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Parliamentary Standards (Legislative Proposals)

Volume 502: debated on Thursday 10 December 2009

The Committee on Standards in Public Life (CSPL) published its report on MPs’ expenses and allowances on 4 November. The Government are grateful to the Committee for its work and welcome the Committee’s recommendations.

The House has sought clarification on the question of what further legislation the Government will bring forward in the light of the CSPL’s recommendations, which I set out in this statement today. The House will wish to be aware that in preparing this statement the Lord Chancellor and Secretary of State for Justice has had constructive discussions with both Sir Christopher Kelly, Chairman of the Committee on Standards in Public Life, and Professor Sir Ian Kennedy, Chairman of the Independent Parliamentary Standards Authority. I am pleased, on behalf of both the Lord Chancellor and myself, to be able to report to the House that both Sir Christopher and Sir Ian are in agreement with the proposed approach to further legislation and on the amendments set out below.

Many of the CSPL recommendations relate to the substance of a new parliamentary allowances scheme. Others, however, relate to the scope and functions of the Independent Parliamentary Standards Authority (IPSA), now being set up under the provisions of the Parliamentary Standards Act 2009 which passed into law earlier this year.

Those substantive recommendations of the CSPL report that relate to the drawing up of the allowances scheme are , of course, under the provisions of the Act, now a matter for consideration by and decision of the new independent authority. The IPSA will shortly be conducting its statutory consultation on a proposed new allowances scheme. Its chair has already made clear that the CSPL recommendations will be central to this consultation.

In relation to the recommendations identified as requiring legislation, the Government’s proposals are as follows:

Power to make deductions from resettlement grant

The Committee recommends that

“where an MP is found to have seriously abused the expenses system or otherwise seriously breached the code of conduct, the Standards and Privileges Committee should always consider recommending that the House reduce or remove the resettlement grant from that MP as part of any sanctions to be imposed and should be prepared to do this for past as well as for future breaches of the rules. The new statutory scheme should empower the House of Commons to impose such a sanction by resolution”.

(Recommendation 33).

The Parliamentary Standards Act already provides that the IPSA’s power to pay MPs’ salaries is subject to anything done in exercise of the disciplinary powers of the House. This enables the IPSA, for example, to give effect to a resolution of the House following an S&P recommendation that an MP should lose salary for a specified time. The Government will bring forward legislation to make the same provision in relation to allowances (including resettlement grant).

Statutory duty of efficiency, cost-effectiveness and openness

The Committee recommends that

“the independent regulator should have a statutory duty to support MPs efficiently, cost-effectively and transparently in carrying out their parliamentary functions”

(Recommendation 41).

IPSA itself is already under a duty to carry out its functions efficiently and cost effectively and is subject to the Freedom of Information Act. The Government will also bring forward legislation to ensure that there is specific reference to supporting MPs to carry out their parliamentary duties in an efficient, cost-effective and transparent way. (See also response to recommendations 49 and 60).

Register of Financial Interests and Code of Conduct

The Committee recommends that

“responsibility for maintaining the register of financial interests and the associated code of conduct should be removed from the independent regulator and returned to the House of Commons”

(Recommendation 42).

The Government propose to repeal section 8 of the 2009 Act and the consequential references to it.

Pay and pensions

The Committee recommends that

“the independent determination of MPs’ pay and pensions should be entrenched in primary legislation in the same way as expenses. The independent regulator should therefore be given statutory responsibility for setting MPs’ pay levels and overseeing MPs’ pensions as well as for dealing with expenses”

(Recommendation 43).

Provision for pay to be included in the IPSA’s remit was in an early pre-introduction version of the Parliamentary Standards Bill but was removed after representations made in the intensive cross-party talks.

Now there is a clear consensus that IPSA should take on responsibility for pay and pensions, the Government will bring forward legislation to give IPSA the power to set, as well as to administer, the MPs’ pay system, after consulting the Senior Salaries Review Body. The powers for both pay and pensions would therefore take effect in 2011-12. MPs’ pay in 2011-12 would then be set by the IPSA on the basis of the SSRB recommendation for that year. Pay in 2012-13 and subsequently would be set by the IPSA following consultation with the SSRB and others as appropriate.

Breaches of the rules on expenses

The Committee recommends that

“responsibility for investigating allegations about breaches of the rules on expenses should be vested in the independent regulator, which should be able to appoint its own compliance officer for this purpose. The compliance officer should be able to conduct an investigation on his or her own initiative, at the request of the independent regulator, or in response to a complaint from a member of the public or an MP”

(Recommendation 44).

Provision for the IPSA to appoint an officer responsible for investigations and compliance, who would act at arm’s length from the other functions of the IPSA, was included by the Government in the original draft of the Parliamentary Standards Bill but was amended after strong representations from the Chairman of the Standards and Privileges Committee. As there is now clear consensus on this, the Government propose to amend the Parliamentary Standards Act to provide for a compliance officer to be appointed by the IPSA through a process of fair and open competition. The compliance officer will be an independent office holder. The powers of the compliance officer to investigate complaints will be similar to those presently vested in the Independent Commissioner. The powers in relation to sanctions will be significantly different (see below).

Enforcement powers of the IPSA

The Committee recommends

“that the independent regulator’s enforcement regime should be strengthened by giving it the power to:

Compel MPs to cooperate with the new body, including through the provision of relevant information.

