Select Committee on Standards and Privileges Ninth Report


NINTH REPORT


The Committee on Standards and Privileges has agreed to the following Report:

A NEW CODE OF CONDUCT AND GUIDE TO THE RULES

1. In March 2001 our predecessors recommended a number of changes to the rules relating to the conduct of Members,[1] which are still awaiting consideration by the House. In this Report we put forward further proposals which have a bearing on our predecessors' recommendations. These relate to the "advocacy rule" (the ban on lobbying for reward or consideration) and to certain aspects of the rules on registration of interests. Our intentions are to simplify and to clarify the rules, and where practicable to align them more closely with the requirements of the Electoral Commission.

2. We recognise that there will always be room for argument about precisely where the line should be drawn between those interests which have to be registered and those which do not, and that any decision must to some extent be arbitrary. We believe the changes we are recommending after careful consideration are changes for the better and strike an appropriate balance between the competing considerations of privacy and openness about interests which might be thought to influence a Member's actions. We propose to keep them under review.

3. We also describe the procedure we have instituted which enables Members to rectify minor or inadvertent failures to register or declare interests. Annexed to this Report is a new version of The Code of Conduct and The Guide to the Rules, amended to take account of our and our predecessors' recommendations, which we commend to the House.

Restrictions on the initiation of parliamentary proceedings

4. In December last year we published a consultation paper in which we put forward two possible options for relaxing the rule which forbids Members from initiating any parliamentary proceeding which relates specifically and directly to the affairs of a body (or of a wider group) in which they have (or expect to have) a pecuniary interest.[2]

5. The two options on which we sought the views of Members and others were —

      (i)  an "exclusive benefit" rule as proposed by the Committee on Standards in Public Life, which would forbid a Member from seeking to confer benefit exclusively on a body in which he had (or expected to have a pecuniary interest); and

      (ii)  a "disproportionate benefit" rule, which would forbid a Member from doing anything in the House the main purpose of which was (or might reasonably be thought to be) to advance disproportionately his own interests or the interests of any organisation with which he was connected.

6. We are grateful to all those who responded to our consultation paper.

7. We indicated in our consultation paper that, of the two options, "our preference [was] for that put forward with the authority of the Committee on Standards in Public Life, which would be clearer and therefore easier to apply". We are strengthened in our view by the fact that the Wicks Committee, whose views we sought as part of the consultation process, continues to support that option.

8. We gave careful consideration to a proposal which was put to us that the present rule on initiation should continue to apply in cases where a Member was providing parliamentary services, in his capacity as a Member, to some outside organisation, and was therefore required to deposit an agreement. On balance we took the view that the clarity of the original proposal from the Committee on Standards in Public Life should be the overriding consideration, and that the requirement to register and to declare interests was a sufficient safeguard; but we propose to keep the matter under review.

9. We recommend that the Guidelines on the application of the advocacy rule (the ban on lobbying for reward or consideration) should be amended as follows:

    1.  Parliamentary proceedings: When a Member is taking part in any parliamentary proceeding or making any approach to a Minister or servant of the Crown, advocacy is prohibited which seeks to confer benefit exclusively upon a body (or individual) outside Parliament, from which the Member has received, is receiving, or expects to receive a pecuniary benefit, or upon any registrable client of such a body (or individual). Otherwise a Member may speak freely on matters which relate to the affairs and interests of a body (or individual) from which he or she receives a pecuniary benefit, provided the benefit is properly registered and declared.

    2.  Constituency interests: Irrespective of any relevant interest which the Member is required to register or declare, he or she may pursue any constituency interest in any proceeding of the House or any approach to a Minister or servant of the Crown, except that:

      —  where the Member has a financial relationship with a company in the Member's constituency the guidelines above relating to parliamentary proceedings shall apply;

      —  where the Member is an adviser to a trade association, or to a professional (or other representative) body, the Member should avoid using a constituency interest as the means by which to raise any matter which the Member would otherwise be unable to pursue.

10. If our recommendation is agreed to, we would regard it as a very serious breach of the rules of the House if a Member failed to register or declare an interest which was relevant to a proceeding he had initiated.

Delegations

11. Our predecessors recommended that the Resolution of the House on delegations, which provides that "... a Member with a paid interest should not initiate or participate in, including attendance, a delegation where the problem affects only the body from which he has a paid interest", should be tightened up. As the wording of the Resolution is consistent with the "exclusive benefit" rule for parliamentary proceedings which we have now recommended, we consider that it should be left unchanged. We remind all Members who may participate in, or accompany, a delegation to Ministers or public officials of the need to declare any relevant interest.

