PAPER B
 
 


SCRUTINY COMMITTEE FINAL REPORT

 

RESPONSIBLE BODY

Scrutiny Committee

ENQUIRY NAME

MEMBERS ALLOWANCES

REFERENCE NUMBER

SC17/06

1                    OUTLINE OF ENQUIRY AND PROPOSED OUTCOME

 

The scoping document agreed by the Scrutiny Committee at its meeting on 23 November 2006 approved an enquiry which was :-

 

To review the processes involved in the consideration by Full Council of the recommendations of the Independent Remuneration Panel regarding members allowances and expenses.

 

To investigate whether the recommendations of the Remuneration Panel had been fully taken into account in the Council’s decision making process.

 

·                    To ensure that there were clear and transparent reasons given for the Council not adopting the recommendations of the Remuneration Panel.

·                    To improve the process for determining members remuneration in the future.

 

2                    RECOMMENDATIONS

 

            This enquiry has found that the process used for the consideration of the Independent Remuneration Panel’s recommendations on members’ allowances by full Council on 18 October 2006 was not as transparent as it should have been. The Committee therefore makes the following recommendations to full Council to address this issue for future occasions :-

 

2.1             That clear concise terms of reference be given to any future Panel with relevant input from both legal and financial officers

 

2.2             That when a report is to be made by the Independent Remuneration Panel this   be made widely available as a separate document and correctly referenced.

 

2.3             That the Chairman of the Independent Remuneration Panel must be invited to attend when the Panel’s report is to be discussed to enable that person to present the recommendations.

 

2.4             That if the Council does not adopt a recommendation by the Independent Remuneration Panel clear and evidenced reasons must be given why.

 

2.5             That if a separate report is to be submitted to full Council on members allowances and/or expenses at the same time as the Panel’s report then this needs to be very clear as to what alternatives are being suggested, the reason for them and who is making these suggestions.

 

            In addition there is an urgent need for the following action to be taken

 

2.6             That the Independent Remuneration Panel be requested to review the Special Responsibility Allowance (SRA) for Member Champions based on evidence from around the Country, in the form of benchmarking from other authorities, other elected members and stakeholders to ensure that the allowance is the best possible in all circumstances to ensure that this is in line with the process adopted for all other SRA’s within the Council.

 

2.7             Specific information be included on the Council’s website relating to members allowances and expenses and this to contain as a minimum reports from the Independent Remuneration Panel, the current members allowance scheme, budget provision and the actual amounts paid on an annual basis to each member, both elected and co-opted as well as the expenses that can be claimed.

 

2.8             An apology be given to members of the Panel who submitted their resignations and that it was incorrect for the Leader and the Chief Executive not only to state that the Panel had been disbanded but also to say that the Panel Members were unwilling to reconvene following submission of its draft report.

 

3                    BACKGROUND TO THE ISSUE

 

3.1             On 27 October 2006 the IW County Press carried a story with the headline “Pay Panel Quits in Council Rises Row”. This reported on the resignations of the four members of the Independent Remuneration Panel (IRP) following the decision of full Council, on 18 October 2006, on changes to the Members Allowance scheme and expenses. In the IW County Press the following week, 3 November 2006, the Leader of the Council, Cllr Andy Sutton, and the Chief Executive, Mr Joe Duckworth, under the headline of “Council bosses defend £5 million for experts and rise in allowances” had a letter published outlining the details of the Council’s decision on members’ allowances. This then led to a letter being published the following week, 10 November 2006 from the four members of the IRP under the headline “Council Bosses ‘misrepresented panel’s position’ “.

 

3.2             The Committee decided to undertake an enquiry into the matter due to the significant public concern and interest. The enquiry was to be undertaken by the two voting co-opted members on the Committee.

 

3.3             This enquiry was not to comment on the decision made by the Full Council relating to the actual amounts involved nor the internal workings of the Panel.

 

3.4             Whilst not strictly part of the scope of this enquiry given the high public profile we have looked into the issue of the latter two letters in the County Press as a matter of public interest.

