This Memorandum refers to the Allowances to Members of the Assembly (Repeal) Bill as introduced in the Northern Ireland Assembly on 15 June 2010 (Bill 27/09)
ALLOWANCE TO MEMBERS OF THE ASSEMBLY (REPEAL) BILL
EXPLANATORY AND FINANCIAL MEMORANDUM
INTRODUCTION
1. This Explanatory and Financial Memorandum has been prepared by the Northern Ireland Assembly Commission 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. So where a clause, or part of a clause, does not seem to require an explanation or comment, none is given.
BACKGROUND AND POLICY OBJECTIVES
3. The framework for paying allowances to Members of the Assembly is governed by sections 47 and 48 of the Northern Ireland Act 1998.
4. Section 47 of the Act allows the Assembly to make provision for allowances for current Members of the Assembly. Section 48 allows the Assembly to make provision for the payment of allowances to, or in respect of, any person who has ceased to be a Member of the Assembly – i.e., a former Member. Three such allowances are provided for, in the Allowances to Members of the Assembly Act ( Northern Ireland) 2000 (‘the 2000 Act’). They are Resettlement Allowance, Ill-Health Retirement Allowance, and Winding-up Allowance (‘the 2000 Act allowances’).
5. The Northern Ireland Assembly Commission (which, under section 40 of the Act, is required to provide the Assembly, or ensure that the Assembly is provided, with the property, staff and services required for the Assembly ’ s purposes) has given extensive consideration to a number of issues relating to the pay, pensions and expenditure of Members. In particular, agreeing with recommendations made to it by the Review Body on Senior Salaries (‘the SSRB’), the Commission has recommended changes to the 2000 Act allowances. The Commission proposes that these changes are made by first repealing the 2000 Act in its entirety, and then making new provision by determination under section 48.
6. The Commission also proposes that the Assembly passes an Act establishing an Independent Statutory Body (‘ISB’) that will determine the future pay, pension and financial support arrangements for Members or former Members of the Assembly (including any allowances for former Members similar to the 2000 Act allowances). Such a body cannot be empowered to pass primary legislation for Northern Ireland, and therefore could not itself repeal the 2000 Act. The repeal of the 2000 Act is therefore a necessary step in the project to establish and empower such a body.
7. The Commission intends that its report will come before the Assembly in the week commencing 28 th June 2010.
BROADER POLICY OBJECTIVES
8. The Bill does not itself make any provision in relation to the new allowances. However in the interests of transparency and of enhancing understanding of the broader policy proposals, they are outlined below. A draft determination making such provision will be put before the Assembly in the week commencing 28 th June 2010, to come into operation on 1 st September 2010.
Resettlement Allowance
9. Each former Member who is not returned following an election (either through standing down or through non-election) is entitled to receive a resettlement allowance. This allowance is based on ‘salary as a Member’ (i.e. the basic salary, excluding for example any additional ministerial salary) and is calculated according to the Schedule to the 2000 Act. The Schedule provides a matrix that shows the percentage to be applied to the salary as a Member in order to calculate the resettlement allowance. That percentage is based on a Member’s age at the date of dissolution and the length of his or her service. The Schedule specifies that all Members who have less than 10 years’ service as a Member receive the same level of allowance regardless of their age. At the 2007 election, for example, all Members received the same level of allowance even though some had been Members since the establishment of the Assembly while others had only been Members for a matter of months. The SSRB report suggested that resettlement allowance should, like a redundancy payment, reflect length of service.
10. The SSRB report also noted that, by including a Member’s age as a factor in determining resettlement allowance, the 2000 Act runs contrary to the principle of age discrimination legislation.
11. Having considered the issue, the Commission, in accordance with the SSRB’s recommendation, is recommending that resettlement allowance be renamed as resettlement payment and calculated at one month’s salary for each year of service as an Member, up to a maximum of nine months’ salary, and paid to any person who is a Member of the Assembly immediately before its dissolution who does not stand for election to the Assembly, or does stand, but is not returned as a Member.
