Assembly Members (Independent Financial Review and Standards) Bill
Explanatory and Financial Memorandum
INTRODUCTION
1. This Explanatory and Financial Memorandum has been prepared by the Northern Ireland Assembly Commission (“the Commission”) and the Committee on Standards and Privileges (“the Committee”) 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 should be read in conjunction with the Bill. It is not, and is not meant to be, a comprehensive description of the Bill. Therefore, where a clause or part of a clause or Schedule does not seem to require an explanation or comment, none is given.
BACKGROUND AND CONSULTATION
Independent Financial Review Panel
3. On 4 May 2007, prior to the restoration of devolution, the Secretary of State wrote to the Chairman of the Review Body on Senior Salaries (“the SSRB”) seeking its agreement to conduct a review of the existing structure for salaries, expenditure and pension benefits payable to Members and office holders of the Northern Ireland Assembly (“the Assembly”). The SSRB, which completed its report in November 2008, recommended that the Assembly should commit to accepting the outcome of future independent reviews on salaries, allowances and pensions without modification, thereby respecting the impartiality of the external review process. This was proposed in response to the desire of Members of the Assembly to be distanced from deciding their own salaries and financial support arrangements. After considering the SSRB Report, the Commission supported the recommendation of the SSRB that consideration should be given to the establishment of an independent mechanism for the future determination of salaries, pensions and financial support for Members. To take this forward the Commission recommended that an amendment to the Northern Ireland Act 1998 (“the 1998 Act”) should be made to enable the Assembly to delegate in its entirety the function of determining salaries, pensions and financial support to an independent statutory body.
4. The framework for determining and paying salaries, allowances, pensions and gratuities is governed by sections 47 and 48 of the 1998 Act. Section 48 of the 1998 Act allows for provision for the payment of pensions, gratuities or allowances to former Members or office holders to be delegated by the Assembly. However, until recently, section 47 of the 1998 Act, which governs the determination and payment of Members’ salaries and allowances, explicitly prevented the Assembly from delegating the function of making a determination. The Northern Ireland Assembly Members Act 2010, which received Royal Assent on the 8 April 2010, amended sections 47 and 48 of the 1998 Act and allows the Assembly to continue to determine salaries and allowances in respect of Members or to delegate this function, to an independent body. This Bill will establish such an independent body, namely the Independent Financial Review Panel (“the Panel”).
5. A public consultation was launched by the Commission on 1 June 2010 inviting comments on the establishment of an independent body and on the establishment, functions, objectives, governance and budget arrangements of the body. Two responses were received, both of which supported the establishment of an independent body.
6. The Panel will be independent and will have the power to determine all aspects of financial support for Members. Such determinations will be binding on the Assembly. The Commission will retain the administration of the salaries andexpenditure incurred by Members and will provide administrative support and accommodation to the Panel in a manner which respects the Panel’s independence. The Panel will be required to exercise its functions with aview to achieving a proper balance between the objective of ensuring probity, accountability and value for money with respect to the expenditure of public funds and the objective of securing an adequate level of remuneration for Members which allows them to discharge their functions effectively
Northern Ireland Assembly Commissioner for Standards
7. All Members of the Assembly are required to comply with the requirements of the Assembly’s Code of Conduct and Guide to the Rules Relating to the Conduct of Members (“the Code of Conduct”). The Assembly agreed a new Code of Conduct which came into effect in October 2009. Following this, the Committee on Standards and Privileges (“the Committee”) began an inquiry into enforcing the Code of Conduct and the appointment of a Northern Ireland Assembly Commissioner for Standards (“the Commissioner”). The aim of the inquiry was to establish the most appropriate means of maintaining the Code of Conduct and handling alleged breaches in relation to it.
8. As part of this inquiry the Committee carried out a consultation and received written submissions and oral evidence from key stakeholders. These helped the Committee to conclude that, in relation to handling alleged breaches of the Code of Conduct, it was appropriate that an independent Commissioner should carry out investigations into complaints; that the Committee should determine whether a breach had occurred; and the Assembly should impose sanctions where appropriate. The Committee also concluded, inter alia, that legislation was required and that the Commissioner’s role, powers (including the power to call for witnesses and documents) and independence from the Assembly in respect of specific investigations should all be set out on a statutory basis. In addition, the Committee also agreed that the Commissioner should have the power to initiate an investigation if the Commissioner believes that a breach of the Code of Conduct may have occurred. It is this particular power, which had been recommended by the Committee on Standards and Public Life, which makes the Northern Ireland model distinct.
