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The latest in a line of reports by the Committee on Standards in Public Life says there has been little real progress on measures to reinforce ethical standards in outsourced public services and calls for a consultation on whether the Freedom of Information Act should apply to private sector providers where information relates to the performance of a public service contract.

Publishing its 2018 progress report today, Lord Bew, Chair of the Committee on Standards in Public Life, said:

From waste disposal to health care and probation services, all kinds of public services are routinely supplied to many of us by private or voluntary sector organisations, paid for with public funds – accounting for almost one third of government spending in 2017.

The public is clear that they expect common ethical standards – whoever is delivering the service – and that when things go wrong there is transparency and accountability about what has happened.

Our report in 2014 looked at departmental commissioning activity and the ethical standards of service providers and made a number of important and straightforward recommendations to enhance the government’s capability to commission services from providers who focus on high ethical standards in service delivery.

Today’s report shows that, disappointingly, very little progress has been made on implementing these recommendations and evidence shows that most service providers need to do more to demonstrate best practice in ethical standards.

In particular, we remain concerned over the lack of internal governance and leadership on ethical standards in those departments with significant public service contracts. Departmental and management boards spend little, if any, time considering ethical considerations and tend to delegate such issues ‘down the line’. Those involved in commissioning and auditing contracts remain too focused on the quantitative rather than the qualitative aspects of their role. And departments lack clear lines of accountability when contracts fail.

While many service providers have developed a greater awareness of their ethical obligations in recent years, partly due to the high-profile failure of some organisations to adhere to these standards, some remain dismissive of the Nolan Principles or adopt a ‘pick and mix’ approach, which is not in the public interest. And many service providers continue to expect that setting and enforcing ethical standards remain a matter for government alone.

The Committee remains of the view that more must be done to encourage strong and robust cultures of ethical behaviour in those delivering public services. To that end, the Committee reaffirms the recommendations made in its 2014 report and has made a further set of more detailed, follow-up recommendations to address particular issues of concern.

In particular, the Committee calls for service providers to recognise that the Nolan Principles apply to them, for greater moral courage among key financial and other professionals in securing and maintaining high ethical standards, and for consultation on the extension of the application of the Freedom of Information Act to private sector providers where information relates to the performance of a contract with government for the delivery of public services.

Following the corporate failures of a number of the biggest providers of services to government since 2013,
including the devastating collapse of Carillion early in 2018, it is now essential that the government confirm their expectations of ethical standards among those who deliver services with public money.”

The report can be downloaded online.

Notes to Editors: Interview requests and media enquiries should go to Maggie O’Boyle on 07880 740627. You can follow the Committee on twitter @PublicStandards.

1. The independent Committee on Standards in Public Life advises the Prime Minister on ethical standards across the whole of public life in the UK. It monitors and reports on issues relating to the standards of conduct of all public office holders.
2. To find out more about the Committee’s work go to the Committee on Standards in Public Life’s website
3. The Committee on Standards in Public Life was established in October 1994 with the following terms of reference: “To examine current concerns about standards of conduct of all holders of public office, including arrangements relating to financial and commercial activities, and make recommendations as to any changes in present arrangements which might be required to ensure the highest standards of propriety in public life.” Additional terms of reference were announced on 12 November 1997: “To review issues in relation to the funding of political parties, and to make recommendations as to any changes in present arrangements.” On 5 February 2013 the terms of reference were clarified by the Government in two respects: ‘…in future the Committee should not inquire into matters relating to the devolved legislatures and governments except with the agreement of those bodies’ and ‘…the Committee’s remit to examine “standards of conduct of all holders of public office” [encompasses For] all those involved in the delivery of public services, not solely those appointed or elected to public office.’ Hansard (HC), 5 February 2013, Col 7WS .The Committee’s terms of reference were further clarified in a House of Lords written Parliamentary Question on 28th February 2013 to explain that the Committee’s remit means it “can examine issues relating to the ethical standards of the delivery of public services by private and voluntary sector organisations, paid for by public funds, even where those delivering the services have not been appointed or elected to public office.” Hansard (HL) Column WA347.
4. The members of the Committee for this report are: Lord (Paul) Bew, Chairman, Rt Hon Dame Margaret Beckett DBE MP (Labour), Sheila Drew Smith OBE, Simon Hart MP (Conservative), Dr Jane Martin CBE, Dame Shirley Pearce OBE, Jane Ramsey, Monisha Shah, Rt Hon Lord (Andrew) Stunell OBE (Liberal Democrat) and Richard Thomas CBE. Richard Thomas CBE finished his 5-year term in office in May 2017. Sheila Drew Smith OBE, who led on this series of reports, finished her 5-year term of office in February 2018.

Dean Jacobs, 29 of Birmingham, was the sole director of L & H Construction Limited, a specialist recruitment company helping people in the mechanical and electrical industries find new work.

But after trading for a little over two and a half years, the business ran into difficulties and L & H Construction entered into administration on 4 January 2017 after HMRC presented a winding up petition for an outstanding tax bill. Upon administration, L & H Construction owed creditors close to £800,000.

Insolvency practitioners were brought in to deal with the administration but Dean Jacobs failed to cooperate with their investigations.

Administrators were then made aware that L & H Construction was awarded an insurance settlement and when asked where the money had gone, Dean Jacobs could not provide any explanation of what he did with the funds.

Further investigations by the Insolvency Service found that despite being fully aware that L & H Construction had stopped trading and owed money to creditors, Dean Jacobs diverted £60,000 from an insurance settlement straight into his personal bank account.

