Clause 62: Matters referred to monitoring officers

135. Clause 62 gives the Secretary of State the power to make regulations to determine the way in which matters referred (under clause 56(3) or 55(4)(c)) to a monitoring officer of a relevant authority should be dealt with.

136. These regulations may:

• enable a monitoring officer to conduct an investigation in respect of matters referred to him and make a report or recommendations to the standards committee of the authority in respect of those matters;

• enable the standards committee to consider any report or recommendations made by the monitoring officer, taking such action as may be prescribed by the regulations;

• confer powers of investigation on a monitoring officer and confer rights on any member who is the subject of an investigation;

• enable a standards committee to exercise punitive powers, including the ability to censure or suspend a member. A right of appeal would be conferred on any member subject to such action;

• enable the ethical standards officer to direct the way in which matters referred should be dealt with by the monitoring officer.

Clause 63: Local Commissioner and Commission for Local Administration in Wales

137. Clause 63 confers new functions on the Commission for Local Administration in Wales (CLAW). Under this clause the CLAW may issue guidance to relevant authorities in Wales on matters relating to the conduct of members of authorities. Any such guidance may be made public. Provision is also made that additional functions may be added by the NAW.

138. Clauses 63(3) and (4) enable the NAW to make regulations to modify, apply or reproduce any necessary provisions relating to Part III of the Local Government Act 1974 for the purpose of Part III of this Act.

Clauses 64 and 65: Investigations

139. Clause 64 provides that the Local Commissioner in Wales may investigate written allegations of breaches of the code of conduct made against relevant authorities members and co-opted members. There are four possible outcomes of these investigations.

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

• that there is no need to take action on the matters investigated (whether or not there was a breach of the code); or

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

• that the matters which are the subject of the investigation should be referred to the president of the Adjudication Panel for Wales for adjudication by a case tribunal.

140. Clause 65 provides the NAW with an enabling power to make Orders so as to provide the Local Commissioner with the powers of investigation available to the ethical standards officers in England. This clause also permits the Local Commissioner to terminate an investigation and to refer matters to monitoring officers for investigation.

Clauses 66 and 67: Reports

141. Clause 66 specifies what action the Local Commissioner should take depending on the findings of his investigations.

142. Clause 66(1) provides that when the Local Commissioner concludes that there is no evidence of a breach of the code of conduct or when no action needs to be taken following his investigation, he may produce a report and may provide a summary of the report to any newspaper circulating in the local authority's area. If a report is provided a copy must be sent to the monitoring officer of the authority concerned. Where the Local Commissioner does not produce a report he must inform the authority's monitoring officer of the outcome of the investigation.

143. Clauses 66(2) and (3) place a duty on the Local Commissioner to produce a report when he concludes that the matters which are the subject of investigation should either be referred to the monitoring officer of the relevant authority or referred to the president of the Adjudication Panel for adjudication by a case tribunal.

144. Copies of the report must also be sent to the monitoring officer and standards committee of the authority concerned and to the president of the Adjudication Panel.

145. Under clauses 66(4) and (5), a report under this clause may cover more than one investigation. The Local Commissioner must inform any member of the relevant authority who is the subject of an investigation and must take reasonable steps to inform the person who made the original allegation about the outcome of the investigation.

146. Clause 67 provides the Local Commissioner with the power to issue an interim report, if during an investigation, he considers that the matters revealed are sufficiently serious that it is in the public interest to suspend a member immediately. The Local Commissioner may recommend in an interim report a maximum period of suspension of six months, or if shorter the remainder of the person's term of office. Any recommendation for suspension has to be referred to the president of Adjudication Panel for adjudication by an interim case tribunal. A copy of any interim report must be given to any person who is the subject of the report, the monitoring officer of the authority concerned and the president of the Adjudication Panel for Wales.

Clause 68: Matters referred to monitoring officers

147. Clause 68 gives the NAW the power to make regulations to determine the way in which matters referred to the monitoring officer of a relevant authority under clause 65(4) or 64(3)(c) should be dealt with. These regulations may:

• enable a monitoring officer to conduct an investigation in respect of any matters referred to him;

• enable a monitoring officer to make a report or recommendations to the standards committee of the authority in respect of matters referred to him;

• enable the standards committee of a relevant authority to consider any report or recommendation made to it by the monitoring officer of the authority;

• enable the standards committee of the relevant authority, following its consideration of a monitoring officer's report or recommendations, to take any action prescribed by the regulations.