A REALISTIC DE MINIMIS FIGURE

12. The main purpose of the Register is to provide information about benefits which might reasonably be thought to influence a Member's actions. Without a realistic de minimis level, below which interests do not need to be registered, there is a danger that interests in the Register which are of substance will be obscured by the proliferation of relatively insignificant benefits, the recording of which does not serve the Register's main purpose. In our view an appropriate de minimis figure for categories of interest including gifts, hospitality, material benefits and remuneration is 1% of the parliamentary salary (currently about £550). We recommend that interests the value of which does not exceed 1% of the current parliamentary salary should not be required to be registered.

13. All single benefits of whatever kind which exceed the threshold should be registered in the appropriate category unless a higher threshold is specified in the relevant category. All benefits received from the same source in the course of a calendar year, which cumulatively amount to more than 1% of the current parliamentary salary, should also be registered. Members who consider that any benefit they have received falls within the definition of the main purpose of the Register, summarised above, even though it does not exceed the 1% threshold, should register it.

EMPLOYMENT AGREEMENTS (AGREEMENTS FOR THE PROVISION OF SERVICES)

14. If our recommendation is agreed to, remuneration under Category 1 (Directorships) and Category 2 (Remunerated employment, office, profession, etc.) will not have to be registered if it does not exceed the 1% threshold. No useful purpose is served by requiring Members who provide parliamentary services to deposit an employment agreement with the Commissioner if their remuneration falls below the threshold for registration. We recommend that a Member who provides services in the capacity of a Member and whose remuneration does not exceed 1% of salary should no longer be required to deposit an agreement or to disclose the level of remuneration received.

15. The two lowest bands in which remuneration has to be disclosed (if it is received for services provided in the capacity of a Member) are "up to £1000" and "£1001-£5000". With a de minimis figure of 1% of salary the lowest band will serve little purpose. We recommend that these two bands should be replaced by a single band of "up to £5000".

MEDIA WORK

16. We have reviewed our predecessors' recommendations relating to media work[3] with a view to making them consistent with the foregoing recommendations and simplifying them further.

17. We recommend that Members who register media work related to parliamentary affairs under Category 2 should not be required to deposit an agreement, but that the remuneration, or value of the reward, they receive for each commitment, or for each group of commitments for the same organisation or audience in the same calendar year, should be specified in the Register in the appropriate band.

18. Where the total remuneration received from an employer or client, or through an agency, in the course of a calendar year does not exceed the 1% threshold, it would not have to be registered, and the level of remuneration received would not have to be disclosed.

19. Media work which is wholly unrelated to parliamentary affairs would have to be registered under Category 2 if the remuneration exceeds the 1% threshold, but the level of remuneration received would not have to be disclosed.

REPORTING OF POLITICAL DONATIONS TO THE ELECTORAL COMMISSION

20. Under the Political Parties, Elections and Referendums Act 2000 a donation to a Member "for his use or benefit ... in connection with any of his political activities" has to be reported to the Electoral Commission if it is worth more than £1000 (either as a single donation or as multiple donations from the same source of more than £200 during the course of a calendar year).

21. We believe it is desirable in principle that the reporting regimes operated by the Electoral Commission and the House should be aligned as closely as possible, since to require Members to use different criteria when reporting the same benefit may cause confusion. Because the Electoral Commission's reporting regime has a statutory basis and is therefore the more difficult of the two to amend, we have considered whether those of the House's rules which overlap with the Electoral Commission's regime ought to be amended so as to be consistent with it, or whether there are sufficient reasons for maintaining different registration requirements.

22. We considered whether benefits which are reported to the Electoral Commission, and which are therefore a matter of public knowledge, should be exempted from registration in the Register of Members' Interests. We decided that they should not, because we believe the public and the House will wish to have this information readily available in one document.

23. The question of overlap arises principally over Category 4 (Sponsorship), where our predecessors recommended wide-ranging changes to the rules. Their proposals relating to financial contributions to constituency associations (Category 4(a)) were drawn up with the requirements of the 2000 Act in mind. We propose that, in the interests of consistency with the Electoral Commission's requirements, the de minimis limit for Category 4(b), which deals with financial or material benefits received by a Member in support of his or her role as a Member, should be raised from 1% of salary to £1,000. We also propose minor changes to the wording of the guidance.

