Select Committee on Standards and Privileges Second Report


Was there an arrangement to use the OCA improperly?

21. The guidance issued by the Fees Office says:

    To qualify for OCA, any expenditure must be incurred wholly, exclusively and necessarily in the performance of parliamentary duties. This is a strict and long-established rule approved by successive Speakers. You cannot therefore claim for expenditure which is personal or party-political.[21]

22. We look first at the evidence for the proposition that there was an arrangement to use the OCA improperly. (Later we consider the evidence for the proposition that the OCA was actually used improperly.)

23. The principal witness was Mr Rowley. He told the Commissioner (and the Committee) that arrangements had been entered into to cross-subsidise the SLP`s campaign expenditure from the OCA. Mr Rowley said that, besides himself, the parties to the arrangements were Dr Reid, Mr Maxton, Ms Annmarie Whyte (the office manager at the SLP headquarters) and Mr Jonathan Upton (Director of Personnel for the Labour Party in London). Mr Rowley`s evidence to the Commissioner was summarised in her report as follows:

    43.  Mr Alex Rowley, the then General Secretary of the Scottish Labour Party, referring to the decision to switch Kevin Reid onto a full-time contract with the Party in October 1998, explained that this had been done at Dr Reid`s request (Annex 129, Q 5) ... Mr Rowley [said]:"Yes, he made it clear that he wanted his son to be on the Party books full-time but that his researcher`s salary would be available to continue working on the campaign" (ibid Q 6)

    44.  Mr Rowley also stated that both Ms Annmarie Whyte (the office manager at Scottish Labour Party headquarters) and Mr Jonathan Upton (Director of Personnel at Labour Party headquarters in London) had been party to this arrangement and that the campaign budget had been adjusted accordingly ...

    45.  ... Mr Rowley added that Dr Reid had expressly raised with him in relation to his son the regulations prohibiting the use of funds paid through the Fees Office for party political purposes (Annex 129, Q 7).

    51.  ... Mr Rowley ... understood Ms Hilliard to be receiving payment for the Party work. Mr Rowley told me he believed "that Dr Reid`s research money was being used for someone else after Kevin Reid had gone full-time", though he could not recall the specific arrangements put in place for Ms Hilliard (Annex 129, Q 14) ...

    53.  Mr Rowley told me (Annex 148A) that the first offer of help with staff for the Party`s election campaign was made by Mr Maxton to Ms Whyte—before Dr Reid had indicated that Kevin Reid was available for that purpose. Mr Rowley added that the offer from Mr Maxton had been reported to him in terms of a suggestion that Mr Winslow would work full-time for the Party but that part of his salary would be paid from the OCA. As Mr Rowley put it (Annex 148): "We had already agreed that Chris would work for the Party on a full-time basis and that this would be funded in part by the Party and in part by John Maxton MP."

    54.  Mr Rowley added: "He [Mr Winslow] was paid part-time by the Party and part-time by John Maxton. This agreement was made between me and Annmarie Whyte, and the budget papers which I was party to took account of the researcher`s money. I arranged for his [Mr Winslow`s] wage to be made up to the level of Kevin Reid`s when he was taken on full-time by the Labour Party" (Annex 129, Q 3).

24. Mr Rowley confirmed his account when he gave oral evidence to us, at Qs 147, 171-2, 175-8 and 254. The following exchange also took place:

    Q271 (Mr Bottomley) So essentially what we come down to, from your point of view and the truth you can tell, is that you had made an agreement with two MPs that staff paid by their arrangements with the House of Commons would be made available to work for the Scottish Labour Party. That is the first thing you are in effect telling us. The second is that you cannot tell us what they did with their spare time. Those are the two essential elements.

    (Mr Rowley) Yes. The agreement on both was that the Party would pay the salary of some sort or another but when it came together it would make what would be seen as a full-time salary.

25. Corroborative evidence from Mr Rafferty, Mr McKinney and Mr Sullivan is set out in paragraphs 38-9, 51 and 55-8 of the Commissioner`s report.

