Former chancellor Philip Hammond has been reprimanded by the government’s anti-corruption watchdog after contacting the second permanent secretary at the Treasury on behalf of a bank.
Lord Eric Pickles, head of the Advisory Committee on Business Appointments – Acoba – wrote to Lord Hammond earlier this month after learning that the ex-chancellor had contacted the second permanent secretary at his former department on OakNorth Bank’s behalf last summer.
In sometimes combative correspondence published yesterday – apparently against the wishes of Hammond, who is revealed in the letters to have considered taking out in an injunction to prevent their publication – Pickles called the former chancellor “unwise” and rejected his arguments that his conduct was within the rules.
Pickles has also written to Cabinet Office minister Michael Gove bringing his attention to the back-and-forth – in which Hammond accused Acoba of “moving the goalposts” – inviting him to consider what “appropriate action” to take.
The committee had issued advice on Hammond’s appointment as a senior adviser at the UK-based bank at the end of 2019, which included its standard ban on lobbying the government or using contacts he had gained as a minister to influence decisions or secure business for two years after leaving the government.
Hammond has argued that he was following up on an offer from the bank to provide software to the government for free to aid the coronavirus response – and was therefore not seeking to drum up business or lobby officials.
However, his contact with second perm sec Charles Roxburgh, which was first revealed by the Telegraph, rang alarm bells at Acoba as it took place well within two years of his tenure as chancellor ending in July 2019.
In his first letter on 13 August, Pickles demanded an explanation for the contact, which he said “appears incompatible with the rules and the advice you accepted before taking up this role”.
In his response, Hammond claimed he did “not believe there is any such incompatibility” as his contact with Roxburgh came after a meeting between OakNorth execs and the Treasury about sharing the bank’s software “toolkit”.
He said the Treasury was slow to follow up on that meeting to discuss this, prompting “speculation internally that maybe information about the toolkit and the bank’s offer that had been conveyed in the meeting had not got through to senior decision makers”.
He then emailed Roxburgh to “seek confirmation that the message and the offer of pro bono support had, indeed, been received and understood at the appropriate level”.
“I do not believe that seeking confirmation of the receipt of a pro bono offer of assistance by senior officials can be defined as ‘lobbying’ in any reasonably understood interpretation of the word,” Hammond told Pickles.
He said the email was “compliant with both the letter and the spirit” of Acoba’s advice, as he had not sought to influence a policy decision nor drum up business for OakNorth.
However, Pickles insisted that while the initial meetings had taken place without Hammond’s involvement, it was “an unwise” to contact a top civil servant on the bank’s behalf.
“There are instances in which direct engagement with an applicant’s former department is simply not appropriate within the spirit of the government’s rules – which are a set of principles that exist to protect the integrity of government. The rules, and the conditions imposed, include provisions seeking to prevent any reasonable suggestion that a former minister’s employer may be offered unfair access or influence within the government as a result of their former role,” he wrote.
He said Hammond’s use of his government contacts was “not consistent with the intention of the rules and was not acceptable”, adding: “The material consideration is the privileged access you obtained for OakNorth not the commercial value of the proposition.”
The comments prompted a terse response from Hammond, who claimed to be “perplexed by your letter and the conclusion you reach”.
“I realise that Acoba is under a lot of pressure to demonstrate that it is not ‘toothless’, but it is a public body, subject to a requirement to act reasonably when making findings following an investigation of an alleged breach. The clear conclusion of your own analysis is that no breach of the conditions occurred. If you wish to make general observations about the adequacy or otherwise of the conditions that your own committee imposed on me, you are of course free to do so, but you must either acknowledge that those restrictions were complied with – or assert that they were not,” he wrote back on 31 August.
He said a “reasonable person would be entitled to interpret your draft letter as implying that I was in breach of the conditions” Acoba had set, but that the committee had not found him in breach of those conditions.
“What is appropriate or inappropriate is ultimately a matter of individual judgement; the question for Acoba – the sole question that the committee should be addressing – is whether or not there was a breach of the terms of the advice,” he said.
He added: “You cannot move the goalposts; I am entitled to have my actions judged by Acoba on the basis of my compliance with the restrictions that Acoba imposed on me in the specific advice letter that it sent to me concerning my engagement with OakNorth.”
In the final letter between the two, which was sent yesterday, Pickles flatly rejected Hammond’s claims and said it is “for the committee to determine whether a breach of its advice has occurred” and that the committee had determined the events were “not consistent with its advice, nor in keeping with the purpose of the rules”.
“I understand from the Acoba secretariat that publication of the committee’s correspondence yesterday was held back from publication, on the basis you were seeking advice on possible legal action, including an injunction to prevent publication,” he said.
He said the committee would publish all the correspondence – including the latest email detailing Hammond’s objections to Acoba’s conclusions – in the name of transparency.
“The committee recognises your disagreement with its decision and understands that you might wish to put your views on Acoba and this particular decision into the public domain,” he said.
In a separate letter to Cabinet Office minister Michael Gove,this week, Pickles said he had "no doubt Lord Hammond sincerely believed his contact with his former department was appropriate and you might wish to take this into consideration while formulating your view on the matter“.
But he added: “However, I consider there is a reasonable concern that direct engagement with the second permanent secretary at HMT was only made available to OakNorth Bank as a direct result of his time as chancellor. I do not consider it was in keeping with the letter or the spirit of the government’s rules for the former chancellor to contact HMT on behalf of a bank which pays for his advice.
“It is the committee’s policy to act transparently, including making public any failure to follow the rules, or the committee’s advice, that it is made aware of. It is now a matter for you to decide what appropriate action to take.”