24. We therefore recommend that the rules and guidance relating to Category 4 be amended as follows:

CATEGORY 4

Sponsorships:

(a)  Any donation received by a Member's constituency association which is linked either to candidacy at an election or to membership of the House; and

(b)  any other form of financial or material support as a Member of Parliament,

amounting to more than £1,000 from a single source, whether as a single donation or as multiple donations of more than £200 during the course of a calendar year.

24. This Category deals with sponsorship or other forms of support by companies, trade unions, professional bodies, trade associations, other organisations and individuals. Political donations which Members are required to report to the Electoral Commission should be entered under this Category unless —

25. Category 4(a) deals with financial contributions to constituency associations. Support should be regarded as "linked" directly to a Member's candidacy or membership of the House if it is expressly tied to the Member by name, e.g. if it is a contribution to the Member's fighting fund or a donation which has been solicited or encouraged by the Member. Financial contributions to constituency associations which are not linked to a Member's candidacy or membership of the House do not have to be registered.

26. Category 4(b) covers support from which the Member receives any financial or material benefit in support of his or her role as a Member of Parliament. (Any contribution for the personal benefit of a Member should be entered under Category 5 (Gifts, benefits and hospitality (UK)).) The types of support which should be registered under this Category include the services of a research assistant or secretary whose salary, in whole or in part, is met by an outside organisation or individual; the provision of free or subsidised accommodation for the Member's use, other than accommodation provided by a local authority to a Member for the sole purpose of holding constituency surgeries or accommodation provided solely by the constituency party; and financial contributions towards such services or accommodation.

25. We also looked again at the rules relating to Category 5 (Gifts, benefits and hospitality (UK)), Category 6 (Overseas visits) and Category 7 (Overseas benefits and gifts). Whilst there is a degree of overlap with the Electoral Commission, all three Categories require the registration of personal as well as political benefits, and therefore the House's reporting requirements are inevitably wider than the Electoral Commission's. In our view it would be inappropriate to fix the de minimis limit for all benefits covered by the three Categories at as high a figure as £1,000. To set a limit of £1,000 for benefits received by a Member in connection with his or her political activities, and a limit of 1% of salary for other benefits relating to membership of the House, would make the rules much more complicated where our aim is to simplify them. Moreover, for the House to follow the Electoral Commission in requiring Members to register under Category 5 benefits which are known to be available to all Members would serve no useful purpose. We have therefore decided that in respect of these three Categories there are good reasons for the two reporting regimes to differ and that no further changes to the House's rules should be made in that regard. It would be helpful for the guidance to Category 7 to make some reference to the ban under the Political Parties, Elections and Referendums Act 2000 on accepting certain gifts and benefits from overseas benefactors, and we so recommend.

Shareholdings

26. The present rule on shareholdings requires the registration of holdings which are —

27. In place of (b) above, the former Committee recommended that shareholdings should be registered if they were greater in value at the time of acquisition than the current parliamentary salary. The Committee chose that formula rather than the current market value because the market value at the time of acquisition is a constant figure: "It would not be practicable to expect Members to be checking the prices of their shareholdings every day to see whether they had exceeded the threshold for registration".[4]

28. Given the size of the shareholding a Member has to have before it becomes registrable, we think it would be reasonable to move closer towards a link with current market value. It would not impose unreasonable demands on Members if they were required to re-value their large holdings (which are likely to be relatively few in number) once a year, and to include in the next published Register any holding which at that point was in excess of the threshold. A registered holding which was disposed of could of course be deleted from the Register.

29. The former Committee recommended that the House should decide whether or not part (a) of Category 9 (Shareholdings) should be retained. We consider that the de minimis figure of 1% is too low, but that Members should still be required to register shareholdings which represent a significant proportion of a company's share capital, even if their value is less than the current parliamentary salary. In our judgement a holding of over 15% of a company's shares should be registrable.

30. We recommend that the rules relating to Category 9 be amended as follows:
CATEGORY 9

Shareholdings: Interests in shareholdings held by the Member, either personally, or with or on behalf of the Member's spouse or partner or dependent children, in any public or private company or other body which are:

(a)  greater than 15 per cent of the issued share capital of the company or body; or

(b)  15 per cent or less of the issued share capital, but greater in value than the current parliamentary salary.

The nature of the company's business should be registered.

31. We recommend that The Guide to the Rules should include the following:

    "The value of a shareholding is determined by the market price of the share on the preceding 5th April; but if the market price cannot be ascertained (e.g. because the company is unquoted and there is no market in the shares), the nominal value of the shareholding should be taken instead. Interests in shareholdings include share options."

