APPENDIX 1
REPORT 2015
LUTON BOROUGH COUNCIL – REPORT BY THE INDEPENDENT
REMUNERATION PANEL (IRP) ON COUNCILLORS ALLOWANCES AND
EXPENSES
1.
PURPOSE OF REPORT
To submit the recommendations for 2014 - 15 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;
91
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. There was a change in the membership of
the IRP panel due to the resignation of two of its members Mr Ben
Bennett and Mrs Josephine Maclean, as well as the passing of Mr.
Dennis Dearnley. The panel would like to formally acknowledge the
commitment of the previous members of the panel to the residents of
Luton. Their knowledge and experience was crucial in supporting new
members to the panel.
The Panel now consists of four members:
●
Ms Carmelita Charles - Chair
● Mrs Alicia Borneo N’Guetta - Vice Chair
● Mr Abdul Malik
● Mr Raymond Brown
92
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 the ‘Panellists’ Friend’, and whose role was to
take the organisational lead in facilitating the work of the Panel. To her
we are exceptionally thankful for her meticulous, thorough work and
care.
4.4
The Panel would like to record its gratitude to the Chief Executive for
taking the time to meet with the Panel, the Head of Finance, Members
who completed the questionnaire and, moreover the Members who
made themselves available for the face to face interviews.
INTRODUCTION
5.1
Since the inception of the Independent Remuneration Panel1 for Luton
Borough Council in 2000, the IRP, to date, has reviewed Councillors
allowances in depth year on year.
5.2
The 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)
1
From herein IRP or Panel
93
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 formula2 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.
5.5
The 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 per earning by workplace. Prior to 2014
this figure was inclusive of overtime pay; however this is no longer the
case.4
5.6
The 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 up rating the various allowances on an annual basis.
5.7
This current review arises out of requirements of the 2003 Members
Allowances Regulations5, which require all Councils to reconvene their
IRP’ once a year. The Panel, as a whole, feel that a fundamental
review of the formula previously created as a guide needs to be
reviewed as it is no longer fit for purpose. Moreover, the Panel is of the
opinion that financial barriers must be reduced in order to attract a
diverse range of candidates to being an elected Member; whilst
ensuring and maintaining a balance that the remuneration is just and
fair., at the same time remembering the principles and, values of the
voluntary nature of being/becoming a Councillor.
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
and advise the Council on a new scheme.
2
Luton Average Hourly Earnings x 20 x 50% = Basic Allowance
<https://www.nomisweb.co.uk/reports/lmp/la/1946157201/report.aspx?town=Luton#tabrespop> [last
accessed 27/01/2015]
4 ibid
5 See Statutory Instruments 2003 Nos. 1021, 1022 and 1692
3
94
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
7.1
The Panel met on the following dates:
•
•
•
•
•
•
•
•
20th November 2014
4th, November 2014
11th November 2014
18th December 2014
8th January 2015
20th January 2015
29th January 2015
4th February 2015
7.2
The Panel meetings were independent, and were in closed sessions to
enable the Panel to consult with Members in confidence and hold its
deliberations in private. The Panel assured all members that all
submissions, written or verbal, would be held in the strictest of
confidence. However, we informed Members that their comments
/observations may be included within the report but we would not
attribute those comments. All Members were invited to participate in
completing the questionnaire. However, in total 16 Members
responded; 6 from face to face interviews and 10 by way of written
submissions. Please see appendix A for a copy of the questionnaire.
7.3
The Panel’s activity fell into five areas:
●
Review of the background and contextual information on Luton
Borough Council relating to the issues of concern, i.e. changes in
political structures, allowances schemes from comparator authorities
and previous allowances reports for the Council- See Appendices
for the full list of information considered by the Panel.
●
Interview Members, Chief Executive and Head of Finance. Although
is not part of the Panel’s brief to consider the Council’s ability to pay,
the Panel saw it fit to understand the basic financial workings of the
Council in order to obtain well-rounded, coherent fact finding.
●
Review oral and written submissions ( the questionnaire) and
analysis of allowances schemes from some South East and East
95
Unitary Authorities members allowances. The Panel took into
account practice elsewhere for bench marking purposes insofar it
was able to obtain relevant information.
●
Review the formula previously created and employed by the Panel
●
Arriving at recommendations; and the drafting and redrafting of
report to the agreement of the Panel.
7.4
The Panel took a tiered approach in considering the evidence. It is
required to operate within the broad statutory framework laid down by
the 2003 Regulations and 2006 Statutory Guidance. The 2003
Members’ Allowances (England) Regulations establishes the limits for
the Panel, i.e., attendance allowances cannot be paid, all Members
must receive a Basic Allowance that is equal in value and express
authority is granted to vary the terms and conditions for claiming the
travel and subsistence allowances, or whether to retain them at all.
