Oonagh Gay: Regulating Lobbyists: A New Dawn?

OonaghIn March 2015, almost unnoticed, the Registrar of Consultant Lobbyists published her first register of consultant lobbyists with 57 entities. By the end of July this had grown to 87. The register is available online here. Law firms have been noticeably reluctant to register, but some accountancy firms have complied. There are many familiar names of lobbying firms and lists of clients, but the full impact of the legislation will not be felt for some time.

The Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014 attracted attention mainly for its provisions in part 2 on third party campaigning at general elections. Charities mounted an effective lobbying campaign to ameliorate the original provisions. However, Part 1 created the first statutory register of lobbyists applicable to the UK Government and Parliament. The Scottish Government announced intentions to legislate in 2013, thereby blocking a private members bill, but is yet to take action.

How effective will the new register be in regulating lobbying? The Act was subject to a barrage of criticism during its parliamentary passage. The Select Committee on Political and Constitutional Reform concluded that the proposals were minimalist, catching only a minority of actions undertaken by multi-client or third party lobbyists.

The Act defined consultant lobbying as direct communication, orally or in writing, on behalf of someone else with UK Government Ministers or permanent secretaries in return for payment. Requirements to register only apply to those who lobby UK Government, not officials of the Scottish Government, Welsh Government or Northern Ireland Executive, or local government officers or councillors. Only those working for lobbying firms whose main business was lobbying were required to register. During the passage of the Bill in the Commons, an amendment excluding smaller, non VAT registered lobbyists was passed. Businesses registered for VAT are in general those with an annual turnover exceeding £79,000.

The Government argued that the legislation would ‘address the problem of information asymmetry’ by requiring openness by lobbying firms over the clients they represent in similar meetings. It rejected calls for a code of conduct, arguing that this should be established within the lobbying industry itself. An independent registrar, financed by registration fees would have the power to levy fines. It took the opportunity to include within the Bill further regulation of the campaigning activities of charities and other third party campaigners in the run-up to a general election and stricter requirements for trade unions to reveal their membership lists. Most of the controversy surrounding the passage of the Bill focused on the implications for charities, in part two, and this tended to overshadow criticisms of the lobbying provisions in part one.

The scope of the register was criticised within the lobbying industry. Some argued that the requirement for lobbying as defined by the Act to be the ‘main business’ of the person concerned would mean many public affairs firms would not be required to register, as they also carried out a range of communications work.

Section 1 prohibits consultant lobbying unless registered. Section 2 defines a “consultant lobbyist” as a person who, in the course of a business and in return for payment, personally makes communications on behalf of someone else to a minister or a permanent secretary (or equivalent position) in the UK Government; organisations that only lobby officials of devolved administrations are not required to register. There is provision for special advisers to be an equivalent position through regulations under section 3(3). This follows an amendment tabled by Lord Tyler at report stage in the Lords. These regulations have not yet been made. The communications fall within the legislation if they are about government policy, legislation, the award of contracts, grants, licences or similar benefits, or the exercise of any other government function. This applies to communications made abroad as well as in the UK, so that offences under the Act are extra-territorial.

The consultant lobbying does not have to be on behalf of the person making the payment, nor does payment have to be linked to a particular communication. It appears to follow that if payment is received to engage in lobbying on behalf of a person, the person receiving the payment will need to register, whoever is paying (so long as the other conditions, such as lobbying being the main business, apply). The guidance issued by the Registrar on 30 January 2015 warns that ‘law or accountancy firms with a Government Relations team, lead Partner or any other employee, whose job it is to communicate with ministers and permanent secretaries on behalf of the firm’s clients may be required to register. The fact that the firm considers this service incidental to their business does not mean that they are not lobbying: it is the making of relevant communications that is significant.’

FAQs subsequently issued by the Registrar at the request of the lobbying industry make clear that drafting communications for a client to send, would not be an act that requires registration as no direct communication with a Government minister has taken place.

