https://cspl.blog.gov.uk/2017/02/08/regulators-and-the-revolving-door/

Regulators and the revolving door

A flurry of recent news stories has raised controversy about ex-ministers and senior civil servants passing through ‘the revolving door’- moving from government service into well-remunerated positions in the private sector. But at least such moves are overseen by the Advisory Committee on Business Appointments whose requirements seem to be taken seriously even though they are not binding.

But the Ministerial Code and the Rules on Business Appointments do not apply to independent regulators who are neither ministers nor civil servants. This includes all Non-executive Board members and (in many cases) the staff of the regulatory body.

There is plenty of scope for financial regulators to move to banks, for patient safety regulators to move to companies in the health sector and for economic regulators to move into utilities. Short term contracts, new ways of working and increasing numbers of secondments mean ‘churn’ between different sectors is a fact of life – and that previous sectoral boundaries may be increasingly blurred. Recent Committee reports on ethical standards for private sector providers and on transparency around lobbying look at wider aspects of this.

There can be great benefit in exporting expertise, experience and “good practice” messages from a regulatory body - and also importing practical know-how into it. But tensions inevitably arise. The risks - in terms of taking confidential information or favouring a former employer – require active ethical management.

These tensions can be particularly acute where the movement of individuals is directly from a regulator to the regulated sector and vice versa. Banning such moves is both unachievable and also undesirable for the working relationships between regulators and those they regulate. But that does not mean nothing should be done. To avoid damage both to the organisation’s and the individual’s reputation, the risks must be properly managed at all levels.

In collecting evidence for our recent report ‘Striking the Balance’ on the ethical practices of regulators, the Committee was struck by how few regulatory bodies had formal policies on either recruitment of staff from the regulated sector or movement of people into the sector. Under 1/3 of the 63 bodies we surveyed at the time said they had policies on movement into the sector they regulate, and even fewer had policies on hiring staff from the regulated sector.

By way of contrast for the civil service, the Rules on Business Appointments are explicitly designed to avoid any reasonable concerns that a civil servant has been influenced in carrying out their official duties by the expectation of future employment or that a particular firm might gain improper advantage. At our interviews with regulators we heard particular anxieties that the moves of non-executive board members could cause big problems in terms of perceptions of integrity and independence. Similar concerns can also arise with staff – not only at executive level, but also with operational staff who know the nuts and bolts of what is going on.

After speaking to them, we recommended that – as a minimum - regulators should follow the rules that apply to civil servants, even if they are not required to. Transparency about moves and action to manage possible conflicts or risks demonstrates the organisation’s ethical standards and makes clear what is allowed and what is not.

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2 comments

  1. Comment by Chris Naylor posted on

    Important issues and guidance in an increasingly marketised, outsourced economy, where different organisational cultures compete. Independence, integrity crucial and perceptions of 'jobs for the boys' to be avoided at all costs. Thank you.
    Going beyond this, is there work on mitigating the risks of potential revolving door situations in major public sector contracting contexts, eg rail franchises, infrastructure projects, construction. Which can run into tens, hundreds, of £1millions in local as well as central government, and so 'off balance sheet' procurement influencing must be tempting indeed.

    Reply

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