Clauses 28 to 30: Different and alternative arrangements

68. Clause 28 enables the Secretary of State to make regulations to cover all the eventualities where local authorities are changing their executive arrangements or moving to different executive arrangements. This includes moving to any new forms of executive provided for in regulations under clause 11(6).

69. Clause 29 provides for alternative arrangements which are not executive arrangements. It allows the Secretary of State to specify arrangements for the discharge of functions which do not involve an executive, but which will ensure that decisions are taken in an efficient and accountable way. These arrangements must be different from current arrangements, in particular they must involve arrangements which are not permitted by section 101 of the Local Government Act 1972 or sections 15 to 17 of, and Schedule 1 to, the Local Government and Housing Act 1989.

70. Clause 30 provides for the operation of alternative fall-back arrangements where a referendum has been lost. It allows the Secretary of State to make regulations enabling local authorities to alter the alternative arrangements they have in place or to move from them to executive arrangements.

Clauses 31 to 33: Referendums

71. Clause 31 gives the Secretary of State a power to make regulations concerning public petitions in relation to whether or not a local authority should have a directly-elected mayor. It provides that regulations made under this clause could require a local authority to hold a referendum where it has received a petition, signed by at least 5% of local electors. Regulations may specify matters such as the form of petitions (including electronic petitions), their verification, the timing of referendums, the action to be taken by a local authority on receipt of a petition and the manner in which and times at which the number of electors required to sign the petition is to be calculated and publicised. Regulations may also vary the 5% threshold for petitions.

72. Clause 32 gives the Secretary of State a power to make regulations which enables him to direct a local authority to hold a referendum on whether they should adopt executive arrangements described in or under clause 11. The regulations will specify the circumstances in which the Secretary of State will be able to invoke this power, and may include provisions for the timing of a referendum and the action to be taken by the authority.

73. Any requirement to hold a referendum arising under these clauses will be subject to the constraint in clause 41(1) that a referendum on executive arrangements may not be held more than once in any five years.

74. Clause 33 enables the Secretary of State by order to require all local authorities, or all authorities of a particular description, to hold a referendum on a particular form of executive.

Clause 34: Local authority constitution

75. Clause 34 requires an authority which is operating executive arrangements under this Part of the Bill to maintain a document (referred to in the clause as their constitution) and ensure that it is available for inspection by members of the public. The constitution shall include the standing orders and councillor code of conduct of the authority and such other information about the discharge of functions in the authority as the Secretary of State may direct.

Clause 35: Guidance

76. Clause 35 requires local authorities to have regard to any guidance issued by the Secretary of State in relation to Part II of the Bill.

Clauses 36 and 37: Elected mayors and elected executive members

77. Clause 36 provides that a directly-elected mayor means an individual elected to that post by the local government electors in the authority's area. The clause also provides for elected executive members to be elected by the local government electors for the authority's area. Elected executive members are individuals who are directly elected to an executive or to a particular post in an executive where such an executive has been provided for in regulations under clause 11(6).

78. Elected mayors are to be treated as a local authority councillor and member for the purposes of local government legislation, except where regulations provide otherwise. This means that general provisions relating to councillors, such as those relating to conduct, qualification, disqualification, the filling of vacancies, entitlement to allowances etc. will also apply to elected mayors.

79. The normal term of office for an elected mayor or an elected executive member will be four years, except as otherwise provided for in regulations made by the Secretary of State under clause 37. Clause 37 also enables the Secretary of State to make regulations providing for the dates, years, and intervals at which elections for elected mayors or elected executive members can take place. This enables the Secretary of State, for example, to provide for elections which are consistent with the different electoral cycles operated by local authorities, and could allow initial terms of office for directly elected members of greater or less than four years so that the cycle can be brought into step with the normal electoral cycle.

Clauses 38 to 40 and Schedule 2: Elections

80. Clause 38 and Schedule 2 describe the method for electing a directly-elected mayor. This will normally be the supplementary vote system (SV), unless there are less than three candidates, in which case the simple majority system is used.

81. Under the SV system, the elector has two votes—a first preference vote cast for the elector's preferred candidate, and a second vote cast for the elector's second preference from among the remaining candidates. Schedule 2 specifies the procedure for returning an elected mayor under the SV system. If any candidate receives more than half of the first preference votes cast, that candidate is the winner. Otherwise, all but the two candidates who received the greatest number of first preference votes are eliminated. Any second preference votes among the votes for the eliminated candidates which have been cast for the two remaining candidates are then added to those candidates' total votes, and the candidate with the highest number of votes overall is elected mayor. Schedule 2 also provides procedures for dealing with an equality of votes at any stage of the process.