Inviting a Minister or Permanent Secretary (or equivalents) to a meeting or event will not trigger the requirement to register in of itself unless it involves the subjects above and is made of behalf of a paying client. An example might be issuing an invitation to a Minister for a meeting which also contains text that relates to Government policy or legislation – this would require registration. (source)

Where a person’s business mostly consists of activities other than the lobbying of Government, and communications with Government are incidental to non-lobbying activities, they are exempt under Schedule 1. People who act generally as representatives of people of a particular class or description and whose communications with Government are also incidental to their main business are also exempt. But trade or membership organisations are exempt only when lobbying on behalf of a class or body of people; their income is derived wholly from that class or body of people and their communications are incidental to their general activity. Charities are exempt from registering as long as they do not receive payment for making communications from the person upon whose behalf they are made.

Following concerns from MPs, Schedule 1 para 5 makes clear that payment for consultant lobbying does not include salaries or allowances paid to MPs and peers. This does not mean that these representatives cannot be consultant lobbyists, simply that the mere fact of receiving these payments is not enough on its own to qualify them. The Registrar attempted clarification in February 2015, stating:

Although the Lobbying Act is not specific on this point, my view is that serving MPs and members of the House of Lords in the context of their normal duties would not be required to register. But if they undertook activities outside their normal duties which might be defined by the act as consultant lobbying, and where other exemptions such as VAT registration did not apply, they would be required to register.

She would expect MPs to register meetings with ministers under the Act when they knew they were lobbying on behalf of a paid client, and were not otherwise exempt.

Section 3 establishes a registrar of consultant lobbyists and Schedule 2 sets out the details of the appointment and the powers of the new official. The registrar is an independent statutory office holder, not an Officer of Parliament such as the parliamentary ombudsman or Comptroller and Auditor General. The maximum term of office is four years, and the registrar can be dismissed if unfit to fulfill the functions of the office. There is no parliamentary involvement in appointment or dismissal. Former Ministers or permanent secretaries, or consultant lobbyists are ineligible until five years have elapsed since they left office or employment. There can be up to two re-appointments, for a maximum of three years each. Civil servants are to be seconded to the registrar, who is made subject to the parliamentary ombudsman, and public records and freedom of information legislation.

The Act creates both civil and criminal liability for falling foul of the registration requirements. It is envisaged that civil sanctions would be used where there are less serious cases of non-compliance, such as administrative oversight. The maximum civil penalty which can be levied is £7000.

The registration scheme is meant to be self-financing. According to the Explanatory Notes to the Bill, the fees were likely to be £200 – £450 per year. In fact, the 2015 fee was set at £750.

The post of Registrar was first advertised in May 2014 and re-advertised in August 2014 at an increased daily rate of £420 on the expectation that the post would warrant 30 to 50 days a year and then the time commitment would decline. The Select Committee on Political and Constitutional Reform held a pre appointment hearing in September 2014 which expressed some disappointment with the preferred candidate Alison White, an ex-commercial director of Royal Mail who lacked detailed knowledge of the lobbying industry, potential deficiencies in the Act, as well as knowledge of Parliament. The Committee expressed annoyance that the Government had given it just one day’s notice of the pre-appointment hearing.

The Act is likely to be the opening part of a larger drama leading to more widespread regulation. Effective regulation requires detailed rules, extensive training and prompt enforcement when rules are breached. Appropriate resources and a culture change are essential to achieve this outcome. Yet the UK has not yet come to a conclusion as to whether a heavily regulated system is the correct outcome, since there would be further reputational damage to its legislature when wrongdoing is exposed.

Oonagh Gay, former head of the Parliament and Constitution Centre, House of Commons Library. A longer version will appear in Parliament: Legislation and Accountability, eds Alexander Horne and Andrew Le Sueur, to be published by Hart in May 2016.

(Suggested citation: O. Gay, ‘Regulating Lobbyists: A New Dawn?’ UK Const. L. Blog (2 Sept 2015) (available at https://ukconstitutionallaw.org/))