This excellent submission was made 11 months ago by Martin Williams, author of 'Parliament Ltd' to the Parliamentary Commissioner for Standards' review of the MPs' Code of Conduct in autumn 2016, and remains presciently relevant today.
Email from Martin Williams
30 November 2016|
www.parliament.uk
1 Responses to the Second Review of the Code of Conduct September 2016 – 30 November 2016 Contents Summary ...
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Introduction
I approach this issue as an investigative journalist and author. I spent a year researching
parliamentary standards ‐ particularly concerning financial interests ‐ and wrote about it in my book,
Parliament Ltd (Hodder, 2016). Beyond exposing examples of conflicts of interest, greed and excess,
the more fundamental problems highlighted were about the rules and regulations for parliamentary
standards.
There is an urgent need for a complete shake‐up not only of the rules, but the entire way Parliament
approaches the issue of standards. In this submission I have briefly outlined some of the main areas
of concern, based on my research and findings, and have concluded with a summary of the key
changes that I believe need to be made. Beneath this submission, I have also responded to the
specific questions asked by the consultation. I hope this is useful.
The public consultation
The essence of the problem with Parliament’s approach to standards is apparent even in this public
consultation. Is the aim really to consult the honest opinions of the general public? Or is it merely to
source guidance from a narrow selection of insiders? Would you actually be prepared to make
sweeping reforms, if that’s what the public demanded?
The first part of this consultation, in early 2016, was buried deep on Parliament’s website; a long,
complicated document full of niche and technical questions. It’s hardly surprising the whole exercise
ended up being rather pointless ‐ it achieved just 19 responses, of which only eight were from
members of public. Other submissions came from four MPs, the head of civil service, three official
standards commissioners, two parliamentary committees and Transparency International, whose
short response explained: “We do not currently have the resources to respond in detail.”
Rather than asking fundamental questions like “should MPs be allowed to vote on areas where they
have financial interests?”, or “should failure to declare an interest be a criminal offence?” the public
were presented with questions like: “Does the Rule set out in Paragraph 10 convey adequately the
intention of the House in relation to Members’ conduct of their public lives? What, if anything, could
be done to explain this more clearly?”
There has been no improvement this time around, with this part of your consultation. This may
sound like a trivial point (and on one level it is, given that the consultation is just the tip of the
iceberg when it comes to problems with the regulation of standards). But it seems to represent a
broader failure in Parliament’s approach to the issue: placing trust in MPs and authorities, while
refusing to take public opinion seriously. The entire system is framed in a way which serves and
benefits insiders, rather than the public. This problem can be found in almost all aspects of the
regulatory system, as I will outline ‐ be it the Register of Interests, the rules on financial interests, or
the enforcement of the rules.
Register of Interests
Nowhere is this approach more alarming than in regulations for the registration and declaration of
financial interests. The key problems with the Register of Interests are:
The Register of Interests is never audited by any official body. This is possibly the most
unhealthy thing about the entire system of standards regulation. The Register is, instead,
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only ever checked by third‐party volunteers (including members of the public, journalists
and rival MPs who wish to scrutinise the interests of another Member). Parliament invests
absolute trust in MPs and places the onus on others to ensure that the declarations they are
publishing are correct.
Although the Commissioner for Standards has the power to investigate and seek corrections
to the Register, this appears to only happen when a complaint is made by a third party. But,
of course, if something hasn’t been declared, it can be often be near‐impossible to find out
about it in the first place. This means the Register is open to abuse.
At best, the failure to audit the Register shows contempt for transparency. At worst, it is
tantamount to institutional gross negligence. Parliament should therefore establish a fully
independent auditing body which conducts regular audits of the Register of Interests to
ensure registrations are accurate, comprehensive and timely.
