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REVOLVING00 DOORS SPECIAL REPORT 1 PUBLIC SERVANTS, PRIVATE PAYDAYS How ministers and mandarins make life after government pay – a Revolving Doors Special by Richard Brooks and Solomon Hughes

Post-, it’s all change at the top. A bunch of ministers are out of a job and advisers and top officials might find it’s time to move on, too. But fret not. A well-trodden path from the public to private sector ensures ministers and mandarins looking to profit from their time in government are all but guaranteed a job in business, usually in an area over which they have exerted great influence. Today’s public servants have joined an undeclared public-private partnership with their future employers if, that is, they serve their future paymasters well. This is the story of Britain’s well-oiled Revolving Door, and the price we all pay for it…

ETIREMENT jobs for those at the top of Rpublic life aren’t all new. ’s Sir Humphreys have long walked into Great British boardrooms soon after picking up their retirement carriage clocks. The corporate heavyweights had to be kept plugged into the establishment, after all. But for the politicians who, constitutionally at least, made the decisions affecting public life, taking the business shilling after a life in office was seen as below the salt. A life in government meant a This trend became a central feature in the that he was “a pretty straight kinda guy”. life in public service, and it wasn’t to be sullied atmosphere of sleaze surrounding the It was a while before serious political sleaze by cashing in at the end of it. Conservative government of the 1990s. returned to dog Labour. But the whole New Instead, post-war Tory patricians took Labour’s emerging generation naturally Labour project, with its “third way” of worthy public positions and wrote their condemned what it saw as yet more Tory greed. embracing the private sector while pursuing memoirs. became an active “Privatisation began with the selling of the social justice, soon twisted the state apparatus chancellor of Oxford University and family silver,” bellowed one in a more fundamental way. It was less well bequeathed a six-volume autobiography to a MP. “It is now ending in the farce of golden reported, however, as it went on out of sight. grateful nation; Sir Anthony Eden took a parachutes for departing cabinet ministers.” Where the Tories had privatised, similar post at Birmingham University and Less subtle early 1990s scandals, such as the “outsourced”. Rather than offload public bred Hereford cattle, while Sir Alec Douglas- “cash for questions” episode, forced the prime utilities to the private sector, business was Home ran a cricket club and pottered around minister to set up the Committee brought in to run the services under contracts on the Scottish family estate. on Standards in Public Life under Lord Nolan that had to be attractive enough to entice them. Old Labour generally hung on in politics until in 1994. Nolan was also supposed to tighten Leading executives, many from the companies they were worn out. Clement Attlee retired to the the rules on what Brown had called “jobs for that would benefit from the paydays ahead, were Lords at 72, while Harold Wilson, cashing in on the boys”. But when it came to the revolving brought into Whitehall to lead a series of his supposed wit, tried his hand as a chat show door, he did little more than extend to ministers “taskforces” that would design this new world. host with no joy. His successor Jim Callaghan did the already ineffectual system governing civil This required the revolving door to spin company provoke a minor scandal when he joined the servants who took jobs in the private sector, men and women into the corridors of Whitehall. newly-formed Bank of Wales under controversial complete with the comically short three-month Incoming captains of industry included financier Sir Julian Hodge, known to Eye readers waiting time before starting a commercial job banker Adrian Montague, later knighted, to run at the time as the “Usurer of the Valleys”. after leaving office. the private finance taskforce that would put It was under the Tory government of Former ministers would now have to run their rocket boosters under a young PFI scheme; , when the relationship new jobs past the advisory committee on business Northern Foods chairman Lord (Chris) Haskins between state and business moved closer and appointments (Acoba). But this was less a to sort out “better regulation”; Barclays chief reached the panting climax of privatisation, gatekeeper and more a commissionaire standing executive Martin Taylor, an Old Etonian whose that senior politicians really began to make by the spinning door to ensure no one got stuck brief was welfare and benefits; British Airways their positions pay. Norman Tebbit joined the on their way from the public to private sphere. chairman Lord Marshall to review energy policy; board of British Telecom soon after selling it and even to look at sports off; Peter Walker, the energy secretary who had New Labour, New Scandal sponsorship following the Ecclestone fiasco. flogged the British gas industry for a bargain No sooner had Tory sleaze helped usher in the Montague’s PFI taskforce, stuffed with price, landed a directorship with British Gas. New Labour government of 1997 than Labour consultants from the big accountancy firms that was gripped by its own scandals, this time of now styled themselves “professional services” the lobbying variety. made the most serious inroads. Soon, billions of Motor racing tycoon Bernie Ecclestone pounds worth of over-priced contracts for major 137 Ministers who have applied to go donated £1m to the party before the election through the revolving door since 2010 and, early in office, Labour reversed its plan for a ban on the tobacco advertising that funded his 394 Jobs for which they have sought industry. When former New Labour spin doctor 367 Jobs for which former mandarins clearance from the government’s Derek Draper was then recorded offering have sought clearance from Acoba advisory committee, Acoba privileged access, had to renounce since 2010 sleaze, declare that his government would be Times Acoba has refused them Times Acoba has refused them 0 “purer than pure” and insist with all sincerity 0

