STATES
MEMBERS’ REMUNERATION
_______________
Lodged
au Greffe on 10th December 2002
by
the Privileges and Procedures Committee
______________________________
STATES OF JERSEY
STATES
GREFFE
|
150 |
2002 |
P.238 |
Price code: C
PROPOSITION
THE STATES are
asked to decide whether they are of opinion -
(a) to agree that the present arrangements
regarding the provision of a means tested minimum income and an expenses
allowance to elected members of the States shall be replaced with a new
remuneration scheme available to all elected members, and that under the new
scheme -
(i) all elected members of the States shall, on
application to the Treasurer of the States and irrespective of income from any
other source, be entitled to receive remuneration up to a maximum of £41,000 per
annum;
(ii) payments
shall be made to elected members monthly in arrears;
(iii) the amount of annual remuneration shall be
increased on 1st January 2004, and on 1st January in each year thereafter, in
accordance with the increase in the Jersey Retail Prices Index as at the end of
the previous year and the Finance and Economics Committee shall report the
amount annually to the States;
(iv) the Privileges and Procedures Committee
shall, in addition to the provisions in sub-paragraph (iii) above,
undertake a triennial review of the amount of annual remuneration and shall
report to the States with recommendations;
(v) Elected States members who are liable to pay
Class 2 social security contributions by virtue of receiving remuneration
under the scheme shall be able to apply quarterly to the Treasurer of the
States for reimbursement equivalent to the secondary (employer’s) element of
those contributions;
(b) to request the Privileges and Procedures
Committee, in consultation with the Finance and Economics Committee, to take
the necessary steps to bring operation into the new scheme as soon as
practicable.
PRIVILEGES
AND PROCEDURES COMMITTEE
Note: The Finance and Economics Committee
commented that the estimated cost of these proposals is approximately
£1 million and represents a significant sum for which no allowance has
been provided in the 2003 Cash Limits as proposed by the States in the Resource
Plan.
Should
the States agree to these proposals the Finance and Economics Committee would
have to recommend a £1.039 million allocation from the General Reserve in
2003 and request that a first charge on the additional funds available in the
prioritisation exercise for 2004.
REPORT
1 Introduction
1.1 The
Privileges and Procedures Committee is required by its terms of reference, as
agreed by the States in adopting P.23/2002, as amended, on 26th March 2002, to
bring forward proposals -
“on
the remuneration and expenses provision for elected members of the States,
including roles such as ministers, chairmen of scrutiny committees, assistant
ministers and others”.
2 Core issues
2.1 Deciding
the appropriate remuneration level for the elected members of a legislature is
always problematic because there is no other occupation that can offer a useful
basis for comparison. The work of a representative is unique. This makes the
matter of remuneration and expenses for elected States members one of the most
difficult and controversial subjects that the Privileges and Procedures
Committee is required to consider in accordance with its terms of reference. There
are clearly a wide range of strongly held views amongst both members and those
outside the States. The Committee has noted that, since giving an indication of
its initial thinking on this matter, there has been considerable comment in the
local media, and from the public, on the draft proposals, some of which has
been extremely critical.
2.2 The
Privileges and Procedures Committee therefore believes it is important to
recall that the principle of making available a minimum income to elected members,
to ensure that no-one is prevented from standing for the States for financial
reasons, has been accepted by the States for many years. The Committee hopes
that no-one would suggest that this fundamental principle should, at this
point, be brought into question.
2.3 At
election time each candidate places their manifesto before the electorate,
meets electors and explains their policies. In a democracy the electors have the
opportunity to make their choice based on their opinion of the policies and
ability of the candidates.
2.4 The
Committee considers that it would be of much greater concern if, in the absence
of a fair remuneration system, the only persons able to put themselves forward
for election were those with sufficient income from other sources. This would
clearly cause an imbalance in representation and would lead to a situation
where certain sectors of Island life were totally unrepresented in the
Assembly. This could include single parents and disabled persons. Granting
suitable remuneration to elected States members would enable a greater number
of candidates to stand, resulting ultimately in an Assembly that in its variety
and balance is truly representative of the people of Jersey.
2.5 In
attempting to bring forward proposals on the remuneration and expenses
available to elected members, and proposals
concerning how such payments should be determined, the Committee has taken
the view that, despite the controversial nature of the subject, it must base
its decisions solely on what, after careful consideration, it genuinely
believes is the fairest and most appropriate system.