The format of the Register makes it impenetrable for anyone who wants to scrutinise it
properly. The biggest complaint in this regard ‐ concerning the file format ‐ has, I believe,
been made several times before, but is worth repeating. The Register should, of course, be
published in a spreadsheet format, rather than PDF or HTML. This is absolutely critical for
the proper analysis and review of information. Further to this, there are a number of factors
that should also change if Parliament wants the Register to be fully accessible:
o The unique company or charity number should be given for each company or charity
mentioned on the register. During my analysis I found dozens (probably hundreds)
of examples where an organisation’s name had been written incorrectly on the
Register. Having the unique number would make it quick and easy for organisations
to be properly identified.
o Data should be standardised so it can be compared and analysed. At the moment,
interests are not registered in a uniform fashion. For instance, annual income from
outside jobs might be given in annual or monthly amounts, while the value might be
gross or net. The Register (in database format) should also allow the public to sort
and analyse the information by different criteria ‐ in a similar way that IPSA’s
expenses database works ‐ rather than clumps of ‘free text’. It should be quick and
easy to discover, for instance, how your MP ranks in terms of outside income, or
how many hours they spend doing outside jobs, compared to others. Similarly, it
should be possible to sort by other categories like company name, so it would be
possible to find out how many MPs earn money from a particular firm.
Organising the data in this way is not a challenge in the 21st century, nor would it be at all
expensive. In the scale of things, these are very simple solutions that would vastly improve
transparency. It is frankly unbelievable that Parliament still publishes its data in such an outdated
and unuseful way.
The rules
The next fundamental change that must take place is the rules. Here again, we see the same
contempt for public opinion, alongside absolute trust in MPs’ honesty.
In general terms, the rules for financial interests allow far too much to go undeclared. During my
research for Parliament Ltd, I conducted an independent analysis of the company directorships held
by MPs and Peers ‐ something that I believe had never been done before. I found that 40% of
directorships declared with Companies House were not declared in Parliament’s Register of Interests
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(this covers both Houses). The reasons were varied: some were clear omissions, but a great many
others would probably not have been deemed a breach of the rules, because the rules allow so
much to go undeclared. There are too many loopholes, caveats and declaration thresholds, allowing
countless things to slip under the radar.
It is not just the case with directorships, but with most categories of interests. And this is part of the
reason why the Commissioner for Standards keeps handing out controversial judgements (i.e. when
MPs are inexplicably let off with a free pass, despite what many may assume to be a breach of the
rules).
The key problem is that the public has no say over what is “relevant”, and what is not. Countless
interests are allowed to be left off the Register because Parliament (i.e. MPs and ultimately the
Commissioner, if a complaint is made) has deemed them to be “irrelevant”. Thus, the onus is put on
the public, first to discover any undeclared interests (which may be impossible to discover), and then
to try and persuade the Commissioner that they deserve to have been told about them.
There appears to be a persistent misunderstanding in Parliament about the purpose of transparency;
an assumption that registration and declaration of interests only really matters if there is a conflict
of interests. However, the whole point of transparency should be that the public can make the
decision about what is “relevant” for themselves. A policy of highly selective declaration for specific
bits of information is not the same as transparency. The current approach starts with the assumption
of secrecy, and then looks for exceptions ‐ rather than the other way around. But it should not be for
MPs or Parliament to dictate what the public deserves to know about, unless good, clear
explanations can be given for non‐disclosure. Therefore, the defence of not declaring something
because it “isn’t relevant” is deeply anti‐democratic; placing the power in the hands of MPs and
Parliament, rather than the public.
An example of this problem is highlighted in the Commissioner’s 2016 report into the complaint I
made about Gisela Stuart MP, following publication of my book. The Member had partnership points
in Vestra Wealth LLP, a wealth management partnership which offered “offshore and international
planning for non‐domiciled and non‐resident clients”. This was not listed in the Register of Interests,
despite Stuart standing unsuccessfully to be chair of the Public Accounts Committee, which
investigates tax planning and non‐doms. However, the Commissioner’s report found Stuart had not
breached any rules in relation to her standing for this position because it was deemed that the
financial interest did not “meet the test of relevance” in relation to the PAC, because the partnership
did not specialise in a single specific area or type of investment.
The problem is not just the fact that members of the public may take a different personal view to the
Commissioner, i.e. by considering the financial interest to have been relevant to the PAC election.
The issue is deeper than that: the public were not able to form an opinion about it in the first place,
because it had not been declared. And there is no method of contesting the Commissioner’s
judgement, following the ruling. It is one person’s view versus another’s. In other words, the report
not only ruled that it was not “relevant” to the PAC, but also ‐ by extension ‐ that the public had no
right to know about it. This meant Stuart was completely within her rights not to register or declare
it, whatever the public may think of that.
