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Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 02/12/2003
Report of the Independent Remuneration Panel



ANNEXE 2


The report of the Independent Remuneration Panel
appointed to review the allowances paid to Councillors of
Waverley Borough Council















November 2003
- 11 -
1. INTRODUCTION

1.1 The Local Government Act 2000 requires all local authorities to appoint an Independent Remuneration Panel to advise on the terms and conditions of their scheme of Councillors’ allowances. We were re-appointed by Waverley Borough Council to undertake this process and make recommendations on its future scheme.

1.2 Our terms of reference were in accordance with the requirements of The Local Authorities (Members’ Allowances) (England) Regulations 2003 (“the 2003 Regulations”), together with “Guidance on Consolidated Regulations for Local Authority Allowances” issued jointly by the Office of the Deputy Prime Minister (ODPM) and the Inland Revenue. Those requirements are:-

To make recommendations to the Council as to:-

(a) the amount of basic allowance;

(b) the responsibilities or duties in respect of which the following should be available:-

(i) special responsibility allowance;

(ii) travelling and subsistence allowance;

(iii) dependents’ carers’ allowance; and

(iv) co-optees’ allowance;

and the amount of such allowances;

(c) whether payment of allowances may be backdated, in the event that the scheme is amended at any time, so as to affect an allowance payable for the year in which the amendment is made;

(d) whether adjustments to the level of allowances may be determined according to an index and, if so, which index and how long that index should apply, subject to a maximum of four years before its application is reviewed;

(e) which Members are to be entitled, if any, to pensions in accordance with a scheme made under Section 7 of the Superannuation Act 1972, and whether basic allowance or special responsibility allowance, or both, should be treated as amounts in respect of which such pensions are payable in accordance with such a scheme.

1.3 The composition of the Panel was as follows:-

Michael Clark (Chairman)
David Clay
Deborah Pepper
Jim Rattray
Peter Williams


1.4 We wish to acknowledge the considerable support that has been provided by Robin Pellow, Graeme Clark and Jean Radley.

2. BACKGROUND INFORMATION

2.1 The Panel met in July, 2003 to consider Members’ entitlement to pensions in accordance with Section 7 of the Superannuation Act, 1972 and, to determine whether town and parish councils should be given the opportunity to offer to their councillors a basic parish allowance and/or parish travelling and subsistence allowances to recompense them for their expenses incurred in the course of their duties as town/parish councillors and a basic allowance. The latter has been completed jointly with Guildford Borough Council.

2.2 We were supplied with the ODPM/Inland Revenue Guidance referred to in paragraph 1.2 above and noted that, in accordance with the 2003 Regulations, a new scheme for Members’ Allowances had to be introduced by 31st December 2003. As a result, the Executive at its meeting on 28th October 2003 endorsed the proposal for the Panel to carry out this review.

2.3 The Panel made recommendations to Waverley for a new scheme of allowances in October 2002. However, the Council deferred consideration of the Panel’s recommendations, as set out in Annexe A attached, until after the May 2003 elections. Nevertheless, it was agreed that an allowance for the Deputy Leader and the Chairman and Vice-Chairman of Standards Committee should be added to Waverley’s current Members’ Allowances Scheme from 1st April 2003 and its existing scheme should be increased in line with the staff pay award for 2003.

2.4 We recognise that appointment as a Councillor is essentially a voluntary service to the local community and that:-

(i) those considering offering themselves for election should not be deterred from doing so by the costs they may have to bear or earnings they may have to forgo;

(ii) a Basic Allowance must be paid to all Councillors; this allowance is intended to recognise the time devoted by Councillors to their work and to cover incidental costs, such as the use of their homes and private telephones;

(iii) Special Responsibility Allowances may be paid to those Councillors who have significant additional responsibilities over and above the generally accepted duties of a Councillor;

(iv) a Dependants’ Carers’ Allowance may be paid to those Councillors who incur such costs whilst undertaking “approved duties”;

(v) some or all of the allowances may be made pensionable;

(vi) Councillors may also claim the cost of travelling expenses incurred on “approved duties”, as well as subsistence allowances in certain circumstances;


(vii) the amounts payable to Councillors are matters for local determination, taking account of particular circumstances, as well as the Constitution of the Council.