9. The Assembly endorsed these conclusions when it approved the Committee’s report on the inquiry on 1 June 2010. This Bill will therefore establish an Assembly Commissioner for Standards. The Bill provides for the Commissioner to receive and investigate complaints and other issues concerning Members, to initiate investigations, and to report the outcome to the Assembly. The Bill provides for the independence of the Commissioner. The Bill also provides for the Commissioner to have the power to call for witnesses and documents and creates offences in relation to refusing to provide or otherwise failing to give evidence.
OPTIONS
10. In both cases there was the possibility of leaving the position unaltered but, as outlined above, both the Commission and the Committee concluded that that was not a satisfactory course and that the Assembly should legislate as proposed in this Bill.
11. As regards the Panel, the Commission considered the National Assembly for Wales Remuneration (Measure) 2010, which established the National Assembly for Wales Remuneration Board, and the Parliamentary Standards Act 2009, which established the Independent Parliamentary Standards Authority, together with responses to consultation exercises conducted. The Commission has concluded that the Panel established by this Bill is the most appropriate model available and represents a proper balance between the necessity for independence and the need to demonstrate cost effectiveness.
12. As regards the Commissioner, the Committee considered models dealing with the investigation of allegations of misconduct by elected Members in other legislatures and concluded that the Assembly required its own statutory model for holding Members of the Assembly to account.
OVERVIEW
13. The Bill has 39 clauses and 5 Schedules. A commentary on each of the clauses and Schedules follows below. However, where a clause or part of a clause or Schedule does not seem to require an explanation or comment, none is given.
COMMENTARY ON CLAUSES
Part 1: The Independent Financial Review Panel
Clause 1: Establishment and membership of the Panel
This clause establishes the Independent Financial Review Panel, which will consist of a Chair and two other members.
Clause 2: Functions of the Panel
This clause sets out the functions of the Panel. The Panel is to determine the salaries and allowances payable to Members of the Assembly under section 47 of the 1998 Act and the pensions, gratuities and allowances payable to former Members and office holders under section 48. The Panel will be subject to specific objectives in terms of probity, accountability, value for money and securing an appropriate level of remuneration for Members of the Assembly.
The Panel may also consider any other matter relevant to its functions either on its own initiative or at the Commission’s request.
Clause 3: Independence and openness
This clause provides that the exercise of the Panel’s functions is not subject to the direction or control of the Assembly or the Commission. The clause also makes provision concerning the public availability of material.
Clause 4: Appointments to the Panel
This clause provides for the Chair and other Panel members to be appointed by the Commission for terms of five years from the date of the appointment. A person may only be appointed to serve on the Panel on two occasions i.e. for a total of no more than ten years.
Clause 5: Panel: disqualifications
This clause applies Schedule 1, which lists the persons who are disqualified from being appointed or serving as Panel members. In order to ensure that the Panel is independent of Members, and is seen to be independent, a very broad range of connections to the Assembly or individual Members will result in disqualification.
Clause 6: Termination of membership of the Panel
This clause provides for the circumstances in which a Panel member will cease to hold office or may be dismissed. Under certain circumstances, a Panel member will automatically cease to hold office. In other circumstances, the Commission may dismiss a person from the Panel.
Clause 7: Code of conduct for Panel members
This clause requires the Panel to issue a code of conduct for its members and makes provision for the contents of the code. This code will require members of the Panel to adhere to the seven principles of public life (often referred to as “the Nolan principles”) and will make provision in respect of the disclosure of interests by Panel members.
Clause 8: Administration and finance
This clause applies Schedule 2, which makes administrative and financial provision in respect of the Panel.
Clause 9: Annual report
This clause requires the Panel to make an annual report to the Commission on its activities during the year.
Clause 10: Meetings of the Panel
Under this clause the Panel will determine its own procedure. The clause also provides that the Panel’s proceedings and determinations remain valid notwithstanding a vacancy or a defect in the appointment of a Panel member.
Clause 11: Exercise of functions
This clause makes detailed provision concerning the timing and frequency of determinations. The general rule will be that a determination will be made only once in respect of each Assembly. Further determinations may be made as necessary to take account of changes in the law and practice relating to pensions or exceptional circumstances. Unless there are changes in the law and practice relating to pensions or exceptional circumstances, there will not be a determination where there is less than a year between an ordinary general Assembly election and an extraordinary Assembly election.
The Panel is required, so far as is reasonably practicable, to make its determination before the election to the Assembly in relation to which the determination relates, although a determination will survive until a new determination is made replacing it. This will allow candidates and the electorate to know, in advance of an election, what financial support will be available to an elected candidate.