3 History
3.1 The
Privileges and Procedures Committee is grateful for the work undertaken by the
former House Committee Remuneration Sub-Committee which published its
consultation document on 25th September 2001 (R.C.33/2001). The Working Party
considered the entire ‘package’ of remuneration and expense allowance,
following the House Committee’s opinion that remuneration for elected States members
required review as part of the wider overview of States members’ facilities,
irrespective of the future structure of the Island’s government, as known at
the time.
3.2 Research
was carried out into the history of States members’ remuneration, a scheme for
which was first established in 1969. Detailed comparisons with a large number
of other jurisdictions were drawn, and a set of consultative proposals were put
forward highlighting the following issues -
· that the work of an elected States member could no longer be
regarded as a part-time ‘amateur’ pursuit;
· that whilst there was a long tradition of honorary service in
the Island, there was also the need to provide support for elected members to
devote themselves entirely to their political duties;
· Jersey was unique in discriminating with the means-tested
system;
· a basic salary should be made available to all elected members;
· elected members should be treated as ‘employed’ for social
security purposes;
· the provision of a resettlement amount;
· the provision of some form of pension arrangement; and
· there should be no change to the present expense allowance,
although this was linked to the provision of States members’ facilities.
3.3 The
House Committee considered the responses to R.C.33/2001, and the Privileges and
Procedures Committee has taken account of the views expressed when formulating its
recommendations. The Committee is aware that as the reforms to the Machinery of
Government progress, it will acquire a “working knowledge” of the departments
and scrutiny committees. This knowledge will inform future decisions. However,
it is already clear that the historical “amateur-politician” image is no longer
appropriate or relevant.
3.4 The
Privileges and Procedures Committee concurs with the views expressed in R.C.33/2001,
that the present means tested system of income support should be replaced by a
basic remuneration available to all elected members, irrespective of income from
outside sources.
4. Sensitivities
4.1 The
Committee is conscious of the sensitivities surrounding this recommendation and
aware that the concept of honorary service remains an important one in the
Island, not just in the political environment. The Committee fully accepts that
some elected members would have no wish to accept any remuneration for the
service they give to the States and therefore, there would be no obligation for
members to receive it if they did not wish to. Nevertheless, the Privileges and
Procedures Committee shares the view of the former House Committee Remuneration
Sub-Committee that it is quite unfair that elected members of the States, who
have outside sources of income beyond the current minimum allowable amount,
should be precluded from receiving adequate compensation for the many hours
they spend on their States duties. The Committee’s view is that elected members
would claim the amount that they felt was appropriate to compensate them for
the work they undertook for the States, up to the maximum allowable.
4.2 The
Privileges and Procedures Committee would reiterate that the present means tested
system, as examined in R.C.33/2001, appears to be totally unique amongst the
various jurisdictions examined by the Working Party including Guernsey and the
Isle of Man, where comparisons are perhaps more appropriate than against larger
jurisdictions such as the U.K. Parliament at Westminster.
4.3 The
Committee has formed the view that suitable remuneration would also provide a
means of compensation for elected members, to enable them to plan and save for
their own futures, in a similar way that they advocate policies relating to
prudent future financial planning for all citizens, for the benefit of the
Island and its community.
5 Level of remuneration
5.1 The
Privileges and Procedures Committee has given careful consideration to the
level at which the basic remuneration should be fixed - this is clearly a
difficult and sensitive issue. Elected members pay should not be so little as
to deter suitable candidates, oblige elected members to obtain further income
elsewhere, or to be ridiculous in comparison to what elected members could earn
elsewhere. In addition, elected members pay should not be so much as to be
unacceptable to an informed public, or to make it the sole attraction of
seeking office.
5.2 The
Committee is sensitive therefore, to ensuring that the level of remuneration is
appropriate, given the extremities outlined in paragraph 5.1 above.
5.3 The
right of the States to determine its own elected members’ remuneration must be
set within the wider political and economic context. Traditionally the status
of the representative has been judged in terms of public service rather than
financial reward. Status and privilege, however, cannot be quantified in exact
monetary terms. Nor can anyone pinpoint exactly where being held in public
esteem compensates for a low salary.
5.4 While
the recommendations made in later paragraphs of this report may give the
appearance of setting an inflationary example, in reality this is highly
unlikely. Inflation is caused by a combination of many factors, such as rising
interest rates, the value of sterling, raw commodity prices overseas etc. To
hold a rise in elected members’ pay alone as contributory to inflation would be
a failure to acknowledge the complexity of modern economics.
5.5 The
Committee is aware that it achieves little to continually discuss the relative
worth of elected States members, regurgitating the same arguments in the States
Assembly. However, the Committee feels that as a political issue, elected members’
remuneration must remain in the political domain of the Chamber.