26. The Commissioner accepted Mr Rowley`s explanation of the notes appended to the SLP`s budget documents which referred to the salaries received by Mr Kevin Reid and Mr Winslow from Dr Reid and Mr Maxton. She set out that explanation as follows:

    63.  Mr Rowley explained in a letter to me of 20 April 2000 (Annex 129A ) how, in his view, the successive versions of the budget documents substantiated his claim that an arrangement had been entered into to divert salaries paid through the OCA to the Labour Party`s campaign budget. The documents did this, according to Mr Rowley, by showing that, after October 1998 (when Mr Reid was put on a full-time Party contract) the budget figures had been reduced by an amount roughly equal to the salaries paid to Mr Reid and Mr Winslow through the Fees Office. In other words, the monthly sum the Labour Party expected to pay to Mr Reid and Mr Winslow was now lower because it was known that the remainder of the total amount which it had been agreed they should receive (for working, in effect, full-time for the Party) would be made up from their Parliamentary researchers` salaries.

    64.  I asked Ms Whyte why the first document showed the projected monthly salary for each of Mr Reid and Mr Winslow as £1,100[22] when their contracted salaries from the Party bore no relation to that figure (£333 per month for Mr Reid up to October 1998 and £500 per month for Mr Winslow until November 1998). Ms Whyte replied that in both cases the figure of £1,100 was included "at an early stage" for planning purposes and assumed that Mr Reid and Mr Winslow would be taken on for 33¾ hours per week, although, as Ms Whyte added, "as it turned out the SLP did not do so".

    65.  Mr Rowley disputed this interpretation, describing Ms Whyte`s reference to taking on Mr Winslow for a 33¾ hour working week as "simply not the case". As indicated earlier[23], he added: "We had already agreed that Chris would work for the Party on a full-time basis and that this would be funded in part by the Party and in part by John Maxton MP".

    66.  At my request, Mr Rowley also provided me with a copy of an internal Party briefing note prepared in connection with the first of the three budget documents (Annex 129A). This consisted of numbered explanatory notes corresponding to different items in the budget. Notes 7 and 8, referring to the salary projections for Mr Winslow and Mr Reid respectively, read:

      7: "Salary & employers contributions - income of £6,000 from J Maxton MP"
      8: "Salary & employers contributions - income of £10,000 from J Reid MP".

    67.  Ms Whyte`s explanation for the notes was that they were intended merely to record the fact that Mr Reid and Mr Winslow "had other sources of income from their MP employer". She further stated : "The Scottish Labour Party did not receive any payments from John Maxton or John Reid, nor did it regard itself as being subsidised by either MP". Mr Rowley described Ms Whyte`s account of the purpose of the notes as "not true". And of Ms Whyte`s claim that the SLP received no money from the two Members he added : "... neither John Reid nor John Maxton paid any money to the Party, they paid the individuals [ie Mr Reid and Mr Winslow] direct".

27. The Commissioner drew our attention to evidence from Mr Rowley and Mr Rafferty about concern at a high level in the Labour Party about the employment arrangements of Mr Kevin Reid and Mr Winslow. We have already quoted extracts from paragraphs 43-5 of the Commissioner`s memorandum, in paragraph 23 above; paragraph 59 of her memorandum expresses her belief that —

    Mr Rafferty reported the gist of this conversation [the conference call] to the First Minister, Mr Dewar. He said that the First Minister had taken the view that, given the problems already being experienced with critical press coverage of other matters relating to the Scottish Parliament and Executive, it might not be helpful for those involved to engage in public speculation or gossip on the matter (Annex 153, p. 7). That conclusion was conveyed by Mr Rafferty to all the special advisers. Mr Dewar told me that he had no recollection of having discussed this matter with Mr Rafferty (Annex 211).

Mr Dewar`s evidence to the Commissioner was in the following terms:

    I am afraid I am not in a position to help with your enquiries. During the campaign for the Scottish Parliament I spent most of my time travelling the country. John Rafferty was of course based at the Scottish Labour Party`s Headquarters in Glasgow during the campaign so we had only limited contact. I have no recollection of any conversation at any time with Mr Rafferty of the nature you describe in your first question. Your further questions on that matter therefore fall.

28. We are inclined to hold the corroborative evidence referred to in paragraph 25 above, and the evidence set out in paragraph 27 above, as not sufficiently direct.

