MPs’ paid directorships and consultancies

On Monday 15 November 2021, it was reported (by the Guardian) that the Labour Party would use an Opposition Day on Wednesday 17 November to debate and vote on whether MPs should be banned from holding paid directorships or business consultancies.

In 2015, the Committee on Standards said that whether MPs should be allowed to have employment outside Parliament was a matter of “legitimate debate. The rules currently permit it” (para 2, report into the conduct of Sir Malcom Rifkind and Mr Jack Straw (495KB, PDF)).

The rules have not changed since. Outside employment is still permitted for MPs. But a recent case in which the Committee on Standards found that former MP Owen Paterson had engaged in paid advocacy, and subsequent press reporting of MPs’ outside interests, has intensified interest in the issue, in MPs’ behaviour and in the Code of Conduct.

MPs must record income from employment and earnings in the Register of Members’ Financial Interests. According to the Guide to the Rules relating to the Conduct of Members (638KB, PDF), they have to record individual payments of more than £100. They also have to record payments of less than £100, if the total from the same source exceeds £300, in a calendar year.

These thresholds were introduced from the beginning of the 2015 Parliament. The House agreed them on 17 March 2015, when it approved the Committee on Standards report on The Code of Conduct and the Guide to the Rules (561KB, PDF), which had been published in November 2014.

On 30 April 2009, the House of Commons considered a number of motions relating to Members’ allowances and the registration of financial interests. The Commons agreed that, from 1 July 2009, the Register of Members’ Financial Interests should contain details of the precise amount of each individual payment received, the nature of the work carried out for the payment, and the number of hours worked.

The Committee on Standards in Public Life (CSPL - an independent, non-parliamentary committee) suggested that these arrangements should be reviewed early in the next Parliament and that introducing a minimum threshold for registering individual payments should be considered.

On 20 January 2011, the Committee on Standards and Privileges’ report, Registration of employment from income (400KB, PDF), recommended a threshold for registering payments was introduced. It recommended the threshold should be 0.1% of an MP’s salary at that time for single payments, or 1%, for aggregated payments from the same source. The House agreed with this proposition on 7 February 2011. Kevin Barron, the Chair of the Committee, said this meant the thresholds were £66 and £660, respectively. The 0.1% and 1% thresholds applied until the beginning of the 2015 Parliament. Prior to this, MPs had been required to register their income from employment etc in bands.

The CSPL has looked at this issue on several occasions. Its 2009 and 2018 recommendations on MPs’ outside interests have not been implemented.

The CSPL’s report, MPs’ expenses and allowances: Supporting Parliament, safeguarding the public (973KB, PDF), was published in November 2009.

The CSPL considered that an outside interest was “any form of activity outside the time commitments for which an MP receives payment and which might create a conflict of interest or time commitments which stop the MP from actively fulfilling his or her primary role, or both” (para 11.4).

The CSPL noted that in its First Report, in 1995, it had concluded that it was “desirable for the House of Commons to contain Members with a wide variety of continuing outside interests”. It noted that since 1995, sitting hours had changed, there had been a rise in constituency work, and more MPs had political backgrounds. It noted a range of views on whether outside interests were good or bad for MPs and their constituents. It recommended that:

MPs should remain free to undertake some paid activity outside the House of Commons, provided it is kept within reasonable limits and there is transparency about the nature of the activity and the amount of time spent on it (Recommendation 34).

It argued that this would allow electors to decide whether to vote for someone who was not devoting their time to their parliamentary duties.

In its 2018 report, MPs’ outside interests (1.1MB, PDF), the CSPL expressed its regret that the recommendations it had made on MPs’ outside interests in its 2009 had “not been fully acted upon by government and Parliament”.

It noted, again, that a majority of MPs did not hold outside interests, but it was concerned that “where a small number of individuals have taken up outside interests beyond what might be considered reasonable, it risks undermining trust in Parliament and Parliamentarians”.

In its 2018 report, it examined how to interpret and police “reasonable limits”. It considered that neither time limits nor financial limits on outside interests were appropriate. Some MPs had to spend specific amounts of time on maintaining professional registration (doctors, nurses, etc). In other cases, earnings came from royalties and did not take time.

It proposed that regulation of MPs’ outside interests should be based on the principle that any outside roles MPs undertake, whether or not they were paid, should not prevent MPs from fully undertaking the range of duties expected of them in their primary role as an MP. The first recommendation of the 2018 report was that the Code of Conduct should include this requirement. Any breach of this principle should trigger an investigation by the independent Parliamentary Commissioner for Standards. Dependent on the findings of that investigation, sanctions should be recommended by the Commons Committee on Standards.

The CSPL argued that it was not appropriate for MPs to engage in “paid political or Parliamentary advisory or consultancy work” because this risked “perpetuating the public concern that MPs are using their public office for personal gain” (p14).

The CSPL noted that such activity was not permitted in other UK legislatures and recommended that the MPs’ Code of Conduct should be updated to state:

“MPs should not accept any paid work to provide services as a Parliamentary strategist, adviser or consultant, for example, advising on Parliamentary affairs or on how to influence Parliament and its members.” (Recommendation 10).

The CSPL also recommended that:

• any information MPs registered on their outside interests should be “digitally accessible” and that declarations made in debate should be identifiable;
• the rules on registration of interests should be reviewed;
• non-financial interests should be registered on the same basis as financial interests;
• changes should be made to the rules on accepting gifts; and
• parliamentary candidates should be required to publish details of any outside interests they intended to continue to hold after election.

The CSPL’s recommendations have not been implemented. The current Committee on Standards began a review of the Code of Conduct in September 2020. It announced that it was undertaking a “comprehensive and far-reaching inquiry into the operation of the Code of Conduct for Members of Parliament”.

There have been past reviews of the current Code of Conduct but the Committee on Standards notes on the inquiry’s webpage that for various reasons it had not been possible to complete these reviews in the short 2015 and 2017 Parliaments.

The CSPL has given written evidence (197 KB, PDF) and oral evidence (185KB, PDF) evidence to the Committee on Standards’ review of the Code of Conduct.

At 3.32pm on 16 November 2021, the Prime Minister tweeted that he had written to the Speaker of the House of Commons to propose:

1. The Code of Conduct for MPs is updated
2. MPs who are prioritising outside interests over their constituents are investigated and appropriately punished
3. MPs are banned from acting as paid political consultants or lobbyists

His letter to the Speaker was attached but did not mention the Committee on Standards ongoing review of the Code of Conduct. It highlighted the Government’s view that the CSPL’s recommendations 1 and 10 (from 2018) should be adopted.

About an hour earlier, Kitty Donaldson, UK Political Editor for Bloomberg News, tweeted what she understood to be the motion that would be brought forward by the Labour Party for its debate on17 November.

On 25 February 2015, the Labour Party used an Opposition Day to debate the motion:

That this House believes that, as part of a wider regulatory framework for hon. Members’ second jobs, from the start of the next Parliament no hon. Members should be permitted to hold paid directorships or consultancies.

The Opposition chose to debate whether MPs should be paid for directorships and consultancies because of allegations that Jack Straw and Sir Malcolm Rifkind had breached the Code of Conduct in discussing potential jobs, once they had left Parliament. In its report on Sir Malcolm Rifkind and Mr Jack Straw (495KB, PDF), the Committee on Standards said the Parliamentary Commissioner for Standards’ had investigated and found no breach of the rules.