PRIVATE EYE 2016 REVOLVING DOORS SPECIAL REPORT 2 hospitals were signed, with millions of pounds in providing services to local education authorities. Systems, Westland Helicopters et al, a new fees going to the same firms. Their consultants Completing an even more arduous wave of government suppliers came fishing in from the firms also sat alongside various industry ideological journey was former transport and this pool of contacts – sorry, “pool of talent heavyweights on the “public services productivity Cabinet Office minister, and one-time and experience”. Thus when Lord Boyce, the panel” set up by Gordon Brown, chaired by International Socialist, Lord (Gus) MacDonald. former First Sea Lord and Chief of the Defence former BP boss Lord Simon and charged with He began a long and lucrative stretch at Staff, ended his military service, the five jobs he making health, education, defence and other Australian investment bank Macquarie as it took included one with WS Atkins, a major functions of government more efficient – almost bought up public infrastructure. And he wasn’t military support services outsourcer. always through outsourcing and competition. the only former firebrand to feel the warm glow Such were the numbers of MoD senior staff As the consultants fanned out across of an outsourcer’s pay cheque. Labour’s former moving to the defence industry (see Hey, big Whitehall – and around 300 private sector defence, health and home secretary John Reid, spenders…, facing page) that in its 2004 report, employees were seconded into departments – later ennobled, went on to find a home with the advisory committee on business the great efficiency push in fact ushered in the notorious cock-up merchants G4S (see Great 4 appointments suggested: “It can be argued that long process of fragmentation and outsourcing Screw-ups below). the numbers seeking such employment are so of public services. There is little evidence the Mandarins satisfied with a job well done significant as to amount to a ‘traffic’ from the intended efficiency ever arrived, but job included Sir Steve Robson, the Treasury official department to the defence contractors…” The opportunities for those behind the policy who had overseen everything from such result could be “a hope or expectation of post- certainly did. triumphs as railway privatisation in the 1990s retirement employment with companies with to the private finance initiative and, er, light which they would be dealing officially”. And Kerrching! Kerrching! touch reform of financial services. Soon he too what was established practice in the defence Among those cashing their New Labour chips would be in the KPMG boardroom – and not industry was fast becoming the case everywhere. relatively early was health minister Baroness long after in Royal Bank of Scotland’s too, (Margaret) Jay, who in 2001 found a role with picking up £100,000 a year as a non-exec as Splashing the cash major outsourcing company Amey. Another the bank careered out of control without too The Labour government that was re-elected in junior minister in the same department, Lord much regulatory attention. 2001, released from its first-term spending Hunt, took an advisory post with the firm All were in fact beating a path first trodden constraints, splashed the cash on contractors favoured for advising on outsourcing health by defence big-wigs. For decades MoD officials and the outsourcing of services – creating services to independent contractors, KPMG. and top brass who had had influence over more job opportunities and obvious conflicts Meanwhile former education minister contracts (that were perpetually late and over of interest. Baroness (Tessa) Blackstone was in demand budget) found their commercial acumen was Acoba, led from 1999 by former Tory with VT, part of the ship-making company valued by the big companies that had benefited attorney-general and Northern Ireland Vosper Thornycroft that now saw outsourcing from those contracts. secretary Lord (Patrick) Mayhew, started to rather than boats as the future and was also Now, along with the usual suspects of BAE impose conditions on new jobs far more frequently. Of 36 applications from top civil servants approved in 2002/03 by the committee G4S: Great 4 Screw-ups… Cabinet minister – which looks only at moves by ministers and John Reid discovered the most senior mandarins – just 11 (36 THE history of G4S – once trained security the joys of percent) had conditions attached, usually in the Group 4 Security but now more staff, to fiddling its outsourcing at G4S form of a waiting period. The following year accurately “Great 4 Screw- prisoner tagging 31 out of 47 (66 percent) were conditional. ups” – illustrates how the contracts, the how sleazy the Yet at the top of government the revolving revolving door bangs everyone firm has gone whole operation is.” door was seen as A Good Thing, so even the on the head as it spins. from disgrace to Another Labour committee’s limited interventions were an Despite repeated failure embarrassment MP, John (now irritation. In one case prime minister Blair and scandal, over 30 years but continues to Lord) Reid, signed directly overruled Mayhew. When Air Chief G4S has won an ever larger win favours from a a 1992 Commons Marshall Sir John Day sought a position with slice of the taxpayers’ pie. Its government whose motion calling on Britain’s largest defence equipment supplier, UK business grew fourfold senior figures spin through Fowler to resign from the BAE Systems, in 2003 Mayhew decided he between 2004 and 2012, to the revolving door and into its G4S board and for a halt to should wait a full year before taking the job, £1.9bn, with £0.7bn coming employment. prison privatisation. But when four times the usual quarantine period. from public sector work After former Tory minister he became defence, health Day had “been involved with Air Force (£0.6bn of that from central and Conservative party and then home secretary in Board decisions that would have had a direct