Ill-health Retirement Allowance
12. The 2000 Act allows the Commission to pay an amount to a Member who retires through ill-health, calculated using exactly the same matrix as for resettlement allowance (see above). In accordance with the SSRB’s recommendation, the Commission is recommending that ill-health retirement allowance be renamed as ill-health retirement payment and calculated in the same way as the resettlement payment.
Winding-up Allowance
13. Winding-up allowance is paid to, or in respect of, persons who cease to be Members. The maximum level that can be claimed is set in the 2000 Act and can be changed by order made by the Commission. The SSRB sought to tidy up the expenditure regime by establishing a direct proportion (of one-third) between the rate of office costs expenditure and winding-up allowance. In accordance with the SSRB’s recommendation, the Commission is therefore recommending that winding-up allowance be renamed as winding-up expenditure and that the limit be set, and remain at, one third of the office costs expenditure each time the level of the office costs expenditure is increased.
OVERVIEW
The Bill repeals the Allowances to Members of the Assembly Act ( Northern Ireland) 2000 (c.3) and makes a consequential repeal to the Statutory Rules ( Northern Ireland) Order 1979 (NI 12). Its repeal provisions will come into operation on 1 st September 2010. On that date, the replacement allowances provisions (provided the Assembly in due course makes the determination that is put before it by the Commission), as recommended by the SSRB, will also come into operation.
OPTIONS CONSIDERED
15. The decision to accept the SSRB recommendations having been made by the Commission, the only legal mechanisms that could give effect to those recommendations are:
to amend the 2000 Act so that it contained the new provisions. This option was not selected as any future changes to the 2000 Act allowances would necessitate the expense and procedural complexity of passing a further Northern Ireland Assembly Act, and as in any case the 2000 Act would have to be repealed in order to allow the proposed ISB to determine allowances in this area; or
to repeal the 2000 Act so that new provisions could be made by Assembly determination, either making new provision under section 48 directly, or delegating the function of making determinations to the Commission. This option was selected, as it will obviate the expense and procedural complexity of passing further Northern Ireland Assembly Acts on the matter, as it allows a consistent approach with determinations on other allowances provided to Members (which are made by determination rather than by Assembly Act), and as in any case the 2000 Act would have to be repealed in order to allow the proposed ISB to determine allowances in this area.
COMMENTARY ON CLAUSES
16. The Bill contains 3 clauses. A commentary on them follows.
Clause 1: Repeals
17. Clause 1(1) repeals the Allowances to Members of the Assembly Act ( Northern Ireland) 2000 (c.3).
18. Clause 1(2) makes a consequential amendment, repealing the entry in the schedule to the Statutory Rules ( Northern Ireland) Order 1979 (NI 12). That entry was inserted by the 2000 Act, and is relevant only to the operation of that Act.
Clause 2: Commencement
19. Clause 2 provides that clause 1 will come into operation on 1st September 2010, so that the repeal of the 2000 Act will occur on that date.
Clause 3: Short Title
20. Clause 3 provides for the short title of the Bill.
FINANCIAL EFFECTS OF THE BILL
21. The Bill itself has no direct financial effect. It will have a positive financial effect by obviating the need, in the event of any future changes to the 2000 Act allowances, to go to the expense and procedural complexity of enacting primary Northern Ireland legislation.
HUMAN RIGHTS ISSUES
21. The provisions of the Bill do not engage any Convention Rights.
EQUALITY IMPACT ASSESSMENT
23. The Commission’s full report will be subjected to screening (and equality impact assessment if appropriate), in accordance with the guidance published by the Equality Commission for Northern Ireland. This Bill is a mechanism to give effect to only one interconnected element of the Commission’s report and so has not been separately screened.
REGULATORY IMPACT ASSESSMENT
24. As the Bill only affects the procedural method by which certain allowances for Members are set, a regulatory impact assessment is considered unnecessary.
LEGISLATIVE COMPETENCE
25. The Member in charge of the Bill, Rev. Robert Coulter had made the following statement under Standing Order 30:
"In my view the Allowances to Members of the Assembly (Repeal) Bill would be within the legislative competence of the Northern Ireland Assembly."
26. As the Bill is not in the charge of a Minister, a statement under section 9 of the Northern Ireland Act 1998 is not required.
SECRETARY OF STATE CONSENT
27. The Secretary of State’s consent is not required.