3. CURRENT SCHEME

3.1 At present, Waverley Councillors are entitled to a total basic allowance of 2,016 per annum. In addition, some Councillors receive special responsibility allowances for undertaking additional duties in accordance with Schedule 1, Annexe B, attached.

3.2 Councillors may also claim the cost of travel and subsistence expenses incurred on approved duties and Child Care and Dependants’ Carers’ Allowance.

4. PRINCIPLES

4.1 The following principles, which were established at the time of our first review, continue to underpin this review:-

(i) the work of a Councillor is essentially voluntary in nature. This principle is recognised and supported by all Councillors interviewed during our reviews in 2002 and 2003. Government Guidance also recognises that some elements of this work should remain voluntary;

(ii) any scheme of allowances should be fair, transparent and logical;

(iii) allowances apply to roles within the Council, not individual Councillors;

(iv) allowances should represent reasonable compensation to Councillors for expenses they incur, and time they commit, in relation to their role, not remuneration for their work. Councillors are not paid employees of the Council and their allowances should not be treated as salary;

(v) allowances cannot be used to recognise individual performance. The legislation does not provide for “performance related” allowances.

(vi) special responsibility allowances are used to recognise the significant additional responsibilities which attach to some roles, not just the extra time required.

4.2 In making our recommendations, we have sought to maintain a balance between:-

(i) the essentially voluntary nature of a Councillor’s role;

(ii) the need for allowances to provide appropriate financial recognition for the expenses incurred and time spent by Councillors in fulfilling their roles;

(iii) the need to ensure that the level of allowances is sufficient so as not to discourage anyone considering becoming a Councillor or to deter existing Councillors from fulfilling their role;


(iv) the need for the allowance system to be as simple as possible, without this consideration becoming an undue constraint on the design of the scheme.

5. OUR INVESTIGATIONS

Councillors’ views on the level of allowances

5.1 All Councillors interviewed in 2002 and 2003 accepted that much of their work was voluntary in nature and this was reflected in the 2002 written returns they made to the Panel. However, many said that they were not aware of the heavy workload involved until they were elected. All accepted that the sacrifices made to be a Councillor were an individual decision. The majority agreed that whilst loss of earnings should not be made good, there should be a reasonable basic allowance to recognise the time commitment in normal backbench work, and to ensure that essential out of pocket expenses were reimbursed.

5.2 In 2003, we interviewed the Leader of the Council and four new members (two portfolio holders and two backbenchers). All Councillors recognised that Members of the Executive took on significant responsibilities over and above those of backbenchers. This confirmed the Panel’s conclusions of 2002.

5.3. Although the new ruling group on the Council has re-organised the responsibilities of the Lead Members on the Executive, we do not consider that the underlying workload of those Councillors with special responsibilities has changed significantly since the last review.

Compensation for time and responsibility

5.4 Responses to the Panel’s questionnaire, during the first review of Members’ allowances in 2002, showed that Councillors spent widely varying hours on activities related to their being a Councillor. Returns submitted by backbench Councillors showed hours ranging from 10 to 70 a month, averaging around 30 hours on duties associated with their role, as do interviewees of 2003. Returns from Councillors with additional responsibilities (other than the Mayor) showed that they spent an average of some 57 hours per months on their duties.

5.5 In relation to external evidence from the Improvement and Development Agency (an agency committed to promoting highest standards in local government), Waverley backbench councillors spend below the average of 57 hours per month on Council work.

5.6 The responses and interviews showed that the Leader and the Members of the Executive had significant responsibilities and committed a considerable number of hours each month to the Council. There was also additional significant responsibility in the work of the Chairmen of committees.


Out of pocket expenses

5.7 We are of the view that out of pocket expenses can vary greatly between Councillors, both as regards heads of cost and amount. It is well nigh impossible to quantify these costs or to establish a sensible “average”. We understand that the Inland Revenue allows 500 per annum as a deduction for “unvouched expenses”, but will allow more if claimed and justified.

