Thursday. 30 October 2014

Secure dropbox: Tell us in confidence


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Dear Margaret, kindly remove your tanks from our lawn

The full letter from Sir Gus O’Donnell, then the UK’s most senior civil servant, to Margaret Hodge, Labour MP. December 20, 2011.

O’Donnell, who became a member of the House of Lords in January, was writing in his last days as the cabinet secretary and head of the UK’s civil service. Hodge is chairwoman of the House of Commons public accounts committee (PAC).

Exaro revealed last Friday how Whitehall mandarins have declared war on MPs over Parliament’s efforts to hold civil servants to account. And we publish the no-holds-barred correspondence over the constitutional clash today.

The row was triggered by the committee’s grilling of Anthony Inglese, general counsel of HM Revenue & Customs (HMRC), over the decision to  exempt Goldman Sachs, the investment bank, from paying up to £10 million in tax.

There is now a serious issue about the way you are perceived by the wider civil service

Dear Margaret,

The PAC and the Civil Service

I have been reflecting carefully on your inquiry into HMRC, and before I leave there are a few points arising from Anthony Inglese’s hearing I need to get on the record. I reminded myself of the lecture you gave to IFG [Institute for Government] at the beginning of the year and found myself again agreeing strongly with much of what you said: the PAC has indeed been effective in drawing attention to government waste; it does not benefit anybody to use committee hearings as a theatrical exercise in public humiliation; and praise certainly can be a more effective tool for change than blame. There are many positive aspects to your committee I could draw on – I am particularly encouraged by the sophisticated dialogue you have developed with several government departments – but I would welcome progress on the latter two.

As you know, I am very serious about the duties of an accounting officer towards the PAC. It is not enough merely to avoid misleading the committee. Accounting officers need to assist you actively in scrutinising public spending. In doing so, they need to be reassured that they will be treated fairly by the committee. This is why I raise Anthony Inglese’s hearing. Whilst I acknowledge that the circumstances surrounding this hearing were in many ways atypical, there is now a serious issue about the way you are perceived by the wider civil service, but most especially in the legal community. We all share an aim to improve value for money for the public, and I believe that your part in this will be made easier if you can swiftly tackle this issue of perception.

Turning to the specific points arising from Anthony’s hearing:

First, when questioning him you set out – in clear terms – a view held by your committee that civil servants are directly accountable to Parliament. I disagree strongly with this as a general principle. I am sure you would agree that, to maintain their impartiality, it is essential that civil servants remain accountable to ministers, who are in turn accountable to Parliament. This is clearly set out in the Civil Service Code. As you pointed out in a recent Radio 4 interview, there is an exception to this principle in relation to the PAC. But you did not point out that, for the very reason of protecting political impartiality, this exception is carefully qualified: only accounting officers are considered directly accountable to parliament; and they are only considered accountable for a limited set of responsibilities. I hope that we can agree on this matter of principle. While I do not wish to dwell on this particular case, Mr Inglese is not an accounting officer, neither did your committee’s line of questioning in this instance go directly to the accounting officer’s set of responsibilities.

Second, the committee decided to overturn the usual conventions on legal professional privilege, arguing that the balance of public interest in this case weighed in favour of open discussion of the legal advice. I do not wish to disparage the weight of the public-interest arguments for disclosure. However, looking at parliamentary precedent for this, I find it difficult to see how you could favour these over the very strong, long held and widely accepted arguments for protecting legal professional privilege. As you know, the law considers it of fundamental importance that clients must receive the best legal advice, which must itself be based on the fullest and frankest disclosure of the facts by the client. I hope you agree that forcing an open discussion of private legal advice undermines this principle, and I ask for your assurance that the committee shares this view.

Third, I understand that the committee feels frustrated at being unable to prove the background to the Goldmans case. I accept the need for the PAC to assure themselves of the quality of its administration, so I support the NAO’s [National Audit Office’s] proper actions to assess whether tax settlements were proportionate and reasonable. Ultimately, in order to assure itself it is of course open to the PAC to decide to take evidence from witnesses on oath. I need to make an important point here: in a court of law, an obligation to tell the whole truth on pain of prosecution for perjury is overseen by a judge to ensure that the witness is given the opportunity to set out this testimony fully. No court would permit the style of questioning adopted by the committee precisely because it denies the witness that opportunity. All civil servants are already bound by duties of honesty and integrity which are now set out in legislation. I hope you would therefore agree that deciding to seek evidence on oath from a civil servant should remain an extremely unusual step, to be taken only when the committee considers it the only way to gather the evidence it needs, and I would welcome your assurance on this and the other points I raise above.

Yours ever,

Gus O’Donnell

Hodge replied by robustly rejecting this.

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