How to minimise risk and influence legislation in the UK

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Corporate engagement with politics has been a dominant feature of 2021, with serving and former public officials' real and perceived lobbying activities, MP's second jobs, and demands for greater political financing transparency dominating the headlines.
 
This focus, with various resulting enquiries and intense media scrutiny, has in turn attracted unwelcome attention for the companies involved. At the same time, it is also recognised that industry can play an important role in helping to inform UK policy and legislation.
 

In this climate, it is vital to understand the tools available to companies to influence policy and legislation, and how to navigate them while minimising potential legal and reputational risks. This article provides an overview of the key rules and pitfalls in this complex and politically charged area.

Lobbying in the UK

  • What is lobbying?

Lobbying is shorthand for the various ways of engaging with the government to seek to influence its approach to a particular issue or policy. Although this term may have conjured negative connotations recently, the UK's Committee on Standards in Public Life recognises that lobbying "is an important and legitimate aspect of public life in a liberal democracy". However, while lobbying is an acknowledged way of raising important commercial issues with government, there are clearly both legal and reputational risks to getting it wrong.

  • Lobbying laws with narrow scope

The source of much of the debate in this area stems from the fact that – at least at the moment – there are few 'hard' rules that apply to corporate lobbying. In particular, 'in-house' lobbyists are not subject to any reporting or transparency requirements, although external lobbyists (such as public affairs consultants) are covered by the relevant legal regime.

The statutory lobbying regime in England and Wales was introduced by the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014 (the Lobbying Act). The Lobbying Act made it a criminal offence to engage in 'consultant lobbying' without being registered on the register of consultant lobbyists. Consultant lobbyists are also required to disclose their clients' names, although not the nature or value of the work they do (as is required in certain other jurisdictions).

The range of activities covered by 'consultant lobbying' is currently very narrow: it requires a written or oral communication directed at very senior government officials, made on behalf of another, in the course of business, and in return for payment. In-house lobbyists are, therefore, de facto exempt from the regime. This has meant that where a company hires a former public official to conduct lobbying on its behalf, neither the company nor the individual are required to register the activity.

Recent reviews of lobbying rules, such as those carried out by Nigel Boardman and the Committee on Standards in Public Life (the Reviews), have proposed wide-ranging and ambitious reforms to the UK regime. They would extend the lobbying rules to cover in-house lobbyists working for more than one organisation, as well as any former public officials. It is also proposed that the lobbying activities triggering registration be expanded to include communications with a broader range of public officials, including special advisers. There are also proposals to significantly increase the amount of information consultant lobbyists are required to disclose about their activities. Although not yet accepted by the government, these proposals do show a possible direction of future travel in the UK.

  • Transparency obligations also bringing lobbying to light

Despite the currently narrow disclosure requirements on lobbyists, lobbying efforts can also come to light as a result of the transparency and conflict of interest rules applicable to public officials. For example, information regarding ministerial diaries (such as meetings with external organisations, hospitality, overseas travel and gifts) is published online, and most senior public officials' interests will be declared and publicly available.

These disclosures provide the media and public with a key source of readily accessible information on lobbying in the UK, as well as the information that can be obtained from public bodies through freedom of information requests. It is also worth noting that the Reviews' proposals would extend the amount of contact required to be disclosed, to include private sector engagement via WhatsApp or Zoom, for example.

Hiring serving or former UK public officials

Another issue which has received significant recent interest is the engagement of serving or former public officials – the former known as 'revolving door rules' and the latter receiving particular prominence in the context of MP's second jobs. For companies, these individuals can provide useful first-hand intelligence on the workings of government.

However, the benefits this presents are not without risks.

  • Serving public officials

Serving public officials can currently take on certain private sector roles alongside their responsibilities in parliament or the civil service. However, these officials have an overriding obligation to act in the public interest and cannot profit from their consultancy roles. They cannot lobby on their employer's behalf, act as a paid advocate, or exercise parliamentary influence for profit, nor can they advise on how to lobby the government. In addition, they will generally be required to register their engagement publicly and declare their interests where relevant.

In the wake of the heightened scrutiny in this area, the government has suggested that any outside role taken on by a sitting MP should be "within reasonable limits", while the House of Commons Standards Committee has proposed an outright ban on MPs providing paid parliamentary advice, consultancy, or strategy services.

  • Former public officials

On leaving the public sector, many public officials take on significant roles in the private sector. A patchwork of rules applies to their employment, which varies depending on their seniority and role.

For example, former government ministers are to obtain permission from the Advisory Committee on Business Appointments (known as 'ACOBA') to take on any role for two years after leaving office. Moreover, in the same period, both former cabinet ministers and civil servants are prohibited from lobbying government in any form. A common criticism of this regime is that there is no liability on these former public officials or their new employers for breaching these rules; the reputational risk of a breach is in effect the main deterrent. However, following recent events, pressure to introduce enforceable sanctions for breach of these rules is growing – the Reviews propose that employment restrictions on public officials be made legally binding, with clear penalties for any breaches.

In the context of both serving and former public officials, the obligation to comply with the applicable (albeit non-binding) rules falls on the serving or former public official themselves rather than their employer. Nonetheless, companies should take care to ensure any rules are complied with given the reputational risks involved.

Key tips for corporate political engagement

It is clearly important to have a channel to engage with government on policy and new laws. However, it is equally important to ensure these activities stay on the right side of the line in order to manage the associated legal and reputational risk. Below are some key tips for getting corporate political engagement right:

  • The main risks for companies are (currently) reputational. There are currently few hard rules on companies. However, the media and the public are focused on a perceived abuse of private sector access to government. Adverse exposure may arise in relation to activity which is currently lawful.
  • Think about how communications would appear if published. There are a number of routes for engagement to become public, and these are likely to be expanded in the present push for transparency. Particularly with written communications, consider how they would appear if published.
  • Hiring public officials is a risk area. The hiring of serving and former public officials is now a particular area of sensitivity. Even if an appointment complies with applicable rules, it can still result in significant (and negative) media attention for the company involved.
  • The rules of engagement are likely to change. There is likely to be a re-set in the nature and style of engagement that certain public officials can – or are willing to – be involved with in the future. Companies should remain alive to developing proposals and any new rules in this area.
  • Engage with formal channels of engagement. Remember that there are various formal channels for engagement on policy, such as responding to public consultations and participating in calls for evidence.
  • As a last resort, consider legal challenges to public body decisions (quickly). Legal challenges can also be an important tool in the protection of corporate interests – given the very short timelines for judicial review, any concerns with the lawfulness of government action should be raised promptly.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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