Leading Article: Public interest, private actions

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THE NEWS that Sir Duncan Nichol, the National Health Service's chief executive until earlier this year, is to join the board of Bupa, has elicited ill-judged reactions from both Government and Opposition. Labour's health spokesman, David Blunkett, saw in Sir Duncan's move to Britain's largest private health care organisation evidence that the Government is 'blurring the distinction between a public NHS and the private health sector'. Tom Sackville, a junior health minister, replied that the appointment 'is a matter for Bupa and for Sir Duncan'.

Both are wrong. Sir Duncan's new job says nothing about the broad sweep of future policy in the health service; but it raises questions about how and when civil servants and politicians should be allowed to take related jobs in the private sector.

Two competing public interests need to be balanced. One is the need to avoid abuse, either when public servants' decisions are influenced by their future job prospects, or when hiring them gives a private firm an unfair edge over its competitors or the taxpayer. The other is the need to encourage a flow of managerial talent between private firms and government - which will be hampered if public servants are banned from taking private jobs altogether or forced into unrealistically long 'quarantine' periods.

The problem arises in other countries as well as in Britain, and attitudes to it vary widely. In the United States, years of abuse of the 'revolving door' have prompted President Clinton to demand a five-year quarantine period for certain departing public servants moving into lobbying jobs. In France, by contrast, it has long been accepted that 100 or so people of the country's elite move smoothly between government and business. Japan has its system of amakudari, or descent from heaven, in which senior civil servants retire to lucrative directorships in the very companies they used to regulate while in power. This system is now under scrutiny, along with many other traditions of Japanese governance.

In theory, the United Kingdom has clear rules. A 46-paragraph set of guidelines gives the prime minister the right to scrutinise top civil servants' acceptance of business appointments. Advised by an independent committee, he or she may ban an individual from accepting an appointment altogether, may impose conditions, or may demand that the appointment be postponed. Yet the very publicity surrounding the Nichol case shows that the system has failed in its aim to avoid even the suspicion of impropriety.

The problem has arisen because of a lack of openness. Neither Downing Street nor the Cabinet Office has revealed whether the former NHS chief executive was asked for or gave any undertakings to avoid the appearance of impropriety. At first sight, there are grounds for believing that he should have done, since Bupa sells its services to NHS hospitals that are trying to reduce their waiting lists. But outsiders cannot know for sure whether the private undertaking Sir Duncan has apparently given to stay aloof from negotiations between Bupa and the NHS for two years will ensure he cannot put his inside knowledge of the health service to improper use.

Since the circumstances of individual civil servants and private-sector jobs vary so greatly, it would be unwise to try to treat all cases identically. Yet the system could be made to work better. The committee, rather than the prime minister, should have the last word, and its minutes should be open to public scrutiny. Private citizens and business competitors should be allowed to make representations before appointments are formally approved. And the rules, currently non-binding, should be written into civil service contracts so that they have legal force.