5.8 We have reviewed the list of facilities that the Council provides to all Members, including IT equipment and support, which is set out in Annexe C, attached.

Travelling and Subsistence Allowance & Dependants’ Carers’ Allowance

5.9 The 2003 Regulations provide that a scheme of allowances may also include the payment of:-

(a) a travelling and subsistence allowance to its members and co-opted members (which may include provision for the payment of an allowance for those members who travel by bicycle or other non-motorised transport); and

(b) a dependants’ carers’ allowance to those councillors who incur expenditure for the care of children or other dependants

whilst undertaking one or more of the following duties:-

(i) attending a meeting:-

of the authority or a committee or sub-committee of the authority

of some other body (including a committee or sub-committee of such body) to which the authority makes appointments or nominations

which has both been authorised by the authority, a committee, or sub-committee of the authority or a joint committee of the authority and one or more other authorities, or a sub-committee of a joint committee and to which representatives of more than one political group have been invited

of a local authority association of which the authority is a member

or

(ii) duties undertaken on behalf of the authority:-

in pursuance of any procedure rule requiring a member or members to be present while tender documents are opened

in connection with the discharge of any function of the authority conferred by or under any enactment and empowering or requiring the authority to inspect or authorise the inspection of premises


or

(iii) any other duty approved by the authority in connection with discharging the duties of the authority or its committees or sub-committees.

5.10 The majority of Councillors supported a payment of both of these allowances on the basis that to know such costs could be claimed might be an encouragement to potential candidates. Equally, it might assist present Councillors to continue in office in spite of a change in their personal circumstances.

5.11 The level of allowances claimed under these headings by Members for the 2002/03 financial year was as follows:-

Travelling & Subsistence Allowance: 23,800
Dependants’ Carers Allowance: 70

Co-optees’ Allowance

5.12 The 2003 Regulations also make provision for the payment of a co-optees’ allowance to any co-opted members of a Council’s committees or sub-committees for attendance at conferences and meetings. Our interpretation of the Regulation is that there is no distinction between Co-Opted Members and Independent Members.

5.13 We understand the Council has appointed two co-optees to the Community Overview and Scrutiny Committee. The three appointees to the Standards Committee are considered by the Council to be “Independent” Members rather than Co-Optees.

6. CONCLUSIONS

Basic Allowance

6.1 In making our recommendations as to the level of the basic allowance, we considered the environment within which the Waverley Councillors operate. Waverley is a mixed urban and rural district covering approximately 34,500 hectares with a population of 115,000, three quarters of whom live in the four centres: Farnham, Godalming, Haslemere and Cranleigh. All four are located on or near the fringes of the borough.

6.2 Because of the rural nature of the Borough, many Councillors have to cover relatively longer distances to attend to Council and their Borough/Ward business than would be the case in a more urban council. We also noted that each Waverley Councillor represents approximately 2,017 people, which is low in comparison to many other Surrey districts.

6.3 As stated earlier in this report, many Councillors devote significant amounts of time to their duties. Our survey at the time of our previous report showed that backbench Councillors spent, on average, 30 hours per month on their duties, of which half was spent on “constituency business”. Councillors with additional responsibilities worked an average of 57 hours per month, with some working substantially longer than this. Information obtained in this review confirms this.


6.4 We also considered the levels of allowances paid by other Surrey district councils and those authorities within the Audit Commission family group. In addition, we looked at the allowances paid to Board members of local Primary Care Trusts and at the Local Government Association daily rate but consider these to be not as relevant as the allowances paid by comparable councils.

6.5 There are 57 Councillors at Waverley, more per head of population than any other Surrey District with a population over 85,000. This inevitably makes the total cost of Waverley Councillor allowances relatively high compared with equivalent Boroughs.