 

3.5             The enquiry interviewed the Chairman of the Panel, Professor David Farnham, together with a Panel member, Mr Richard Key, the Clerk to the Panel, Mr Chris Mathews, the Director of Finance, Mr Paul Wilkinson and the Director of Policy, Performance and Partnerships and Deputy Chief Executive, Mr John Lawson.

 

3.6             Additionally a telephone survey was conducted by the Lead Member for the enquiry of 3 members of the Council to ascertain whether they were aware of the recommendations of the Independent Remuneration Panel.

 

3.7             The enquiry looked at the processes involving the IRP since 2001 and how these had been reported to full Council and recommendations dealt with.

 

3.8             The Office of Deputy Prime Minister issued, in July 2003, New Council Constitutions : Guidance on Regulation for Local Authority Allowances. This guidance contains a combination of description of the main statutory provisions, statutory guidance to which local authorities must have regard and non statutory guidance. These are guidance notes and support the Local Authorities (Members Allowances) (England) Regulations 2003, SI2003 No 1021.

 

4                    KEY ISSUES IDENTIFIED

 

4.1             Consideration by full Council since 2001

 

4.1.1       Since 2001 full Council has considered of a report relating to recommendations of the Independent Remuneration Panel on the following occasions :-

 

o                   21 November 2001 the full Council considered the minutes of the panel’s meeting which included its recommendations.

 

o                   17 April 2002 the Executive considered a report by the Leader of the Council and its minute and recommendation was submitted to full Council for debate. The report of the Leader attached a summary of the Panel’s recommendations with a full copy of its report being available for members’ inspection.

 

o                   26 November 2003 the full Council considered the report of the Leader of the Council on the Panel’s recommendations. Again a summary of the Panel’s recommendations were attached as an appendix to the Leader’s report with a full copy of the Panel’s report available for members’ inspection.

 

o                   24 November 2004 the full Council considered the final report of the Panel.

 

o                   15 March 2006 the full Council received an interim report from the Chairman of the Panel.

 

o                   18 October 2006 full Council received a report from the Director of Policy, Performance and Partnerships and Deputy Chief Executive. A summary of the Panel’s report was attached as an appendix and the full report could be accessed via the Council’s web site link for the meeting.

 

4.1.2       This shows that there has been a variety of approaches in advising full Council of    the Panel’s deliberations and recommendations. Although, with the exception of the last instance, the approach has been either a submission of the report of the Panel without a covering report – or if a covering report was thought necessary this has been in the name of the Leader, The two most recent occasions showed a marked inconsistency. The interim report in March 2006 was in the name of the Chairman of the Panel whilst the final report in October 2006 was an appendix to a report by the Director of Policy, Performance and Partnerships and Deputy Chief Executive.

 

4.1.3       There is a need for a consistent approach together with recognition that the Panel is Independent and established for a statutory purpose. Given that the decision on Members Allowances is a matter for full Council and that they must “make regard to the recommendations” of the Independent Panel if there is to be any covering report to the Panel’s report then this needs to be very clear as to what alternatives are being suggested, the reason for them and who is making these suggestions.

 

4.2             Appointment of the Independent Remuneration Panel, Role and Terms of Reference

 

4.2.1       The Panel was appointed by full Council at its meeting on 23 November 2005. Professor David Farnham was appointed as Chair of the Panel until May 2009 (the life of the Council). The other members of the Panel were the subject of a delegated decision by the Director of Policy, Performance and Partnerships (DPPP) and were for the same period. The original terms of reference were also agreed at this meeting. These posts were advertised and the members selected after all candidates were interviewed.

 

4.2.2       The role of the Panel, as stated in the DPPP’s report to full Council on 18 October 2006, was “to take evidence from around the Country, in the form of benchmarking from other authorities, from elected members and other stakeholders to ensure that the scheme of allowances is the best possible in all circumstances”.

 

4.2.3       The Panel was given the following objectives :-

 

·               To reduce the total cost in real terms, to the public purse against a baseline of the cost in 2004/2005 to the projected cost in 2009/2010.  The average reduction on a year-on-year basis amounts to 2.5% per annum.

 

·               To incentivise Members to reduce non-cash costs of facilitating Member activity (for example the cost of printing, word processing, etc).

