Shortcomings in the way public bodies manage civil servants' conflicts of interest mean there is a risk that government decision-making is not always objective, a new report from the National Audit Office has warned.
Conflicts of interest arise when officials' personal relationships or external business activities affect work in their main job – or create a perception that an influence is present.
The Cabinet Office issued new guidance on conflicts of interest in 2022, in the wake of Nigel Boardman's reports on the Greensill scandal and concerns about NHS procurement in the early months of the Covid-19 pandemic. But the NAO says that a lack of central management for the guidance means there is not a consistent approach.
Departmental bodies – including ministerial departments, non-ministerial departments and executive agencies – must have policies that comply with the guidance, titled Declaration and management of outside interests in the civil service. Non-departmental public bodies are encouraged to have their own policies.
The NAO said the government had not sought to manage the rollout of the new guidance, and that its research – which included a detailed look at how six public bodies manage conflicts of interest in their organisation – was the first evaluation of how effective practice currently is. The watchdog also surveyed 35 other public bodies on their conflicts-of-interest work.
It said that 71% of the public bodies surveyed for the report stated that they had improved their systems for managing conflicts following the publication of the 2022 guidance.
The NAO said that 91% of the surveyed organisations now require senior staff to annually declare conflicts in line with the Cabinet Office guidance, but only 40% had extended the requirement to all staff. The figures for departmental public bodies were 96% and 36% respectively.
Nevertheless, the NAO said in most organisations the requirement for staff to declare their interests was "undermined" by a lack of data on rates of compliance.
The survey showed that 71% of organisations lacked management information on compliance, while of the five bodies that required all staff to complete a declaration and who were able to share management information, only one could demonstrate 100% compliance.
The NAO said that not all public bodies offered training to staff on declaring and managing conflicts of interest and noted that there is no core offer available to all civil servants.
It said officials were aware of the shortcomings in their systems and that many public bodies lacked central registers, proper records, data on compliance, and checks that mitigations work.
The report concludes that while there are well-established systems in place to manage ministerial conflicts of interest, many public bodies do not have effective systems for managing risks related to civil servants and other public officials.
"Public bodies take inconsistent approaches to who needs to make a declaration and what this should include, and compliance with policies is variable and often not recorded," it finds.
"The government therefore exposes itself to the risk that unmanaged and unmitigated conflicts are on occasion influencing the objectivity of its operations. This makes it difficult for the government to be sure that it is always acting with propriety and making decisions that are in the public interest."
The report says the Cabinet Office should set a clear minimum standard for the governance, systems and processes that it expects departmental public bodies to put in place – and that non-departmental public bodies should bear this standard in mind as they design their policies.
It adds that the Cabinet Office should also support the creation of a temporary "good practice forum" for public bodies to build networks and learn from each other as they put the minimum standard in place – with input from the Government Internal Audit Agency.
NAO head Gareth Davies said it was clear that the government's work on propriety was far from done-and-dusted.
"Despite improvements in its systems for managing conflicts of interest, government has more to do to ensure full coverage of the civil service and other public officials and consistent implementation of the required controls," he said.
Sir Geoffrey Clifton-Brown, chair of parliament's Public Accounts Committee, said all public bodies should have effective systems in place to manage conflicts of interest – and the NAO report showed it was "clearly not the case".
"Most people would take for granted that public bodies have central registers of interests in the same way as other professions," he said. "Government must take addressing these shortfalls seriously or else it risks undermining the objectivity of its operations."
A government spokesperson said: "We are pleased that NAO’s report highlights that 71% of the public bodies have improved their processes for managing conflicts of interest since 2022.
"We are committed to restoring public confidence in government to further ensure that all those in public service are held to the highest standards. We thank the NAO for their recommendations, which we will consider carefully."
In addition to today's report, the NAO has published a good-practice guide on managing conflicts of interest.