5.6 What
is required is a simple mechanism, whereby the value of elected members’
remuneration can be maintained from one year to the next and thus avoid
frequent discussion of increases and other adjustments on a yearly basis. The
Committee believes there is merit in applying annual increases based on the
Retail Price Index, as a mechanism to ensuring that elected States members’
remuneration does not fall significantly out of step with public sector pay
settlements. This would apply in the January of each year based on the Retail
Price Index as at December in the previous year. These rates would be reviewed triennially
by the Privileges and Procedures Committee to ensure that they remained at a
fair and reasonable level.
5.7 While
the Committee does not deny that the work of an elected States member is
unique, nor argue that the job content of an elected States member and a civil
servant are the same, the Committee nevertheless feel that members would be
interested to know of the civil service grades that compare with the proposed
amount, which at current levels, would be between £36,873 (Grade 11/0) and £41,076
(Grade 11/3)[1]. As set out later in this
report, the Committee’s favoured option would be for remuneration at the top
end of that range. This corresponds to the remuneration paid to ‘middle
managers’ in the civil service and is believed to strike the appropriate
balance in relation to the two extremes referred to in paragraph 5.1.
5.8 Jersey’s
current mechanism for means tested remuneration for its politicians is unique
and does not feature in other parliamentary jurisdictions. Elected members can,
at the time of writing, claim income support and expenses allowance up to a
maximum of £36,974, and the proposals contained in this report, allowing for
the balance of elected States members who currently do and those who do not
claim income support/expenses, are unlikely to yield any radical change in the
cost of remuneration in the future. Providing suitable remuneration would,
thus, encourage States members’ to come from all walks of life, rather than be
narrowly representative of the electorate. Given the need that the majority of elected
States members have to maintain commitments and responsibilities outside the
Assembly and their States work, (such as mortgages and families), it is perhaps
even more important to attract and retain as broad a membership as possible to
the States.
6 Positions of greater
responsibility
6.1 Given
the implementation procedures currently in hand regarding the proposed
ministerial form of government for Jersey, and that such information was not
known at the time the former House Committee submitted R.C.33/2001 to the
States, the Privileges and Procedures Committee, in its First Report, proposed
to make available limited additional remuneration, over and above the basic
amount, to those elected States members with additional responsibilities. This
was suggested as follows -
|
Chief Minister - |
additional 50% of basic
remuneration; |
|
Minister/President of PPC/Chairmen
of Scrutiny Committees - |
additional 15% of basic
remuneration. |
It
was also suggested that the States may consider providing members of Scrutiny
Committees and Assistant Ministers with additional remuneration of 10%. However,
due to the uncertainty of the potential workload and levels of responsibility
of the respective positions, the Committee wish to defer the question of
additional remuneration until more is known of the future roles within the
Assembly. For this reason, the States are not being asked to consider this
issue as part of this proposition.
7 Pensions
7.1 The
Privileges and Procedures Committee has considered carefully the recommendation
of the House Committee Remuneration Sub-Committee, that a pension scheme should
be established for elected members of the States. Although such schemes are
common in almost every other legislature, the Privileges and Procedures
Committee believes that the expense and complex administration in establishing
such a scheme could not currently be justified in Jersey. Although it is
obviously appropriate for elected members who remain in the States for the
majority of their working life to make adequate pension provision, the
Committee is of the view that it is preferable for elected members to make
their own arrangements and believes that this will be more feasible if the
basic remuneration is increased to the level suggested in this report.
7.2 Elected
members would not be provided with an employers’ contribution towards pension
arrangements, which, by comparison with a Grade 11/3 civil service officer,
would amount to a sum of £ 6,227 per annum.
8. Social Security
8.1 The
Committee considers that the present system of reimbursement of a sum
equivalent to the employer’s social security contributions, reinstated in 2001,
works well and should continue. For the avoidance of doubt, the Committee would
point out that elected members remain responsible for the payment of the
employee’s contribution if they are liable to make contributions.
9. Expenses
9.1 There
is, at present, no accurate information available about the total ‘cost’ to an
individual as a result of being an elected member of the States. In addition,
it is apparent that this cost will vary greatly depending on the member’s
individual circumstances. Some members rent office accommodation to use in
connection with their States’ duties, others employ full or part-time secretarial
support and some need to meet the cost of child care in order to attend to
their States’ duties. Others may already have access to office accommodation or
simply work from home. The Committee researched average costs and discovered
that office space costs between £15 and £25 per square foot (source Simon
Buckley at Healey & Baker), hiring a secretary costs between £15,000 and
£20,000 per annum (members often share the services of a secretary) depending
on their skills and role (source: Recruitment Limited and Excel Recruitment)
and childcare can cost from £4/hr to £8/hr depending on the age of the child
and the qualifications of the child minder (source: Susan Kemp, Jersey
Childcare Trust).