government). chairman Sir Norman Fowler the 2000s, Reid leapt on the bearing on the MoD’s business with the G4S’s first big privatisation (since elevated to the peerage) privatisation bandwagon company” and “normal propriety principles break, transporting prisoners, became a director of Group himself, continuing to and rules” dictated a significant wait. No doubt saw inmates escape from 4 in 1990, Labour’s Barbara hand contracts to G4S. In grateful for Day’s efforts as commander-in- and die in custody. The Roche said: “The prison 2008, having left office, he chief of the RAF’s Strike Command when it government’s own lawyers contracts are an integral part completed the move from struck 1,300 times in Iraq just a few months called the firm a “laughing of the government’s whole privatisation scourge to before, the prime minister overruled the stock” after its Yarl’s Wood privatisation programme. The beneficiary by becoming a committee in the “wider national interest”. immigration detention centre fact that you can have Sir £50,000-a-year consultant Blair saw the revolving door as critical to burnt down in 2002. From its Norman Fowler, who is close to G4S. public sector reform. Back in 1999 he had gold medal Olympic cock- to the heart of government, G4S has bagged many other moaned of the “scars on my back” from what up ten years later, when it having this connection with big public sector cheeses. he saw as civil service opposition to his plans, couldn’t produce enough Group 4 raises questions about Sir Paul (later Lord) Condon, and he stuffed his second-term Downing Street commissioner of the Met operation with “can do” McKinsey Police from 1993 to 2000, sat management consultants. on its board until 2012, leaving The US outfit had first reorganised after the Olympics fiasco. And government by creating President Dwight D Philip Wheatley, the Ministry Eisenhower’s “contractor state” in the 1950s; of Justice’s director-general and despite disastrous work at the BBC and for prisons and probation, Railtrack in the 1990s, this was precisely the became a consultant in 2011, kind of firm Blair wanted running his show in as have a number of former the early 2000s. In came ex-McKinseyite Michael prison governors and top staff Barber, later knighted, to run a “delivery unit” from other departments. The (alongside former BBC boss and McKinsey danger of the revolving door adviser Lord (John) Birt as “blue skies thinker”). isn’t just that it puts money The other side of this coin was to get public into politicians’ pockets and so servants into private sector jobs more easily, threatens the integrity of the which meant further weakening the rules public-private sector divide; regulating the revolving door, “to ensure they it’s that it hands sensitive are compatible with public service that is keen public services to to encourage greater interchange with the incompetents like G4S. private sector…” The task was given to a former civil servant, Sir Patrick Brown, who had helped

PRIVATE EYE 2016 REVOLVING DOORS SPECIAL REPORT 3 privatise bus, rail and water services before to Downing Street in 2007 as new prime taking his own turn through the revolving door minister Gordon Brown’s head of policy. into the boardrooms of Northumbrian Water The champions of reform at the top of the and bus and rail operator Go Ahead. civil service, who had invited increasing numbers Brown duly recommended relaxing the of bankers and consultants in, all found their rules, but Blair was frustrated by resistance own rewards on the outside. The head of the civil from Mayhew and the parliamentary public service under Blair until 2005, Lord (Andrew) administration select committee that oversaw Turnbull, landed a handy retirement position at him, then chaired by Labour’s Tony Wright management consultancy Booz Allen, among MP. In fact a series of scandalous moves only other jobs. His achingly modernising successor, increased pressure for some sort of clampdown Lord (Gus) O’Donnell, who left in 2011, enjoys as Blair entered his final years in office. Even posts at consultancies Frontier Economics and before the MPs’ expenses scandal, public PwC, Canadian bank Toronto Dominion and a mistrust, aggravated by the Iraq War and a directorship of Brookfield Asset Management. sense that the political elite were in it for And then of course there was the master themselves, had reached alarming levels. And himself, Tony Blair, who span gloriously through with some justification. his own gilded revolving door (see Banking on Many who were once in the front ranks of high office, overleaf). If life as a statesman- the Blair project began to bail out as his businessman was perfectly acceptable, why premiership sputtered out. Those who had led shouldn’t anybody get in on the act? his market-oriented reforms found themselves most in demand. , the health High-speed gravy train secretary between 1999 and 2003 who had With the tone set from the top, even as trust in done so much to enhance the private sector’s public life hit rock bottom with the 2009 Clockwise from top left: Former cabinet ministers share of NHS services through commissioning MPs’ expenses affair, the revolving door Alan Milburn and Patricia Hewitt; and Sir John Day reform and foundation trusts, had led the way refused to slow down. and Sir Steve Robson, who all span through the by becoming an adviser to private equity group As a recession induced by bankers running revolving door on the back of New Labour policy Bridgepoint Capital. It was behind a number of health companies, including Alliance Medical, that were cashing in on the changes. Hey, big spenders… Babcock, but not and Pakistan – a One of his successors at health, Patricia for taxpayers. Last key “war on terror” Hewitt, also found her experience valued by IT MIGHT be no coincidence year the National post – became the three companies that were winning business in that the most spendthrift part Audit Office firm’s business the now opened-up health market: Alliance of government is also the (NAO) revealed development Boots, BT – which received billions of pounds one whose top brass most that a £3.2bn joint director. He was from