Memorandum submitted by the Parliamentary
Commissioner for Standards
Complaint against Dr John Reid and Mr John Maxton
Mr Kevin Reid
38. Mr Paul McKinney, the Labour Party`s Director
of Communications in Scotland in April and May 1998, told me he
recalled attending a series of strategy meetings during that period,
the purpose of which was to plan the Party`s approach to the following
year`s Parliamentary elections (Annex 164). A recurrent theme
was the lack of staff and resources for the campaign. In the margins
of one such meeting, according to Mr McKinney, Dr Reid had offered
his son`s assistance to the Party using words along the lines
of "My boy Kevin isn`t doing anything; he could come and
help" (Annex 165, Q 3 and 4).
39. Mr Nelson supplied me with his notes of a
conversation he had with Mr McKinney in which the latter claimed
that Dr Reid`s offer of his son`s services was coupled with a
promise to provide the necessary funding. According to Mr Nelson,
Mr McKinney`s exact words were: "I think his dad [Dr Reid]
said `I will help you out. You can have my boy and I will pay
for him`" (Annex 2). Later in the same conversation, again
according to Mr Nelson, Mr McKinney ascribed to Dr Reid the words
"... my boy`s not doing anything, he can come in and I will
find a way of paying him". Mr Nelson provided me with a transcript
of a subsequent taped conversation with Mr McKinney in which the
latter confirmed the substance of his previous statement to Mr
Nelson (Annex 169).
40. Dr Reid`s response to Mr McKinney`s evidence
on this point (Annex 8) was that there was nothing sinister in
his offer of his son`s services to the Party. He had quite openly
indicated to Party officials that his son would be prepared to
work on media monitoring and that his existing employment arrangements
with the House of Commons allowed ample flexibility for this.
Dr Reid challenged the attribution to him of the statement that
his son had nothing to do. It was more likely (though he could
not remember his comments word for word at that distance in time)
that he had referred to Kevin having time to spare. This was because
he had, by then, concluded his academic studies, not because he
had abandoned working for his father as a researcher.
41. At all times, Dr Reid told me, he had sought
to observe the necessary proprieties and, for that reason, had
insisted that a part-time contract with the Party should be drawn
up for his son. He had undertaken to find the necessary funds
to pay for his son`s full-time salary from Party sources, and
this had been successfully achieved.
42. Mr Kevin Reid`s involvement with the Party
overlapped with Mr McKinney`s for only 3 or 4 weeks, during which
time Mr McKinney said he had the impression Mr Reid was an unpaid
volunteer. He knew nothing of Mr Reid`s employment arrangements
and only discovered much later from the press that in fact, Mr
Reid was at that time being paid by his father as a Parliamentary
43. Mr Alex Rowley, the then General Secretary
of the Scottish Labour Party, referring to the decision to switch
Kevin Reid onto a full-time contract with the Party in October
1998, explained that this had been done at Dr Reid`s request (Annex
129, Q 5). This followed several telephone conversations between
Mr Rowley and Dr Reid in which the latter expressed concern at
press articles criticising the Conservative Party for allegedly
allowing Parliamentary researchers to be used for campaigning
purposes whilst being paid from public funds. (Indeed, Dr Reid
had faxed Mr Rowley one such article). Dr Reid, according to Mr
Rowley, had been worried that unless his son were placed on a
formal full-time footing with the Party, he might be vulnerable
to similar accusations. In answer to my question "Did John
Reid tell you that his resource of a part-time research salary
would still be available to take on another person for campaign
work?" Mr Rowley replied as follows: "Yes, he made it
clear that he wanted his son to be on the Party books full-time
but that his researcher`s salary would be available to continue
working on the campaign" (ibid Q 6)
44. Mr Rowley also stated that both Ms Annmarie
Whyte (the office manager at Scottish Labour Party headquarters)
and Mr Jonathan Upton (Director of Personnel at Labour Party headquarters
in London) had been party to this arrangement and that the campaign
budget had been adjusted accordingly. As Mr Rowley put it: "I
discussed employment with Jonathan Upton when creating the budget.
I told Jonathan Upton that these staff were funded partly from
Westminster research funds and I did explain to Jonathan Upton
why Kevin Reid needed to be put on to a full-time salary. I told
him what John Reid was concerned about".
45. As indicated earlier, Mr Rowley stated that
Dr Reid had made clear to him that, after Mr Kevin Reid had been
made a full-time Party employee, "his researcher`s salary
would be available to continue working on the campaign".
