Jack Newman and Matthew Smith
The first scandal that really shook the Johnson government, and which started something of a cascade that eventually led to his downfall, was the ‘Owen Patterson scandal’ of late 2021. The scandal initially arose because Conservative MP Owen Patterson used his parliamentary position to lobby for two companies from which he’d received over £10k as a consultant. Although the real scandal erupted because the government attempted to change the rules to protect him, the question of MPs’ ‘second jobs’ rose to the top of the news agenda. Across the media, debates raged about the circumstances in which it was right for MPs to hold second jobs, with some arguing second jobs brought diverse experience into parliament, and others arguing that they were detrimental to the integrity of democracy. On both sides, it was an oft-repeated refrain that MPs are usually “far too busy” to be holding any other employment. An Ipsos-Mori poll at the time found almost two-thirds of people agree with the statement that “MPs are paid to work full time for their constituents and to serve the country and they therefore should not have time to do other jobs as well” (Ipsos-Mori, 2021).
Questions about elected representatives holding outside interests have been addressed in various ways in the academic literature. Often referred to as ‘moonlighting’, this practice has been scrutinised by academics, who investigate whether it leads to decreased parliamentary activity. In Italy, Gagliarducci et al (2010: 689) show that “politicians with higher outside income are less committed to parliamentary activity in terms of voting attendance”, and Arnold et al (2014) find similar results in Germany. In Ireland, Baturo and Arlow (2018) show that, after leaving office, one in ten Irish TDs (MPs) “engage in consulting, lobbying or board membership”, suggesting that MPs’ second jobs may be stepping stones to future employment. These studies tend to ‘follow the money’, looking at payments that MPs have formally received, and compare these to their parliamentary activity.
In our forthcoming paper, which we presented to the PSA Parliaments Conference 2022, we look at this phenomenon in the UK parliament, asking whether outside interests potentially make MPs ‘too busy to serve’. Rather than focus on the money officially declared in the register of interests, we focus instead on the position of MPs within ‘corporate networks’. To gather our data, we located all 650 MPs within the Companies House database, identifying all the firms on which they sit as company directors. We then look at all the other directors of these companies, and all the other roles held by those directors, and then all the directors of those companies. This gives us a vast network of interconnected companies, what Mizruchi (1996) calls ‘director interlocks’ and what is widely described as ‘the corporate network’.
There is a lot of existing research that seeks to understand this corporate network. Some research suggests that when companies are linked through shared directors, there are significant benefits in terms of access to knowledge, information, and advice (Pfeffer and Salancik, 1978; Sarabi et al., 2021). This backs up those who, during the Owen Patterson debate, argued that MPs’ second jobs are beneficial to parliament because they bring in diverse experience. However, other research raises concerns about a ‘corporate elite’ or ‘inner circle’ (Useem 1986) within which there is actually very little diversity (Heemskerk and Fennema 2009). There is also a very important strand of research showing that directors who hold lots of directorships, known as ‘busy directors’, are actually associated with weak corporate governance and have a negative impact on firm performance (Sarabi and Smith, 2021; Kaczmarek, Kimino and Pye, 2014; Ferris, Liao and Tamm, 2018; Fich and Shivdasani, 2012; Cooper and Uzun, 2012; Méndez, Pathan and García, 2015).
So, when MPs act as company directors, all this existing literature on the corporate network can help us understand the implications for parliament. The question is whether the positions that MPs hold in these corporate networks make them ‘too busy to serve’, as was argued by commentators during last year’s second jobs debate, and as implied by the existing literature on busy directors. In order to answer this question, we measure the position of MPs within the corporate network and compare this to their parliamentary activity. Given the challenges of measuring parliamentary activity, we look at parliamentary questions as a proxy for this activity, basically assuming that MPs who ask more questions are more active in Parliament. We did also control for a range of other independent variables including age, gender, tenure in parliament, political party etc.
We then compared the parliamentary activity of each MP to their position within the corporate network. We found that MPs who hold a ‘brokerage’ role in the network, linking together otherwise unconnected companies and sub-networks, were more likely to ask questions in parliament. Because brokerage roles are usually associated with higher corporate opportunity and more important contributions to knowledge flows, we can suggest that MPs with higher levels of opportunity in the corporate network are more active in parliament. In contrast, we found that MPs who were deeply embedded in the corporate network, being connected to lots of other well-connected actors, were less likely to ask questions in Parliament. This suggests that MPs who are deeply embedded in highly networked groupings of ‘busy directors’ are less active in parliament, which could be because they are ‘too busy’ to serve effectively.
In order to develop a fuller understanding of the reasons behind these trends, further research will be needed. Our next step will be to expand the research in various ways, especially looking at the trends over a longer period of time and looking at larger corporate networks. We are also keen to try to draw a link between the sector of the companies where MPs sit as directors and the nature of their parliamentary contributions. We are particularly interested in the extent to which MPs are asking questions on topics that link to the work of those companies. All of this will require further data collection.
Overall, it is clear that an MPs outside interests do affect their parliamentary activity, and potentially in ways that limit the time they give to their parliamentary duties. In the public discourse, the debate will continue to rage about whether outside interests have a positive impact on parliament, and our forthcoming paper is only one contribution to that debate. But, given that the findings of our paper align with existing literature on the corporate network and with existing literature on political second jobs, it is increasingly clear that MPs’ outside interests are not unconnected from their parliamentary activity. The MPs’ code of conduct states that an MP “should not place themselves under any financial or other obligation to outside individuals or organisations that might influence them in the performance of their official duties”. The word ‘influence’ here leaves a lot of room for interpretation, but it is quite clear that patterns of behaviour in corporate networks do correlate with patterns of behaviour in parliament. At what point this constitutes an infringement of the ministerial code is a debate that will no doubt continue to run.