LAND AND PROPERTY

32. Members are required to register any land or property (other than their homes) "which has a substantial value or from which a substantial income is derived". Our predecessors proposed a definition of each of these terms by reference to the current parliamentary salary.

33. We think it is desirable to clarify the circumstances in which a Member who derives income from property used for his or his spouse's residential purposes has to register the property. The current rule, that second homes need not be registered unless regularly let at commercial rents, is insufficiently precise. In our view any property (or properties) from which a Member derives substantial income (defined as more than 10% of the parliamentary salary) ought to be registered even if the Member or his spouse also uses it for residential purposes.

34. We said in a recent report that we would give further consideration to the question whether a Member's ownership of several residential properties might constitute a financial interest of such significance that it ought to be registered.[5] On reflection we are not persuaded of the need for any further change in the rules beyond that which we have recommended in the previous paragraph.

35. We recommend that the rules and guidance relating to Category 8 be amended as follows:

CATEGORY 8

Land and property: Any land or property —

(a)  which has a substantial value (unless used for the personal residential purposes of the Member or the Member's spouse or partner), or

(b) from which a substantial income is derived.

The nature of the property should be indicated.

    30. Property used for the personal residential purposes of the Member or the Member's spouse or partner (that is, homes and second homes) does not need to be registered under Category 8(a). It may need to be registered under Category 8(b), but only if the Member derives an income from it and derives a substantial income from his total property portfolio (see paragraph 30B). A property, such as a farm, on which the Member has a residence should be registered if it has a substantial value aside from the residential use.

    30A. "Substantial value" means a value greater than the current parliamentary salary. If a Member's total property portfolio (excluding homes and second homes) has a substantial value, it should be registered.

    30B. "Substantial income" means an income greater than 10 per cent of the current parliamentary salary. If the income from a Member's total property portfolio (including homes and second homes) is substantial, all the properties from which any income is derived should be registered.

    30C. Entries should be reasonably specific as to the nature of the property and its general location, for example:—

      "Woodland in Perthshire"
      "Dairy farm in Wiltshire"
      "3 residential rented properties in Manchester".

OVERSEAS VISITS

36. The last Committee recommended that the Armed Forces Parliamentary Scheme should be added to the list of bodies in respect of which overseas visits are exempt from registration. Similar schemes to those on the list are operated by the police and by the National Council of Voluntary Organisations (NCVO). We recommend that any visits undertaken on behalf of, or under the auspices of, the Police Service Parliamentary Scheme or the NCVO's MP Secondment Scheme should be exempt from registration under Category 6 (Overseas visits).

Rectification procedure

37. The last Committee said it was —

38. We have accordingly instituted a procedure which applies to admitted failures to register or declare interests where the interest involved is minor or the failure to register or declare was inadvertent. In the case of non-registration, rectification requires a belated entry in the current Register, with an appropriate explanatory note; in the case of non-declaration, it requires an apology to the House by means of a point of order.

39. If the Commissioner considers that rectification is the appropriate outcome of an inquiry, and the Member concerned agrees, the Commissioner makes no written report to us. As a consequence we would make no report of our own on the complaint.

Remaining recommendations

40. Some of our predecessors' recommendations fall as a result of the recommendations we have made in this Report. The remainder are set out for ease of reference in Annex 1 to this Report. We commend them to the House.

New Code and Guide

41. We have prepared a revised version of The Code of Conduct and The Guide to the Rules which has been amended to take account of all the recommendations made in this Report. This is set out in Annex 2 to this Report. We recommend that the new Code and Guide be adopted by the House.


1   Fifth Report, Session 2000-01, Proposed Amendments to the Rules relating to the Conduct of Members, HC 267 (2000-01). See also Fifteenth Report, Session 1999-2000, Consultation on Proposed Amendments to the Rules relating to the Conduct of Members, HC 710 (1999-2000). Back

2   Fourth Report, Session 2001-02, Restrictions on the Initiation of Parliamentary Proceedings: A Consultation Paper, HC 478 (2001-02). The rule is set out at paras. 53-61 of The Guide to the Rules.  Back

3   Fifth Report, Session 2000-01, paras. 28-35. Back

4   Fifteenth Report, Session 1999-2000, Consultation on Proposed Amendments to the Rules relating to the Conduct of Members, HC 710 (1999-2000), para. 31. Back

5   Fifth Report, Session 2001-02, Complaints against Mr Keith Vaz, HC 605-I (Session 2001-02), para. 27. Back

6   Fifth Report, Session 2000-01: Proposed Amendments to the Rules relating to the Conduct of Members, HC 267 (2000-01), para. 48. Back


 
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