Ministerial Appointments: Vetting and Managing Conflicts of Interest

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Monday 23 January.

“To start with ministerial appointments, appointments made to His Majesty’s Government are a matter solely for the Prime Minister in line with his constitutional position as the Sovereign’s principal adviser and the head of the Government. It is for the Prime Minister to recommend individuals for appointment. In considering potential appointments, the Prime Minister may receive advice from the Civil Service on matters of propriety and potential conflicts of interest. The Civil Service has no role in approving or vetoing appointments as appointments are a matter for the Prime Minister. It would not be appropriate for me to comment further on the advice that may be given during the appointments process.

It is critical that all Prime Ministers are able to receive advice in confidence. I would not want to do anything to erode that ability. Once an appointment is made, the process for the management of conflicts of interest and potential conflicts is clear and robust, and follows the processes set out in the Ministerial Code. It is the responsibility of all Ministers to ensure that no conflict arises, or could reasonably be perceived to arise, between their role and their private interests, financial or otherwise. That is ultimately incumbent on the individual and it is clearly set out in the Ministerial Code. Ministers should declare and manage potential conflicts of interest, working with their Permanent Secretary and the independent adviser on Ministers’ interests. They are under an ongoing duty to further declare relevant changes to their interests.

Honourable Members will be aware that the Prime Minister has appointed Sir Laurie Magnus as his independent adviser on Ministers’ interests. Sir Laurie will be taking forward the work on the declaration of Ministers’ interests in line with his published terms of reference. As the Prime Minister confirmed this morning, the independent adviser will also be conducting an investigation to establish the facts surrounding the matters concerning my right honourable friend the Member for Stratford-on-Avon, Nadhim Zahawi, that have been subject to media reports over the weekend. I know that Sir Laurie will bring integrity and rigour to the role of independent adviser and the outcome of his work will be made public in due course.”

My Lords, it is vital that we get the terms of reference right on this investigation. Will it include Mr Zahawi’s use of legal threats to supress media reporting? Will the independent adviser examine why, according to the Information Commissioner’s investigation, Mr Zahawi deleted texts from his phone relating to Lex Greensill’s Covid loans application? Greensill Bank went on to lend seven times the loan limit to companies headed by Mr Sanjeev Gupta. A business associate of Mr Gupta also thanked the then BEIS Minister, Mr Zahawi, for his role in securing these loans. Does the Minister know if Mr Zahawi advised Greensill to put in multiple applications, and will this matter also be investigated?

My Lords, there are established procedures for the appointment of Ministers, and by Ministers, and these are followed. This was the purport of the question we are replying to, and we need to allow the process to run its course. As the noble Baroness suggests, the Prime Minister has appointed Sir Laurie Magnus, who is the independent adviser on Ministers’ interests. As I said when I answered questions last year, the Prime Minister was then moving quickly to appoint the independent adviser. The terms of reference will give the independent adviser the opportunity to look into what he thinks needs to be looked into—having a look at the issues that have been raised and speculated on—and we have made clear that anyone in the Government should help the independent adviser with that process. On the point about the texts, the Information Commissioner has looked at that. He concluded his investigation on 18 January this year—so, last week—and he did not require any steps to be taken. He considered that BEIS had conducted sufficient searches for the relevant information.

My Lords, may I suggest to my noble friend that any public concern about ministerial interests will be greatly alleviated if the independent adviser could, of his own initiative, institute investigations?

The independent adviser, as my noble friend suggests, is appointed by the Prime Minister and it his constitutional position to be the ultimate arbiter of the Ministerial Code, and to decide whether a breach of the code has occurred upon the advice of the independent adviser. So it makes sense for the Prime Minister to be the ultimate decision-maker, but, of course, we have appointed Sir Laurie Magnus to take on this role and to look extremely carefully at the issues that have arisen and been reported on this week.

My Lords, the last Prime Minister but three made great play of the distinction between “people from somewhere” and “people from anywhere”. I thought, at the time, that the real people from anywhere were those who try to avoid paying their taxes and arrange their financial affairs somewhere else—in offshore financial centres and elsewhere. Could the Minister assure us that part of the questioning of the suitability of people for ministerial appointments should significantly include questions about offshore financial arrangements and tax avoidance?