the NHS’s disastrous IT programme – commonly go to work for Babcock-Lockheed previously Britain’s and Cinven, the private equity group that the companies receiving the scheme to train UK ambassador to bought Bupa’s hospitals. fattest cheques. military aircrew was Saudi Arabia and, At the same time the consultants who had In 1984, Labour’s Gordon running five years according to a been brought in to push through the health Brown railed against “the late and the MoD leaked US embassy reforms found that, their work done, they incestuous relationship may run out of pilots. cable, had a could now take lucrative private sector between the Ministry [of Britain’s largest Soar point: Admiral “profound effect” positions helping both NHS and private Defence] and the arms world”, big-ticket arms Sir Trevor swapped on the decision healthcare providers navigate the labyrinthine but little has been done to firm, BAE Systems, the MoD for Babcock not to prosecute systems they had created. The NHS’s director break it up. By 2010, after 13 is no stranger to BAE Systems for of commissioning, Mark Britnell, resigned in years of Labour rule, the MoD tardiness or cost inflation. Its corruption in 2005. He left 2009 to become a partner at KPMG, as did his had ordered £36bn worth of kit Astute class submarines ran to join another prosecution- deputy, Gary Belfield, just a few months later. more than it could afford. £2bn over budget; and the dodger, HSBC bank, in 2013. Contemplating the future of the health service The coalition government MRA4 Nimrod programme was Foreign-owned firms at a conference in the US in 2010 after the claimed to have addressed cancelled in 2010 when it was also shop for top British coalition government had been formed on a this, but cost overruns persist. £789m over budget and nine connections. Babcock’s pilot deficit cutting agenda, reported , The price of new aircraft years late. It too loves a top training cock-up partner, US Britnell told private health companies: “The NHS carriers, for example, has risen airman. In September 2012, arms giant Lockheed, has Sir will be shown no mercy and the best time to take from £2.9bn in 2008 to £6.2bn – Air Chief Marshal Sir Simon David Manning – one of Tony advantage of this will be in the next couple of which means more money for Bryant became a BAE Systems Blair’s key Iraq War aides – years.” His firm, with more than 200 consultants the Aircraft Carriers Alliance programme director, following on its board. The company’s working on health, stood ready to help. building them, led by French the 2010 appointment of Air UK chief executive, Peter firm Thales and Britain’s Chief Marshall Sir Glenn Torpy Ruddock, joined after leaving City of dreams Babcock and BAE Systems. as a senior adviser. his job as RAF Air Marshal The other great beneficiaries of the New Babcock likes hiring Diplomatic expertise in 2011. Thales, meanwhile, Labour years were the banks – and no revolving important people. Tony Blair’s can help too. In 2011, Sir recruited former defence door turned more smoothly than that between former security adviser Sir Sherard Cowper-Coles, minister Baroness (Ann) Taylor the City and the public bodies that had been David Omand sits on the former Foreign Office special in 2010 and GCHQ director Sir instrumental in the “light touch” regulation board, as did Admiral Sir Nigel representative to Afghanistan David Pepper in 2009. the bankers valued so highly. Essenhigh, the former First Labour’s first economic secretary in charge Sea Lord, until his retirement of creating the softly-softly Financial Services in 2012. That year Admiral Authority, Ruth Kelly, ended up at HSBC bank Sir Trevor Soar, former when she stood down as an MP in 2010. She commander-in-chief of the now sits on the board of the body that replaced Royal Navy Fleet, became a the useless FSA, the Financial Conduct Babcock consultant. Within Authority. Meanwhile the man who led the FSA a year he had resigned in during its formative years, Sir Howard Davies, “embarrassment” after a had gone on to the payroll of US investment Sunday Times reporter caught bank Morgan Stanley when he left the regulator. him claiming that he could The same firm was home for four years from “ignore” lobbying bans. 2003 to Britain’s current top civil servant, Sir Also in 2012, Babcock hired Jeremy Heywood. He had been a civil servant in Lieutenant-General Sir Paul the Treasury and at Number Ten, but left after Newton, former commander it emerged in the Hutton inquiry into weapons of training in the army, as a inspector Dr David Kelly’s death that he had member of its advisory board at failed to minute key meetings. At Morgan a time Babcock was expanding Stanley Heywood led the team that restructured its military training contracts. Southern Cross care homes leading to its Does it work? Maybe for infamous collapse, before being welcomed back

PRIVATE EYE 2016 REVOLVING DOORS SPECIAL REPORT 4 amok hit most people in the pocket, the mandarins’ and ministers’ favourite gravy train BANKING ON HIGH OFFICE: Tony and Mandy cash in simply put on a more frequent service. In 2010/11, largely following the ejection of the THERE were no greater conflict of interest with his the rules. Again, however, Labour government, 42 former ministers beneficiaries of the Tony Blair role as Middle East peace details sometimes seep out. applied for 95 jobs. era than the bankers, whose envoy, a job he acquired in The peer and former EU trade Less than a quarter were approved bonuses escalated as the 2008 and resigned from last commissioner has admitted unconditionally, indicating the extent of the British government bent over year as the Chilcot report doing extensive work for conflicting interests. A spike in the numbers backwards to allow them to hove into view. Then there controversial Indonesian might have been expected at such a point, but trade their most toxic products were nice little earners from company Asia Pulp and Paper this was no mere blip. A couple of years before, in . While the world’s not so nice regimes such as it deals with an agreement the Commons public administration select taxpayers eventually coughed as