82. Clause 39 provides that entitlement to vote at elections of elected mayors or elected executive members is the same as the electoral franchise for normal local government elections.

83. Clause 40 provides the Secretary of State with a power to make regulations regarding the conduct of elections for elected mayors and elected executive members. This includes a power to apply or modify any statutory provisions relating to the conduct of elections. This will allow the Secretary of State to ensure that the existing statutory framework for the conduct of elections can be applied to mayoral and elected executive elections appropriately.

Clause 41: Provisions with respect to referendums

84. Clause 41 provides that a local authority may hold only one referendum on proposals for executive arrangements in any five-year period. This includes referendums triggered by a public petition under clause 31, or required by the Secretary of State under clauses 32 or 33. The people eligible to vote in a referendum will be those people who would normally be entitled to vote at local government elections in the authority conducting the referendum.

85. Clause 41 also provides for the Secretary of State to make regulations on the conduct of referendums, and to provide for the application of electoral legislation to the holding of referendums.

Clause 42: Power to make further provision

86. Clause 42 allows the Secretary of State by order to make such incidental, consequential, transitional or supplemental provision as he considers necessary for the purpose of operating the provisions of Part II of the Bill.

Clause 43: Power to modify enactments

87. Clause 43 allows the Secretary of State to make orders to modify, apply, extend, or repeal any legislation. This power is constrained to such modifications as are necessary to give full effect to Part II of the Bill.

PART III: CONDUCT OF LOCAL GOVERNMENT MEMBERS AND EMPLOYEES

Summary

88. Part III of the Bill establishes a new ethical framework for local government. This includes the introduction of statutory codes of conduct, with a requirement for every council to adopt a code covering the behaviour of elected members and of officers, and the creation of a standards committee for each local authority.

89. It also establishes a new non-Departmental public body (NDPB), the Standards Board for England; this will provide an independent process for investigating instances of unethical conduct by local authority members, including any allegations that a code of conduct has been breached.

Background

90. At present, councillors are required, by virtue of s.83 of the Local Government Act 1972, to declare at the time of accepting office that they will be guided by the National Code of Local Government Conduct (issued as a Joint Circular under s.31 of the Local Government and Housing Act 1989). The Code deals with the treatment of non-pecuniary interests.

91. A requirement on members to give notice of their pecuniary interests in the form of a register was introduced by regulations made under s.19 of the 1989 Act. The declaration of pecuniary interests at relevant meetings is a requirement under s.94 of the 1972 Act; s.97 of that Act enables dispensations to be granted to speak and/or vote at such meetings.

92. However, apart from the criminal offences under section 94(2) of the 1972 Act of failure to declare a pecuniary interest or non-registration of such an interest under section 19(2) of the 1989 Act, the only action that can be taken against an individual member is under section 30(3A) of the Local Government Act 1974 which provides for the local government Ombudsman to be able to name a member or members where he finds that a breach of the code by an individual member constitutes maladministration.

93. The Third Report of the Committee on Standards in Public Life on Standards of Conduct in Local Government (the Nolan Committee) in July 1997 recommended that the existing National Code of Local Government Conduct should be replaced. The Nolan Committee also recommended that local authorities should be able to discipline individual councillors, subject to a right of appeal to an independent tribunal.

94. The Government response to the Nolan Committee's report was included in the consultation paper Modernising Local Government: a new ethical framework⁴. The paper set out possible arrangements for introducing such a new framework, subject to consultation. It broadly agreed with the Nolan Committee conclusions but went further in its emphasis on external independent investigation and discipline.

95. A separate consultation paper, entitled Modernising Local Government in Wales: a new ethical framework⁵, was published in Wales, setting out suggested arrangements for introducing a new framework tailored to Welsh requirements.

96. The White Paper Modern Local Government: In Touch with the People⁶ set out the Government's intention to legislate for a new ethical framework for local authorities. It signalled three principal components of the new framework:

• a requirement on every council to adopt a code of conduct, based on a national model, that all members would have to sign up to;

• a requirement for most authorities to set up a standards committee to oversee ethical issues and provide advice and guidance on the code of conduct and its implementation;

• the establishment of an independent body, the Standards Board, with responsibility for investigating alleged breaches of the council's code of conduct.