29. As regards the documentary evidence on which the Commissioner relied, we have been told by Dr Reid that the first budget document, the authenticity of which was not accepted by Labour Party officials in London,[24] represented the SLP`s bargaining position in its negotiations with the national party over the budget for the Scottish Parliament election campaign (Q300). No other plausible explanation for the notes referring to the salaries received by Mr Kevin Reid and Mr Winslow from Dr Reid and Maxton has been offered except by Mr Rowley. The explanation given by Ms Whyte (namely, that the notes simply recorded the fact that the two researchers had other sources of income), which is expressly rejected by Mr Rowley, seems to us unlikely to be correct, since that information was not relevant to planning the SLP`s expenditure. Ms Whyte`s later statement, that she needed information about Mr Winslow`s other earnings to ensure that he was taxed correctly,[25] appears to be based on a misunderstanding of the working of Pay As You Earn[26]. Nonetheless the documentary evidence, taken on its own, seems to us to be possibly inconclusive. We have noted the opinion expressed to the Commissioner by the Director of Finance and Administration, which the Commissioner properly drew to our attention,[27] and which we have quoted in paragraph 6 above.

30. We turn to Mr Rowley`s evidence which is crucial to this complaint. We have no doubt of the sincerity and honesty of Mr Rowley`s belief in what he told us nor of his sense of public duty in answering truthfully questions put to him by the Commissioner or by the Committee. He spoke of his deep and continuing loyalty to the Labour Party (Qs 227-9, 234) and he acknowledged Dr Reid`s support when he (Mr Rowley) first became General Secretary (Q 255). He explained that he had not initially made any allegations against anyone; he had simply sought to tell the truth when he had been asked questions (Q193). He accepted responsibility for his own part in what had happened. He now believed the arrangements to have been wrong. He said he had not given the propriety or otherwise of the arrangement any thought at the time, because he understood that similar arrangements had been entered into in the past (Q186).

31. Mr Rowley`s evidence, although doubtless given in good faith, may in part be overstated. He was mistaken when he told us that he "was absolutely clear that neither [Ms Hilliard nor Mr Winslow] were working for MPs, they were working full-time for the Labour Party" (Q172). There is evidence that both were doing some work for Members. Besides the evidence of the researchers and the Members, Mr Rafferty told us that Mr Winslow was doing work for Mr Maxton (Qs 68-9), and Dr Reid provided the Commissioner with documentary evidence illustrating the work done for him by Ms Hilliard.[28] In the Commissioner`s view both Ms Hilliard and Mr Winslow did some work for Members, although (as they have both admitted to her) this fell short of their contractual obligations in the election period for the Scottish Parliament.[29] (We discuss the question of contractual obligations in relation to variable contracts in paragraphs 42 and 46 below.) Although Mr Rowley specifically rejected this interpretation when it was put to him (Q254), it is possible that the basis on which the researchers` services were made available to the Party was that they would be equivalent in commitment, or in value, to full-time staff while continuing to work their contracted variable hours for their Member.

32. Mr Rowley told us that he believed that the very fact that the researchers were employed by Members of Parliament should debar them from working for a political party (Qs 173 and 238). He is wrong in this belief. There is nothing improper in paid employees of Members also doing voluntary or paid work for a political party. Mr Rowley`s understandable anxiety that such a practice could give rise to damaging stories in the press or to complaints such as this one may have led him to assume that the House`s rules were more stringent than they are.

33. Mr Rowley`s understanding of events is strenuously disputed by the two Members concerned. When they appeared before us we found them impressive witnesses who appeared to hold their views sincerely. Mr Rowley`s understanding is also disputed by the three researchers, who are in a position to know what happened, although we recognise that their understanding may be influenced by their loyalty to the two Members. It is also disputed by three senior officials of the Labour Party in Scotland and in London. We have taken account of the fact that the witnesses may have conflicting loyalties. This weight of evidence cannot easily be disregarded. It must be set against the more than occasional failures and reluctance on the part of the Members, the researchers and the Party officials to respond fully and promptly to the Commissioner`s requests for information,[30] whether they regarded the inquiries as justified or not. We note with disapproval Mr Jonathan Upton`s failure to answer a number of direct questions from the Commissioner.