Require the repayment of wrongly paid or misclaimed sums, with associated costs if appropriate.

Impose, subject to the procedural safeguards laid out in the Act, its own non-parliamentary sanctions for breaches of the expenses regime (including where necessary of a financial nature) analogous to those available to HMRC and DWP, without the need to report to the Commissioner for Parliamentary Standards”

(Recommendation 45).

The Parliamentary Standards Bill which the Government presented to Parliament contained provisions allowing the IPSA to recommend sanctions. They were removed during the Bill’s passage.

As it now appears that allowing sanctions to be imposed directly by the regulator is acceptable, the Government will introduce amendments to the 2009 Act to give the compliance officer the power to impose sanctions, namely a civil penalty, as well as requiring restitution of wrongly paid allowances. Repayments, monetary penalties and costs will also be made recoverable as a civil debt. In addition, the Government will provide a route of appeal from the decisions of the compliance officer to the first-tier tribunal. Since allowances claims are not covered by privilege, there should not be any difficulty in this regard.

Cases could still be referred to the Committee on Standards and Privileges if it is felt that parliamentary sanctions are also needed or to the prosecuting authorities if the offence of making false declarations may have been committed.

Lay members of the Speaker’s Committee

The Committee recommends that

“the Speaker’s Committee on the independent regulator should include three lay members drawn from outside Parliament who have not previously been MPs or peers. They should be chosen through the official public appointments process and formally approved by the House”

(Recommendation 48).

The Government propose to bring forward legislation to provide for the appointment of lay members of the Speaker’s Committee.

General duty to act openly and transparently

The Committee recommends that the independent regulator should be placed under a general duty to act openly and transparently, to give reasons for any revisions to the expenses scheme, and to report, and take account of, the views of the general public as well as the House of Commons (Recommendation 49).

Section 5(4) of the Parliamentary Standards Act requires the IPSA to consult a number of people and bodies in preparing an allowances scheme, including “any person the IPSA considers appropriate”.

The Freedom of Information Act 2000 already applies to the IPSA, including a duty to issue a publication scheme.

The Government are however content to bring forward amendments to the 2009 Act to add an additional requirement that the IPSA must give reasons for its revisions to the allowances scheme, to give reasons for adopting a determination in respect of MPs’ pay, and to consult the general public. (See also response to recommendations 41 and 60.)

Sunset provisions

The Committee recommends that

“the sunset provisions in the Parliamentary Standards Act 2009 should be repealed”

(Recommendation 53).

The sunset provisions, set out in section 15 of the Act, were inserted in the House of Lords. They deal with the code of conduct on financial interests and the position of the independent commissioner for investigations. As both the role of the IPSA in relation to the code and the commissioner are to be repealed, the sunset clause has no further purpose and therefore can be similarly repealed.

Publication of claims

The Committee recommends that

“the independent regulator should continue to publish, at least quarterly, each individual claim for reimbursement made by MPs with accompanying receipts or documentary evidence. The information published should not be confined to claims actually reimbursed”

(Recommendation 60).

As part of the proposed amendments to the 2009 Act to give effect to recommendations 41 and 49, which require the IPSA to act transparently, the Government will bring forward legislation to place on the IPSA the duty to publish claims made and allowances paid, with such details as it considers appropriate. The 2009 Act already requires IPSA to determine procedures for the circumstances in which findings of investigations should be published. (See also response to recommendations 41 and 49.)

There are three further recommendations which would require legislation to achieve, but on which it has been accepted that immediate legislation is not necessary.

Publication of electoral candidates’ financial interests

The Committee recommends that

“all candidates at parliamentary elections should publish, at nomination, a register of interests including the existence of other paid jobs and whether they intend to continue to hold them if elected. The Ministry of Justice should issue guidance on this in time for the next general election. Following the election, consideration should be given as to whether the process should become a statutory part of the nomination process”

(Recommendation 37).

The Ministry of Justice is working on the guidance. The Ministry of Justice will discuss the approach with the Electoral Commission and others as appropriate before guidance is issued, in time for the next general election. A decision about whether to implement this on a statutory basis will, as the Committee suggests, be taken in the next Parliament.

Hon. Members who are members of devolved legislatures

The Committee recommends that the practice of permitting a Westminster MP simultaneously to sit in a devolved legislature should be brought to an end, ideally by the time of the elections to the three devolved legislatures for May 2011 (Recommendation 40)

This is not strictly an issue about MPs’ allowances. The Committee recommends that this provision should be in place by May 2011 and the Government will consult interested parties before implementing it in the next Parliament.

Term of office of IPSA Chair

The CSPL recommends that

“the chair of the new regulatory body should be appointed for a single, non-renewable five year term. The other members of the new body should in principle be appointed on the same basis, but some flexibility may need to be shown in relation to those appointed in the first round”

(Recommendation 47).

Paragraph 4(1) of schedule 1 to the 2009 Act provides for the chair of the IPSA to be appointed “for a fixed term not exceeding five years”. Paragraph 4(3) provides that “a person who has held office as a member of the IPSA (whether as the chair or an ordinary member) may be re-appointed as a member once only, for a further period (whether consecutive or not) not exceeding three years”.

The CSPL acknowledges the need for flexibility in relation to the first round of appointments. The Government accept the principle of the recommendation, but believes that amendments to the legislation are not required now. They could be made at a later date if still required.