97. A separate White Paper, Modernising Local Government in Wales: Local Voices⁷, set out the intentions of the newly formed National Assembly for Wales (NAW) to implement a new ethical framework for Welsh authorities, broadly comparable to the English framework.

98. The Government papers Local Leadership, Local Choice⁸ in England and A Stronger Voice for Local People⁹ in Wales provided further details of the framework and proposals were included in the accompanying draft Local Government (Organisation and Standards) Bill which was submitted to the scrutiny of a Parliamentary Joint Committee of MPs and Peers in May 1999.

Commentary on clauses

Clause 45: Principles governing conduct of members of relevant authorities

99. Clause 45(1) and (2) of the Bill provide the Secretary of State in England and the NAW in Wales with a power to develop a set of general principles of conduct, which will apply to all authorities covered by the new ethical framework. The general principles are intended to provide a guide for councillors' behaviour in the execution of their duties and will underpin the model code of conduct referred to in clause 46 that these authorities will adopt for their members. The general principles will also be subject to approval by Parliament in respect of England, by affirmative resolution of both Houses, before the Secretary of State can introduce them. In Wales, the general principles of conduct will be subject to approval by a resolution of the NAW.

100. Clause 45(3) and (4) place a duty on the Secretary of State and the NAW to consult various bodies in developing the general principles of conduct. They include representatives of local government, the Audit Commission and the Commissions for Local Administration in England and Wales (the local government Ombudsmen).

101. Clause 45(5) sets out the relevant authorities in England and Wales whose members' conduct is to be governed by the general principles of conduct.

102. Clause 45(6) provides a definition of co-opted member. The new ethical framework applies equally to all those voting members of a committee or sub-committee of a relevant authority, whether they have been elected to the authority or co-opted on to it.

Clause 46: Model code of conduct

103. Clause 46(1) and (2) enable the Secretary of State or the NAW to issue a model code of conduct for members and co-opted members of relevant authorities. The model code will give practical effect, in terms of councillors' behaviour, to the general principles. The code replaces a number of statutory instruments implemented in an ad hoc fashion over time. Once councillors have signed up to a locally adopted version of this code, they will be expected to abide by it. If they do not, they will become subject to investigation by the new Standards Board, and to possible subsequent disciplinary action under clause 66.

104. The clause specifies that the model codes must be consistent with the general principles. A code may include mandatory and optional provisions. Once again, the Secretary of State and the NAW would be required to consult representatives of local government and other persons or organisations before introducing model codes. The Secretary of State may invite these organisations to draw up a draft model code.

Clauses 47 and 48: Duties

105. Clause 47 places a duty upon relevant authorities to adopt a code of conduct within six months of the new model code coming into force. An authority's code of conduct must include any mandatory provisions of the model code that applies to the authority. However, the authority has discretion to incorporate in its code any optional or additional provisions it wishes to include, providing they are not inconsistent with any within the model code of conduct.

106. This clause also makes provision that if an authority fails to adopt a code of conduct within the specified period, the mandatory provisions of the model code relevant to the authority will apply to it by default until it adopts its own code. Once an authority has adopted or revised its code of conduct, it must publish the fact, make the code of conduct available for public inspection, state the address of their principal office and send a copy to the Standards Board.

107. Clause 48 makes provision for declarations and undertakings by members and co-opted members of relevant authorities that they will observe codes of conducts.

Clauses 49 and 50: Standards committees

108. Clause 49 places a duty upon all relevant local authorities except parish councils or community councils to establish a standards committee.

109. This clause also specifies various details of the composition of an authority's standards committee. Although the authority has discretion over the overall number of members of the standards committee, the committee must have at least three members—two who are elected members of the authority and one of whom is an independent person (i.e. not a member of that or any other authority). In an authority that operates under the executive arrangements set out in Part II of the Bill, a standards committee must not include a directly-elected mayor or executive leader, and may not be chaired by a member of the executive.

110. Clause 49 also gives each of the Secretary of State and the NAW power to make regulations on the appointment of the independent member, the size of standards committees, and the way in which standards committees conduct their business. The Standards Board may also provide guidance to relevant authorities on such issues. It provides the independent members on the committee with voting rights, and requires the authority to provide the Standards Board with a copy of the standards committee's terms of reference.

