APPENDIX 1
REPORT 2016
LUTON BOROUGH COUNCIL – REPORT BY THE INDEPENDENT REMUNERATION PANEL (IRP) ON COUNCILLORS ALLOWANCES AND EXPENSES
1.PURPOSE OF REPORT
To submit the recommendations for 2016 -17 of the Independent Remuneration Panel for consideration by the Council.
2.BACKGROUND
2.1 Local Authorities are required, by law, to make a scheme of allowances for their elected Councillors, and to establish and maintain an independent panel to make recommendations about the scheme, including amounts to be paid.
2.2 The functions of the Panel are described more fully in Regulation 21 of the Local Authorities (Members Allowances) (England) Regulations, 2003.
2.3 Luton Borough Council’s current Independent Remuneration Panel (IRP) consists of individuals drawn from the local community and appointed by the Chief Executive, who meet to review and discuss the allowances which should be paid to Councillors, and make recommendations.
2.4 The duties of the IRP include reviewing, and making recommendations about:
* the level of Basic Allowance paid to elected members of the
Council;
* the Special Responsibility Allowances paid to those Councillors
with extra responsibilities;
* allowances for childcare and dependents’ care;
* allowances for travel and subsistence; and
* allowances paid to co-opted (i.e. non-elected) members
3. Terms of Reference
3.1 The Panel has agreed, after due consideration, a general term of reference, primarily to make recommendations to the Luton Borough Council on the appropriate form and level of remuneration:
i. To provide guidance to the Council on the Members’ remuneration package as a whole, including IT peripherals and consumables;
ii. For special responsibility allowances (SRAs), where appropriate;
iii. For co-optees responsibility allowance
iv. Regarding the dependants’ carers’ allowances for councillors and co-optees;
v. Regarding the travel and subsistence allowances for councillors and co-optees;
vi. To make recommendations on the appropriate form and level of remuneration for independent members appointed to Education Appeal Panels and;
vii. To consider any other issues brought to the Panel’s attention during the review,providing it is within the Panel’s remit and issues covered by the 2003 regulations.
3.2 In providing such advice, the panel will have regard to:
i. The roles which councillors are expected to fulfil and the differing roles and responsibilities of portfolio holders;
ii. Practices amongst other local authorities in the UK, specifically comparing and contrasting Unitary Authorities;
iii. The current statutory framework for the remuneration of councillors and the scope which the council has to establish and vary its own arrangements, and any commentary on that ( Local Government Association, Head of Finance, and other interested parties);
iv. The views of councillors.
4. The Panel
4.1 Luton Borough Council reconvened its IRP for the purpose of carrying out its terms of reference. LBC Democratic Services Team successfully recruited four members of the public to join the existing panel members following an advert and interviews.
The Panel now consists of eight members:
- Ms Carmelita Charles- Chair
- Mrs Alicia Borneo N’Guetta- Vice Chair
- Mr Abdul Malik
- Mr Raymond Brown
- Mr John Fullarton
- Mr Keith Williams
- Mr Azizul Ambia
- Mr Bill McGill
4.2 The Panel works within an agreed constitution:
●The quorum for a meeting of the Panel must consist of three members;
●A timetable of matters needing consideration be reported to the next meeting of the Panel;
●A summary must be reported of any meetings attended for the purpose of fact finding (e.g. Overview and Scrutiny, Area Board,Scrutiny Finance Review Group etc.);
●The consideration of whether members of the Panel who have the desire to stand for election as perspective Councillors should be deferred until a later date.
4.3 The Rules of Procedure of the Panel are as follows:
●appointment and removal of the Chair of the Panel;
● making of decisions;
● arrangements for convening meetings; and
● circulation of information
4.4 The Panel had the support of Ann Loeffler, Business & Support Manager, who acted as a technical advisor to the Panel and whose role was to take the organisational lead in facilitating the work of the Panel. In Ann’s absence the Panel were provided with the support of Jenny Davis from Democratic Services team. The panel are grateful to both Ann and Jenny for their administrative support.
4.4 The Panel would like to record its thanks to the following for taking the time to meet with the Panel:
- Chief Executive
- Service Director of Finance
- Leader of the Labour Group,
- Liberal Democratic Group Leader
- Conservative GroupLeader
- The Portfolio holders for Finance and Infrastructure and Transport
- Two Councillors elected in May 2016
- One of the Democratic Services and Scrutiny Team Leaders
- A Democratic Services and Scrutiny Officer
INTRODUCTION
5.1 Since the inception of the Independent Remuneration Panel[1] for Luton Borough Council in 2000, the IRP, to date, has reviewed Councillors allowances in depth year on year.