148. The NAW may by regulations confer rights on any member or co-opted member of a relevant authority who is the subject of the monitoring officer's investigation and may enable the standards committee of the relevant authority to censure a member or co-opted member of the authority, to suspend or partially suspend such a person, and confer rights of appeal on such members in respect of any such action taken against them.

Clause 69: Adjudication Panels

149. Clause 69 makes provision for two Panels of persons known as the Adjudication Panel for England and the Adjudication Panel for Wales or Panel Dyfarnu Cymru.

150. The members of the Adjudication Panel for England are to be appointed by the Secretary of State and he may appoint a president and deputy president from among those members. The NAW will appoint members of the Adjudication Panel for Wales and the Assembly may also appoint a president and deputy president from among them.

151. The president and deputy president of each Panel are to be responsible for:

• training the members of their Adjudication Panel;

• issuing guidance on how case tribunals will reach decisions.

Clauses 70 to 73: Case tribunals, interim case tribunals and adjudications

152. Clause 70 provides for adjudications upon findings by an ESO following investigation and interim recommendations by an ESO under clauses 60 and 61 or by a Local Commissioner in Wales under clauses 66 and 67. These are to be conducted by case or interim case tribunals consisting of not less than three members of the Adjudication Panel appointed by the president or deputy president, both of whom themselves can be tribunal members. A tribunal may conduct a single adjudication in relation to two or more matters which are referred to the president for adjudication. A member of the Adjudication Panel cannot be a member of a tribunal constituted to look into a matter if he/she has been a member of the authority or a member of a committee or sub-committee of the authority concerned in the previous five years. Finally, this clause makes provision for the Secretary of State and the NAW to issue guidance in respect of the composition of case or interim case tribunals.

153. Subsection (8) provides that a member of an interim case tribunal may not be a member of a case tribunal, which on conclusion of that investigation subsequently conducts an adjudication in relation to that person.

154. Schedule 4 places each case tribunal under the supervision of the Council on Tribunals.

155. Clause 71 enables a person who is the subject of a tribunal hearing either to appear before the case tribunal in person or to be represented by a third party. This clause also makes provision for the Secretary of State and the NAW to make such further regulations covering the process of adjudication as is considered necessary. Such regulations might cover:

• requiring people to attend to give evidence to the case tribunal;

• requiring them to make relevant documents relating to the investigation available to the panel;

• prescribing the procedure to be followed by a case tribunal;

• provision enabling the president or deputy president to settle the procedure to be followed in relation to matters specified in the regulations;

• awarding or settling costs or expenses;

• the registration and proof of decisions and awards of case tribunals.

156. Clause 71 also introduces an offence of failing to comply with any requirement imposed by the case tribunal in considering a case. It is similar to the offence introduced by clause 58 and also has the penalty of a level 3 fine (£1,000 at present).

157. Clause 72 makes provision for the decisions of interim case tribunals. It places a duty on the interim case tribunal to decide the matters before it. It must decide whether or not the member mentioned should be suspended on an interim basis (and from what particular activities or business they should be suspended) and whether that suspension should be for the period recommended by the ESO. If the interim case tribunal decides that a member should be suspended that suspension should not exceed six months and the tribunal must give notice (including the date on which the suspension is to begin) of its decision to the standards committee of the relevant authority concerned. The standards committee is under a duty to comply with the notice. Copies of any notice to suspend must be given to the member and the relevant monitoring officer and the interim case tribunal must take reasonable steps to inform the person who made the allegation of its outcome.

158. Subsection (5) provides that any decision made by an interim case tribunal should not prevent an ESO from continuing with the investigation. Further interim reports may also be produced and considered.

159. Subsection (10) provides that any person suspended under this clause may appeal to the High Court, either against the suspension or the length of the suspension.