There is an established procedure that anyone who is fortunate enough to be appointed a Minister goes through, and that includes a number of questions. Indeed, when candidates are put forward to HOLAC for the House of Lords, that is also the case. Tax is one of the areas of questioning but, in relation to today’s debate, clearly the independent adviser will be looking into these matters. It is clear that the Prime Minister became aware of media reports, but when the Minister without Portfolio was appointed, he was told that there were no outstanding issues. Obviously, the details of an individual’s tax affairs are confidential, but this is an important area of inquiry.

My Lords, we should never lose sight of the fact that we are talking about a truly remarkable person, whose life story is exceptional and who is an incredible example to all ethnic minorities in this country. Bearing this in mind, should we not await Sir Laurie’s report and not prejudge the issue?

I have to say that my noble friend is completely right. We must find out what the facts are; the independent adviser is looking into this. We need due process. That is why the Prime Minister is ensuring that we look at the actions that were taken. It is also why we have the independent adviser who has now been appointed, which I think has been welcomed right across the House.

My Lords, is it not the case that while officials may bring to the Prime Minister’s attention matters within their knowledge bearing on ministerial appointments, they must have regard to the laws governing personal privacy, including privacy on tax matters?

The noble Lord is right. The other point worth making is that, as a Minister, it is your personal responsibility to make it known to your Permanent Secretary and, if appropriate, to the independent adviser, what conflicts of interest or perceived conflicts of interest you might have. This is a process that is gone through scrupulously, in my experience, when Ministers are appointed.

My Lords, transparency is the biggest antidote to sleaze, which revolves around money. The best way of dealing with this is to ensure that all Ministers publish their tax returns. That policy can be made without waiting for any report from the independent ethics adviser. What objections can the Minister have to that suggestion?

There is an issue of balance between privacy and the need to know—the transparency. I have often engaged with the noble Lord on these tax issues and the Prime Minister himself has said that he will publish his tax return, but moving to a different system raises quite a lot of issues of balance. I come back to my point about personal responsibility and explaining where there are these issues or might be conflicts of interest when you are a Minister, or if circumstances change.

Is it not the case that it is very important that any Prime Minister of the day has an independent ethics adviser and an independent Commissioner for Public Appointments? What is the point of having these officials doing those jobs unless they are allowed to get on with them—do the jobs they are paid and appointed to do—and avoid the speculation, which is completely unfounded until the facts are known?

I thank my noble friend. Sir Laurie Magnus is doing just that. He was appointed in December and now has an important case to look into. We need to give him time to look at the issues that have been raised and come to the Prime Minister with a summary of his findings, so that we can move forward. But we need to establish the facts because, unfortunately, everything you read in the newspapers is not always spot on.

My Lords, the Minister has laid great emphasis on due process, which we understand, and there is an inquiry going on, which we understand. Will she agree voluntarily to bring to the House a Statement once the outcome of this investigation is known?

Statements to the House are a matter for the usual channels. However, given the interest in this matter it is quite possible for noble Lords to raise Questions, and Statements are often made on important matters of the day. I cannot make a specific promise, of course, but I understand where the noble Viscount is coming from, and that the House wishes to know and to be kept informed.

My Lords, the Minister said, in reply to an earlier question, that it was a constitutional principle that the ultimate authority for the Ministerial Code lay with the Prime Minister, but in what way would it be unconstitutional for the Prime Minister to give the independent adviser the right to initiate his own investigations?

I think that that would change the set of balances that exists at the moment. The Prime Minister, Rishi Sunak, has been very clear on the importance of accountability, integrity and professionalism, and he reissued the code with his own words to encourage that. He has also asked the independent adviser to explore the issues surrounding this particular case and to report the findings to him. I do not think that we need to move as far as the noble Baroness is suggesting, but we need to come to the right answers on these issues. It really matters that people trust our system of parliamentary democracy.