 

·               To incentivise a reduction in the environmental impact of Member activity (for example, travel, paper and IT consumables).

 

·               To incentivise Members to concentrate on the strategic improvement of the performance of the Council.

 

·               To enable and encourage the role of elected Members as community leaders.

·               To ensure the retention of existing Members in their elected role and to attract a diversity of Members in the future.

 

·               To include the independent chairman and members of the Standards Committee and co-opted members of the Scrutiny Committee and one of the Policy Commissions within the scheme.

 

4.2.4       The terms of reference agreed by full Council were later added to by way of an officer’s delegated power. This sought recommendations from the Panel to full Council by 21 February 2006 on the level of SRA for 2005/06 and (subject to the Panel’s final report) future years for Cabinet Members, Scrutiny Committee Chairman, Commissioners, Chairman of the Regulatory Committee, Vice Chairman of the Regulatory Committee (Licensing), Vice Chairman of the Regulatory Committee (Development Control) and Cabinet Secretaries.

 

4.2.5       In the report of the DPPP reference was only made to bullet point 6 above and the principle “to ensure that the cost of democracy, like all other functions of the Council, becomes continually more cost effective”.

 

4.2.6       The Council was not in a position to confirm that all the objectives that it had set the Panel had actually been achieved. There was also further confusion to this issue by including all but the first bullet point in Appendix 1 to the DPPP report titled “Executive Summary and Recommendations of 5th Report of Independent Remuneration Panel August 2006”.

 

4.3             Recommendations from the Panel

 

4.3.1       One of the main areas of concern expressed by the Panel related to the objective in bullet point 1 – “To reduce the total cost in real terms, to the public purse against a baseline of the cost in 2004/2005 to the projected cost in 2009/2010.  The average reduction on a year-on-year basis amounts to 2.5% per annum.”

 

4.3.2       In Appendix 1 to the DPPP report it states  “ its work has been conducted within the requirement to reduce the total cost of Members’ allowances and expenses in real terms to the public purse against a base line of the cost in 2009/10”. This is incorrect as the IRP’s terms of reference clearly referred to a baseline cost in 2004/2005. A close examination seems to suggest that there has been some truncation of this paragraph in Appendix 1 – as it appears to be the Executive Summary and Recommendations of the Panel – and this para in the Panel’s main report is significantly longer and clearer. Whilst it is accepted that this might be a simple typographical error – it does serve to further confuse.

 

4.3.3       It has been explained that after the Chairman of the Panel discussed the Panel’s draft report with the Leader of the Council it became clear that the Panel’s Terms of Reference where neither clear nor accurate. It was at this stage that the Panel, whilst willing to review its draft report, was unable to do so over the following months because it could not obtain authoritative, consistent and unambiguous financial data from Officers of the Council, despite repeated requests to do so. Officer involvement at this stage became complex and ultimately unclear. It would have been far wiser for officers to have been clear on their advice when the Council established the Terms of Reference of the Panel. One of our recommendations is aimed at ensuring this situation does not arise in the future.

4.3.4       The allowances proposed by the Panel and those that were agreed by Council as included within Appendix 2 to the report of the Director of Policy, Performance and Partnerships were not compared in a single table. This would have clearly enabled direct comparison and clarity for both members of the Council and the public.

 

4.3.5       The small sample of members of the Council, 3, who were contacted by telephone by the Lead Member for this enquiry indicated that they were not aware of the differences between the allowances recommended by the Panel and those actually contained in the report. They all believed that the sums agreed by full Council were those being recommended by the Panel.

 

4.3.6       Another recommendation of the Panel which was not accepted by the Council although covered in paragraph 13 (vii) of the DPPP report relates to recommendation 9. This suggested that the Panel should receive the annual reports produced by each individual member of the Council to ascertain whether there should be any adjustments in the Allowance Scheme. The Scheme approved by Council, Appendix 2 to the DPPP report, however gives the responsibility for considering such reports to full Council.

 

4.3.7       There is no clear audit trail to publicly demonstrate the Council’s acceptance, or otherwise, of each of the Panel’s recommendations. Where a recommendation was not accepted no reason is given as to why.

