London Calling 20 – Sleaze or more? The revolving doors between business and government

ISSN: 2736-6065

Blog Post by Irina von Wiese, former LibDem MEP  

London Calling is the European Liberal Forum’s column aimed at bridging the Channel. 

While most of the country was holding its breath over the spectre of a European Super League, another scandal was (almost) brushed under the carpet. Until it grew to a size the government could no longer ignore.

It all started with the collapse of a financial services company, Greensill, which crippled some of its corporate customers and put thousands of jobs at risk. During the ensuing investigation, a few unexpected links were unearthed. In particular, there were a number of texts sent by former Prime Minister, David Cameron, to the current Chancellor of the Exchequer, Rishi Sunak.

It turned out that while still resident of No. 10 Downing Street, Mr Cameron appointed Lex Greensill, owner of Greensill Capital, as an unpaid adviser. As such, Mr Greensill came up with a plan to provide government-backed short-term loans to small companies. After he moved out of No. 10, Mr Cameron found employment with his former advisor, with the task of persuading his successors’ ministers to back Greensill Capital loans.  In 2019 – three years after he left office – David Cameron met the Health Secretary, Matt Hancock, for a ‘private drink’ to discuss a new payment scheme for NHS staff, run by Greensill. But it was when the Covid-19 pandemic threatened the survival of thousands of businesses that he saw the real opportunity for his employer (and himself) to cash in: he texted Mr Sunak, asking him to include Greensill in an emergency government loan scheme. He also contacted two Treasury ministers. No contract resulted, and before David Cameron could resume his lobbying efforts, Greensill Capital went bust.

Mr Cameron eventually admitted that he should have refrained from contacting the government through any but ‘the most formal of channels’ but denied that he broke any code of conduct or government rules on lobbying.

Such rules, indeed, prohibit former ministers and other government officials from lobbying government for (only) two years after leaving office. Before accepting a new (private sector) job, they must inform the Advisory Committee on Business Appointments, which advises on potential conflicts of interest. Ironically, the Committee’s advice is not binding, so the information is just a formality. David Cameron stood down in July 2016 and joined Greensill in August 2018, so on paper it looks like he did nothing wrong.

Many former MPs, too, use their status to lobby their successors. According to the Times, at least ten former MPs who now work for companies that engage in lobbying or consultancy work hold so-called ‘category X’ permanent access passes to the Houses of Parliament. They are not allowed to lobby, but they can book meeting rooms and have dining rights in the House of Commons. Among them are a former Labour MP who is now the CEO of the Betting and Gaming Council, which lobbies for the gaming industry; a former Labour minister who is CEO of the Credit Services Association, which lobbies for the debt collection and debt purchase industry, and a former Tory defence secretary who is now deputy chairman of Genel Energy, a Jersey-based oil company. For Liberal Democrat readers, I hasten to add that Sir Nick Clegg, who is now head of Facebook’s global affairs, also possesses this category of pass. It is also true that he lives in California and may have less use for it.[1]

Unlike former members of the European Parliament[2], former MPs who are granted a ‘category X’ pass are not required to declare their financial interests with the Commons, or log their meetings with politicians.

The murky world of business-government relations was further illuminated on 21 April, when reports broke that Boris Johnson himself had texted his friend and Conservative donor Sir James Dyson, ensuring him his employees would not have to pay extra tax if they came to the UK to make ventilators during the pandemic. Apart from the obvious question whether a producer of vacuum cleaners is able to make reliable medical equipment (it turned out the answer is no), this raises renewed concerns over the informal chit-chat between a Prime Minister and an industrialist on the topic of taxation.

Belatedly, finally, questions are being asked about how the important interaction between government and lobbyists should be conducted to ensure transparency and minimise conflict of interests. Even if legitimate, should such conversations by-pass official lines? Are tests an appropriate medium, however urgent the task? And what about former officials? Is the two year-rule enough to eliminate nepotism?

Forced to take action on Greensill, Boris Johnson announced a review of ‘how contracts were secured and how business representatives engaged with government’. Note the past tense – not a general problem, it seems, but a review limited to a single incident. It took Parliament – to be precise: the Commons Treasury Select Committee – to intervene and launch a broader inquiry into the ‘lessons’ from the Greenfill scandal, and ‘the appropriateness of HM Treasury’s response to lobbying’. Maybe they now wish to extend that inquiry to the appropriateness of No. 10 Downing Street’s response to such lobbying.

 

[1] According to the Facebook, Clegg never used his pass and is happy to return it, see above FN1

[2] See Article 6 of the Code of Conduct for Members of the European Parliament with Respect to Financial Interests and Conflicts of Interest, https://www.europarl.europa.eu/pdf/meps/Code%20of%20Conduct_01-2017_EN.pdf