The clause also provides for the duration of determinations and the reporting and publication of statements concerning the existence of exceptional circumstances.
Clause 12: Contents of determinations: salaries and allowances
Section 47 of the 1998 Act includes provisions which must apply to salaries and allowances payable under that section, for example, providing that if a Member is also a member of the House of Commons, his or her salary is to be reduced. This clause applies those same provisions to the Panel’s determinations on salaries and allowances.
Clause 13: Contents of determinations: pensions, gratuities and allowances
Section 48 of the 1998 Act includes provisions regarding pension contributions, pension schemes and the calculation of pensions. This clause applies those same provisions to the Panel’s determinations on pensions, gratuities and allowances.
Clause 14: Availability of determinations
This clause makes provision for determinations to be reported to the Commission and published. This is consistent with section 47 (8A) of the 1998 Act which requires that provision made under section 47 (2A)(b) of the 1998 Act includes provision for the publication of every determination of salaries and allowances under that provision. This clause is to ensure that the content of the determination is open and transparent.
Clause 15: Meaning of “the Panel”
This clause defines “the Panel”.
Part 2: The Northern Ireland Assembly Commissioner for Standards
Clause 16: Establishment of the Commissioner
This clause provides for there to be a Northern Ireland Assembly Commissioner for Standards (“the Commissioner”).
Clause 17: Functions of the Commissioner
This clause sets out the Commissioner’s functions as being to receive and investigate complaints and other issues concerning Members, to initiate investigations and to report the outcome to the Assembly. The Commissioner may also be asked to give advice on matters of general principle.
Clause 18: Independence of the Commissioner
This clause provides that the exercise of the Commissioner’s functions is not subject to direction or control by the Assembly. That is subject only to procedural and administrative directions given under clause 24.
Clause 19: Appointment of the Commissioner
This clause provides for the Commissioner to be appointed by the Assembly for a term of five years. A person may only be appointed to serve as Commissioner once. The Assembly will be responsible for ensuring that the Commissioner is appointed by way of fair and open competition and for determining appointment criteria and the terms of appointment.
Clause 20: Commissioner: disqualifications
This clause applies Schedule 3, which lists the persons who are disqualified from being appointed or serving as the Commissioner.
Clause 21: Termination of the Commissioner’s appointment
This clause provides for the circumstances in which the Commissioner will cease to hold appointment or may be dismissed. Under certain circumstances, the Commissioner will automatically cease to hold office. The Assembly may also by resolution dismiss the Commissioner.
Clause 22: Further provision about the Commissioner
This clause applies Schedule 4, which makes administrative provision about the Commissioner.
Clause 23: Appointment of an Acting Commissioner
This clause enables the Assembly to appoint an Acting Commissioner to discharge any or all of the Commissioner’s functions if for some reason the Commissioner is unable to act. The clause will allow for the Commissioner and the Acting Commissioner to operate at the same time, but handling different cases. The disqualifications applicable to the Commissioner will apply also to the Acting Commissioner and the clause also provides for the Acting Commissioner’s resignation and removal.
Clause 24: Directions to the Commissioner
This clause enables the Assembly to give the Commissioner directions regarding general procedures and compliance with standards, codes of conduct and registration of interests. There is an overriding restriction to prevent directions from interfering with any specific investigation.
Clause 25: Investigations by the Commissioner
This clause provides for the Commissioner to determine the procedure and timing for any specific investigation and reporting its outcome to the Assembly.
Clause 26: Further investigations
The Assembly will be able to request the Commissioner to carry out further investigations.
Clause 27: Reports
This clause provides that a report by the Commissioner may make recommendations, but will not be able to recommend the imposition of a specific sanction on any Member. The clause also provides for reports to be published.
Clause 28: Power to call for witnesses and documents
This clause enables the Commissioner to require witnesses to attend and give evidence or to provide documents. This clause is subject to the same limitations as apply to the Assembly’s power to call for witnesses and documents under section 44 of the 1998 Act. A prospective witness will not be obliged to answer a question or produce a document which would not have to be answered or produced in court.
Clause 29: Witnesses and documents: notice
This clause sets out the procedure by which the requirements in clause 28 are communicated to witnesses.
Clause 30: Witnesses: oaths
This clause provides for the taking of oaths or affirmations by witnesses.
Clause 31: Offences
This clause creates a number of offences in relation to refusals to provide or otherwise failing to give evidence in accordance with a request under clause 28. It would also be an offence to refuse to take an oath or make an affirmation under clause 30. In the case of refusals to attend, give evidence or produce documents, the clause provides for a defence of reasonable excuse. Maximum penalties for an offence under this clause will be a fine up to level 5 (£5,000) on the standard scale or three months’ imprisonment.