111. Clause 50 sets out the functions of a standards committee. The general functions are to promote and maintain high standards of conduct within the local authority and to assist members of the authority to observe the authority's code of conduct.

112. This clause also outlines a range of specific functions. These are to:

• advise the authority on the adoption or revision of a local code of conduct;

• monitor the operation of the authority's code;

• advise members of the authority on matters relating to their code of conduct.

113. This clause also enables the Secretary of State and the NAW to issue further regulations in respect of the functions of standards committees. It also allows the Standards Board to issue guidance on these matters.

Clause 51: Standards committees or sub-committees for parish councils

114. Clause 51 puts in place arrangements for the functions of a standards committee for parish council to be carried out on their behalf by the district council (or unitary county council where there is no district). Clause 51(1) to (3) specify that this can be discharged either through the standards committee of the district or by setting up a sub-committee of the standards committee to specifically consider parish council conduct issues. In deciding whether or not to set up a separate sub-committee to consider parish issues, clause 51(4) requires the district council to consult the parishes concerned. Furthermore, clause 51(6) and (7) require at least one parish member to be present when the committee or subcommittee discusses parish issues. This clause also enables the Secretary of State to make regulations under clause 49 on the size, composition and proceedings of standards committees for parish councils. Similarly the Standards Board may issue guidance under clause 49 and 50 as for other standards committees.

Clause 52: Standards committee or sub-committees for community councils

115. Clause 52 allows the standards committees or sub-committees of such committees to discharge functions in relation to community councils in Wales and their members which are situated in the area of the county/county borough councils concerned. It requires the principal councils to consult their community councils on whether to use the councils' main standards committee or to set up a specific sub-committee to hear allegations against community council members.

Clause 53 and Schedule 3: Standards Board for England

116. Clause 53 provides for the creation of a Standards Board for England. The Secretary of State is given the power to appoint members of the Standards Board. The Standards Board is to have at least three members.

117. The functions of the Standards Board are:

• to appoint employees known as ethical standards officers (ESOs);

• to issue guidance to local authorities in relation to the conduct of their members (the Board may arrange for any such guidance to be made public);

• such other functions as may be conferred on the Standards Board by order, made by the Secretary of State.

118. Schedule 3 covers the status and general powers of the Standards Board. It sets out the grounds for disqualification for being appointed as a member of the Standards Board. It requires the Secretary of State to appoint the chairman and deputy chairman of the Standards Board. This Schedule also enables the Standards Board to appoint (and pay) staff to carry out its functions and includes provision for the employment of staff to support the Adjudication Panel and case tribunals in the exercise of their functions (see commentary on clauses 69 to 74 below). It provides that staff cannot support both ethical standards officers and the Adjudication Panel or case tribunals.

119. Schedule 3 includes provision for:

• the proceedings of the Standards Board;

• declaration of members' interests;

• provision of finance;

• submission of accounts;

• annual reporting arrangements;

• the application of seal and evidence;

• Parliamentary disqualification for any member of the Standards Board.

Clause 54: Written allegations

120. Clause 54 provides that a person may make a written allegation to the Standards Board for England that a member or co-opted member of a relevant authority has failed or may have failed to comply with the authority's code of conduct. If the Board considers that such an allegation should be investigated it must refer the case to its ethical standards officers.

Clause 55: Functions of ethical standards officers

121. Clause 55 specifies the functions of ethical standards officers. Their main function will be to investigate allegations that a member or co-opted member of an authority has breached its code of conduct. Ethical standards officers may also investigate any associated cases that have come to their attention as a result of undertaking an investigation into a written allegation.

122. This clause also states that the purpose of an investigation by an ethical standards officer is to find:

• that there is no evidence of a failure to comply with a code of conduct; or

• that there is no need to take action on the matter investigated; or

• that the matter should be referred back to the 'monitoring officer' of the authority to deal with; or

• that the matters which are subject of the investigation should be referred to the president of the Adjudication Panel for England.

Clauses 56 to 58: Investigations

123. Clause 56 enables ethical standards officers to investigate allegations even if the person concerned is no longer a member of the authority. An investigation into a member of an authority may not be carried out by an ethical standards officer who has been a member of that authority (or any of its committees) at any time within the last five years. Ethical standards officers are also placed under a duty to declare to the Standards Board any direct or indirect interest in any matters referred to them and to take no further part in any investigation of such a matter.

