Policy Papers


‘The new politics’: parliamentary lobbying, public procurement and political reform

Craig Paterso |

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Executive Summary

  • The 2010 parliamentary expenses scandal provided a temporary diversion from more sustained concerns surrounding the relationship between politics, commerce and public policy development.
  • There is a historical pattern of inter-connections between political figures, commercial organisations and unelected officials - with the potential to exert undue influence over policy.
  • Commercial lobbying in parliament and the 'revolving door' between politics and business lack transparency. The case of the private security industry offers insight into the role these opaque relationships can have over public policy.
  • The 1980s saw a Conservative government being lobbied by an aggressive private security industry. After 1997, Labour ministers increased demands on the private security industry to produce new and innovative modes of control. This experience shows the need to regulate both sides of the revolving door.
  • Ministerial figures can give commercial organisations influence over policy and the 'revolving door' gives them a financial incentive to do just that. This raises serious questions about the process through which commercial organisations become preferred bidders for contracts.
  • The historical pattern for the past three decades has revolved around public concern, calls for reform, parliamentary debate and subsequent inertia. Although the Conservative-Liberal Democrat Coalition has promised to introduce a statutory register of commercial lobbyists this reform will not fully address ongoing concerns about 'the revolving door'.

Introduction

The establishment of the Conservative-Liberal Democrat Coalition in the wake of a hung parliament in May 2010 was heralded by both parties' leaders as representing the dawn of a 'new politics'. Most significantly, this 'new politics' called for a renewed focus on transparency and democratic accountability after a major political scandal. But the first year of the Coalition has borne witness to continued concern about the influence of powerful commercial agencies over public policy and is indicative of a more entrenched problem. This should not be a surprise. The final days of the Labour government, like the Conservative one that preceded it, were mired in sleaze and scandal, yet this time the addition of the parliamentary expenses scandal to broader concerns about parliamentary probity and transparency has left all three parties with seemingly dirty hands.

In his History & Policy paper, Kevin Jefferys emphasised that mistrust of politicians is neither new nor necessarily damaging for democratic institutions. Indeed, the 2010 pre-election media furore surrounding retiring 'politicians for hire' and 'cash for promises' made by former ministers bore a marked resemblance to the final years of the Conservative government in the mid-1990s. After nearly two decades in power, civil servants and ministers mapped out their routes away from Westminster and Whitehall much as their Labour colleagues would do many years later. While the 2010 'cash for promises' questions focused on the former Labour Transport Secretary, Stephen Byers, and his connections with Tesco and National Express, the 1994 'cash for questions' scandal centred on links between the Conservative MPs, Neil Hamilton and Tim Smith, a parliamentary lobbyist and the commercial organisations, U.S. Tobacco and House of Fraser.

More recently, the media has focussed on former Home Secretaries, David Blunkett and John Reid, who left their ministerial offices to work in the security industry. Again, this shift mirrors that of Conservative ministers, Malcolm Rifkind and Douglas Hogg, who left ministerial office to advise commercial security companies. In both cases, the opaque nexus of politics and business - and its influence over the development of public policy - is key. This paper analyses a case study from the private security industry - the policy evolution of the electronic monitoring of offenders - and identifies historical similarities and differences across Conservative and Labour administrations in relation to political lobbying, the parliamentary revolving door and the development of public policy. The study raises questions about both the potential for unelected officials to unduly influence public policy and the continued influence of elected officials over public policy after they have left office.

Politics, commerce and the "revolving door"

Cash for 'promises', 'questions' or access matters, because of its implications for commercial influence over both Parliament and government. This influence can manifest itself through political lobbying or the transfer of staff between government and business, a process commonly referred to as the parliamentary 'revolving door'. This door can provide commercial organisations with access to, and influence over, key political figures that serves to undermine the democratic process. This is particularly evident with the development of public-private partnerships (PPP), an industry with a capital value of around £64 billion. PPPs transfer public sector business into the private sector. The opaque nature of this process, alongside the recurrence of the same big corporate names, raises concerns about transparency in procurement and the private benefits for those involved.

The political-commercial nexus has grown in importance due to the willingness of governments since the 1980s to privatise parts of the public sector such as education, health, defence, transport, energy and criminal justice through PPPs. This sub-contracting process means that greater value is placed on individuals with specialist knowledge in these areas; meanwhile, insufficient transparency of the influence of commerce has eroded public trust in the processes of governance. This was acknowledged in the House of Commons Public Administration Select Committee (PASC) report that was published on 5 January 2009. The report concluded that

Measures are needed... to make it harder for politicians and public servants to use the information and contacts they have built up in office as an inducement to other potential employers... We are strongly concerned that, with the rules as loosely and as variously interpreted as they currently are, former Ministers in particular appear to be able to use with impunity the contacts they build up as public servants to further a private interest.

