Jim Pickard, FT.com, 22/2/2008

Former ministers and civil servants who breach the rules when they take jobs in the private sector should face criminal action, a senior Whitehall figure said on Thursday.

Appearing in front of the Commons public administration committee as part of its inquiry into the role of lobbyists – the first such investigation for 15 years – Lord MacLennan said there was a convincing argument for following the US system, where there were clearly defined legal requirements covering such moves.

If breaches were reported by whistleblowers “then the normal forces of the criminal justice system come into play”, said Lord MacLennan, who belongs to the independent Advisory Committee on Business Appointments. “That is an option and I hope it is one which will be considered.”

Such a change would mark a revolution in the current system, under which the advisory committee’s advice is based on fluid definitions of lobbying and has no enforcement powers.

About 800 moves from the public sector to the private sector are passed to the committee every year and of these 50 or so are examined by its members. But it emerged that only one minister and two civil servants had ever been urged not to take a particular job in the private sector.

The trend for former “crown servants” moving on to often lucrative posts in business is perhaps best exemplified by Tony Blair, the former prime minister, who has won lucrative contracts with JPMorgan and Zurich Financial Services since leaving office.

The many former ministers now in the private sector include Patricia Hewitt, former health secretary, who is paid by Alliance Boots and Cinven; Denis MacShane, former Europe minister, now working for United Utilities; and Alan Milburn, who is on the board of PepsiCo.

Many former civil servants and special advisers have also been vetted by the advisory committee.

They include Air Chief Marshal Sir Anthony Bagnall, now an adviser at EDS; Sir Richard Dearlove, former chief of the intelligence service, who is on AIG’s board; and Sir David Omand, former security co-ordinator at the Cabinet Office, who is now adviser to the Society of British Aerospace Companies.

Among the most controversial of recent years was Sir Robert Walmsley, former chief of defence procurement, who, a year after retiring in 2003, took a job with General Dynamics, a US defence company that had won £2bn in orders from the Ministry of Defence.

Paul Flynn, the Labour MP, said it was wrong that so many people were using public posts “as a springboard, as an apprenticeship, for earning great riches”.

MPs on Thursday questioned the process by which the advisory committee – described by Mr Flynn as “an all-male collection of the great and the good” – offered its advice and whether it was too lenient.

Former crown servants are almost always given approval for their new posts but are sometimes advised to wait for a period of months before starting. They may be advised not to lobby the government for a certain period, usually 12 months.

In the case of Air Chief Marshal Sir John Day, who had been asked to wait a year before becoming an adviser to BAE Systems, the period was cut to three months after an intervention by Mr Blair.