Public Affairs industry’s Clause 4 moment


This is an article by Nick Reach.
You could write for Behind the Spin too. Find out how here.

Recent quarrels over APPC membership show a young industry coming of age. Nick Reach argues that the industry must work hard to repair the damage or risk tougher Government regulation.

On 17 May 2007 John Grogan MP (Labour, Selby) tabled an Early Day Motion (EDM) which could have the most profound effect on the public affairs industry since John Major established the Nolan Commission.

The EDM is part of a wider campaign by the Association of Professional Political Consultants (APPC) – with Grogan as their front man – to pressurise non-member agencies into joining.

hp4 Grogan fired a shot across the bow of non-member firms on the APPC’s behalf. Grogan’s EDM neatly summarises the essence of the debate between the APPC and non-member firms that raged throughout 2007 and continues into 2008.

At first glance the EDM endorses the role that public affairs firms play in British democracy. But it is the latter part of the text which has seen the APPC and some non-member firms at each other’s throats.

It calls for “all public bodies and private firms” tendering public affairs contracts to insert clauses into their agreements with public affairs consultancies that insist they adhere to the APPC’s code of conduct.

By implication, they must become members of that organisation. And it is this refusal to join the APPC – often for quite legitimate commercial reasons – that has led to conflict within the industry.

APPC and disclosure

The APPC is a self-regulatory body for the public affairs industry. It was set up in 1994 by five public affairs agencies against the backdrop of the cash-for-questions scandal.

It has its own code of conduct, the central tenet of which is clause 18. This requires consultancies to disclose the names of all their clients in the APPC’s published register. This client disclosure clause has formed the biggest obstacle to joining for some non-members.

Confidentiality

So, why is the clause so contentious and why has it prevented some of Britain’s most long-established and successful public affairs firms from joining the APPC?

Client disclosure could breach confidentiality agreements between public affairs firms and their clients. Lord Bell, whose firm Bell Pottinger Pubic Affairs refuses to join the APPC, said that his agencies were unable to sign up to APPC or Public Relations Consultants Association (PRCA) codes due to “confidentiality clauses in some of our client contracts with government and public bodies – normally because of national or personal security issues” (PRWeek, 24 August 2007).

Bell’s reference to security issues is not as far-fetched as it at first seems. He advises Boris Berezovsky, the exiled Russian business tycoon, who has survived several attempts on his life.

The Public Administration Select Committee (PASC) set up an inquiry into lobbying, after Grogan and the APPC highlighted the issue. The inquiry has already held several evidence sessions and continues this year.

Big Ben The Committee called three MPs at its first evidence session: John Grogan, Peter Luff and Stephen Pound. Defending the position of non-members, Luff used a persuasive example from his own days as a lobbyist.

He described a foreign insurance company that wanted him to promote the idea in Parliament that it would be acceptable for it to take over a British firm. Luff advised the company that a campaign would not be necessary and the firm went ahead with the acquisition without public affairs support.

If he had been required to declare the insurance firm as a client it would have been a breach of Stock Exchange rules around mergers and acquisitions.

Confidentiality is clearly a central ingredient in building trusting business relationships. Irreparable damage would be caused to some client-consultant relationships if the law required public affairs firms to disclose the names of their clients.

Closed shop

By attempting to force non-members to join, there is a risk that the APPC will create a ‘closed shop’ in the industry. That is to say, access to Parliament could become restricted if organisations tendering public affairs contracts were required to employ only APPC members.

The implications for democracy of an outside body having such a high degree of control over access to Parliament are of serious concern. Parliament should control access to Parliament.

Law firm DLA Piper, which has a lobbying arm, made a formal complaint to the Office of Fair Trading (OFT) that the APPC was in breach of the 1988 Competition Act by trying to force public sector bodies to work exclusively with its members. The Law Society backed this complaint.

The OFT closed the case in November 2007 after the APPC backed down from its position requiring that those contracting public affairs services should only deal with its members.

A set of ‘guiding principles’ was then formulated by the APPC, in association with the CIPR and the Public Relations Consultants Association (PRCA), which fell short of requiring agencies to disclose their client lists.

Storm in a teacup

“In making representations to the institutions of government, political consultants must be open in disclosing the identity of their clients and must not misrepresent their interests,” states clause 4 of the APPC’s code of conduct.

This clause effectively addresses the issue of openness and transparency in the industry, requiring lobbyists to be open about who they’re representing when presenting a client’s case to decision-makers.

Clause 4 makes the disclosure clause (clause 18) redundant. Ironically, not clause 4 but clause 18 is the source of argument between the APPC and some non-member firms.

Clause 4 deals perfectly well with the issue of transparency – something that the APPC and John Grogan have overlooked.

If the APPC were to remove the client disclosure clause, they would remove a barrier preventing some firms from joining.

Hypocrisy

Non-APPC members are entitled to a different interpretation of transparency. An unfortunate consequence of the debate is the growing misconception that APPC members automatically adhere to their own standards. They do not.

The case of Edelman and Burson-Marsteller, who were called to appear before the APPC’s management committee in October last year, is evidence of this.

The agencies were accused of not registering clients with the APPC. The Sunday Times and The Observer rumbled the agencies on the eve of the Labour Party conference. Both firms were let off the hook.

Burson-Marsteller successfully argued that they hadn’t undertaken public affairs work for the client in question. Edelman admitted its error and apologised. Ironically, Edelman’s European Vice-President Michael Burrell is a former APPC chair.

Looking ahead

As the industry awaits the PASC’s report, it must try to find a way forward without doing any further damage to itself.

The APPC must surely regret the aggressive stance it has taken toward non-members. The resulting PASC enquiry is likely to mean tougher regulation for the industry. Select committees rarely support the status quo.

Although the APPC is seriously misguided in sticking to the disclosure clause as a condition of membership, it is unlikely that it set out to create a ‘closed shop’ or anti-competitive situation.

However, this would be the result if APPC membership were made a condition for those bidding for public affairs contracts.

The exclusion of non-APPC agencies would give a commercial advantage to members. But this would be an unintentional side effect rather than a purposeful move by the APPC to increase its members’ market share.

The squabbles over APPC membership reflect an industry coming of age, trying to find a unified voice. CIPR past president Lionel Zetter described the current system of self-regulation as “broadly effective” – it is.

Nevertheless, the industry must act fast to come to some kind of collective agreement. The ‘guiding principles’ are a step in the right direction. Now the industry must get its house in order before the other House does the job for it.

EDM 1509 – Public Affairs Firms and Transparency – 15.05.2007

Grogan, John

That this House believes that public affairs firms have a key role to play in articulating the point of view of business, charities, trade unions and public bodies to Government and Parliament; believes that political lobbying must always be open and transparent; welcomes in this regard the codes of the Association of Professional Political Consultants (APPC) and Public Relations Consultants Association (PRCA), which insist that public affairs firms publish the names of all clients and do not make payments to hon. Members and Peers; notes that the APPC register is easily accessible on that Association’s website and calls on the PRCA to adopt a similar practice; applauds the decision of Thames Gateway London Partnership to insist that agencies bidding for their public affairs contract must adhere to the ethical codes of the APPC; and calls on all public bodies and private firms to insert a similar clause in all lobbying contracts.

Early Day Motions

Early day motions (EDMs) are formal motions submitted for debate in the House of Commons. However, very few EDMs are actually debated. Instead, they are used for reasons such as publicising the views of individual MPs, drawing attention to specific events or campaigns, and demonstrating the extent of parliamentary support for a particular cause or point of view.

Photo credit: Joe Swan

Leave a comment