Kazakhstan. Estimates of between the country and the committee had concluded that “former ministers up to pay for the damage, they Blair’s wealth range from £20m EU over illegal logging. His in particular appear to be able to use with got their chequebooks out to £100m. directorship of Sistema, a impunity the contacts they build up as public for the former British prime Blair’s co-architect of the Russian conglomerate with servants to further a private interest”. This, said minister. New Labour project, Lord defence and surveillance the MPs, “is unacceptable, particularly where In early 2008, just a few (Peter) Mandelson, can’t be interests and close ties to the they continue to be paid from the public purse as months after leaving office, too far behind. He has a £7.5m Kremlin, is a matter of public sitting Members of Parliament.” They were Blair took an advisory role Regent’s Park house and record; as is his chairmanship particularly irked by the case of Labour MP at US investment bank JP works through the modestly- of the advisory board of Lazard Stephen Ladyman (Who he? Ed.), a former Morgan for a reported £2m a named Global Counsel LLP, International, a network of transport minister who was using his erstwhile year. Another cushy number which promises clients to “add senior figures acting for the office “as a way of introducing himself when soon followed with Swiss value” to their activities by bank that isn’t itself a company lobbying” for a traffic information company. insurance company Zurich “combining our understanding and conveniently doesn’t More stellar New Labour veterans’ Financial Services. of politics and economics publish accounts that might reputations went before them. Untroubled by Blair does not have to with our experience in reveal how much it pays its Acoba’s concerns, leading lights including Lord declare who else he works government”. chairman. Mandelson (former trade minister), Lord (John) for, and fees pass through a Mandelson claims that The final member of the Hutton (former business and defence secretary) secretive web of partnerships he need declare only the New Labour triumverate, and Jacqui Smith (former home secretary) all and companies called consultancy, not its clients. Gordon Brown, has also trooped into firms with interests in what not Windrush and Firerush. he thus enjoys life on the found a welcome in the City long before had been inside their ministerial red Occasionally snippets do red benches and a title that as an adviser to US fund boxes. Not surprisingly, when MP Tony emerge, such as his work impresses clients while management giant Pimco. Wright’s committee demanded stricter rules, it for Kuwait and the United escaping the need to name his Among the company’s recent met with little interest from a government and Arab Emirates. These have real paymasters – breaching strategies has been to buy ministers already on their way out. prompted accusations of a the spirit if not the letter of the dross on many banks’ balance sheets in the wake of March of the on-the-makers the financial crash, including Just as Tony Blair had come into office billions of pounds worth from promising to clean up, so did . Lloyds Banking Group – which In opposition shortly before arriving in collapsed and needed a Downing Street in 2010, he announced that he major bail-out after its Brown- would end “crony capitalism”, including “the engineered tie-up with HBOS ex-ministers and ex-advisers for hire, helping in 2009. The former chancellor big business find the right way to get its way”. and prime minister passes his He did eventually extend the ban on former fee from Pimco to the Office of ministers and mandarins lobbying government Gordon and Sarah Brown for in their new jobs from one year to two; but he good works. did nothing to address the core problem. To the surprise of nobody, the gravy train rolled on – more powerfully even than under New Labour. PIECES OF EIGHT: Top turns through the revolving door With the outsourcing of public services now embedded in Britain – the value had doubled to Minister Public position Subsequent private payday around £120bn by 2015, according to the Lord (David) Blunkett Secretary of state for work and Adviser to scandal-hit ‘workfare’ firm Information Services Group consultancy – so pensions 2005 too is the idea of the public-private servant. The dismal record of the services doesn’t Alan Milburn Health secretary 1999 -2003, Adviser to private health company investor matter. G4S and Serco, for example, might increasing role of private sector Bridgepoint Capital have fiddled contracts for tagging prisoners for Lord (John) Hutton Health minister 1999-2005; Director, Circle Holdings (private company years (and are still under investigation by the defence secretary 2008-2009 that took over Hinchingbrooke Hospital); Serious Fraud Office), but the government adviser to defence contractors Bechtel persists in handing them outsourcing contracts. and Lockheed Martin Thus a civil servant who had advised on Lord (Andrew) Lansley Health secretary 2010-2012, Consultant with Bain & Co, US justice policies such as tagging, David Griffiths, behind Health Service Act that management consultancy promoting health could go to work for G4S in December 2011. removed limits on hospitals’ service privatisation private sector work Sir Ed Davey Secretary of state for energy Adviser to MHP Communications, lobbying and climate change 2012-2015, firm for EDF agreed deal for Hinkley Point C to be built by EDF Sir Howard Davies Chief executive of ‘light touch’ Directorships of financial services Financial Services Authority companies Morgan Stanley, Prudential, 1997-2003 Phoenix Group and chairmanship of RBS Dave Hartnett HMRC permanent secretary Consultant to Deloitte; member of for tax until 2012, concluding HSBC’s ‘financial systems vulnerabilities several tax deals with chairman committee’ of Deloitte including Vodafone sweetheart deal and discussing with HSBC tax evasion through Switzerland Rupert Harrison Chief economic adviser to Managing director of asset management chancellor , company BlackRock, cashing in on pension behind major pension reforms reforms.

