In Britain, Europe and the US alike, disillusionment appears to have soared not just with political systems and the politicians and officials who run them, but also with leading figures in corporate life. “They’re all in it for themselves” is a frequent jibe.

Fairly or not, the perception is that leading figures slip quietly and profitably from the corporate world to senior government jobs and back again, picking up glittering golden handshakes and farewells as they go, and possibly exerting a corrupt influence on the whole policymaking process.

The former Chancellor, George Osborne, announced recently that he was taking a part-time role with BlackRock, the world’s largest asset management firm. Shortly afterwards, Osborne said he was taking another part-time job as ‘Kissinger Fellow’ at the Arizona-based McCain Institute for International Leadership.

Since David Cameron resigned as Prime Minister in June 2016, no fewer than four of his senior staff, including former Director of Communications Sir Craig Oliver, have moved into the private sector to join firms of lobbyists. 

And at the beginning of this year, the Acting Chief Executive of the Financial Conduct Authority, Tracey McDermott, announced that she was moving to Standard Chartered. 

None of the above have been accused of being illegal or unethical – but they are taking with them a vast collection of insights, contacts and networks from their years of public service. There are no laws to control such movements – only a patchwork of different codes of conduct for MPs, ministers and civil servants, which are frequently criticised as being inadequate and toothless.
A price worth paying?In 2013, a UK Cabinet Office paper – referenced in a report from independent non-party think tank, The High Pay Centre, and authored by Professor Stephen Wilks of Exeter University – said: “It is a long-standing government policy that those with experience in government should be able to move into business or other areas of public life.” 

However, it is also a common stated aim of democratic governments that they should stop people making large amounts of money for themselves by using this 'revolving door', and possibly compromising confidential information by moving easily between the public and private sectors. The profits that individuals can make by doing so can cause anger amongst voters, but on the other hand, changing jobs has advantages for everyone, including the spreading of experience. For this reason, democratic governments want to control the practice rather than end it completely.

Most of the behaviour that causes anger is entirely legal. When the EU’s former Commission President Manuel Barroso joined the US investment bank Goldman Sachs in July 2016 as non-executive chairman, a 150,000-signature petition from EU staff accused him of “morally reprehensible behaviour”, but the Commission’s Ethics Panel cleared him of breaking any rules. His successor, Jean-Claude Juncker, proposed that the 18-month cooling-off period for departing commissioners – which Barroso had observed – should be doubled to three years, but few people expect such a change to prevent similar controversies in the future.

A research paper for Transparency International, the global anti-corruption group, points out that “moving through the revolving door can be beneficial to both sides, improving understanding between public officials and business”. Likewise, in the financial sector, former FCA chief executive Martin Wheatley agreed that public concern over individual cases is “a price worth paying for having the right expertise”. 

The big risk, however, is that such moves could lead to undue influence on policy and procurement decisions by the interests of past or prospective employers. Recent research suggests that in the US, firms that offer jobs to public officials improve their chances of government contracts by around 7.5%. The situation in the UK is unlikely to be much different.
“Those with inside knowledge of how the system is being set up will have information and experience that would be very valuable in the private sector”   There are no recent figures to illustrate how large a financial advantage can be won by taking a turn in the revolving door. Certainly George Osborne’s six-figure salary from the McCain Institute alone will dwarf his £74,000 salary as an MP. 

UK rules, administered by the Advisory Committee on Business Appointments (ACOBA), focus on those leaving public or political office for the private sector rather than the other way round. According to The High Pay Centre report, the rules are “lightweight, minimalist, and have been roundly criticised by the press, academics, think tanks and Parliamentary committees.”

But ACOBA has no real power of sanction, and its recommendations are not binding. It is criticised for having a bias in favour of approving proposed moves. And, although the Committee on Standards in Public Life recently called for its remit to be widened to include staff at regulatory bodies such as the FCA and Ofcom, ACOBA currently reviews moves only by ministers, the most senior grade of civil servants, special advisers and military officers. Knowledge of government or regulatory practice is likely to be particularly valuable in highly controlled areas like the financial sector. But moves between departments such as the Treasury or HMRC and private sector companies are not covered by the ACOBA requirements, except in the case of the most senior civil servants. 

Research from the US suggests that attempts to tighten controls on movement between the public and private sectors might also damage the ability of the regulatory authorities to seek and retain talent. The issue of internal politics may cause people seeking an inroad into the private sector – not the other way around – to jump ship, while those at the uppermost levels, partners, for example, may jump to the regulator and back again for medium to long-term development of knowledge, which translates to higher earnings. However, this is not the case for junior members of staff, who lack the opportunity to move around so freely.     

In the financial sector and across the board, although there are occasional scandals, there is very seldom any firm proof of actual wrongdoing. “The problem may be one of perception, but perception is important,” says Dr Elizabeth David-Barrett, senior lecturer in politics at Sussex University, whose research expertise includes corruption and anti-corruption, international business and development, and public policy and procurement. “It’s a matter of trust in public institutions, and I think people are right to be concerned, especially now when big reforms and outsourcing are going on in the health and social services sector. Those with inside knowledge of how the system is being set up will have information and experience that would be very valuable in the private sector.”  

This poses the question: is it time for institutions and regulatory bodies to lead by example, in order to promote a higher ethical standard than the law requires? After all, leadership should come from the top and not be demanded by the bottom up.  

In the meantime, people will continue to rage about occasional stories of highly profitable career moves; governments will continue to promise tougher action and greater transparency, and the revolving door will continue to spin.
Seen a blog, news story or discussion online that you think might interest CISI members? Email rosalie.starling@wardour.co.uk.