Within the legislative context the Panel has an obligation to pay regard
to the 2006 Statutory Guidance which for instance mandates certain
considerations for Panels in reaching their recommended Basic
Allowance but provide suggestions in reaching an appropriate level for
the Leader’s SRA.
7.5
The Panel also took into account oral and written representations made
by Members. The interviews and written submissions were utilised to
act as a sounding board to suggestions and ideas from members of the
Panel. It was also used to provide a qualitative feel of the issues
facing elected Members, and the hours dedicated to performing their
role and duties.
7.6
All the evidence and representations have been reviewed and
evaluated within the comparative context. The principal approach
adopted by the Panel in its review and assessment of the evidence has
been to benchmark the scope and levels of allowances paid in Luton
Borough Council against that paid in other comparable authorities at
the national, regional, and sub-regional level. More specifically, the
Panel has compared allowances paid in Luton Borough Council against
other peer groups: other benchmark Unitary Authorities and ‘ near
neighbours’; some unitary authorities in the Southeast of Englandspecifically Slough and Reading.
7.7
Benchmark Councils have been selected on the basis of population
size6 and similarity to Luton. In addition local District and County
Councils have been used as comparators. The Benchmark Councils
include:
●
●
●
Blackburn with Darwin
Middlesborough
Milton Keynes
6
Nomis Official Labour Market Statistics, Labour Market Profile (Luton)
<https://www.nomisweb.co.uk/reports/lmp/la/1946157201/report.aspx?town=Luton#tabrespop> [last
accessed 27/01/2015]
96
●
●
●
●
●
●
Portsmouth
Peterborough
Reading
Southend-on-Sea
Stockton-on-Tees
Swindon
‘Near Neighbours’ comparators include:
●
●
●
●
●
Bedfordshire County Council
Bedford District Council
Mid Beds District Council
South Beds District Council
Central Beds Council
7.8
It must be noted that Panel was not driven by allowances paid in the
comparator groups but has been at the very least concerned to ensure
that Luton Borough Council was not out of line with the scope and
levels of allowances currently paid in the comparator groups, or if it
was that the Panel was content for that situation to continue.
7.9
Additionally the Panel reconsidered reports and materials from the
remuneration panels of other local authorities e.g. Slough Borough
Council Birmingham City, Stevenage Borough, Central Bedfordshire
and Bedford Borough: information from the Council on the Executive
and Scrutiny functions of Luton Borough Council; labour market data;
and information made available by the Taxpayers Alliance (TA)on the
levels of allowances paid to Councillors in local authorities across the
UK (See Appendix B). Also considered reports from The Local
Government Association (LGA).
8.
Guiding Principles of the Review
8.1
The Panel came to an agreement that it is imperative that allowances
was not over and above what the residence of Luton earned on an
hourly basis. Conversely, and equally important , the Panel agreed
that future councillors must possess skills, experience and qualities to
ensure the residents of Luton at all times have well rounded candidates
to choose from. The Panel also agrees that the remuneration should in
some way help signify the value and importance of the role.
8.2
The Panel was also guided, and of an unanimous decision, that
financial barriers to standing for and remaining on the Council by
younger candidates needed to be reduced; and that running for the
elected position of Councillor should not only be an option for
individuals in a unique position (e.g. inter alia, retired, financially stable,
and/or self-employed).
8.3
Within this context the Panel has also sought to make the scheme as
simple and transparent as possible both in terms of understanding
what allowances are paid and why. The Panel has addressed this by
reviewing the formula previously created as a guide, and simplifying it
97
only to reflect an average of the hours - based on Councillor’s
responses,
9.
The Evidence Reviewed and Key Messages/Observations
9.1
Taking into account the current economic climate
9.1.1 The Panel discussed at great length the current economic climate and
the cuts that the council is likely to face in the coming financial year.. ,
Notwithstanding the number of challenges that the council faces such
as the demands for housing and primary school places. The Panel are
aware that the Council has been required, as all local authorities have
been, to find savings and will be required to seek further savings in the
short term. The question was to which extent elected Members should
be asked to “share the pain”. This was also a core concern in the
Panel’s 2014 report.
9.2
Comparative Picture
9.2.1 It is evident from the comparisons of other Unitary Councils and near
neighbouring Councils, that the sums payable in the allowances
scheme for Luton Borough Council are at the lower end of the range of
allowances paid, and even more so when compared to the national
picture with regard to English Unitary Councils.7 This finding in itself not
a strong reason to increase allowances.