160. Clause 73 covers the outcome of the case tribunal's findings. It places a duty on the case tribunal to decide on any case before it, whether or not there has been a breach of the code of conduct, and to notify the standards committee of the authority concerned. Where the case tribunal decides that a person has failed to comply with the code of conduct, this clause places the case tribunal under a duty to decide whether the nature of the failure is such that the person should be suspended from being a member of the authority (or any of its committees or sub-committees) or disqualified from being elected or being a member of that or any other authority. Suspension can be for a period of up to one year, although this must not extend beyond the person's term of office. Disqualification may be for up to five years.

161. In any case where the case tribunal decides that a person has failed to comply with a code of conduct, this clause requires the case tribunal to issue a notice to the standards committee of the authority concerned and specify the details of the failure. The case tribunal must also state whether it has decided that a member should be suspended or disqualified. This clause also places a duty on the authority to comply with any notice from the case tribunal to its standards committee. The case tribunal is required to send a copy of any notice issued to the Standards Board and to anyone who is the subject of the notice, and also to take reasonable steps to inform the person who made the initial allegation of the outcome of the tribunal's adjudication. Notices are to be published in local newspapers in the authority's area. Finally this clause introduces a right of appeal to the High Court for a person that a case tribunal decides has failed to comply with the code of conduct.

Clause 74: Recommendation by case tribunal

162. Clause 74 makes provision that any case tribunal which gives a notice to a standards committee about a case may also make recommendations about any matters relating to the exercise of the authority's functions, the authority's code of conduct or the authority's standards committee. A copy of any recommendations must be sent to the Standards Board or the Local Commissioner in Wales.

163. The authority to whom recommendations are made is under a duty to consider them within three months and it must prepare a report for the Standards Board or Local Commissioner outlining what action it has taken or proposes to take. If the Standards Board or Local Commissioner is not satisfied with the action taken or proposed, subsection (5) provides it with the power to require the authority to publish a statement giving details of the recommendations made by the case tribunal and of the authority's reasons for not fully implementing them.

Clause 75: Disclosure and registration of members' interests

164. Clause 75 makes provision with respect to the disclosure of interests by councillors, the maintenance of registers concerning those interests and the circumstances in which members are not entitled to take part in proceedings of those authorities.

165. In particular, clause 75(1) and (2) place the registration and declaration of interest within the model code of conduct.

166. Clause 75(4) provides for the standards committee to grant dispensations for local authority members to participate in any business where they have interest.

167. Clause 75(5) provides for the Secretary of State to issue regulations setting out the circumstances in which standards committees may grant dispensations to members of local authorities to enable them to participate in meetings in which they have an interest.

168. Clause 75(7) and (8) specify that the register should include the interests of the spouse, partner or any person in that member's household. Furthermore, the interests that are to be registered—and declared—are now included as a mandatory element of the new model code.

169. Finally, under clause 75(9) the monitoring officer of an authority is given specific duty of establishing and maintaining the public register of interests (as specified in subsection (1).

Clause 76: Code of conduct for local government employees

170. Clause 76 gives the Secretary of State and the NAW power to issue a code of conduct for local government employees. The clause requires each of them, in drawing up a code, to consult representatives of local government and also of local government employees. This code of conduct is to be incorporated into the terms and conditions of every local government employee.

PART IV: ELECTIONS

Summary

171. Part IV of the Bill gives the Secretary of State a power to alter, by order, the frequency of elections to local authorities, and the years in which local elections are held.

Background

172. The pattern of elections to local authorities varies across England and Wales. Some local councils have 'all out' elections once every four years, whist others elect a third of their members in each of three years out of four—commonly known as annual elections. The timing of these electoral cycles also varies depending on the type of local authority.

173. In the White Paper, Modern Local Government: In Touch with the People¹⁰, the Government proposed to build on this well-established system and introduce a form of annual accountability through the ballot box for all local authorities. The White Paper proposed that elections by thirds should become the standard pattern for all unitary councils, including London boroughs. In two-tier areas, the Government proposed a pattern in which both the district councils and county councils would elect by halves in alternate years.

