services which the peer might be expected to perform on behalf of the clients might include:
6.11 The Committee, in its First Report, considered that there was some risk that the distinction between advice and paid advocacy would be difficult to sustain in the House of Commons. It believed that agreements to provide parliamentary advice could cause problems: "the impression can easily be gained, however unfair this may be in individual cases, that not only advice but also advocacy have been bought by the client".12 Evidence about the operation of the current rules Evidence in favour 6.12 The Committee recognises the force of the comment by Lord Griffiths that the Lords' ban on paid advocacy is a "bright line" rule, clear in theory and exerting a definite pressure in favour of the public interest.13 Peers accept that they should not act as a result of a financial inducement from an outsider. 6.13 A particularly clear statement in favour of the current rules was made by the Rt Hon Lord Archer of Sandwell QC. He referred to the principle which prohibits financial inducements for the exercise of parliamentary influence as
6.14 This view was echoed by the Rt Hon Lord Jenkin of Roding, who said:
6.15 The Rt Hon Lord Griffiths explained the operation of the rule as he saw it:
Evidence of actual or potential disadvantages 6.16 In contrast, we heard evidence to suggest that there were practical shortcomings in the working of the rules. While the wording of category (2) is clear in itself, it is possible that the net is not cast widely enough. An examination of the Register shows that in almost every case, it is only peers associated with commercial lobbying companies who are actually registered as having financial interests in businesses involved in parliamentary lobbying on behalf of clients. Yet we heard it argued that this does not accurately reflect the full range of peers who are connected with parliamentary lobbying (sometimes known as "public affairs" or "political consultancy"), which is often also carried out by other types of professional firms. These include some law, accountancy and management consultancy firms. The Association of Professional Political Consultants (APPC) said:
6.17 One peer, Lord Clement-Jones, told us that he was "by profession, a practising solicitor and a public affairs lobbyist, running the public affairs practice of a major UK law firm" 18 - a fact which he fully registers in category (2) of the Register. 6.18 Lord McNally urged that it should be made clear that those registering under category (2) should include peers with connections with all firms offering lobbying facilities:
6.19 Another strand of evidence claimed that the rules were too restrictive and were jeopardising the contribution of knowledgeable and experienced people to the deliberations of the House. A distinguished career in a significant field of endeavour, leading to a seat in the House of Lords, brings with it expert knowledge and judgement of a very high order. Especially when the member maintains a paid position after elevation, he or she is in an excellent position to contribute up-to-date expertise and information to debate and the discussion of legislation. Several witnesses were concerned that the current rules could be interpreted in such a way that this could be lost. 6.20 Mr Michael Davies, Clerk of the Parliaments, was among them. He said "I think perhaps the rigour of the present rule has diminished the way in which certain quite clearly bona fide organisations can get their views across to Parliament".20 Mr James Vallance White, Registrar of Lords' Interests, gave the example of a member who was a paid adviser to the Police Federation, and who wished to continue to represent that body in the House of Lords after the introduction of the rules recommended in the Griffiths Report. The member brought the matter to the Sub-Committee on Lords' Interests, and, according to Mr Vallance White,
6.21 Lord Newby, who advised the Prince's Trust on a number of issues, including a youth employment initiative, saw the Lords' rules as unfairly restrictive. His interpretation of the rule was extremely and unusually strict:
6.22 There was also another confusion about the operation of category (2). Witnesses differed in their views about whether peers who are directors or employees of parliamentary lobbying companies should refrain from intervening only in matters related to those clients with whom they had direct professional relationships, or whether the prohibition covered matters related to all the firm's clients. Advice from the Clerks appeared to be that, where no direct professional relationship existed between a peer and a client, speaking, voting and other participation were allowed. But Lord Newby said "there are always borderline issues."23 Michael Burrell of the APPC believed that the current rule "places too great a burden on the judgement of the individual." 24 6.23 Thus, a number of witnesses felt that, straightforward though it was in theory, the actual operation of the rule had not shown it to be entirely clear and satisfactory. We believe that there is a strong case for some clarification of the rules, to allow the House to benefit from the expertise of members without a direct interest in a matter. A ban on consultancies 6.24 One suggestion for change was that there should be a ban on parliamentary consultancy agreements involving members of the House of Lords. 6.25 Earl Russell argued for a ban on "all payment for parliamentary services, including consultancy together with advocacy". His view was that "the taking of outside payment for parliamentary services must carry a permanent risk of conflict of interest" 25 Taken literally this would prevent peers from acting not only as lobbyists but also as advisers for companies, charities and other organisations, wherever payment was involved. The Rt Hon Lord Naseby expressed support for a ban on members having an association with a public affairs consultancy.26 6.26 The lobbyists' organisation, the APPC, urged that the Committee should reiterate for the Lords its original recommendation for the House of Commons to prohibit consultancy agreements with multi-client organisations. Michael Burrell, Chairman of the APPC, said: Legislators have a different role [from lobbyists]. They have a duty to listen, but they also have a duty to work out what is the best thing to do. Those two jobs are quite distinct and should be seen to be distinct. I have never understood how anyone can be a lobbyist and a legislator simultaneously. 27 6.27 Lord Dubs said that "My instinct is to say that nobody who is a member of either House should be a lobbyist". He continued: One does not want to get to the position where every organisation that wants a voice in Parliament pays somebody to give effect to it. That undermines the point of Parliament. Members of the Commons should represent their constituencies and members of the Lords should take a broad view based on their knowledge, judgement and experience - not because they are paid to do so.28 6.28 Supporting this line in general terms, the Rt Hon Lord Owen said that:
6.29 Professor Dawn Oliver recommended that it should no longer be possible for members to disqualify themselves from participating in the House by entering into such agreements. Her perspective was that "such arrangements deprive the House of the benefit of the contributions of members." She continued:
6.30 A number of witnesses, however, gave evidence pointing to the conclusion that a complete ban on consultancies is not needed. For instance, those peers who were connected with lobbying appeared to see the force of the present rules and to act on them. 6.31 Lord McNally was acutely conscious of the need to uphold the rules:
6.32 Another peer who referred to the limitations on participation was Lord Naseby. As a consultant to the Council for Responsible Nutrition, he said he could not speak on nutrition issues:
6.33 The Rt Hon Lord Wakeham argued that consultancy arrangements were in any case ineffective and would tend to die out:
6.34 Among the arguments in favour of a complete ban on members of the House holding consultancies are these:
6.35 Among the arguments against such a ban are:
6.36 The Committee concludes
that the balance of argument is against a ban on consultancies. To prohibit
them completely would be disproportionate to the potential problem.