6.6 Accepting the comments in paragraphs 6.1 to 6.5 and together with the principles set out in paragraph 4, we consider that the basic allowance should be set at a level which:-

Recognises and compensates Waverley Councillors for the time they spend on their duties

Reimburses them for the expenses they incur in the course of their duties

Reflects the nature of the role Councillors play in Waverley

6.7 We repeat our previous recommendation that the basic allowance should be paid in two parts:-

(i) The first part comprises an allowance to compensate for out of pocket expenses for which we consider that 500 per annum should be paid.

(ii) The second part comprises an allowance to recognise the responsibility and time involved in the role of Councillor and we consider an allowance of 1,600 per annum is reasonable for the time spent and the commitment described in paragraph 5.4 and the additional considerations outlined in paragraphs 6.1 and 6.2 above.

6.8 WE THEREFORE RECOMMEND that the Basic Allowance payable to all Members of Waverley Borough Council should comprise of an allowance of 500 per annum to compensate for out of pocket expenses, and an allowance of 1,600 per annum to recognise time and effort.

Special Responsibility Allowances (SRAs)

6.9 We remain of the view that it is fair and straightforward to apply a multiplier to the time and effort component of the basic allowance to determine the SRAs to be paid to those Councillors with significant additional responsibilities and to reflect the differing levels of those responsibilities assumed in different roles.

6.10 The Regulations do not limit the number of SRAs which may be paid, nor do they prohibit the payment of more than one SRA to any one Member, although they do require that an SRA is paid to at least one Councillor who is not a member of the controlling group on the Council.


6.11 We recognise that these are important considerations for local authorities and that if the majority of Members of the Council received an SRA, the local electorate may rightly question whether this was justified. Under the current scheme of allowances for Waverley, there are 32 separate special responsibility allowances.

6.12 The ODPM Guidance advises that SRAs may be paid to those members of the Council who have significant additional responsibilities, over and above the generally accepted duties of a councillor. These special responsibilities must be related to the discharge of the authority’s functions and we have concluded that only those roles listed below merit such an allowance:-

Leader of the Council

Deputy Leader of the Council

Shadow Leader of the Council

Members of the Executive

Portfolio Holders

Chairmen of the Overview and Scrutiny Committees, Licensing and Development Control Committee and Sub-Committees

Chairman of Standards Committee.

6.13 WE RECOMMEND that a multiplier (set out in the table in paragraph 7 below) should continue to be attached to each role recorded in paragraph 6.12.

Pensions

6.14 The 2003 Regulations require the Panel to make recommendations as to which Councillors shall be entitled to pensions in accordance with a scheme under Section 7 of the Superannuation Act 1972 and whether the basic allowance or SRA (or both) should be pensionable.

6.15 We have considered the issue of eligibility for pensions and accept that it is important for everyone to make proper financial provision for their retirement. We therefore considered whether it was appropriate for the Council to offer membership of the Local Government Pension Scheme (LGPS) to Councillors. We noted that:-

the 2003 Regulations give the option of pensions for Councillors which would help them make proper provision for retirement

time taken on Council duties may, for some Councillors, and particularly for those with special responsibilities, reduce the opportunities for full time pensionable employment

a broader cross section of the community might be attracted to stand for election to the Council if pensions were offered


6.16 We recognised that:-

work as a Councillor is essentially a voluntary activity

virtually all Council and committee meetings are held in the evening

some Councillors combine their role with full or part time paid employment as a result of which they are able to accrue pension benefits

some Councillors are already in receipt of a pension, being retired or having taken early retirement

the majority of Councillors we interviewed showed no particular interest in making allowances pensionable although there was a strong view to the contrary from one Member

although the 2003 Regulations do not specifically require the Panel to examine costs of pension provision, this seems particularly relevant as there would be significant additional costs to the Council in making pension provision for Councillors, especially given their higher than average age profile

it is always open to Councillors to make their own arrangements for pension in retirement based on their allowance

6.17 Whilst pension provision for Councillors may be regarded as desirable, the question of cost also needs to be considered carefully. If the average age of councillors was 59 years, the underlying contribution rate would be around 15% compared with the current actual rate for Officers of 10.02%.