 

4.4             Letter from the Leader and Chief Executive in the IW County Press

 

4.4.1       In the letter in the IW County Press on 3 November 2006 from the Leader of the Council and the Chief Executive it indicates “the Remuneration Panel was established for the purposes of making recommendations concerning members’ allowances. It ceased operation when the panel delivered its report, therefore its members were not in a position to resign from something that had already been disbanded.”

 

4.4.2       This view conflicts with the original decision of the Council on the period of appointment. There is also wording in paragraph 36 of the Guidance from the ODPM that not only must the Council establish a Panel but it must maintain it. Although the Council may believe that the Panel is unlikely to have to meet again up to the elections in 2009 it cannot disband it. Indeed the Scrutiny Committee believes that there is one further piece of work that it should be tasked with relating to the SRA for Member Champions and this is set out in paragraph 4.5 below.

 

4.4.3       Allowances are now index linked so reducing the possibility of the Independent Remuneration Panel being required to convene again until 2009 at which time the anticipated reduction in the number of Elected Members will have taken place. No decision was actually taken by full Council to disband the Panel and the content of the letter on this point by the Leader of the Council and the Chief Executive was incorrect.

 

4.4.4       It was also incorrect for the Leader and Chief Executive to state publicly that the Panel was unwilling to reconvene following completion of its draft report.

 

4.4.5       There is a need for these inaccuracies to be acknowledged by the Leader and the Chief Executive.

 

4.5             Member Champions

 

4.5.1       Member Champions were appointed at Annual Council on 24 May 2006, and were given a Special Responsibility Allowance of £2,000 subject to the Council considering the final report of the IRP. There is no mention of this role within the IRP nor was it included specifically in its terms of reference. Whist the DPPP report, paragraph 14, highlights that the proposed scheme of allowances includes such a payment it was not covered by the IRP report and no evidence was provided in support of a figure for the SRA.  The terms of reference, which had been agreed by full Council on 23 November 2005, was then amended by officers with the addition of some further work relating to SRA’s and a report on these submitted to the Council on 21 February 2006.

 

4.5.2       No attempt was made to request the Panel to undertake any work on the SRA for Member Champions and these were therefore decided entirely by the Council without any objective independent evidence being provided. The process does not appear to accord with the advice contained within paragraph 37 of the ODPM Guidance which indicates that the Panel should make recommendations about the level of special responsibility allowances and to whom they should be paid. 

 

5                    EVIDENCE / BACKGROUND PAPERS / ADDITIONAL INFORMATION

 

1.             Scoping Document approved by the Scrutiny Committee 23 November 2006.

 

2.             Report and minutes of full Council – 21 November 2001, 17 April 2002, 26 November 2003, 24 November 2004 relating to Independent Remuneration Panel

 

3.             Report to Full Council and minute – 23 November 2005 – Appointments to and Terms of Reference for the Independent Remuneration Panel.

 

4.             Report to Full Council and minute – 15 March 2006 – Interim Report of the Independent Remuneration Panel.

 

5.             Review of Members Allowances and Expenses for IW Council – Fifth Report of the Independent Remuneration Panel – August 2006.

 

6.             Report to Full Council and minute – 18 October 2006 – Members Allowances.

 

7.             New Council Constitutions : Guidance on Regulation for Local Authority Allowances – ODPM – July 2003.

 

8.             The Local Authorities (Members’ Allowances) (England) Regulations 2003 SI 2003 No. 1021.

 

9.             IW County Press – 27 October 2006 – article headed “Pay Panel Quits in Council Pay Rises Row”.

10.        IW County Press – 3 November 2006 – letter from Cllr Andy Sutton and Joe Duckworth under heading of “Council Bosses defend £5m for experts and rise in allowances”.

 

11.        IW County Press – 10 November 2006 – letter from Prof D Farnham, P Savory, R Key and L Brennan under heading of “Council Bosses ‘misrepresented panel’s position’”.

           

Prepared by:

 

 

 

 

Date:

Mrs Sue Poston (Lead Member) and Mr Tony Marvin (up to 7 January 2007)

 

April West & Paul Thistlewood, Overview & Scrutiny Team

 

February 2007