34. In the light of these considerations we conclude that the evidence for an improper arrangement does not reach the standard we require to uphold the complaint. It is therefore not necessary for us to consider in detail the responses to this evidence which were put in by Mr Maxton and Dr Reid. Had it been necessary for us to do so we would have attached particular weight to —

    —   the strength and consistency of the two Members` denials of the allegation;

    —   the inherent improbability of the suggestion that a busy Minister representing a constituency a long way from London had spare capacity from the OCA which could have been diverted to party-political work.

35. Dr Reid`s evidence to us on the question of an arrangement was as follows:

    The original conversation was not with Alex Rowley, it was a strategy meeting, as Ms Filkin has reported. What happened in the course of it is that we were discussing two things, one was the budget negotiated with Labour Party headquarters. ... It was a bargaining position we had in that first budget. That is exactly why we had everybody marked down as full time, and we had people in it that we never got. It is what we all do in negotiations. During the course of that we were discussing how we can get resources in to do this, that and the next thing. One of the things that came up, naturally, is who is committed to the Labour Party. People who are committed to the Labour Party are sometimes working for labour organisations, MPs, all the rest of it, that came up... The next item on the agenda was funding and the budget, which we were to get from Labour Party headquarters. When I raised the question of Kevin it was fully in that context. When I said, "We will get the money for him", it was in the context of the next item in the agenda. It is as plain as a pikestaff if you look at that agenda page... When they said they were looking for somebody for media monitoring I said, "My son is going to have time to spare, I will ask him if he will come in and help". The reason he had time to spare is that that meeting happened on 28th April and Kevin was finishing his university classes within a fortnight, so instead of working at university and for me he could work for the Labour Party and me. I had to ask Kevin if he was willing to do it because it would mean him having to sacrifice him going out looking for a new career, as that is logically what he would have done. Alex Rowley was never party to those discussions, Paul McKinney was at them—Paul McKinney whose evidence I am more than happy to accept, because McKinney himself will verify what I am saying. It is Mr Nelson's handwritten note of what has says Mr McKinney said that is subtly different, where he said I would pay him. When I said that then I had a number of conversations with Alex Rowley. I want you to understand the context of them. They were not like this, they were not very formal meetings, they were mainly snatched conversations, some time in the middle of a busy Labour Party headquarters, where I would be visiting—as sometimes we do at headquarters—for two or three minutes, nipping in. I said to Alex, "Kevin will come in. He is prepared to do the work here. He can be flexible in his hours but," this is the important point, "Alex, I want him to have a separate contract. I want him to have a separate contract because I do not want any implication that he is not being paid for the work that he does for you". Of course if Kevin had a contract for three hours, like any Labour Party supporter or any Conservative or any Independent supporter he would not sign off exactly after the three hours, he could give some voluntary time, if he wished. This is the important matter, there was never anything said, communicated, winked at, nudged to Alex Rowley which said, "He will not have to do anything for me". That is the crucial point. That is the conversation we had. Alex Rowley has obviously, from what I have seen, come to the view, based apparently on his previous experience, that that must have meant they were not doing anything for us. He is wrong in that, as the evidence shows. (Q300)

    I have not denied, nor did I in my opening statement, that I wanted to help the Labour Party. That was communicated to Alex Rowley. If you want to call that an arrangement, call that an arrangement. (Q320)

    There was no implication or communication which said to him [Mr Rowley] that the staff that I employed would not work for me. (Q321)

    If the arrangement made was that I would help the Labour Party, if you can call that an arrangement, yes, but there was nothing improper in that. If the arrangement made was that my employees would not work for me, not only was it not made but the evidence Ms Filkin herself accepts completely undermines that it would have been made, because you would not make an arrangement and then immediately go and break it. (Q325)

21  The Green Book (Parliamentary Salaries, Allowances and Pensions), p. 15. Back

22  Equivalent to £1,000 when employers' National Insurance Contributions are subtracted (see paragraph 196). Back

23  See paragraph 53. Back

24  Appendix 1, para. 47. Back

25  Appendix 1, Annex 186C. Back

26  Appendix 1, Annex 209A. Back

27  Appendix 1, paras. 69, 213. Back

28  Appendix 1, para. 94. Back

29  Appendix 1, paras. 268-73. Back

30  Appendix 1, paras. 74-6, 84-5, 92-100, 109-10, 114, 238, 268-9. Back

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