The rules on paid advocacy are generally satisfactory.
Ensuring public confidence in the propriety of consultancies 6.37 However, there are some steps that could be taken by the House to ensure that public confidence in the propriety of consultancies is maintained. Some of the potential weaknesses and failures of clarity identified above could be rectified with modest changes to administrative arrangements and an increase in openness. 6.38 We believe, firstly, that the guidance on the operation of category (2) of the Register should be redrafted. It should be made clear that all peers with a financial interest in parliamentary lobbying businesses must register. 6.39 The opportunity should also be taken by the House to make clear whether or not members who are involved with organisations who lobby on behalf of clients should refrain from participating in Lords' business for all clients of that organisation, or only for those clients with whom they are personally working. We conclude that the House authorities should make clear that peers should only refrain from participating in business relating to their direct personal clients. 6.40 We also see merit in one change to provide greater clarity and transparency in the operation of the rules on parliamentary services. We recommend that the relevant agreements should be deposited with the Registrar of Lords' Interests, who would make them publicly available on request. It is important that the public should be aware of the nature of these obligations, and that there is confidence that peers' independence is not fettered by them. 6.41 There is also the question whether the amount of fees earned under an agreement should be made public. Lord Tugendhat argued that it was necessary to make public the fees earned from activities "that arise wholly or largely as a result of being a member of the House". He put this in a separate category from amounts received for "professional business and other earnings derived from activities carried on outside the House," where Lord Tugendhat felt that there should be no requirement to divulge income. 34 Baroness Young of Old Scone, on the contrary, said that, although parliamentary services agreements should be lodged with an officer of the House, the quantum of fees was "immaterial" and did not need to be made public.35 6.42 Since transparency should
apply in particular to remuneration received in respect of Parliamentary
services, the Committee concludes that such fees should be made public.
Some consultancy agreements state the actual fee to be paid annually.
Others may provide simply for payment of 'such fees as may be agreed
annually', or may provide for payment on a 'time spent' basis. In the
latter two instances, peers should be required to make public their
earnings when the agreement has operated for more than one year.
1 First Report, Vol 1, p 24, para 22. 2 First Report, Recommendations 2 and 3. 3 One recommendation would have banned Members of Parliament from entering into any parliamentary consultancy agreements with organisations that provide paid parliamentary services to multiple clients. A House of Commons Select Committee did not accept that recommendation, on the ground that it was not the type of outside body paying a Member of Parliament that was critical, but rather the actions of a Member pursuant to the paid relationship (Second Report of the Select Committee on Standards in Public Life, HC 816 (1994-95). The Select Committee therefore recommended that a distinction should be drawn between paid advocacy (which was banned) and paid advice (which was acceptable so long as it was registered and declared). The House of Commons accepted the Select Committee's recommendation in drawing up its new rules of conduct in 1995 (The Guide to the Rules Relating to the Conduct of Members, paras 53-64). 4 First Report, Recommendation 5. 5 Sixth Report, p 18, paras 3.3-3.7. 6 Appendix to the Nineteenth Report of the House of Commons Select Committee on Standards and Privileges, (HC 1147 (1997-98)). 7 Sixth Report, p 39, para 3.96. 8 The August 2000 Register of Lords' Interests lists 12 peers in category (1) ("Consultancies, or similar arrangements involving payment or other incentive or reward for providing parliamentary advice or services") and 10 peers in category (2) ("Financial interests in businesses involved in parliamentary lobbying on behalf of clients"). 9 (Unpublished) Report of the Select Committee on Procedure of the House, Sub-Committee on Registration of Interests (1974), para 21. See para 4.8. 10 The full text of the Resolutions relating to declaration and registration of interests passed by the House of Lords on 7 November 1995 is reproduced in Appendix D. The 1990 Second Report of the Select Committee on Procedure of the House (reproduced in part in Appendix C and which made recommendations adopted at that time) contains similar language on the undesirability of paid advocacy. See para 4.9 above. 11 Supplementary written evidence. 12 First Report, p 29, para 49. 32 Day 6 (am). There was controversy in 1998 and succeeding years about claims that vitamin B6, a dietary supplement, could be injurious to health in certain circumstances.
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