As a result, on 16 April 2018 the Secretary of State accepted a disqualification undertaking from Dean Jacobs. The ban became effective from 7 May 2018 and he is now banned from directly or indirectly becoming involved, without the permission of the court, in the promotion, formation or management of a company for 10 years.

Susan MacLeod, Chief Investigator of Insolvent Investigations, Midlands & West at the Insolvency Service, said:

Dean Jacobs put his own interests ahead of the company’s creditors and the timing of the funds he took from the insurance settlement showed a cynical disregard to those creditors.

Directors who put their own personal financial interest above those of creditors damage business confidence. We will take action against directors who do not take their duties seriously and abuse their position and they will therefore lose the privilege of limited liability trading.

Notes to editors

Dean Jacobs date of birth is February 1989 and he is known to have resided in Birmingham.

L & H Construction Limited (CRO No.09278805) was incorporated on 24 October 2014 and traded from Birmingham as a provider of specialist recruitment in the mechanical and electrical industry.

Dean Jacobs was the sole registered director from 25 October 2015 until the company went into administration on 4 January 2017. The estimated deficiency as regards creditors and shareholders was £799,361.

On 16 April 2018 the Secretary of State accepted a Disqualification Undertaking from Dean Jacobs, effective from 07 May 2018, for a period of 10 years. The matters of unfitness that were accepted were that:

On/after 06 December 2016, Dean Jacobs caused an insurance settlement due to L & H Construction Limited in the sum of £60,000 to be paid into his own personal bank account at a time when he knew L&H was insolvent and as a result creditors suffered a loss.

Disqualification

A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot:

• act as a director of a company
• take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
• be a receiver of a company’s property

Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.

Persons subject to a disqualification order are bound by a range of other restrictions.

The Insolvency Service (England and Wales)

The Insolvency Service, an executive agency sponsored by the Department for Business, Energy and Industrial Strategy (BEIS), administers the insolvency regime, and aims to deliver and promote a range of investigation and enforcement activities both civil and criminal in nature, to support fair and open markets. We do this by effectively enforcing the statutory company and insolvency regimes, maintaining public confidence in those regimes and reducing the harm caused to victims of fraudulent activity and to the business community, including dealing with the disqualification of directors in corporate failures.

BEIS’ mission is to build a dynamic and competitive UK economy that works for all, in particular by creating the conditions for business success and promoting an open global economy. The Criminal Investigations and Prosecutions team contributes to this aim by taking action to deter fraud and to regulate the market. They investigate and prosecute a range of offences, primarily relating to personal or company insolvencies.

The agency also authorises and regulates the insolvency profession, assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees, provides banking and investment services for bankruptcy and liquidation estate funds and advises ministers and other government departments on insolvency law and practice.

Further information about the work of the Insolvency Service, and how to complain about financial misconduct, is available.

Contact Press Office

Media enquiries for this press release – 020 7596 6187 or 020 7637 6498

You can also follow the Insolvency Service on:

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• LinkedIn
• YouTube

World-class export finance offer

Speaking at today’s (Wednesday 9 May) UK Trade and Export Finance Forum, Minister of State for Trade and Export Promotion, Baroness Fairhead set out the government’s plans to put a world-class export finance offer at the heart of UK trade through UK Export Finance (UKEF).

Ahead of the publication of the Export Strategy, which will outline the government’s vision to boost UK exports, Baroness Fairhead pledged to help more UK businesses access UKEF-backed finance, particularly SMEs and companies that supply to exporters but do not yet export themselves, in order to grow their business.

Baroness Fairhead, Minister of State for Trade and Export Promotion, said:

In UKEF, the UK’s exporters have a world-class export credit agency that can provide innovative, flexible finance and insurance to help them realise their full exporting potential.

Our Export Strategy will specifically aim to make more businesses aware of UKEF’s products and services, helping them to access new opportunities overseas and grow their businesses through exporting.

The draw of UKEF support

Baroness Fairhead also announced the government’s ambitions to generate more business for UK companies through UKEF. Using the draw of UKEF support for major international projects, the government will significantly increase the contribution of UK goods and services suppliers to major projects around the world – an approach that is already creating hundreds of millions of pounds of opportunities for UK exporters.

Baroness Fairhead committed to a review of UKEF’s product suite, to ensure UKEF’s support remains comprehensive and relevant to market needs.

Baroness Fairhead said:

That’s my call to you today. We want to build our Export Strategy with you; and together with you, we can build a nation of exporters.

Baroness Fairhead spoke at the day-long forum, following a speech from International Trade Secretary, Dr Liam Fox MP, who earlier announced an agreement between UKEF and Atkins International, a world-leader in international project management and engineering projects, to grow its UK supply chain and boost UK exports, as well as UKEF support for the Dubai World Trade Centre.

The event included talks and panel discussions from John Mahon, the newly-appointed Director General for Exports at the Department for International Trade; Antonia Romeo, Permanent Secretary of the Department for International Trade; Louis Taylor, CEO of UK Export Finance; Baroness Northover, HM Trade Envoy for Angola and Zambia; and Baroness Nicholson, HM Trade Envoy for Iraq, Kazakhstan and Turkmenistan; senior representatives from multinational companies General Electric and Bechtel; and the CEO of Scottish bus manufacturer and major UK exporter Alexander Dennis.

The Export Strategy will build on the government’s Industrial Strategy, published last November, which set out a long-term plan to boost the productivity and earning power of people throughout the UK.

Background

This year UKEF has increased – and in many cases, doubled – its financial capacity to support exports to over 100 markets around the world, as the UK seeks to enforce its position as a leading player in the global market, and make world-leading UK expertise, products and services accessible to buyers around the world.

In 2017, UKEF was awarded ‘best export credit agency’ by Global Trade Review and Trade Finance magazines.