Registration of income from employment - Standards and Privileges Committee Contents


Registration of income from employment



Background

1. On 30 April 2009, the House agreed the following Resolution:

(1) That, for the purpose of complying with the Resolution of the House of 22 May 1974 relating to Registration of Members' Financial Interests, in respect of interests falling within Category 1 (Directorships), Category 2 (Remunerated employment, office, profession, etc) or Category 3 (Clients), hon. Members shall furnish the Registrar with the following particulars—

(a) the precise amount of each individual payment made in relation to any interest,

(b) the nature of the work carried out in return for that payment,

(c) the number of hours worked during the period to which the payment relates, and

(d) except where disclosure of the information would be contrary to any legal or established professional duty of privacy or confidentiality, the name and address of the person, organisation or company making the payment;

(2) That such interests shall be registered whether or not their value in any given year exceeds one per cent. of the current Parliamentary salary;

(3) That the provisions of this Resolution shall apply whether or not the interest in question depends essentially upon, or arises out of, the hon. Member's position as a Member of Parliament; and

(4) That the provisions of this Resolution shall come into effect on 1 July 2009.

2. Since the new rule came into effect, Members have been obliged to register on a monthly basis the full amount of each payment received over and above their Parliamentary salaries and allowances for work they carry out or for services they provide. They have also had to register the nature of the work, the number of hours worked and—with very limited exceptions—the name of the person, organisation or company paying them.

3. Under Standing Order No 149(1)(b), the Committee on Standards and Privileges is responsible for reviewing the form and content of the four registers maintained under various resolutions of the House. Our predecessor Committee raised concerns about the consequences of the new rule both before and after it came into effect. Similar concerns were expressed by the Committee on Standards in Public Life (CSPL) in its report on MPs' expenses and allowances:

The Committee takes the view that it is important that constituents have access to as complete information as possible about the extent of their MPs' activities outside the House of Commons. Recording the number of hours worked, as well as the payment received will increase transparency. In particular, it will inform the public so that they can judge the extent of an MP's commitment. However, it is also important that the issue is dealt with proportionately. The new arrangements should therefore be reviewed early in the next Parliament to assess whether they are working effectively and without disproportionate effort. This should include consideration of a sensible de minimis rule for registering individual payments.[1]

4. We have now had the benefit of being able to review the operation of the new rule on the basis of some 18 months of experience. We have done so in consultation with the Parliamentary Commissioner for Standards, the Registrar of Members' Financial Interests and the Leader and Shadow Leader of the House. Having taken full account of the views expressed by all these and by the CSPL, we make in this short Report a recommendation which, should the House accept it, will in our view align the rule more closely with the purpose of the Register of Members' Financial Interests, which is to show whether a Member has received a material benefit which might reasonably be thought by others to influence his or her actions, speeches or votes.

Should a threshold be reintroduced?

5. Before July 2009, a threshold of 1% of a Member's salary applied to payments registered under categories 1 to 3 of the Register.[2] That threshold was abolished by the 30 April 2009 Resolution. The Chair of the Committee at the time, speaking in the debate on the Motion, observed that,

... any hon. Member who receives a £30 fee for completing an opinion poll, even though the sum is donated to a local charity, will need to register that sum. Not only that, but they will be obliged each time to register the name of the organisation, its address and the amount of time that they spent on the phone. Also, if a colleague is presented with a bottle of wine after a speaking engagement, that becomes potentially registrable as earnings, as does the time spent at the function. That is because the Government, without any consultation, have abolished the de minimis threshold for categories 1, 2 and 3 in the register, which the House confirmed without a Division only two months ago.[3]

The Minister replying to the debate took a different view, saying,

I do not like to disagree with the Chairman of the Standards and Privileges Committee, ..., but I do disagree with his interpretation of our motion. We have made it clear that the new threshold of zero does not apply to gifts and hospitality—in other words, to category 5 in the register.[4]

6. It is clear from the debate that the difference of view between the then Government and most of those who expressed concerns about the proposal was not about the intended effect of the new rule, but about how it would work in practice. The previous Government anticipated that where a Member received an item such as a bottle of wine or a bunch of flowers after giving a speech or cutting a ribbon, that would be seen as a gift rather than as payment. Because a de minimis threshold of 1% of the Parliamentary salary—currently £660—applies to the registration of gifts, only the finest bottles of wine and most extravagant of bouquets would fall to be registered under category 5.

7. In operation, the new rule has been interpreted—in our view, rightly and inevitably—as our predecessors predicted and the advice given to Members has been that a bottle of wine, bunch of flowers or other item received by a Member in return for or in recognition of a service which he or she has provided should be registered as a payment. The key question which Members have been advised to ask themselves when considering whether to register something as a payment is, "Would I have received this at the time if I had not performed the service in question?"