PRIVATE EYE 2016 REVOLVING DOORS SPECIAL REPORT 5

TIERS BEFORE BEDTIME: the lower orders “business strategy” for Raytheon, Development, is now a suit at the hi-tech arms firm which last McKinsey. DfID approved the move, MANY more senior civil servants strongest in the Ministry of year announced a “£70m geospatial saying there was “no intent from than previously known are flying Defence, with six of the 12 staff intelligence deal for the UK Joint McKinsey to engage Alistair on DfID under the radar into new jobs with going straight into the arms trade: Forces Intelligence Group”. contracts for the first two years of companies linked to their past Brigadier Jon Brittain was Paul Blakiston was a director employment”. Nevertheless, Fernie work, Private Eye can reveal. head of defence logistics and the in charge of “value for money says on his CV that one of his “key Permanent secretaries and their Joint Forces Command – which benchmarking” for the MoD at achievements” was overseeing “a deputies – the top two tiers of the brings together air, sea and land the start of 2015. By the end of the £735m capital increase of private civil service – have always had forces – until February 2016. But year he was strategic development equity company CDC Group plc”. to apply to Acoba for approval for on 19 December 2015 (before he’d officer for Babcock Marine, one of Viewing this publicly-owned new jobs. But directors and deputy officially left), he became a partner the Navy’s biggest contractors, with development fund, formerly the directors who are third and fourth in Terrington Management, an arms multi-billion pound contracts for Commonwealth Development tier mandarins (for older readers, industry lobbyist. nuclear submarines and the like. Corporation, as a private equity think Bernard to a department’s Sir Air Commodore Jonathan Ager The revolving door out of the company says everything about the ) have their applications was an assistant chief of staff at Air Ministry of Justice is in good approach to development that a civil considered by their own bosses. Command until late 2015. He is now working order too: servant might take if he has one eye Details of such moves from a programme director for arms firm Craig Watkins, director of on who might be buttering his bread May to December 2015 reveal that Lockheed. finance and planning at the MoJ, in future. around half the 50 top staff leaving Air Vice-Marshal Peter Ewen became business development At the Department for Work and 16 departments went to work either was director of air support for leader at EY (Ernst & Young), Pensions, Michael Hewson was for companies in business areas the RAF, “responsible for the focusing on public sector work for the account director for the Health related to their former job or for procurement, in-service support central and local government and Services Directorate “leading the consultancies that serve them. The and airworthiness of the Royal Air health. EY was paid by the MoJ to team responsible for the policy link between old and new job was Force’s fleets of large aircraft” until develop its recent privatisation of on the PIP [personal independent January last year. Eight months probation. payment] assessment, including the later he became “Head of Air” for Ian Young, the ministry’s assessment criteria”. He is now an Airbus Defence, the main supplier “solutions delivery director” executive at Atos, the private firm of large aircraft to the RAF. became a programme director at that runs PIP assessments (er, so Brigadier Nicholas Davies’ role Lockheed Martin. badly that 60 percent of rejected with the MoD has been “redacted” David Cooke, business IT claims are overturned on appeal). from government records, portfolio manager at the MoJ, Lucy Robinson, deputy possibly because he was joined Atos. It and Lockheed each director of the HS2 “growth commander of the have £125m computer contracts and regeneration” team at the hush-hush with the department, awarded Department of Transport, is now a Joint Forces in 2013 and 2014. The MoJ was director for government policy and Intelligence concerned enough to ask Lockheed funding at London and Continental Group. Since and Young to sign non-disclosure Railways, the private firm that runs the start of agreements. So that’s all right, then. the Channel Tunnel Rail Link with this year he Elsewhere, Alistair Fernie, heavy government financial support, has a new director for international finance and is now working on HS2 rail job running at the Department for International development – if it ever happens.