5.2The Panel undertook a full review of the Councils’Members’ Allowances Scheme in 2008/ 2009 by considering in a deliberative fashion, a wide range of evidence, views of Members, and the operation of the current scheme within the new legislative context. As a result of that fundamental review and change a substantial increase of twenty-five percent (25%) was added to the Members allowance, increasing the figure to seven thousand five hundred pounds (£7,500.00)
5.3 Prior to this there had not been an increase since 2000. The figure today still stands at £7,500 although a recommendation was submitted in 2013 and 2014 calling for a decrease, primarily because of the economic climate at that time where cut backs had to be made by the Council, as well as the Panel’s desire to stay in line with the formula they had previously devised.
5.4 In order to produce remuneration recommendations the Panel found it fit to establish a formula[2] as a guide. The basis of the formula was devised based on interviews conducted with Councillors at that time, it primarily centred around approximately how many hours on average a Councillor would spend carrying out his/her non-political duties; this was then multiplied by the average Luton hourly earnings over fifty-two (52) weeks.
5.5The figures used in order to calculate Luton’s Average Hourly earnings was/has been sourced from Nomis official labour market statistics,[3] specifically the hourly pay as perearning by workplace. Prior to 2014 this figure was inclusive of overtime pay; however this is no longer the case.[4]
5.6The panel has reviewed the rate and does not believe this change is detrimental, but rather a fairer reflection, as overtime hours is neither a certainty nor a guarantee. The Panel thus will continue utilising the current indices for benchmarking the various allowances on an annual basis.
5.7 The review of 2014-2015 arose out of requirements of the 2003 MembersAllowances Regulations[5], which required all Councils to reconvene their IRP’ once a year. The Panel at that timeconsidered that a fundamental review of the formula was needed as it is no longer fit for purpose. The challenge for the remuneration panel is how to assess a just and fair rate of remunerationfor elected members (including those with special or additional responsibilities) for their representative roles whilstacknowledging the voluntary element of this contribution that members make as ‘engaged’ and committed citizens.
6. The Regulatory Context
6.1 This report is a synopsis of the proceedings and recommendations made by the Independent Remuneration Panel appointed by Luton Borough Council to consider its current Members’ allowances scheme.
6.2 The Panel was convened under The Local Authorities (Members allowances)(England) Regulations 2003 (SI 1021) to make recommendations to the Council on a new scheme of Member’s allowances. These regulations which arise out of the relevant provisions in the Local Government Act 2000, require all local authorities to set up and maintain an advisory Independent Members Remuneration Panel to review and provide advice on Members’ allowances. All Councils are required to convene their Remuneration Panel and seek its advice before they make any changes or amendments to their allowances scheme and they must ‘pay regard’ to the Panel’s recommendations before setting a new or amended Members’ Allowances Scheme.
7. Process and Methodology for 2016 Review
The panel sort to gain as much information as possible by conducting structured interviews ( please see the questions within the appendices) with both members and officers; in order to get an up to date picture of the issues that impact on the role of the elected member and the challenges that the authority faces. It would be remiss of the panel to not acknowledge that the council still needs to provide services either in partnership or as an enabler whilst having to deliver these services with reduced budgets.
7.1 The dates of the panel meeting were as follows:
•9th November 2015
•23rd November 2015
•7th, December 2015
•14th December 2015
•11th January 2016
•18th January 2016
•25th January 2016
•2nd February 2016
7.2 The Panel meetings were independent, and were in closed sessions to enable the Panel to consult with members and officers in confidence and hold its deliberations in private. The Panel assured allthose interviewed that their comments would be held in the strictest of confidence. However, members and officers were informed that their comments /observations may be included within the report but their comments would not be attributed.
7.3 The work of the Panelwas as follows:
●Continue to review members’ allowances. This included the review of the 2015 formula ( although the formula was endorsed by members at the full council meeting) the proposal of a small increase in members’ basic allowance from £7,500 to £7720 was rejected by members.
●Conduct interviews with the Chief Executive and Director Audit and Finance. Although is not part of the Panel’s brief to consider the Council’s ability to pay, the Panel saw it fit to get up to date information regarding the financial challenges that the authority faces in order to appreciate the fiscal terrain that officers and members are having to navigate.
●Conduct interview with all three political leaders of the council along with newly elected members. Firstly, toexplore changes in the roles and responsibilities of the political leaders. How the remuneration allowance helps them carry out their role.
●For the newly elected members the panel wanted to gauge their understanding and knowledge of the role of the elected member and their expectations in terms of remuneration.
●Newly recruited panel members attended a number of council meetings to familiarise themselves with the workings of the council and governance. (please see the reports within the appendices)
●Also to fully understand and appreciate the allocation of the Special Responsibility Allowance a panel member observed the work of the Health and Social Care Scrutiny panel. The panelconsidered and assess the feasibility of SRA for the newly created Children and Social Care Scrutiny Panel in line with the panel’s objective to monitor any changes in the roles of members when considering SRA’s for chairs not currently remunerated.