174. The Welsh White Paper, Modernising Local Government in Wales: Local Voices¹¹, proposed giving the NAW a power to determine the frequency of elections for principal councils. The White Paper also proposed a power for the NAW to rationalise the timing of electoral cycles for all local authorities in Wales.

Commentary on clauses

175. Clause 93 provides that powers under Part IV exercised by the Secretary of State in England will be exercisable by the NAW in Wales. It also provides that the Parliamentary procedures set out in clause 92(4) to (6) for orders and regulations do not apply to the NAW, which has its own procedures for scrutinising secondary legislation.

Clauses 78 to 83: elections

176. Part IV deals with the times and frequency by which councillors are elected to local authorities. Clause 79 defines the three different schemes of elections that may be applied to principal councils (as defined in clause 78). These are:

• all-out elections, with the whole council being elected once every four years,

• elections by halves, with half the councillors being elected every other year,

• elections by thirds, with one third of the councillors being elected each year for three years out of four.

In each case, councillors have a four-year term of office.

177. Clause 80 provides for the Secretary of State to be able to specify, by order, that a particular scheme of elections should apply to a particular principal council or description of principal council. The scheme of elections must be one of the three schemes set out in clause 79. The order may also specify the year or years in which elections are to be held.

178. Where the specified scheme of elections involves the election of only a proportion of councillors in any one year, the order may include provision for identifying the wards, electoral divisions and councillors that may be affected by such a change. This is necessary because the number of councillors representing a ward in a principal council may not be evenly divisible by the frequency of elections that is being specified for the authority. In such cases, there is a need to be able to identify which seats are to be elected at which elections. Similarly, in the electoral divisions of counties (which only have one member per division), it will be necessary to identify which divisions will have elections in any particular year.

179. Clause 80(6) allows the Secretary of State to specify the method to be used for identifying the electoral divisions, wards and councillors in such cases. It also allows the Secretary of State to direct principal councils to propose to them methods for identifying electoral divisions, wards and councillors.

180. Clause 81 provides for the Secretary of State to be able to change, by order, the years in which elections take place for any local authority (including parish and community councils). The purpose of this provision is to change the phasing of electoral cycles without changing the scheme (or frequency) of elections.

181. Clause 82 allows the Secretary of State to make further orders, should the need arise, making supplementary and transitional etc. provisions in relation to earlier orders, under clauses 80 or 81.

182. Clause 83 makes minor amendments to the Local Government Acts of 1972 and 1992 to allow the creation of multi-member electoral divisions in non-metropolitan counties in England.

PART V: MISCELLANEOUS

Summary

Surcharge etc.

183. Alongside the introduction of the new ethical framework in Part III, Part V makes a number of ancillary provisions relating to the audit framework for local government (as set out in the Audit Commission Act 1998). These include the repeal of the current surcharge provisions. They also remove the Secretary of State's power to sanction items of account; this enables the Secretary of State to protect individuals from surcharge and becomes unnecessary once surcharge is repealed. Finally, it includes arrangements to introduce a new system of advisory notices to enable auditors to seek a Court decision about the legality of what an authority proposed to do. This would replace existing arrangements for auditors to issue a prohibition order.

Welfare services

184. Part V of the Bill includes provision for a new framework within which local authorities work jointly with other agencies and partners to plan and commission welfare services for vulnerable people. Part V creates a new central government grant to replace current fragmented funding arrangements for welfare services with one single budget from April 2003.

185. Funding which will be transferred to the new grant includes:

• Housing Benefit paid in respect of support services;

• Housing Corporation Supported Housing Management Grant;

• Home Office Probation Accommodation Grants;

• grants made by DETR to Home Improvement Agencies;

• relevant elements of DSS Resettlement Programme Revenue and of local authority Total Standard Spending.

Other provisions

186. Part V also provides for changes necessary to the Local Authority Social Services Act 1970 resulting from measures in Part II of this Bill and provisions on allowances and pensions for local authority members.

187. Finally, Part V also amends section 2A of the Local Government Act 1986, which prohibits local authorities from promoting homosexuality.