Clause 32: Protection from defamation actions
This clause provides that, for the purposes of the law of defamation, statements by the Commissioner will attract absolute privilege and statements to the Commissioner will have qualified privilege.
Clause 33: Restriction on disclosure of information
This clause provides that information disclosed to the Commissioner in the course of an investigation will not be disclosed by or on behalf of the Commissioner except for the purpose of enabling the Commissioner to discharge functions or in connection with the investigation or prosecution of an offence.
Part 3: Supplementary provisions
Clause 34: Transitional provisions
This clause makes necessary provision allowing for the move from the current system for dealing with the investigation of complaints to the system introduced by the legislation.
Clause 35: Orders
This clause gives the Commission authority to make statutory rules, which will enable it to amend the lists of persons who are disqualified from being a member of the Panel or being Commissioner.
Clause 36: Consequential amendments
This clause applies Schedule 5, which contains amendments consequential on the legislation. In particular, the Panel will be subjected to the Freedom of Information Act and the jurisdiction of the Ombudsman.
Clause 37: Interpretation: general
This clause contains definitions of terms used in the Bill.
Clause 38: Commencement
This clause provides for the commencement of the legislation. Certain clauses will come into force on the day on which this Bill receives Royal Assent and the remaining clauses will come into operation on such day or days as the Commission may by order appoint.
Clause 39: Short title
This clause contains the short title of the legislation.
SCHEDULES
Schedule 1: Disqualification from membership of the Panel
This Schedule lists the persons who are disqualified from being appointed or serving as Panel members. The list can be amended by subordinate legislation made by the Commission.
Schedule 2: Panel: administrative and financial arrangements
This Schedule contains provisions relating to Panel members’ terms and conditions of appointment and the provision by the Commission of administrative support, accommodation, services and funding.
Schedule 3: Disqualification from being appointed or serving as the Commissioner
This Schedule lists the persons who are disqualified from being the Commissioner. The list can be amended by subordinate legislation made by the Commission.
Schedule 4: Commissioner: further provision
This Schedule contains provisions relating to the Commissioner’s terms and conditions of appointment and the provision by the Commission of administrative and professional support, accommodation, goods and services and funding. It also requires the Commissioner to provide the Commission with financial information and an annual report. The Schedule gives the Commissioner a general power calculated to facilitate the discharge of the Commissioner’s functions and provides for the validity of the Commissioner’s actions.
Schedule 5: Consequential amendments
This Schedule makes provision for amendments consequential on the legislation.
FINANCIAL EFFECTS OF THE BILL
14. Financial costs in relation to the initial establishment of the Panel have been estimated at £15,000 based on the cost of fair and open competition to recruit each of the three Panel members and the ancillary costs of providing sufficient office resources to facilitate the Panel’s work. The recurring costs of the Panel are unlikely to follow an annual pattern. The provisions of clause 11 are likely to ensure that the Panel will undertake the majority of its work immediately prior to the commencement of an Assembly mandate i.e. once every four years. In the financial year of that period of activity, it is estimated that the Panel could incur costs of approximately £100,000 with significantly more modest costs of approximately £15,000 in the three intervening years. Financial costs in relation to the initial appointment of the Commissioner have been estimated at £10,000 based on the cost of fair and open competition to recruit the Commissioner and the ancillary costs of providing sufficient office resources to facilitate the Commissioner’s work. The yearly recurring costs of the Commissioner are expected to total £25,000 based on the current level of investigations.
HUMAN RIGHTS ISSUES
15. The Bill is compatible with the Convention rights.
EQUALITY IMPACT ASSESSMENT
16. Equality screening in respect of the proposal to establish the Panel did not reveal any significant differential impact on any of the groups set out in section 75 of the Northern Ireland Act 1998. As a result, it was decided that a full Equality Impact Assessment was not required.
SUMMARY OF THE REGULATORY IMPACT ASSESSMENT
17. A regulatory impact assessment is considered unnecessary.
LEGISLATIVE COMPETENCE
18. At Introduction Mr Peter Weir MLA and Mr Declan O’Loan MLA had made the following statement, on behalf of the Assembly Commission and the Committee on Standards and Privileges respectively, under Standing Order 30:
“In our view the Assembly Members (Independent Financial Review and Standards) Bill would be within the legislative competence of the Assembly.”
SECRETARY OF STATE CONSENT
19. The Secretary of State has consented under section 8 of the Northern Ireland Act 1998 to the Assembly considering this Bill. |