The committee pointed to two main concerns related to transparency: the trading of insider information, where an individual leaving government provides a bidding company with an unfair advantage, and undue influence from an individual who provides illicit lobbying services.

Despite their high profile in 2009, these concerns were not new. The Select Committee on Members' Interests had issued a similar warning about a lack of public transparency in 1983:

The House has nothing to gain and a good deal to lose by allowing the present obscurity to continue.

The 1991 Select Committee on Members' Interests discussed the introduction of self-regulation for lobbyists but acknowledged the difficulties of doing this in a voluntary manner. The issue was raised again in 1994 by the Nolan Committee on Standards in Public Life, which was convened by John Major in response to the first 'cash for questions' scandal, in order to address unethical conduct amongst MPs. But throughout the cycle of accusations, calls for reform and debate, political inertia reigned.

The 2009 PASC report returned to these issues, calling for a mandatory register of lobbyists and a review of the business appointment rules that related to 'the revolving door'. These recommendations, coupled with additional concern about the public procurement process, could spur on significant reform. The Coalition has already pledged to introduce a statutory register of lobbyists, but no reform of business appointments for political figures has been discussed - even tentatively.

At present, transparency activists wait to see whether promises will be put into practice. This paper outlines the key areas of influence that the political-commercial nexus has over public policy. This will be done through the use of a case study from the private security industry on the development of the electronic monitoring of offenders.

The birth and development of the electronic monitoring of offenders: the Conservative years

The private security industry grew considerably from the 1980s onwards, with the expansion of imprisonment playing the biggest initial role. This paper focuses on an entirely new development, the electronic monitoring (EM) of offenders, which was first introduced into England and Wales in 1989 by a Conservative administration and, after a period of stagnation, developed with renewed vigour from 1999 onwards under a Labour administration.

The EM of offenders developed as a response to the problem of prison overcrowding as well as the increased focus on market values in the criminal justice sector. This new form of crime control used developments in surveillance technologies to create a 'tag' that an offender could wear on their wrist and which could be monitored on a screen many miles away. The preference for market delivery of previously 'public' goods and services, initially described as 'privatisation', became a feature of the 1980s and 1990s and enabled EM entrepreneurs in the United Kingdom to experiment with this new criminal justice tool.

At the same time, the law and order politics of the 1980s had revived concern with managing the Victorian residuum, or underclass, and this influenced policy developments in the United States and, later, the United Kingdom. Right wing think tanks such as the Adam Smith Institute (ASI) marketed criminal justice privatisation in the UK as a solution to the problem of the urban poor, citing evidence provided by security companies such as the Corrections Corporation of America (CCA) to advance their case.

This helps explain the arrival of EM in England and Wales in 1989, despite the dearth of supportive research evidence but with the support of key cheerleaders in commerce and politics. In England and Wales, the Offender's Tag Association (OTA), an organisation with intimate connections to the Conservative Party, had advocated the use of EM since 1982. In the mid-1980s the idea was picked up by John Patten, an ambitious junior minister in pursuit of an eye-catching policy to make his name with, and Patten's political drive led to the introduction of EM in an unsuccessful trial in 1989. Despite the failure of the technology during this trial, Patten, and the OTA, continued to advocate the use of EM, operated through the private sector, as an effective alternative to imprisonment.

New trials began in the mid-1990s, looking at the efficacy of EM-based curfew orders. Their evidence showed that EM technology now worked, but that the curfew order was unlikely to reduce prison numbers or reduce re-offending when compared to similar community sentences. Again, these inconclusive findings only slowed development. To understand the birth and growth of EM during this period, it is necessary to look elsewhere. Growth in EM, to some degree, mirrored that of prison privatisation, another policy advocated by the ASI to the Conservative Party. The ASI advocated privatisation on the grounds that it would improve efficiency by 'using innovative managerial and technological methods and by concentrating resources on capital investment rather than increased labour costs'.

Thus, the efficacy of these new criminal justice policies was measured according to their economies of scale - the number of offenders they could manage per set cost - rather than their effectiveness in combating offending. This complex policy process, driven by the ASI and private security companies, revealed a new philosophy on crime and its control. The existence of criminal behaviour was to be viewed as 'normal'. This meant that the number of offenders in wealthy societies would inevitably rise and new, innovative modes of offender management were required to control this growing population. This thinking and the political-commercial response to it created a new market in crime control.

The consolidation and proliferation of the electronic monitoring of offenders: the Labour years

Labour's victory in 1997 brought renewed growth to the EM industry at a time when stagnation had seemed inevitable. From 1999 onwards, the number of offenders subject to EM grew exponentially as successive Home Secretaries encouraged its use, rising from 9,000 cases per year to 53,000 in 2005. This growth in numbers - around 18,000 individuals are currently being electronically monitored on any given day - was driven by a raft of legislation that widened the eligibility of offenders for EM. In addition to this, new legislation was provided for technological developments such as biometric systems and satellite tracking which were yet to be ready for operational use.

