Closing the ‘revolving door’ would weaken government further

The writer, a former head of the Downing Street policy unit, is a Harvard senior fellow

As the fallout from the Greensill saga drags on, you could be forgiven for thinking that ministers have no time to govern, so busy are they texting their mates. Boris Johnson exchanges messages with industrialist James Dyson about ventilators and tax; Chancellor Rishi Sunak chats with David Cameron about Greensill; and the housing secretary has been busy discussing planning applications with property developer and Tory donor Richard Desmond.

It feels like there’s something rotten in the state of Britain. But what, exactly? The top of government does feel too casual. But I can’t get terribly exercised that in a national emergency, a leading entrepreneur was in direct contact with the prime minister. And although I despair that Cameron became a lobbyist, the Treasury resisted his requests to give extra Covid-19 loans to Greensill.

The problem is the lack of transparency when texts and WhatsApps are used to conduct official business. The old-fashioned practice of having an official listening in on the line is there to protect the public, and politicians too. Yet some worrying aspects of this saga lie in the bowels of Whitehall itself. Who gave the cheery Australian Lex Greensill a pass allowing him to “camp” in the economic and domestic secretariat, the most powerful part of the Cabinet Office? And how on earth could Bill Crothers, head of government procurement, become a part-time adviser to Greensill while being a civil servant? That’s not a revolving door, it’s a gate which has fallen off its hinges.

Crothers says that his double act was not “seen as contentious”. He never asked the Advisory Committee on Business Appointments, or Acoba, for permission. The chair of that committee, Lord Eric Pickles, has said there appear to be no “boundaries at all” for senior civil servants moving into the private sector. That is extraordinary. The cabinet secretary Simon Case has asked other civil servants to own up if they have a second job, suggesting the centre hasn’t the faintest idea how many do. A civil service which has been a stickler for procedure, which raged against “sofa government” under Tony Blair, seems to have been afflicted by casual informality.

It’s tempting to argue that we should end the revolving door between business and government. But that would be a mistake. Clearer rules are certainly needed, and better policing of conflicts. But Whitehall needs more commercial nous, not less. It needs to send more civil servants out into the private sector and local government to understand contracts, finance and IT. The reliance on management consultants to inject what are sometimes pretty basic concepts from the real world is a symptom of the lack of capacity.

Greensill also demonstrates how naive politicians and officials can be about business. One of the few weaknesses of the late cabinet secretary Sir Jeremy Heywood was his fascination for articulate business people with finance ideas. He seems to have been impressed by Greensill, whom he worked with at Morgan Stanley in the early 2000s and later introduced to Cameron’s administration. It is not clear who Greensill was accountable to. But the economic and domestic secretariat, where he had a desk, reports to the cabinet secretary.

What the Treasury select committee should ask when it begins its inquiry is when did Greensill’s model become a Ponzi scheme? The kind of supply chain financing he was doing at Morgan Stanley was commonplace. But at some point it became much more opaque. Moreover, someone needs to explain why this kind of financing would ever have been useful to a government which could borrow cheaper and pay its suppliers on time if it wanted to.

There are echoes here of Carillion, the government outsourcer whose jaw-dropping demise is charted by Bob Wylie in Bandit Capitalism. Carillion went bust in 2018, with liabilities of over £7bn, including a £2.6bn hole in the pension fund which had to be filled by the taxpayer. Wylie cites Carillion’s liberal use of receivables to mask its mounting debts; a similar accounting trick was used by Greensill. He also shows how slow government was to see what was happening.

There is nothing wrong with business people working in government, as long as they are used in the right way. Tony Blair’s much-lauded delivery unit in Number 10 was quietly staffed by McKinsey under Michael Barber, who subsequently became a McKinsey partner. It was so successful that Boris Johnson is now forming a new version with Barber’s help.

More often, however, talented outsiders find it impossible to get anything done. Only 6 out of 22 of the current permanent secretaries have any significant professional experience outside Whitehall, according to the Commission for Smart Government, which I sit on. The commission believes that Whitehall must become more permeable to talent, not less, if government is to operate more effectively.

Equally there is nothing wrong with people going from the public into the private sector, improving understanding across a divide which in Britain can feel like a gulf. But it is absurd that Acoba cannot stop people from taking any job, however startling a conflict it presents. If officials or MPs have a future employer in mind, they may start to see things more from that employer’s point of view. You should not always be able to hop straight from one to the other.

Every government has to strike the right balance between formal and informal. But the danger for this administration is the perception that its supporters can bypass the official channels to lobby ministers. Much greater transparency is needed, not just for ministers but for the official channels too.