Leading Article: Bull market for civil servants

WHO KNOWS how to run a prison? The answer must be: not many people outside the Prison Service and the department that controls it, the Home Office. So if the Government decides to privatise part of the service, some experienced officials and prison governors are likely to be in demand from private-sector companies tendering for the contracts. That, as we report today, is what has happened: several officials have resigned to join a security company that has been awarded the only contract to date and is in the running for others. One of the officials was involved in laying down the criteria by which the bids were assessed.

In a field new to privatisation, expertise is clearly desirable. But the transfers leave a less than wholesome taste in the mouth. And so it has always been when civil servants depart for more lucrative employment in companies or sectors with which they may have had official dealings. There are, of course, guidelines, but these are voluntary rather than mandatory, and there are no known sanctions if they are ignored: according to the Cabinet Office, this has never happened.

One aim is to ensure that the advice and decisions of serving officials are not influenced by the hope or expectation of employment with an outside firm or organisation affected by them. Another is to prevent a firm from gaining an unfair advantage by employing someone who has technical information that a competitor might regard as a trade secret. For junior officials, approval for a move has to be sought from heads of department; for more senior staff, from the Cabinet Office; and at the top level from an advisory committee on business appointments, composed of the 'great and good' from outside Whitehall. In the case of senior ambassadors, the Secretary of State is consulted. A delay of up to two years - for sensitive information to lose its value - can be recommended.

A certain cross-pollination between the civil service and the private sector can only benefit both, as has been widely recognised. In reality, it tends to be largely one way. In 1988, the Inland Revenue lost 260 inspectors, mainly to accountancy firms. On retirement at 60, senior diplomats often pick up directorships from companies in countries where, as ambassadors, they wined and dined those most useful to know.

The most questionable instances have involved the Ministry of Defence and companies on the receiving end of huge defence contracts. Sir Peter Levene, himself an arms manufacturer, was brought in as head of procurement in 1985 to introduce discipline where laxness had prevailed. Sir Peter is now the Prime Minister's adviser on efficiency, working closely with the head of the home civil service, Sir Robin Butler. With the Government anxious to increase the contracting-out or privatising of services, more and more civil servants will find their market value rising. Sir Peter and Sir Robin should examine whether the present guidelines should not be made mandatory and applied more firmly.