9.3
Interviews and Written submissions
9.3.1 This process proved extremely valuable. Although there were
variations in responses, it was clear the hours dedicated to the role and
duties differed from one Councillor to the next. Approximately 30% of
the overall respondents were of the opinion that Councillors should
only be remunerated only for attendance to meetings etc., reverting to
the former system. Whilst approximately 35% advocated for an
increase, and the remaining 35% were of the opinion that the
remuneration should neither be increased nor decreased.
9.4
Review of Formula
9.4.1 As a result of the above findings, the Panel is of the opinion that the
existing formula is no longer fit for purpose and needs to be reviewed
with regard to the numbers of hours allocated to the work carried out by
Councillors on a weekly basis.
9.4.2 The Panel is of the opinion that a formula is still the way forward to use
as a guide, as the statutory guidance is very specific on the questions a
Panel must consider when arriving at the recommended Basic
The TaxPayers’ Alliance, ‘Councillors’ Allowances’, Research note 116, 2012
<http://www.taxpayersalliance.com/councillors_allowances> accessed 27/01/2015
7
98
Allowance (BA). The Department for Communities and Local
Government states:
Having established what local Councillors do, and the hours which are
devoted to these tasks the local authorities will need to take a view on
the rate at which, and the number of hours for which, Councillors ought
to be remunerated.8
10.
RECOMMENDATIONS
10.1
The statutory guidelines published by the Department for Communities
and Local Government, as mentioned above, highlights three
variables9 when setting and recommending an appropriate BA:
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.
10.2
The interviewees, by way of asking supplementary questions, indicated
that the required time commitments varied from 10-20 hours per week,
and at times for Councillors with special responsibilities, 25-35hrs per
week, however this varied from Councillor to Councillor. Most of those
hours however were spent preparing for meetings and not set aside
entirely to conduct surgeries to address constituents concerns.
10.3
The IDeA 2013 Census of Councillors reported that “an average of
25.1 hours per week was spent on council and political business and
group/party business combined (20.8 hours on council and political
business, and 4.3 hours on group/party business)”. However, only an
average of 6 hours were spent on “engaging with constituents,
conducting surgeries, and enquires, whilst an additional 4hrs was spent
working with community groups”.10
10.4
Taking into consideration the above findings the Panel recommends
that the hours stipulated in the formula be changed in order to reflect
the above findings and interviewees responses. The formula will now
be as follows:
Basic Allowance= 25hrs/wk x Luton Avg Hourly Resident Earnings
x 52 wks x 50%(voluntary contribution)
Department for Communities and Local Government, ‘New Council Constitutions: Guidance on
Regulations for Local Allowances, London: TSO, 2006, para 67
<http://webarchive.nationalarchives.gov.uk/20120919132719/http:/www.communities.gov.uk/publicati
ons/localgovernment/newcouncilconstitutions> accessed 28/01/2015
9 ibid, paras 68-69
10 Kettlewell, K. and Phillips, L., Census of Local Authority Councillors 2013, (LGA Research
Report), 2014, Slough: NFER, pg 12-13, 42
8
99
10.5
The Panel calculated Luton’s Hourly Resident Earnings by employing
the figures stipulated in the official labour market statistics. The hourly
figures highlighted under “Earning by Residents” was used rather than
the figures stipulated under the “Earning by Workplace” as the former
“figures show the median earning for employees living in the area”.11
Whilst the latter is the median earnings for the employees working in
the Luton area, but not necessarily a resident of the area. 12
Luton Avg Hrly Earnings= 12.94 (male)+ 10.80(female) = 11.87
2
10.6 By explicitly basing, the hourly rate on the Luton resident’s median
hourly earnings to calculate the BA, the Panel considers that it places
Luton Councillors on a par with earning of their constituents.
10.7
The Panel has taken into consideration the demanding nature of the
role of Councillors and deemed that although not all Councillors make
themselves available year round, some do, and thus they should not be
penalised.
10.8
As a result the Panel has agreed that Councillors should be
remunerated for the full 52 weeks. Conversely, the Panel adheres to
LGAs 2013 Census, as discussed above, and thus deemed that half of
the 25hrs is spent on Council business, thus allocating 12.5hrs to be
remunerated, and the other half has been conceptualised as public
service, and therefore not remunerated. This keeps in line with the
spirit that a Councillor s role is primarily voluntary in nature.
10.9
A recommended BA by following the above formula and the Statutory
Guidelines, the Panel recommends that the BA be increased to £7,720.