Mr Rowley added that Dr Reid had expressly raised with him in
relation to his son the regulations prohibiting the use of funds
paid through the Fees Office for party political purposes (Annex
129, Q 7).
46. Ms Whyte told me that she had not been aware
of any discussions relating to the employment of Kevin Reid, or
of either of the other two researchers (Annex 184). She also denied
(Annex 186B) ever having had a conversation with Mr Rowley about
the researchers` salaries, except for one occasion on which Mr
Winslow`s pay from "his other job" was discussed, in
order to ensureMs Whyte claimedthat Mr Winslow was
47. Mr Upton supplied me with copies of the letters
sent to Mr Reid and Mr Winslow offering them employment with the
Party, together with copies of subsequent letters offering them
improved terms (Annex 188). He also authenticated copies of two
out of three Scottish Labour Party budget documents sent to me,
at my request, by Mr Rowley containing projected salary payments
for the period in question (Annex 129A). These documents are described
separately. Mr Upton
said that he had agreed to release this information although,
he maintained, it had "nothing to do with the House of Commons
or Members of Parliament".
48. Describing the background to the decision
in October 1998 to upgrade his contract with the Party, Kevin
Reid stated that the sole reason for this change was the increased
demand by the Party for media monitoring services (Annex 88, pp.
2 to 4). No considerations of impropriety or the need to avoid
press criticism had been adduced, although he had personally been
aware of stories in the media about the Conservative Party`s alleged
misuse of Parliamentary researchers. The justification for the
move to a full-time contract had not been discussed with anyone
other than his father and Mr Rowley, although the details would
also have been arranged with Ms Whyte.
49. Dr Reid accepted that in arranging for his
son to be put on a full-time Party contract to reflect his increased
workload he had been mindful of public perceptions (Annex 8).
But this was because he recognised that it would have been "wrong
in principle" not to make the change, not out of anxiety
that the press might uncover any actual malpractice.
50. Ms Hilliard, from her experience with the
Party, told me she was unaware of any concerns about Kevin Reid`s
employment status of the kind mentioned by Mr Rowley in his evidence
(Annex 111, pp. 7 and 8).
Ms Suzanne Hilliard
51. Both Mr Rowley and Mr Sullivan understood
Ms Hilliard to be receiving payment for the Party work. Mr Rowley
told me he believed "that Dr Reid`s research money was being
used for someone else after Kevin Reid had gone full-time",
though he could not recall the specific arrangements put in place
for Ms Hilliard (Annex 129, Q 14). Mr Sullivan believed that Ms
Hilliard`s salary was "made up from different sources as
well", but he, too, was unable to remember the details. Mr
Sullivan said that his understanding was that, from Christmas
1998 until the end of the election campaign, she worked full-time
for the Labour Party in a paid post. After the election campaign
he believed she worked for someone else (Annex 172, pp. 3 and
52. Ms Hilliard said in her statement to me that
she "did not really advertise" the fact that from November
1998 onwards she was employed by Dr Reid (Annex 108, p. 4). She
added: "When I was doing my work in Delta House [the Labour
Party`s offices in Glasgow], I think a few people knew what I
was doing, but not very many". In answer to a specific question
from me, she denied that she had received any bonus from the Labour
Party and she said she was prepared to say on oath that she had
never been paid by the Labour Party during hours for which she
had been paid by the Fees Office (Annex 111, p.16).
Mr Chris Winslow
53. Mr Rowley told me (Annex 148A) that the first
offer of help with staff for the Party`s election campaign was
made by Mr Maxton to Ms Whytebefore Dr Reid had indicated
that Kevin Reid was available for that purpose. Mr Rowley added
that the offer from Mr Maxton had been reported to him in terms
of a suggestion that Mr Winslow would work full-time for the Party
but that part of his salary would be paid from the OCA. As Mr
Rowley put it (Annex 148): "We had already agreed that Chris
would work for the Party on a full-time basis and that this would
be funded in part by the Party and in part by John Maxton MP."
54. Mr Rowley added: "He [Mr Winslow] was
paid part-time by the Party and part-time by John Maxton. This
agreement was made between me and Annmarie Whyte, and the budget
papers which I was party to took account of the researcher`s money.
I arranged for his [Mr Winslow`s] wage to be made up to the level
of Kevin Reid`s when he was taken on full-time by the Labour Party"
(Annex 129, Q 3).