9.2 The Privileges and Procedures
Committee is not able to make firm recommendations on the matter of expenses
until the issue of facilities for elected members is concluded. The Committee considers both issues
to be closely linked, as elected States members might avoid certain expenses if
improved facilities were made available. For example, the cost of renting
office accommodation could be avoided if such accommodation was provided
elsewhere for use.
9.3 Other
matters referred to in paragraph 9.2, such as secretarial support, might fall
outside this general view, although it may attract further consideration should
such support in some form be provided at a future date.
9.4 The
Committee has formed the opinion that it would be inappropriate to establish a
complex and potentially bureaucratic system, requiring elected members to
account formally and fully for every item of expense, as is the case in many
other jurisdictions. With improved facilities and the suggested remuneration
level, it is possible for elected members to regulate their own level of
expenses within the overall maximum payable.
9.5 The
Committee has been advised by the Comptroller of Income Tax that the total
remuneration payment referred to earlier would be treated as taxable income,
but elected members would be able to make a formal claim to the Comptroller in
respect of any expenses incurred in the performance of their duties. The
procedure for making claims is by way of a completed annual income tax return. Members
should note that, whilst there is no percentage limit on income that could be
claimed on expenses, elected members can only claim expenses which are wholly
or exclusively incurred in relation to their duties and work as an elected
States member. These expenses could include secretarial support, office rental,
transport, certain clothing and telephone.
10. Funding
10.1 If
the proposal to introduce revised remuneration finds approval with States members,
and assuming that it is envisaged that such payment is to include provision for
elected members themselves to meet their own expenses and pension arrangements,
the Privileges and Procedures Committee is, as stated earlier, minded that the
remuneration should be in the region of £41,000.
10.2 Details
of potential expenditure associated with elected States members’ income and
expense allowance for 2002 and 2003 are as follows -
|
|
|
£ |
|
2002 |
|
|
|
Maximum Expense Allowance
claimable |
= |
9,277 |
|
Minimum Income Support claimable
(max) |
= |
27,697 |
|
Total maximum claimable |
= |
36,974 |
|
|
|
|
|
Based on all 53 elected
members claiming: |
|
|
|
Total expense allowance |
= |
491,681 |
|
Total minimum income support |
= |
1,467,941 |
|
Total payments for 2002 |
= |
1,959,622 |
|
|
|
|
|
2003 |
|
|
|
Maximum Expense Allowance
claimable |
= |
9,667 |
|
Minimum Income Support
claimable (max) |
= |
28,722 |
|
Total maximum claimable |
= |
38,389 |
|
|
|
|
|
Based on all 53 elected
members claiming: |
|
|
|
Total expense allowance |
= |
512,351 |
|
Total minimum income support |
= |
1,522,266 |
|
|
|
|
|
Total payments for 2003 |
= |
2,034,617 |
There
are, in addition, Social Security payments for the year 2002 estimated in the
sum of £23,000.
(Note: Figures for 2003 are
based on increases over the 2002 figures of 4.2% for the expense allowance and
3.7% for Income Support.)
10.3 If
the proposal to provide entitled remuneration for all elected States members at
a single level of £ 41,000 is adopted, this would amount to the potential annual
sum of £2,173,000. This equates to a
total shortfall of £ 138,383 in the potential amount payable under the existing
scheme.
While this figure cannot accurately be
determined, as it is difficult to predict the number of elected States members
who would actually claim the full remuneration (not all members claim income
support at present), the calculation assumes that the elected membership of the
States remains at 53 in total and that all elected members would claim the full
amount, which is, in practice, probably unlikely.
10.4 It
is intended that such monies would paid on a monthly basis, and not on a
quarterly in advance basis as currently provided in accordance with an Act of
the States dated 14th July 1998. Remuneration would be set up and administered
through States central payroll.
11 Financial
and manpower implications
11.1 Any
financial implications imposed as a result of the States approving a new
remuneration entitlement for elected members, would be subject to the necessary
funds being identified by the Finance and Economics Committee and it is only
correct to point out that no additional sums have been earmarked within the
proposed 2003 cash limits for this purpose.
11.2 This proposition has
no implications for the manpower resources of the States.