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ALLOWANCES TO MEMBERS OF THE ASSEMBLY AND OFFICE HOLDERS BILL

EXPLANATORY AND FINANCIAL MEMORANDUM

INTRODUCTION

  1. This Explanatory and Financial Memorandum has been prepared by the Department of Finance and Personnel in order to assist the reader of the Bill and to help inform debate on it. It does not form part of the Bill and has not been endorsed by the Assembly.
  2. The Memorandum needs to be read in conjunction with the Bill. It is not, and is not meant to be, a comprehensive description of the Bill. Where a clause or part of a clause (or Schedule) does not seem to require any explanation or comment, none is given.

PURPOSE

  1. The purpose of this Bill is to make provision for the payment of allowances to persons who have been Members of the Northern Ireland Assembly or holders of offices mentioned in section 47(3)(a) of the Northern Ireland Act 1998.

BACKGROUND

  1. The Assembly as a matter of principle, and at the instigation of the Assembly Commission, has decided to adopt recommendations by the Senior Salaries Review Board (SSRB) in the area of salaries, allowances and pensions.
  2. The SSRB, inter alia, has recommended that:
    • a Resettlement Grant be payable, in respect of continuous service in the body, to any Member of the Scottish Parliament, the National Assembly for Wales or the Northern Ireland Assembly who, at a general election to that body, does not stand for re-election or who stands but is not re-elected; and that the formula used at Westminster to calculate the level of grant be adopted for each of the devolved bodies;
    • an Ill-health Retirement Grant be available, in respect of continuous service in that body, to a Member of the Scottish Parliament, the National Assembly for Wales or the Northern Ireland Assembly, who is obliged to resign because of ill - health;
    • the level of grant be equal to the level of Resettlement Grant which would otherwise be available were the Member to leave at a dissolution of the Parliament or Assembly and that a Member claiming an Ill-health Retirement Grant would not be eligible for a Resettlement Grant at the next election;
    • those in receipt of an additional salary in respect of any Office held in the Scottish Parliament, the National Assembly for Wales or the Northern Ireland Assembly who cease to hold that Office be entitled to a severance payment calculated in the same way as that available to Ministers and Office-Holders in the Westminster Parliament;
    • the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly make provision for a winding up allowance to ensure that Members who leave the Parliament or Assembly are able to cover agreed costs necessarily incurred in completing Parliamentary/Assembly or constituency business.

COMMENTARY ON CLAUSES

Clause 1: Resettlement allowance for members

This clause provides for a Member who either does not stand for re-election in a general election, or who is not re-elected, to be given a resettlement allowance to assist with the costs of adjusting to non-parliamentary life.

Subsection (2) defines the amount of allowance as being the relevant percentage of the Member's salary immediately before dissolution. The relevant percentage and the definition of salary are explained in subsection (3).

Subsection (3) and the Schedule - The salary to be used for the purposes of subsection (2) is the "salary as a member" (ie the salary determined by the Assembly for Members who are not office-holders, MPs or MEPs) immediately prior to dissolution or, in the case of dual mandate Members, their reduced salary. The relevant percentage of salary is set out in the Schedule and takes account of a Member's age and number of complete years of service. This gives a resettlement allowance varying, for example, between six months' pay for a Member standing down from the Assembly aged below 50, to one year's salary for a Member standing down between age 55 to 64 with 15 or more years' service.

Subsection (4) allows for service prior to the Bill coming into operation (including the period prior to devolution) to count in the calculation of complete years of service, starting with the date on which a Member first took his seat after the elections on 25 June 1998. A period of service can only count once in the calculation of a resettlement allowance, or indeed an ill-health retirement allowance under clause 2, so if someone has two separate spells as an Assembly Member, the first spell is disregarded in the calculation of resettlement allowance in respect of the second spell. Only complete years can be used in the formula and part-years must be disregarded. Disregarded part years may not be added to part years of service in any subsequent claim for a further resettlement or ill-health retirement allowance for the purposes of making a complete year.

Clause 2: Ill-health retirement allowance for members

Clause 2 provides for an Ill-health Retirement Allowance to be payable by the Assembly Commission to a Member who is obliged to leave the Assembly during its term or at its dissolution because of ill-health. The allowance is calculated using the same formula as the Resettlement Allowance which would otherwise be available were the Member to leave at a dissolution. A condition of payment of the Ill-health Allowance is that the Member is not entitled to the payment of a Resettlement Allowance. The allowance is only payable to those who cease to be a Member due to ill-health on or after devolution day.

