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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