Elsewhere, the official in charge of the common career pattern is now Department for Work and Pensions’ “work something like 80-90 percent in the programme”, Alan Cave, went to work for public sector for the job security Serco, one of the DWP’s main suppliers. and (still) very good pension, Departing ministers too now take jobs with followed by a few years in the companies whose business they have greatly private sector on a much higher influenced as a matter of course. salary. A survey earlier this year in Sir Ed Davey, Lib Dem energy secretary in the found that two the coalition, felt no compunction about thirds of the jobs applied for by top combining his new knighthood with a job at mandarins since 2008 were in the the lobbying firm for French company EDF, sectors they were responsible for in towards whom he had pushed a £20bn (and office. The same goes for ministers. rising) nuclear contract while in office. Acoba’s most recent report, for On Her Majesty’s Lucrative Service: Former MI6 heads Sir Richard A trade minister or Foreign Office minister 2015/16, shows that as well as a Dearlove, Sir John Scarlett and Sir John Sawers routinely moves on to at least one job with a record number of ministerial company prospering in the area he or she has moves (largely because so many Lib Dems left in the mid-1850s, the men he commissioned for promoted. David Cameron’s Africa minister government), there was an “increasing tendency the job, Sir Stafford Northcote and Charles Mark Simmonds resigned in 2014 claiming he for individuals to seek to take up appointments Trevelyan, called for civil servants “possessing couldn’t live on his government salary and in business or other sectors with which they sufficient independence, character, ability and took ten private sector jobs – most related to have had dealings while in public office”. experience…” to advise ministers impartially. his ministerial portfolio (see Eye 1406). Since the latter part of a public sector career That independence is swept away by the ever- Nor is there any question that a top spook tends to be spent in the most influential turning revolving door. should not land a job with one of the banks and/ positions, and at best these people will not or oil companies working in sensitive parts of the want to upset any likely future employer, the The Browning version world. The last three heads of MI6, knights effect on the attitude to business within Against the tide stands the prime minister’s Richard Dearlove, John Scarlett and John government is obvious. advisory committee on business appointments. Sawers, have ended up in the boardrooms of BP, The trend is followed lower down the ranks, Acoba’s longstanding critic, veteran Labour Statoil and BP respectively. Long-serving director too – as new information uncovered by the Eye MP Paul Flynn, calls it “nothing but a poodle of MI5 Sir Jonathan Evans joined HSBC; while reveals (see Tiers before bedtime: The lower without teeth or claws, bark or bite… totally this year the head of GCHQ, Sir Iain Lobban, orders, above). Until 2010, the number of senior and utterly useless”. The Eye’s latest became a director of Standard Chartered. All civil servants at the couple of grades below the investigations suggest he isn’t far off the mark. companies benefit from heavy government top mandarin levels passing through the revolving Since 2010, as Eye 1407 reported, the lobbying on their behalf around the world, even door annually was at least reported, reaching 394 committee has not advised that a single – in the case of the two banks – to protect them in 2008/09. These moves into the private sector, proposed appointment, out of more than 750, from the consequences of unrestrained money approved either by the civil servant’s department should not be made. Approving a series of laundering and sanctions-breaking. or the Cabinet Office, are no longer counted. controversial moves, the committee under one- Senior civil servants in charge of transforming The scale of this migration erodes a time Tory minister Baroness (Angela) Browning public services also seem to have apparently cornerstone of sound government. When has published inaccurate accounts of ministers’ automatic employment rights in the private William Gladstone sought to reform a civil and officials’ prior dealings with their new companies that benefit from their efforts. A service in which there was too much cronyism employers. In some cases this poses questions

PRIVATE EYE 2016 REVOLVING DOORS SPECIAL REPORT 6

ACOBA: Ask no questions, hear no lies Rupert Harrison, who took his job with asset management company EVER since Harold Wilson’s of information laws, the Eye did BlackRock soon after designing government first decided, in 1975, to discover one dubious meeting. major changes to pensions. monitor the revolving door between Former Tory cabinet minister Lord The Acoba letter approving the Whitehall and business, the Strathclyde had met the energy position contained no mention that committee established for the job department’s top civil servant, he had repeatedly met the company has been officially advisory only. Stephen Lovegrove, on behalf of while at the Treasury, including When the advisory committee his new employer, an American around budget and autumn on business appointments (Acoba) corporation called URS, which had financial statement times, even opines on ministers and officials controversial multi-billion pound though in other cases it did report taking private sector jobs, therefore, contracts with the department. far lesser prior involvement with even the conditions attached to Acoba had advised Lord a future employer (see Eye 1395). approval – such as not lobbying Strathclyde not to lobby the So what had Harrison told Acoba? the government or using inside government on behalf of URS The only way to find out is to see information – don’t have to be at the time and the meeting his written application. A freedom obeyed. looked like a clear breach of this of information request was refused When Lord Nolan extended the (although Stratchclyde told the on the grounds that if such matters system to former ministers in 1995, Eye he was not “lobbying” at the were publicised, future applicants he naïvely thought that whether the meeting). But this was a rare find. might be less than honest. And committee’s recommendations are It isn’t feasible to make freedom by the way, said Acoba, Harrison followed or not would be something of information