Clearly, MPs cannot register absolutely everything, but Parliament has nevertheless approached this
issue the wrong way around. The starting assumption should be transparency, and if there
objections for particular things then let’s hear them. Instead, the rules start from an assumption of
financial privacy and then picks out random items that it has decided should be in the public domain.
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All directorships should be declared, unless someone can give a good reason why not. The same
goes for all jobs (both remunerated and unremunerated), charity trusteeships, investments and
property. Apart from the possibility of exceptional circumstances, there is no reason why most of
these basic things cannot and should not be declared, other than the unwillingness of Parliament to
impose such rules. Declaration takes barely any time at all and should be a basic requirement of
public office.
It is notable that the requirements for declaration of financial interests is, in places, far more strict
for local councils than it is for the House of Commons. Councils have to abide by statutory legislation
‐ Relevant Authorities (Disclosable Pecuniary Interests) Regulations 2012 ‐ which, for instance,
requires registration of “any employment [by the councillor, or their partner], office, trade,
profession or vocation carried on for profit or gain”. Whereas, in the House of Commons,
registration in this category is restricted to work with a minimum income threshold (£300 or £100,
depending on the frequency of payments), and does not cover MPs’ partners unless they work in
lobbying or are paid from parliamentary expenses. Likewise, councillors and their partners are
required to declare “any beneficial interest in land which is within the area of the relevant
authority”. This compares to the House of Commons, where MPs only have to declare land if it has a
total value of over £100,000, or if an income of more than £10,000 p.a. is derived from the property.
And again with investments, the minimum threshold for councillors’ declarations is £25,000,
compared to £70,000 for MPs.
The rules contain so many shortcomings that it would be impossible to discuss them all here.
However, here are three further points which I think are particularly noteworthy.
1. The rules do not enable Members to update the value of shares any more regularly than
once a year. In fact, it seems that Members could be required to actually backdate the value
of shares. This became apparent to me following my complaint about Gisela Stuart MP, and
the Commissioner’s subsequent report which found she had not breached any rules. Shortly
after I questioned Stuart in person about her partnership points, she made enquiries about
their value and subsequently added it to the Register, having found out that the estimated
value was in fact £93,000 ‐ considerably over the £70,000 threshold. However, in her report,
the Commissioner for Standards said that “shareholdings… should be registered based on
their value on the preceding 5 April”. She added that it seemed likely the value of Stuart’s
partnership points had only increased in recent months, and there was no evidence to
suggest it exceeded the value at the preceding 5 April. Therefore, Stuart had clearly not
broken any rules, despite the fact she had had an undeclared investment which was over the
threshold value. This case highlights the possibility of significant things going undeclared
without a single rule being broken. The same is true of many other categories of interest,
including charity trusteeships, which regularly go undeclared. The problem is that interests
may become relevant to any member of the public at any time throughout the year, and
depending also on what that MP does throughout the year. It is not good enough simply to
have an annual update where the public can retrospectively discover the financial interests
their MPs may have held for the past 11 months. So if Parliament really does believe that
investments over a certain value should be declared (as it claims to), then it should establish
proper rules to ensure this always happens.
2. Until the 2015 General Election, the rules required MPs to disclose contracts for any outside
jobs which involved “the provision of services in his capacity as a Member of Parliament”.
This has now been scrapped and the requirement no longer applies – I am unsure about the
reason for this change. It is true that the rule was rather vague, and had limited impact,
given that contracts were only available in hard copy in the Parliamentary Archives.
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However, the change should have gone the other way: to expand and clarify the rule, rather
than scrap it. MPs’ outside job contracts are now completely confidential, even when they
are being paid to provide services in their role as an MP. This is nothing short of a scandal,
especially as the change appears to have taken place without nearly the level of scrutiny or
debate that it deserved.
The rule should be brought back and expanded to cover all contracts for external paid
employment, regardless of what the work involves. These contracts should be posted on
Parliament’s website so members of the public can see for themselves the terms under
which their MPs are working for private companies.