124. Subsection (3) provides that an ethical standards officer may cease an investigation at any stage before its completion and refer the matters which are the subject of the investigation to the monitoring officer of the authority concerned. (Clause 62 makes provision that conditions may be attached to any such referral.)

125. Clause 57 concerns the procedure for conducting an investigation. There is specific provision that the person being investigated must have an opportunity to comment on the allegation. Otherwise, the clause allows an ethical standards officer to conduct an investigation as he sees fit. There is specific provision allowing ethical standards officers to reimburse the costs of the people from whom they seek information. The clause also provides that the conduct of an investigation should not affect the ability of the local authority to take action in respect of the matters being investigated.

126. Clause 58 gives the ethical standards officer rights of access to the information or documents necessary for the investigation. These powers are also conferred upon any person the ethical standards officer authorises to assist with an investigation. Any person from whom the ethical standards officer makes enquiries or seeks information or explanations is obliged to co-operate. The duty to provide information extends to communications with government departments. The duty does not, however, extend to the Parliamentary Commissioner, a Local Commissioner, or the Health Service Commissioner. Ethical standards officers are to be able to obtain advice during an investigation and to pay for its provision.

127. Finally, clause 58(10) introduces an offence of failing to provide the ethical standards officer with such information, documentation or other evidence as he requires as part of his investigation. Any person convicted would be liable to a fine of level 3 on the standard scale (currently £1,000).

Clause 59: Restrictions on the disclosure of information

128. Clause 59 provides that information obtained by an ethical standards officer may only be disclosed if at least one of the following conditions is met:

• the disclosure is for the purposes of any functions of the Standards Board, an ethical standards officer, the Local Commissioner in Wales or a case or interim case tribunal;

• the person to whom the information relates has consented to its disclosure;

• the information has previously been disclosed to the public with lawful authority;

• the disclosure is for the purposes of criminal proceedings in any part of the UK, although information obtained from persons who are under the obligation to comply with ethical standards officers under clause 58(2) cannot be disclosed;

• the disclosure is made to the Audit Commission for the purposes of any functions of the Commission or an auditor under the Audit Commission Act 1998.

129. Clauses 59(2) to (4) provide that the Secretary of State or a relevant authority may prevent the disclosure of information if it would be contrary to the public interest.

130. Clause 59(5) introduces an offence of unlawfully disclosing information obtained during an investigation by an ethical standards officer. Any person on summary conviction would be liable to a term of imprisonment of up to six months. Any person on conviction on indictment would be liable to a term of imprisonment not exceeding two years, or to a fine, or both.

Clauses 60 and 61: Reports

131. Clause 60 provides that where an ethical standards officer concludes that there is no evidence of any failure to comply with the code of conduct of the relevant authority concerned or where no action needs to be taken in respect of the matters which are the subject of the investigation he may produce a report and may provide a summary of the report to any newspapers circulating in the area. If a report is produced, a copy must be sent to the monitoring officer of the relevant authority.

The monitoring officer of an authority is appointed under section 5 of the Local Government and Housing Act 1989.

If the ethical standards officer does not produce a report, he must inform the monitoring officer of the relevant authority of the outcome of the investigation.

132. Clause 60(2) and (3) place a duty on an ethical standards officer to produce a report when he concludes that the matters which are the subject of an investigation should be either referred to the monitoring officer of the relevant authority or referred to the president of the Adjudication Panel. Copies of the reports must be sent to the monitoring officer of the authority concerned, to the standards committee of the relevant authority or, as the case may be, to the president of the Adjudication Panel. A report may cover more than one investigation.

133. The Standards Board must on the conclusion of all investigations give notice to any member of the relevant authority concerned who is the subject of the investigation and must take reasonable steps to inform the person who made the original allegation about the outcome of the investigation.

134. Clause 61 provides an ethical standards officer with the power to issue an interim report if, during an investigation, he considers that it would be in the public interest to do so. Such reports can recommend that the person being investigated should be suspended or partially suspended from being a member of the authority or any of its committees or sub-committees for up to six months. The matter is then referred to the President of the Adjudication Panel for adjudication by an interim case tribunal.

⁴ Published April 1998, DETR.
⁵ Published June 1998, Welsh Office.
⁶ Cm 4014, July 1998.
⁷ Cm 4028, July 1998.
⁸ Cm 4298, March 1999.
⁹ Published April 1998, Welsh Office.