Even now, there was no clear evidence base that identified what EM actually achieved - other than expanding the state's potential to monitor the movements of ever-growing numbers of individuals. While the first EM pilots in England and Wales were promoted by John Patten, second generation EM technologies were championed by David Blunkett during his tenure as Home Secretary. In England and Wales, resistance from the Probation Service to the introduction of EM in 1989 had allowed central government to invite commercial organisations into the jurisdiction of the Probation Service to create a new crime control market.

The market approach continued in the Criminal Justice and Court Services Act 2000, where legislation for the satellite tracking of offenders in England and Wales was introduced in advance of the EM technology being ready for the programme. Blunkett publicly championed these developments as the new 'Prison Without Bars', while nervous commercial providers quietly pointed out the limitations of the technology. Thus, the birth, consolidation and later proliferation of EM technologies must be understood as the political construction of space for commercial organisations to enter the criminal justice market and develop innovative modes of crime control. The influence of the 'revolving door' over procurement and policy development was raised as a concern by the Advisory Committee on Business Appointments in 2009 which noted the growth in numbers of people travelling through the door during the Labour years.

Analysis of the political-commercial nexus uncovers a different dynamic at work during the Labour years: ministers proactively promoted new commercial sector innovations, while the commercial sector acted more cautiously through fear of its products being oversold. George Mair's 2005 research on the extent to which EM 'works' in England and Wales highlights the 'pick and mix' attitude taken by ministers and Home Office officials with regard to the findings in official research. Good news was embraced while bad news was quietly ignored. In 2003 a Home Office commissioned evaluation on EM was aborted due to it not being cost-effective, although it eventually became apparent that the Home Office did not like the results that were coming out of the study. In 2002, SNP politician John Swinney accused the then Scottish Executive of providing evidence in favour of increased privatisation in the Scottish corrections system by subsidising Serco's profits at Kilmarnock prison. Nearly £750 million of public money had been given to Serco in order to make the contracting-out process look more economically attractive to potential future bidders.

Having promoted the use of satellite tracking through his 'Prison Without Bars' slogan, Blunkett left his post in November 2005 to take up a job with Entrust, one of the many technology firms whose products he had promoted whilst in power. The Advisory Committee on Business Appointments permitted this move with the caveat that 'he should not become personally involved in lobbying UK Ministers or officials on behalf of the company'. Prior to this, Blunkett had received negative newspaper coverage when it was discovered that he held shares in another firm, DNA Bioscience, which had business interests which conflicted with his position as Work and Pensions Secretary. Both Entrust and DNA Bioscience had demonstrated interest in becoming preferred bidders for government contracts.

Similarly, Dr John Reid was appointed group consultant for Group 4 Securicor (G4S) in December 2008 after leaving his position as Home Secretary in June 2007. Having also run the Ministry of Defence until 2006, Reid courted controversy when, three months after starting his new position, G4S won a four year contract to supply private security guards to around 200 Ministry of Defence sites across Britain. The consistent lack of expressed concern by the very committee set up to scrutinise the 'revolving door' should heighten our anxiety about its existence and the role it played in the procurement process.

Global lobbying, local contracts

The global embrace of technology as a tool of law enforcement is evident across crime control systems. Technologies such as biometrics, CCTV and Geographical Information Systems have grown apace, developing in commercial environments that market the benefits of technologies in monitoring and managing unruly behaviour. This has meant that surveillance technologies such as EM and CCTV have often developed due to political and commercial agendas rather than evidence-based research. Thus, growth in the EM of offenders can be viewed through the historical prism of public sector privatisation and the extension of commercial forms of social control.

After the Cold War, the US government played an increasingly active role in lobbying foreign countries on behalf of American defence and private security contractors. The impact of this lobbying was felt in England and Wales, where the Prison Reform Trust obtained documents detailing private prison contracts between the government and international corporations such as CCA and Wackenhut. Further evidence of the lobbying power of international corporations became evident when the director of UK Detention Services (CCA's UK subsidiary) acknowledged, 'it took us two or three years to finally convince the government that this [privatisation] was the way forward ... UK Detention Services was very much involved in bringing forward the arguments in favour of the case'.

The commercial market in security grew after 1989, as private security companies were accompanied by defence contractors keen to maintain profit margins in the absence of a clearly defined threat against the western world. Together, they forged a new market in 'technocorrections' - including CCTV, biometrics and EM. The innovative products produced by this market were subsequently marketed to important political figures, through groups such as the ASI and OTA, as solutions to the problem of crime. Across England and Wales, this growth has ensured that the private security industry now provides services to the value of £4 billion per annum and employs approximately 500,000 people.