Subsection (1) describes the category of Member who may apply to the Commission for the payment of an ill-health allowance. To be eligible to apply Members must be under 65 years of age when they resign their seat post-devolution on the grounds of ill-health.

Subsection (2) attaches certain conditions to the payment of allowance, the level of which is the same as that for a resettlement allowance under clause 1. The Commission must be satisfied that a Member does not intend to seek re-election, and ceasing to be a Member must be a direct consequence of ill-health which is such as would prevent him or her from performing adequately the duties of a Member. The sub-section also makes clear that Members cannot become entitled to an ill-health retirement allowance if they are eligible for a resettlement allowance under clause 1.

Subsection (3) makes it a requirement that an application for an allowance must be supported by medical evidence.

Subsection (4) gives discretion to the Assembly Commission to require an applicant for an ill-health retirement allowance to undergo a medical examination by a nominated practitioner and to either bear the cost of such an examination itself, or charge the applicant accordingly.

Clause 3: Allowances to persons ceasing to hold certain offices

Clause 3 provides for an allowance to be paid, in certain circumstances, to a Member who, post devolution, ceases to hold a qualifying office (as defined in Section 47(3)(a) of the Northern Ireland Act 1998) and who does not again become the holder of such an office within 3 weeks.

Subsection (1) describes the category of Member who is entitled to an allowance under this clause. Members must be under 65 years of age and must cease to hold a qualifying office. They would be ineligible for an allowance if they become the holder of a qualifying office within 3 weeks of the cessation. Members who cease to hold a qualifying office post devolution but before the Bill comes into operation are covered by the provisions, but payment of the allowance could not be made until after the Bill is passed. A qualifying office is defined in subsection (4).

Subsection (2) stipulates that the allowance shall be the equivalent of 3 months' pay - pay being that element of the annual salary paid to the officeholder immediately before cessation in respect of his position as an officeholder ie his previous full salary less the salary of a Member who is not an officeholder (or less the reduced salary of a Member who is not an officeholder but who is an MP or MEP).

Subsection (3) makes it clear that no allowance is payable if the reason for cessation is death.

Subsection (4) defines qualifying office as any of the offices mentioned in Section 47(3)(a) of the Northern Ireland Act 1998, namely:

Clause 4: Winding up allowance

Clause 4 provides for an allowance to be paid in respect of Members to enable payments to be made to meet the cost of any work on Assembly business undertaken on behalf of a deceased, defeated or retiring Member after the date on which he ceases to be a Member.

Subsection (3) sets the limit payable under this clause as £11,617 which is equal to one third of the Office Cost Allowance, in line with practice in the Westminster Parliament. Subsection (4) gives discretion to the Commission as to whom an allowance under this section is paid in respect of a Member who has died.

Clause 5: Payment of allowance

This provides for any allowances payable under the Bill to be paid by the Assembly Commission.

Clause 6: Short title

This gives the short title of the Bill.

The Schedule

The schedule sets out the percentages of salary payable as a Resettlement or Ill-health Retirement Allowance depending on the Member's age and the number of complete years of service at dissolution. Depending on circumstances, a maximum of 1 year's salary would be payable and a minimum of 6 months. Salary in these cases is defined as (for single mandate) a Member's ordinary salary or (for dual mandate) the reduced salary payable.

FINANCIAL EFFECTS OF THE BILL

  1. It is difficult to estimate the financial effects of the Bill because the total amount of allowances paid out will depend upon the number of occurrences of Members leaving the Assembly, whether at an election or through ill-health, and the number of cases of office holders standing down from their position. On the basis of recommended salaries, should a Member stand down at the next election he or she would be entitled to a resettlement allowance equivalent to 50% of salary, resulting in a payment of some £19,000. A similar amount would be available for those retiring due to ill-health.
  2. The allowance payable for someone ceasing to be an office holder equates to ¼ of their final annual salary as an office holder.

LEGISLATIVE COMPETENCE

  1. The Member in charge of the Bill, Mr John Fee, has made the following statement under Standing Order 28 of the Northern Ireland Assembly:

"In my view the Allowances to Members of the Assembly and Office Holders Bill would be within the legislative competence of the Northern Ireland Assembly."