requests for every had disclosed the meetings. The that newshounds could discover. meeting between government and mistake – which conveniently Former HMRC tax boss Dave Hartnett Public shame would be the price a company employing a former averted any adverse publicity for steps through the revolving door paid by anybody not following them. official. Even if it were, departments Osborne or Harrison – was Acoba’s “A free press using fair techniques now claim the information is in not mentioning them. Deloitte). But, again, revealing what of ” (which “personal” and not disclosable. Another of the committee’s Hartnett had put on his application had of course exposed the need for The manner in which senior customers looked even more would apparently harm the system. his work) should spot abuses of the figures land their plum posts is suspect. Former HM Revenue & The Eye found other cases system, he thought. also shrouded in secrecy. The first Customs tax boss Dave Hartnett was where Acoba’s version of events did Alas, the task is all but anybody knows about a new job is given a place on HSBC’s “financial not match other records. The upshot impossible. While government when the applicant has been given systems and vulnerabilities” is that applicants can either deceive departments do publish lists of top it. No part of the process – which committee soon after meeting the or put a helpful slant on what they civil servants’ and ministers’ includes declaring bank half a dozen times to discuss tell Acoba, safe in the knowledge meetings with outside bodies, previous the Swiss tax evasion scandal that they won’t be exposed. Far they don’t include meetings involvement (Eyes passim ad nauseam). Yet the from inhibiting disclosure, opening at party conferences or with a putative approval letter for this job said his up applications – preferably before other “informal” events. employer – can HSBC “contacts were no more jobs are taken – would force more Nor do the published lists be scrutinised significant than the contacts he had accurate disclosures. name names. When BAE through with other banks operating in the PS: At least Hartnett and Harrison Systems meets a defence “investigative UK.” This was palpable nonsense. went through the official process. As minister, for example, is it journalism” or Barely less credible was the well as the revolving door, there is represented by a former any other means, approval of a consultancy position now a side door that Acoba doesn’t top brass whom the even when not all with adviser Deloitte, monitor. Last year Eye 1403 reported advisory committee has is above board. whose chairman Hartnett had met how the government’s director- advised shouldn’t be The Eye has 48 times in five years and with general for energy markets and lobbying? recently tried whom he had struck repeated deals. infrastructure, Simon Virley, had There is to examine the Acoba glossed over this, remarking gone to work for KPMG after handing no way to job swops of a that “he also dealt with a wide the firm (also adviser to nuclear know. couple of figures. range of major accountancy and builder EDF) large slabs of taxpayers’ A couple One was former law firms” and the tax settlements money to advise on nuclear plans. of years chancellor George had involved another HMRC board But since he went on a five-year ago, using Osborne’s chief member (without mentioning that it “career break”, he didn’t have to freedom economic adviser, was Hartnett who chose to deal with apply to Acoba. How convenient.

about what it has been told by the applicants; in Ex-chancellor George and poacher, purchaser others it appears the committee fudges its Osborne’s chief economic and provider or even clearances to conceal glaring conflicts of interest adviser Rupert Harrison, regulator and the (see Ask no questions, hear no lies, above). meanwhile, can dream up regulated, that invariably The committee waves through jobs even pension reforms while on ends in disasters, up to when the stench is overpowering. Former HM the government payroll, and including the Revenue & Customs boss Dave Hartnett, for and then almost financial crisis. example, was allowed to take a post with HSBC immediately take a top Public servants cannot bank soon after holding a series of meetings with job from an asset be unduly restrained from its directors over rampant evasion at its Swiss management firm that he moving jobs; but there is outlet – involving UK bankers – from which it had been meeting Acoba chair Baroness (Angela) Browning no reason not to and its customers then emerged unprosecuted by regularly and that would and her fiercest critic, Paul Flynn MP implement outright or HMRC. He has also joined the accountancy firm cash in on his reforms. extended bans on Deloitte, with whose chairman he had formed a There is no suggestion these moves were ministers and mandarins working in sectors they tax settlement double-act, including on the themselves corrupt per se. The beauty of the once regulated or for which they once developed notorious sweetheart deal with Vodafone (which revolving door is that it obviates the need for policy. As new cabinet minister David Davis put itself recruited HMRC director John Connors anything so grubby. In place of brown envelopes it a few months ago: “Cabinet ministers and through a well-oiled revolving door between come quiet, even subconscious, thoughts in a senior civil servants are not underpaid. It HMRC and the tax avoidance industry). minister’s or mandarin’s head. The revolving shouldn’t be that they can just go off and take door removes all tension between the state and work where they use their influence and contact the private sector with which it should deal network.” If his new boss Theresa May is indeed objectively. Both sectors end up employing the to “make Britain a country that works not for the 118 Ministers in government in May 2015 same people and they think the same way. No privileged few but for everyone”, as she promised part of government now questions the market in Westminster just weeks ago, she could make a 33 Ex-ministers seeking external in public services such as health, for example. start by jamming her foot in the revolving door ■ appointments in 2015/16 Perhaps more even than lobbying and hospitality, the revolving door creates the Additional reporting by Christian Eriksson 123 Jobs they wanted (and had approved) uniformity of thinking between gamekeeper Illustrations by Rob Murray

PRIVATE EYE 2016