3. Despite all the rules, conflicts of interest are still allowed in Parliament. The rules do not
adequately cover this. There is nothing to stop an MP speaking in a debate in which they
have significant financial interests, so long as those interests are declared. This can (and
does) lead to a distortion of the democratic process. A particularly striking example can be
seen with landlords. Some 30% of MPs earn money as landlords, compared to just 2% of the
public, yet they are allowed to join debates on the subject and vote. The same is true for
individuals who have interests ‐ there is nothing in the rules to prevent a conflict of interest,
as long as they are not being specifically and directly paid to lobby or vote in a particular
way.
Other, more modern, democratic government institutions have strict rules against this. For
instance, the rules of the Welsh Assembly Government state: “Where a Member has a
registrable interest which is required to be declared … the Member is not allowed to vote if
in relation to that interest the decision might result in a direct financial advantage to the
Member which is greater than that which might accrue to the electorate generally.” What
possible reason could there be for imposing such a ban on the Welsh Assembly Government,
but not on the House of Commons? Either conflicts of interest have the potential to distort
the democratic process, or they do not. Parliament’s continued failure to bring in such a ban
shows contempt for democracy and accountability and should be urgently reviewed.
Enforcement of the rules
The systems for enforcing the rules on financial regulation have proved themselves time and time
again to be not fit for purpose. Both the Commissioner and the Committee for Standards will be well
aware of the overwhelming criticisms of their work, but it is worth noting some of the biggest and
most fundamental problems.
Almost always, the penalties handed out to MPs who breach the Code of Conduct are
laughable. One of many examples: while a government minister, Vince Cable was accused of
taking a £6,000 donation‐in‐kind without declaring it on time. After making a slight apology,
the only penalty issued by the commissioner was that the relevant section of his Register of
Interests would be temporarily printed in italics. This is not a serious or credible penalty ‐ it
is nothing more than the equivalent of a teacher’s red pen. A glance through the
Commissioner’s reports will show how, time and again, serious breaches are brushed under
the carpet. Rarely is a sanction any more than a temporary change of typeface. This has two
effects: first, there is no deterrent for MPs who may be lax about their declarations; second,
it gives the impression (possibly correctly) that Parliament is not really that bothered about
breaches to the Code of Conduct.
The penalties need to be made significantly more substantial. In the Welsh Assembly
Government, the rules state that it is “an offence for a Member to take part in any
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proceedings” if they have failed to declare relevant interests. . The rules add: “A Member
who is guilty of such an offence is liable on summary conviction to a fine of up to level 5 on
the standard scale.” Again, there is no good reason why failure to declare interests should be
a criminal offence for Welsh Assembly Members, but not for MPs. I would strongly urge
Parliament to consider bringing in such an offence. It is unlikely there would be nearly so
many breaches of the Code if Members knew they could be breaking the law in doing so.
The lack of independence (of both the Committee and the Commissioner) means there is
zero credibility over the enforcement of rules. This argument has been made many times
before. MPs should not be allowed to police themselves, nor should they be allowed to
directly appoint those who police them. Even if there is no influence, there is certainly not
the appearance of no influence ‐ and that is essential for credibility, as with all regulatory
bodies. The entire framework for regulating standards should be shifted to an independent
body similar to IPSA.
The failure to take significant action against Standards Committee members who have
breached the rules further undermines its credibility. It is unbelievable that so many
members ‐ including the chair ‐ have not only been found in breach of the rules, but also
that they have been allowed to remain on the committee. I can see no possible justification
for this.
Like the Commissioner and the Committee for Standards, the ACOBA watchdog is not fit for
purpose. Much has been said about this already, so I will not go into detail other to agree
with the view that ACOBA is a pointless, toothless watchdog that further discredits
Parliament’s approach to standards. It should be beefed up and controlled entirely
independently from Parliament.
Summary of proposed changes
1. Make it a criminal offence for MPs and Peers to fail to declare financial interests.
2. Ban MPs and Peers from voting on issues where they ‐ or companies they work for ‐ stand to
gain from the decision (i.e. gain more than the standard population).
3. Expand the rules on disclosure to include all financial and property interests, all outside jobs
(including unpaid jobs), and all directorships, without exception.