●The recruitment of new members onto the IR panel
●To understand the rules regarding HMRC taxation of members allowances and expenses
8Panel Discussions and Researchincluding interviews
8.1In the previous 2015-16 report the IR panel were clear that the allowances that elected members received was not over and above what the residence of Luton earned on an hourly basis. That the formula would reflect the statutory guidelines as set out by the Department of Communities and Local Government when setting and recommending an appropriate basic allowance for elected members. These are:
1.Time required to fulfil roles of ordinary Members
2.The voluntary principle, the notion that part of the time put in by a Member in their back bench roles should be unremunerated, often known as the Public Service Discount (PSD)
3.The worth of a back bench Member’s time, or the rate of remuneration.
Equally important,for the panel at that time was that the formula that was developed placed elected members on a par with their constituents. The formula wasconsidered fair, robust,simple and transparent. It acknowledgedthe roles and responsibilities of elected members from leader, portfolio holders to backbenchers. And although the panel’s recommendations for a small increase in the members basic allowance was rejected the formula overall had been endorsed by all parties.
8.2 In the panel’s review of the allowance the newly recruited members of the panel questioned the use of the NOMIS official labour market statistics( from Office for National statistics) for Luton within the formula. It was suggested that the emerging living wage of £7.20 (due to come inforce in April 2016raising to £9.00 in 2020) replaces the Luton average hourly rate of £11.87 in the formula calculations. So the Basic Allowance formula would be:
12.5hrs/wk( the average time spent on elected member work excluding political activities) x £7.20( Living wage) x 52 wks£4,680.
There was much discussion and not all panel members agreed that the living wage should be basis of the formula as the living wage was aimed at occupations within the service sector that are prone to low wages. It was agreed that panel need to know more about the living wage it could be an objective for the panel in 2017
8.3The Panel’s interviews with all three leaders provided insights into the complexity and changing role and responsibilities of the elected member. All the interviewees were asked the same questions.Broadly, there was agreement that the 2015/ 2016 formula was valid as one member commented ‘the allowance was about right for Luton’. There was a general consensus that the remuneration did not really impact on their roles as councillors. That people generally came forward to be members to serve their communities. However, there was an acknowledgement that the allowance helps members to carry out their duties.
The panel were informed that the role and responsibilities of the elected member within a Unitary Authority had changed substantially since 2009. Members have been given greater statutory responsibilities such as corporate parenting and safeguarding. The role of the Leader has become more strategic and it is a much bigger role than pre 2009.The volume of work that is required as a member is significant; having enough time to read the officers reports, broad knowledge, a good an in-depth understanding of local government finance and funding, being available to their constituents- doing surgeries, preparing and asking the right questions before the meetings as well as making effective use of the technology and resources available.These were just some of the headline narratives that the members identified as crucial in discharging their duties.
These all contribute to the skills required to function as an effective member. In one members’ view,“ it is a technical job being a councillor. Nowadays common senses doesn’t seem to be the thing anymore. The councillors’ role has become more political. Central government is not making it easier for local government”.
Although Broad band and IT consumables (such as paper and ink cartridges) are included in the basic allowance there was some confusion about what the basic allowance actually included. One member specifically wanted to know what the allowance covered. The panel considered that this should be an area for further clarification.
8.4The panel interviewed two newly elected members to find out what motivated or prompted them to become councillors and whether the members allowance was an important element in their decision to be members. In addition to this the panel wanted to ask members how the allowance impacted on their roles and duties. Members were invited to describe their role and their duties. Also the panel explored with the members what skills they brought to the role. With regards to what prompted them to be members both spoke passionately about helping people in their community and getting the community involved in ward activities. It was about public service for both and an acknowledgement that councillors give a significant amount of their time to the role. Both were enthusiastic about the various committees that they are involved in and were able to articulate their roles and responsibilities that went with the unsocial hours. It was clear that the allowance was important for both in order for them to carry out their duties whether it was use for covering taxis following late council meetings or to personal outgoings.
There was the view that although the allowance in Luton was not the highest and at a time of budget cuts a 1% rise in the allowance maybe possible. This would be in line with the civil service. The other view expressed was that the basic allowance should be over £10,000 because of the sheer volume of work and the complexity of the role.
8.5Panel members attended the following meetings as part of the review of allowances focusing on members’ roles and responsibilities:
- Overview and Scrutiny 24th November 2015
- Executive Meeting 14th December 2015
8.6The panel considered and assessed the feasibility of attaching a Special Responsibility Allowance (SRA)for the chair of the newly established Children and Social Care Scrutiny Panel. The Panel learnt that the work of the Overview and Scrutiny Panel had become overwhelmed with items for children and social care. The nature and volume of the work meant that it was not feasible to place these items under the Task and Finish umbrella for short term examination. In addition to this finance and health are big areas for scrutiny that requires a great deal of attention. So it was considered that there should be a new panel specifically for children and social care. Officers have assessed that there should be no overlap for this new scrutiny panel with the existing panel and there is support of full council for the new panel.