Elementary move for Clegg aide Neil Sherlock

The Lib Dem special adviser heads back to private sector

The Labour MP and shadow Cabinet Office minister Jon Trickett was seething. It had just emerged that Deputy Prime Minister Nick Clegg had spent £900,000 on special advisers after they had increased in number from three to 14.

This was, claimed Trickett, "total hypocrisy" after the Liberal Democrats had previously stated that special advisers should not be funded out of the public purse. One "spad" in particular provoked the ire of the MP for Hemsworth in West Yorkshire: Neil Sherlock, a former public and regulatory affairs partner at Big Four accountant KPMG who had donated £88,000 to the Lib Dems.

By the time the news of the salaries emerged, Sherlock was Clegg's trusted lieutenant for government relations, a key role that saw him act as a liaison to business. "Neil Sherlock should not be rewarded for his donations to the Liberal Democrats with a publicly funded job," fumed Trickett.

However, Clegg knew just how important the affable Sherlock was to his team. He was supposed to be with the Deputy PM for only 12 months, but at conference last year, Clegg persuaded Sherlock to stay on until after this month's Budget.

At a time when party grandee Lord Rennard has been accused of wandering hands and former environment secretary Chris Huhne faces jail over speeding points fraud, the departure comes at an unfortunate time for the Lib Dem leader.

However, it is understood that a return to the Big Four is on the cards, with suggestions that Sherlock is in negotiations with KPMG's rival, PreciewaterhouseCoopers.

The role is not clear, but someone with such political nous would be a timely hire for any of the biggest accountants at a time when they are under acute regulatory pressure. Last month, the Competition Commission revealed its interim findings into the audit market, which included recommendations to crack the domination of KPMG, PwC, Ernst & Young and Deloitte over the audit market.

The four look over the books of more than 95 per cent of FTSE 350 firms, work that is worth more than £800m in fees. Recommendations potentially include forcing listed firms to change their auditors every set number of years, having found that 31 per cent of FTSE 100 companies had used the same accountant for more than two decades.

And it seems the big firms are listening, with a number of major audits having recently changed hands, such as insurer RSA. Last week, it emerged that KPMG faces losing corporate Britain's most lucrative accounting contract, HSBC, which is running a pitch process for the first time since 1991.

PwC and Sherlock declined to confirm the talks, but the move makes sense. Sharp as a tack – Sherlock gained a first-class degree and was president of the Oxford Union – he worked with then-KPMG chairman Sir Michael Rake on regulatory reform of the accounting industry in the wake of the Enron scandal in 2001.

No doubt Clegg is worried about no longer having that big brain nearby, but it might have been difficult for Sherlock to stay anyway. His wife is Lady Parminter, who was asked to run the whistleblowing system for women to report any acts of sexual misconduct, formed as a result of the lurid claims made about Lord Rennard.

As a result, there were mutterings that as Lady Parminter's husband was a key aide to Clegg, that system could not be considered truly independent. The role was only temporary, but many political opponents thought this was yet another Lib Dem gaffe.

This Sherlock has surely deduced that he will have a quieter life back in the private sector.

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