6.18 WE RECOMMEND that only those Councillors in receipt of a SRA should be considered for membership of LGPS and then only in respect of the SRA. However, a decision as to whether this is a reasonable expense for the Council to bear is that of the Council.

Travelling and Subsistence Allowance

6.19 We note that, following our first review of Members’ Allowances, we recommended that no changes be made to the existing arrangements for travelling and subsistence allowances. We have re-examined the current travelling and subsistence rates and note that Waverley’s current rates are the same as those recommended by the National Joint Council for Local Government Services (NJC).

6.20 As part of the travelling and subsistence allowance, the 2003 Regulations also provide for the payment to councillors of an allowance in respect of travel by bicycle or by any other non-motorised form of transport on approved Council business, as referred to in paragraph 5.9 above. We understand that the Council actively encourages staff to cycle to work and has an agreed mileage rate of 20p per mile. This rate is in line with the ODPM recommended mileage rate for bicycle travel. We can see no reason why Members should not also receive a similar allowance.


6.21 WE RECOMMEND:-

(i) That the Council’s motor mileage rates for Members should continue to be aligned with the current NJC Car Allowances for Casual Users as set out in Annexe D, attached and revised, from time to time, by such revisions as may be agreed by the NJC.

(ii) That the Council’s subsistence rates for Members should continue to be aligned with the current NJC rates as set out in Annexe D and revised from time to time, by such revisions as may be agreed by the NJC.

(iii) That a cycle mileage allowance of 20p per mile be introduced for Members and revised, from time to time, by such revisions as may be recommended by the ODPM.

Dependants’ Carers’ Allowance

6.22 We recognise that the costs to Councillors of providing care for their children or dependants whilst on approved Council business, as referred to in paragraph 5.9 above, can be considerable.

6.23 To contribute towards these costs, to ensure that potential candidates are not deterred from standing for election and that current members are able to continue in spite of any change in their personal circumstances, WE RECOMMEND an allowance of 6 per hour up to a maximum of 100 per month.

6.24 These allowances should not be payable for the employment of a member of the claimant’s own household. All claims should be supported by documentary evidence to the satisfaction of the Director of Finance.

Co-Optees’ Allowance

6.25 As indicated in paragraph 5.12, we consider that there is no distinction between Co-Optees and Independent Members. Of the Council’s five Co-Optees, only the Chair of the Standards Committee has a sufficiently heavy workload and level of responsibility to warrant paying an allowance. WE RECOMMEND that the Chairman of the Standards Committee receives an allowance of 500.

Indexing of Allowances

6.26 To enable adjustments to be made to the level of allowances for the period during which the new scheme of allowances is in operation:-

WE RECOMMEND that the basic allowance and each of the SRAs be increased annually in line with the percentage increase in Waverley’s staff salaries until November 2007, at which time the scheme shall be reviewed again by an Independent Remuneration Panel.

Backdating of Allowances

6.27 WE RECOMMEND that the scheme of allowances to be agreed by the Council be backdated to 1 May 2003.


7. WE THEREFORE RECOMMEND the following scheme of allowances for Members of Waverley Borough Council:

Factor
x 1,600
Amount
No.
Total
()
Basic AllowanceOut of pocket expenses
500
57
28,500
Compensation for time & responsibility
1.0
1,600
57
91,200
Total Basic
2,100
57
119,700
Special ResponsibilityLeader of the Council
3.5
5,600
1
5,600
Deputy Leader
1.0
1,600
1
1,600
Shadow Leader
2.0
3,200
1
3,200
Members of the Executive
1.0
1,600
10
16,000
Portfolio Holders
1.0
1,600
9
14,400
Chair: Dev Control
1.25
2,000
1
2,000
Chair: Licensing
1.00
1,600
1
1,600
Chairs: Overview & Scrutiny
1.5
2,400
3
7,200
Chairs – Dev Control sub-committees
1.25
2,000
4
8,000
Total Special Responsibility
59,600
Co-optees’ Chair: Standards
Flat rate of 500
500
Total Basic + Special Resp +
Co-optees’
179,800
Dependants’
Carers’
6 per hour to a maximum of 100 per month