8. Due to the absence of any threshold applying to payments, all such items now have to be registered. A Member who chooses to treat as a gift the bottle of wine he or she receives after making a speech exposes him- or herself to an allegation that he or she has failed to register a payment received for a service provided. Members have understandably and indeed necessarily adopted a cautious approach and we believe that many have registered as payments items which they might otherwise have regarded as gifts. These have included 'payments' ranging from cases of wine to jars of honey or bunches of flowers, as well as sums of cash.

9. The trivial nature of some of these payments and the disproportionate effort involved in recording and then registering them has called into question the utility of the rule. The February 2010 edition of the Register contained over 100 more pages than the June 2008 edition.[5] Fascinating as some may find it to know which Members have received jars of honey or bunches of flowers, this has little if anything to do with the purpose of the Register, which is to enable anyone to form a view as to whether a Member has received a material benefit which might reasonably be thought to influence his or her actions, speeches or votes.

10. To avoid similar problems arising in other parts of the Register, it has been thought sensible and proportionate to specify a de minimis threshold, which in most cases is 1% of the Parliamentary salary. Comparable provision is made in registers kept by other organisations, such as local authorities. The question we are considering is, should a threshold apply, as before, to payments registrable under categories 1 to 3?

11. An alternative remedy might be to define 'payment' in such a way as to exclude items such as bottles of wine, which, although presented to a Member in return for giving a speech or providing some other service, are not part of what a reasonable person would regard as 'employment'. These could then be registered as gifts—if their value were to exceed the £660 threshold. We see difficulties with such an approach. To be of any practical use, a definition would have to be very specific about the circumstances in which an item was or was not to be treated as a payment. It might be relatively straightforward to draw up a rule which provides for a bottle of wine following a speech to a constituency group to be treated as a gift but for a case of wine in return for speaking at a commercially run seminar to be registrable as a payment. But we fear that between the areas of black and white there would certainly be a large area of grey, which would require Members to exercise judgment and, inevitably, add to the risk of error.

12. Another possible remedy might be to apply to the rule a more precise definition of 'employment', so that the requirement to register a payment would be triggered only when a contract of employment is in place. We are concerned that this would make the rule more difficult to police and that it would actually increase the burden both on Members and on the Registrar and her staff. A threshold is easier to understand, simpler to operate and more straightforward to enforce.

13. We therefore favour the reintroduction of a threshold for registration categories 1 to 3. We have considered carefully the level at which that threshold should be set. Possibilities would include the existing thresholds which apply to category 5 of the Register (ie, 1% of the Parliamentary salary) and to the registration of gifts by local authority members (currently £25).[6] The problem with the first is that £660 is quite a high threshold. The problem with setting a defined sum at whatever level is that it would need to be updated from time to time. For these reasons, we favour setting the threshold at 0.1% of the Parliamentary salary—currently £66—for individual payments and at 1% of the Parliamentary salary—currently £660—for multiple payments from a single source in any one calendar year.

THE THRESHOLD FOR CATEGORY 5 (GIFTS)

14. We have also considered whether the thresholds for registration of payments and of gifts should be aligned at 0.1%. The present 1% threshold for gifts was introduced in 2001, when it was raised from £125. The reason advanced by our predecessor Committee at the time for raising the threshold was that a low threshold was likely to encourage trivial complaints about matters which could not reasonably be thought to influence a Member's conduct.[7] Without making any specific recommendation, the then Committee invited the House to decide between 0.5% and 1% and the House chose 1%.[8] We would wish to consult further before reaching a view on whether the threshold applying to gifts should be lower than 1%.

Recommendation

15. We recommend that the Resolution of the House of 30 April 2009 relating to the Registration of Members' Financial Interests be amended, by leaving out paragraph (2) and inserting:

(2) That such a payment shall be registered

(a) where its value exceeds one tenth of one per cent. of the current Parliamentary salary; or

(b) where the total value of payments from the same person, organisation or company in a calendar year exceeds one per cent. of the current Parliamentary salary.


1   Committee on Standards in Public Life, Twelfth Report, MPs' expenses and allowances, Cm 7724, paragraph 11.24 Back

2   The Code of Conduct together with the Guide to the Rules relating to the Conduct of Members, 2005, HC 2005-06 351 Back

3   HC Deb, 30 April 2009, col 1103 Back

4   HC Deb, 30 April 2009, col 1125 Back

5   264 pages as against 157. Not all this increase occurred in categories 1 to 3. Back

6   The threshold of £140 for gifts to Ministers relates to their acceptance, not to registration. See Ministerial Code, Cabinet Office, May 2010, paragraph 7.22.  Back

7   Fifteenth Report, Session 1999-2000, Consultation on Proposed Amendments to the Rules relating to the Conduct of Members, paragraph 11 Back

8   Fifth Report, Session 2000-01, Proposed Amendments to the Rules relating to the Conduct of Members, paragraph 6 Back


 
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