Labour wants inquiry into why Johnny Mercer did not resign from role at training firm

This article is more than 1 year old

This article is more than 1 year old

Johnny Mercer, the minister for military personnel and veterans, has been accused of a potential breach of the ministerial code by failing to step down from a second job, worth £85,000 a year, while in government.

Labour has asked Sir Mark Sedwill, the cabinet secretary, to investigate why the minister maintained a paid directorship in Crucial Academy Ltd, which retrains former military personnel.

His directorship in the firm was disclosed by the Guardian on Thursday. Mercer resigned from the position in the Brighton-based company on Friday, having earned more than £11,500 while also being paid as a minister.

The ministerial code states that ministers must “scrupulously avoid any danger of an actual or perceived conflict of interest” between their position and their private financial interests.

“They should be guided by the general principle that they should either dispose of the interest giving rise to the conflict or take alternative steps to prevent it,” the code reads.

Labour’s deputy leader, Tom Watson, and shadow defence secretary, Nia Griffith, sent the letter to Sedwill on Friday morning, before Mercer’s resignation was disclosed. They have asked Sedwill to investigate to ensure that the code has been adhered to.

“Mr Mercer’s register of interests lists that he received £85,000 per annum for 20 hours work per month in this role. Mr Mercer was subsequently made minister for military personnel and veterans in the Ministry of Defence on 28 July 2019.

“It has now been 60 days since Mr Mercer’s appointment as a government minister.

“We hope you can investigate this matter to provide assurances that … there has not been a breach of the ministerial code,” they wrote.

Mercer was appointed as a defence minister in July. At the time he told the Plymouth Herald that he would step down from Crucial because “it is well known that those who are appointed to the government have to give up employment interests elsewhere”.

Crucial Academy received tens of thousands of pounds from the same government fund that funded a close associate of Boris Johnson.

Grants given by the cybersecurity immediate impact fund are being reviewed after it emerged that Jennifer Arcuri’s company Hacker House was awarded £100,000 earlier this year.

Watson, who is also the shadow culture secretary, has demanded the review should include a payment of £68,424 given to Crucial Academy Ltd.

The firm is ultimately funded by Surge Financial, which was paid for marketing a failed bond scheme, that lost thousands of savers £236m.

Paul Careless, the owner of Surge Financial, was arrested in June by officers investigating the collapse of London Capital & Finance.

Mercer, a former army officer, stood down as a non-executive director at Crucial earlier this year. He was appointed as an executive director on the same salary in June.

On Thursday, Mercer said he would be stepping down from Crucial after discussing the job “just this week with the permanent secretary in the Ministry of Defence”.

According to Companies House records, Mercer resigned his directorship on 27 September 2019, the same week the MP for Plymouth Moor View was found in breach of parliamentary rules by failing to declare he co-owns a consultancy firm with his wife.

In January, Mercer was ordered to repay more than £900 after an investigation into his expenses by the MPs’ expenses watchdog, Ipsa.

Mercer has not responded on Friday to the Guardian, but he told the Plymouth Herald that any severance pay he receives from Crucial Academy is a “private matter”.

“On arrival in the department I immediately sought advice on how to [step down from Crucial Academy] without detrimentally affecting a very good Academy I am proud to have had a role in.

“I discussed that advice just this week with the permanent secretary in the Ministry of Defence, and am facilitating an exit from that company in good order, under guidance from the Cabinet Office,” he said.

A statement from the Cabinet Office said the minister was aware of the requirements of the ministerial code and would be adhering to them, including in relation to his financial interests.

A spokesman for Crucial Academy said due process was followed on all grant applications.