Background

Surcharge etc

188. The White Paper Modern Local Government: In Touch with the People¹² set out proposals to repeal the existing surcharge provisions contained within s.17 and 18 of the Audit Commission Act 1998; these provisions enable the auditor to surcharge councillors for recovery of unlawful items of expenditure. It also suggested replacing the current system of prohibition orders (set out in s.20 to 23 of the 1998 Act) with advisory notices.

Welfare services

189. The Government's proposals for a new role for local authorities to take a lead in partnership working to address support needs in the community were set out in the consultation paper Supporting People: a new policy and funding framework for support services¹³. The responses to the proposals were published in the paper Summary of analysis of responses to the 'Supporting People' consultation document¹⁴.

190. The provisions on welfare services follow the proposals that were put forward in the consultation document. They address a number of issues in the current system of funding:

• they respond to the 1997 court ruling on the role of Housing Benefit in funding support services;

• they are based on a system of joint commissioning at local level. This will replace current funding arrangements where support is funded through a variety of funding streams;

• they allow more transparency about support needs and provision around the country.

191. The new system of funding will clarify what is happening in this area, as well as allowing checks on the quality of support provision.

192. The proposals are consistent with the principles of promoting independence, as set out in the White Paper Modernising Social Services¹⁵, and with the proposals for welfare reform set out in the Green Paper New ambitions for our country: a new contract for welfare¹⁶.

Social services functions

193. The proposals for changes to the Local Authority Social Services Act 1970 are consistent with the White Paper Modernising Social Services (see footnote 15).

Prohibition on promotion of homosexuality: bullying

194. Section 2A of the Local Government Act 1986 (inserted by section 28 of the Local Government Act 1988) prohibits local authorities from intentionally promoting homosexuality, or from promoting the teaching in their schools of the acceptability of homosexuality as a "pretended family relationship". Clause 91 amends section 2A by clarifying that it does not prevent maintained schools from taking steps to prevent any form of bullying.

*

Maintained school

Commentary on clauses

Clause 84: Surcharge etc.

195. Clause 84 has the effect of repealing the current 'surcharge' provisions set out in the Audit Commission Act 1998 and also the Secretary of State's power to sanction an item of account. The changes will affect all bodies to which the surcharge provisions apply.

Although the term

surcharg

196. Removal of the relevant surcharge provisions from s.17 of the 1998 Act does not affect the auditor's ability to apply to the courts for a declaration that an item of account is contrary to law. Under these arrangements, the Standards Board and Adjudication Panel, rather than the auditor, will determine whether there has been misconduct and any issue would be pursued through them.

197. This clause also removes the Secretary of State's power to sanction an item of account. The granting of sanction protected individuals authorising unlawful expenditure from the possibility of surcharge by preventing the auditor from applying to the court for a declaration that an item of account is unlawful. Removing the surcharge provisions removes the need for the Secretary of State to grant sanction.

Clause 85: Advisory notices

198. Clause 85 replaces sections 20 to 23 of the Audit Commission Act 1998, revoking the existing arrangement for prohibition orders and replacing them with a system of advisory notices. Advisory notices will apply to all bodies subject to audit under this Act other than health service bodies.

199. The advisory notice gives auditors time to seek the opinion of the courts on the legality of an authority's actions where they consider that the authority is contemplating a decision or course of action that would result in unlawful expenditure or other financial loss. This clause gives the auditor power to issue an 'advisory notice' in such circumstances, and specifies the form of the notice and how it should be served on the authority concerned.

200. An authority in receipt of a notice must first consider it. If they then decide that they want to proceed with the action specified in it, this clause requires them to provide the auditor with written notice of their intentions. Furthermore, it prevents them from proceeding with the activity for a period (of up to 21 days) specified by the auditor in the advisory notice. During this period, the auditor may then choose to seek an opinion from the court on the legality of the proposed course of action. The authority may then only proceed with the action if the court decides that it is lawful or if the auditor does not seek a court's opinion within the notice period.

¹⁰ Cm 4014, July 1998.
¹¹ Cm 4028, July 1998.
¹² Cm 4014, July 1998.
¹³ Published December 1998, DSS. Also available on the DSS website (www.dss.gov.uk).
¹⁴ Published July 1999, DETR.
¹⁵ Cm 4169, November 1998.
¹⁶ Cm 3805, March 1998.