Yet, while the British government embraced the idea of criminal justice privatisation, this did not guarantee contracts for the commercial organisations involved in the lobbying. CCA were key players in the initial lobbying of the UK government, but their British franchise had limited success in procuring services. Similarly, GEO group played a significant part in the promotion of prison privatisation, and subsequently within the construction of the EM industry, yet ultimately all but withdrew from the European market.

Instead, British and European companies with clearer links to the political establishment came to dominate this new industry. Conservative MP Sir Edward Gardner, the Chairman of the Home Affairs Committee that looked at the prospect of prison privatisation in 1988, went on to form his own private prison company. Sir John Wheeler, another Conservative MP, promoted the interests of the British Security Industry Association (BSIA), which included companies such as Group 4 and Securicor, while a member of the same committee. Indeed, when the first private remand prison was built in 1992 by Group 4 their director of projects, Charles Erikson, had been recruited directly from his position as head of remand contracts for the Prison Service in England and Wales.

Parliamentary lobbying and political reform

While political lobbying clearly played a role in the construction of a crime control industry in the UK, the role of the political-commercial nexus remains difficult to decipher. In the Conservative years, lobbying pressure was directed by business towards key strategic players in policy development. But, the evidence of the Labour years sees governmental ministers pressuring business to innovate and develop new products. Thus, concern surrounds both the development of misguided policy through undue influence and the role of the 'revolving door' in the procurement process.

The 2009 PASC Report called for a statutory, rather than voluntary, register of interests to provide transparency about the relationship between former ministers and commercial organisations in order to address this concern. This would provide a legal obligation for ministers to follow the guidelines. The committee also requested that the 'revolving door' remain closed for longer than the current two years:

What we would like to ensure, however, is that consistent rules are strictly applied so that former Ministers and other public servants are effectively prevented for an extended period of several years from using the contacts and sensitive information that they acquired in public office to further their own and others' private interests.

In response to this, the soon to be outgoing Labour government stated that they would prefer a voluntary system of self-regulation:

The lobbying industry should be given an opportunity to make self-regulation work effectively (and) should 'look again' at its current arrangements and its progress should be kept under review.

No time frame was provided for this progress review, thus continuing the cycle of public concern, calls for reform, debate and procrastination. In response to the most recent 'cash for promises' scandal, the Labour Government announced that it would introduce a statutory mandatory register of lobbying interests. The Conservatives subsequently pledged to remove the ministerial pension of any minister who did not follow the guidelines on lobbying and paid advocacy. The Coalition's promise to continue with this debate bodes well yet a generation of history has taught us not to presume that popular, political calls for parliamentary reform will ultimately manifest themselves as actual change.

Conclusions

'Let's just say present government policy presents us with opportunities.'
Nick Buckles, Chief Executive Officer, Group 4 Securicor

Senior political figures, alongside civil servants, industry professionals and academics, can provide commercial industry with a veneer of respectability and enable the promotion of commercial products that do not necessarily serve the public interest and in some cases simply do not work. The private security industry provides one particularly stark example of this with the introduction of EM, and also CCTV, being supported by initially dubious and ultimately unsubstantiated evidence.

The private security industry has grown rapidly since the end of the Conservative government in 1997 and contributed to booming industries in policing and surveillance in addition to incarceration. The absence of supportive research evidence raises questions about the reasons for this growth.

It remains difficult to dissect the role and function of the political-commercial nexus in policy development, as discussion and contracts remain hidden behind commercial confidentiality in England and Wales (although not Scotland). Despite this, historical analysis of public policy development helps us identify patterns of change from a distance which can help us make sense of current proposals for reform. The initial Coalition agreements, delivered on 11 May 2010, promised a statutory register of lobbyists as well as reforms in party funds in an attempt to address concern surrounding the influence of big business over politics, as did the full Programme for Government. While enhanced transparency of the role of commercial organisations is welcome, these reforms will not close the 'revolving door': the ministerial side of the political-commercial nexus remains unchanged.


Further Reading


ACOBA (2009) The Advisory Committee on Business Appointments: Tenth Report. http://acoba.independent.gov.uk/media/16510/acobatenthreport2008_2009.pdf. Last accessed 22 August 2011.

ASI Research. (1984) Omega Report on Justice Policy. London: Adam Smith Institute.

Mair, G. (2005) 'Electronic Monitoring in England and Wales: evidence-based or not?' Criminology & Criminal Justice. 5(3): 257-277.

PASC (2009) Lobbying: Access and Influence in Whitehall. First Report 2008-09. http://www.publications.parliament.uk/pa/cm200809/cmselect/cmpubadm/36/36i.pdf. Last accessed 22 August 2011.

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