For accounting purpose the figure of £7,715.50 was round up to
£7,720. The Panel therefore recommends that an increase of £220 pa
is made on the current allowance of £7,500.
10.10 The Panel asserts that the formula and figure arrived at is fair,
objective, transparent, and can consistently be applied, as it is well
supported and justified.
11.
Special Responsibility Allowances
11.1
The payment of Special Responsibility Allowance (SRAs) is
discretionary under Part 2, paragraph 5(1) and 5(2) of the Local
Authorities (Members’ allowances) (England) Regulations 2003 i.e. a
Council may ...), the exception being paragraph 5(2) (b) which requires
an authority to pay an SRA to ‘...at least one person who is not a
member of the controlling group and has special responsibilities
described in paragraph (1)(a) or (f) of the regulations; provided that (i)
the Members of an authority are divided into at least two political
groups; and (ii) a majority of members of the authority belong to the
same political group (“the controlling group”).’
11
ibid, pg 8 [emphasis added]
100
11.2
SRAs are paid, as a proportion of BA, to those members who have
significant additional responsibilities such as, inter alia:
●
●
●
●
11.3
Leader of the Council
Executive Members
strategic planning and decision- making,
formal governance roles, chairs of committees, and (in some cases)
quasi-judicial responsibilities over and above the generally accepted
duties of a Councillor.
The Panel has reviewed the level of SRAs over the last few years in
light of the recommended rate of BA. Notwithstanding the above,
allowances paid under the scheme had to fall within one of the
categories prescribed therein. Having considered the regulations, the
Panel was of the opinion that the SRA Notwithstanding the above,
allowances paid under the scheme had to fall within one of the
categories prescribed therein.
101
The recommended scheme of allowances for 2015/2016
A basic allowance for all Members of
the Council
£7,720 per annum
Special responsibility allowances per
annum for the following posts in
addition to the basic allowances :
The Executive Leader
Twice the Basic Allowance
(£15,440)
Executive Members with Portfolios,
including the Deputy Leader
Three quarters of the Basic
Allowance (£5,790)
Chairs of the following Committees:


Scrutiny Board
Development Control
} One third of the Basic Allowance
} (£2,573)
Chairs of the following Committees /
Group:
Administration & Regulation
Audit & Governance
All Area Boards
Scrutiny Health and Social Care
Scrutiny Finance Review Group
}
}
} One sixth of the Basic Allowance
} (£1,287)
}
Leader of the Major Opposition Group
One third of the Basic Allowance
(£2,573)
Co-Optee’s Allowances :
●
●
●
Statutory co-opted members
(unless Chair of Standards
Committee
One sixth of the Basic Allowance
(£1,287)
●
●
●
Statutory co-opted members
(where Chair of Standards
Committee)
One third of the Basic Allowance
(£2,573)
102
12.
Other allowances
12.1
The Panel recommends that the rate of Dependent Carer’s/Childcare
Allowance be, paid to reimburse the cost of actual and necessary
expenses, It should remain at the rate of £7 per hour, payment to be
made upon provision of receipts. This is up to a maximum payment of
£20.00 per hour to be paid only with the prior approval of the Head of
Policy and Performance. The allowance should not be payable to
members of a Councillors family or household. (In exceptional cases
where a Councillor’s care responsibilities are higher, and increased
costs are incurred an application should be made in writing to the Chief
Executive and considered on its merits prior to the expenditure being
incurred).
12.2
The Panel further recommends that the Council continue to reimburse
the costs of travel expenses actually and necessarily incurred by
Councillors and co-opted members in connection with their duties, at a
rate of 52.2p per mile (Casual User rate); this rate being in line with
that paid to officers of the Council.
13.
The Provision of Broadband and IT Consumables
13.1
The Panel has decided not to recommend a separate allowance for the
provision of broadband and IT consumables such as printer paper and
ink as the increased Basic Allowance would meet these costs.
14.
THE WORK OF THE PANEL IN 2015-2016
The work of the Panel for 2015/16 will include:
i)
ii)
iii)
iv)
v)
vi)
vii)
viii)
ix)
continuing to review allowances
monitoring any changes in roles of Councillors when considering
SRAs
monitoring the development of annual reports by Councillors
continuing interviews with Councillors and officers
continuing to attend a variety of council meetings
to continue the recruitment of new members of the panel
consider councillors rights to membership of the Local
Government Pension Scheme
The taxation of Members allowances and expenses.
SRA’s for Chairs not currently remunerated.
Appendices
Appendix A: Taxpayers Alliance Comparison Allowances
Appendix B : Questionnaire
Appendix C : Nomis official labour market statistics (Luton)
103