4. Publish the Register of Interests in an accessible spreadsheet format, which provides a
sortable breakdown of the details. This should include the unique company number for each
business interest and a standardised method of reporting external income.
5. Introduce a regular, independent audit of the Register of Interests.
6. Make MPs publish the contracts for any outside jobs they have and publish these online.
7. Scrap the Select Committee on Standards, the Office of the Parliamentary Commissioner of
Standards and Acoba and hand responsibility to either IPSA or another independent
organisation.
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Responses to the specific Consultation Questions
1. No. See Q2 for detailed explanation and suggestions.
2. The descriptors allow too much ambiguity, and they too often place the judgement of what
is acceptable in the hands of MPs.
For ‘Selflessness’: the descriptor should be extended to include “‐ or act in a way that could
reasonably be perceived to do so”, with regards to not acting in a way that benefits
themselves.
For ‘Integrity’, the new descriptor bases the judgement entirely on what an MP “believes to
be right”. This is not good enough, as we have time and again seen that the personal
judgement of MPs can vary widely and has often slipped well out of sync with public
expectations. The same is true with the use of the word “relevant” in the sentence about
declaring financial interests. You should add: “or anything that could reasonably be
perceived to be relevant”. Furthermore, while the old wording said that MPs must not
“place themselves under any financial or other obligation… that might influence them.” The
new wording seemingly allows them to do this, just so long as they resist the influence. This,
surely, is not desirable.
For ‘Objectivity’ the current wording is far better than the proposed change. The current
wording is specific and concise, whereas the proposed change is vague, ambiguous and
effectively meaningless.
For ‘Accountability’, the word ‘accountable’ has ‐ inexplicably ‐ been removed and replaced
with ‘responsible’. This is a bad and worrying proposal. It is important that public office
holders are not just held responsible, but also held accountable for their actions. The new
wording should preferably include both words (“Members are accountable and responsible
for their actions…”), but the word ‘accountable’ is without doubt the more important of the
two.
For “Openness”, the new wording is completely inappropriate as it provides a huge caveat
for the principle of openness ‐ namely that the principle only applies when an MP personally
deems it to be “possible”. Again, we have seen that MPs’ perceptions of what it is possible
and appropriate to disclose have varies greatly and have often been out of sync with public
perceptions. Therefore, the wording should be adapted to incorporate aspects of the current
descriptor, and the 2013 descriptor, like so: “Holders of public office should act and take
decisions in an open and transparent manner. Information should not be withheld from the
public unless there are clear and lawful reasons for so doing. They should give reasons for
their decisions and restrict information only when the wider public interest clearly
demands.” Although the proposed change is shorter, it allows huge ambiguity. It is better to
clearly specify the exact detail of this principle, rather than leave it to MPs to interpret it,
each in their own way.
For ‘Honesty’, the proposed changes are a clear improvement.
For ‘Leadership’, the new wording is fine, although I think it is a shame to have removed: “be
willing to challenge poor behaviour”.
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3. I would like to suggest the following changes to the rules:
In Paragraph 6 (Conflicts of Interest), this should be adapted to include reasonable
perception of conflicted interests. E.g.: “A Member must avoid conflict ‐ or perceived conflict
‐ between the public interest and their personal interest.”
In Paragraph 7 (Advocacy and paid lobbying), this is too ambiguous. How is a “paid
advocate” defined? It is not clear from the rules and is left to interpretation. For instance,
although it is fairly clear that this would include a ban on having a job as a PR consultant who
worked for clients trying to influence Parliament, it is less clear whether the rule includes a
ban on running a PR company that lobbies Parliament if the member works as a CEO, rather
than an actual consultant. I would argue that any paid work for any lobbying or advocacy
company should be banned because although a CEO may not personally deal with clients
themselves, they will clearly have the interests of clients in mind and will have a direct
financial incentive to promote them. Therefore, Paragraph 7 should go on to say “…or accept
any paid work for an organisation that seeks to lobby Parliament and has financial incentives
for doing so.”
In Paragraph 10, I would argue that it is time to strengthen the rules to prevent conflicts of
interests and suggest the rules should reflect this by banning MPs from voting in debates
where they have relevant financial interests.
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