55. The Labour Party`s Scottish Campaign Co-ordinator
between January and May 1999, Mr John Rafferty, told me he was
aware that Mr Winslow was working for Mr Maxton whilst simultaneously
employed by the Party, although he saw nothing, in principle,
irregular in that arrangement. But since during the last four
weeks of the election campaign, in particular, it was doubtful
whether Mr Winslow could have performed his Parliamentary duties
in his spare time, Mr Rafferty believed that Mr Winslow could,
during that period, be seen as having been paid in part from the
Office Costs Allowance for carrying out work on behalf of the
Labour Party (Annex 154A, Q 6-9).
56. Mr Sullivan supported this analysis; his
understanding at the time had been that Mr Winslow`s Party salary
"was made up from different sources" (Annex 172, pp.
6 and 7). But he had not assumed that the source was the Fees
Office since he was aware of the rules prohibiting the use for
party political purposes of Parliamentary researchers paid through
the OCA (ibid, p. 11).
57. Mr Rafferty confirmed that shortly after
the Scottish Parliamentary elections in May 1999, he had brought
together in a conference call all the special advisers in the
newly formed Scottish Executive to brief them on some impending
adverse press coverage of allegations concerning lobbying activities
in relation to the Scottish Parliament
(Annex 153, pp. 3 to 9).
58. During the course of the conference call,
Mr Winslow had expressed the hope that the media would not "start
making mischief" with the fact that he and Kevin Reid had
for a while been simultaneously employed by the Labour Party and
by Members of the House of Commons as researchers (ibid,
p.4). In his initial interviews with me, Mr Rafferty distanced
himself from the suggestion that Mr Winslow`s concern stemmed
from the fear that real misconduct on his part might be uncovered
(Annexes 151 and 153). However, during subsequent questioning,
the purpose of which was to clarify his earlier responses more
precisely, Mr Rafferty confirmed that he had been left with the
"clear impression" from the degree of anxiety shown
by Mr Winslow that "there may have been misuse of public
funds" (Annex 154A, Q 15 and 16).
59. Mr Rafferty reported the gist of this conversation
to the First Minister, Mr Dewar. He said that the First Minister
had taken the view that, given the problems already being experienced
with critical press coverage of other matters relating to the
Scottish Parliament and Executive, it might not be helpful for
those involved to engage in public speculation or gossip on the
matter (Annex 153, p. 7). That conclusion was conveyed by Mr Rafferty
to all the special advisers. Mr Dewar told me that he had no recollection
of having discussed this matter with Mr Rafferty (Annex 211).
60. Mr Winslow responded to my questions about
the conference call by emphasising that his remarks had formed
a small part of a discussion about an entirely separate issue,
namely the alleged lobbying scandal. His concern had been that
the media might seek to misrepresent his employment arrangements,
not that there was a risk of genuine malpractice being uncovered.
As far as he was concerned, this was a "very minor issue".
He was not aware that his comments had been pursued at a higher
level and he himself had not discussed the subject with anyone
else (Annex 105, pp 6 and 7).
The Scottish Labour Party budget documents
61. Following my request for any evidence confirming
the details of the salaries paid by the Party to the staff concerned,
I was supplied, by Mr Rowley, with copies of 3 budget documents
relating to the SLP`s campaign for the Scottish Parliament elections
( Annex 129A), dated May 1998, October 1998 and January 1999,
respectively. (As indicated earlier,
the authenticity of the first of these documents is not confirmed
by the United Kingdom Labour Party). These documents set out in
tabular form the projected monthly salary payments to members
of staff at Scottish Labour Party headquarters during the period
May 1998 to June 1999, as well as the planned totals for the period
as a whole.
62. The relevant figures for Mr Reid and Mr Winslow
have been extracted from the SLP documents and are reproduced
in a separate table prepared by my office (Annex 200(i)). A further
table, also prepared by my office (Annex 200(ii)) , sets out the
monthly salaries paid by the Fees Office to Mr Reid and Mr Winslow,
the monthly salary assumed to have been paid to them by the SLP
on the basis of the two separate contract letters sent to them,
and the monthly salary total derived from each of these components.
63. Mr Rowley explained in a letter to me of
20 April 2000 (Annex 129A ) how, in his view, the successive versions
of the budget documents substantiated his claim that an arrangement
had been entered into to divert salaries paid through the OCA
to the Labour Party`s campaign budget. The documents did this,
according to Mr Rowley, by showing that, after October 1998 (when
Mr Reid was put on a full-time Party contract) the budget figures
had been reduced by an amount roughly equal to the salaries paid
to Mr Reid and Mr Winslow through the Fees Office. In other words,
the monthly sum the Labour Party expected to pay to Mr Reid and
Mr Winslow was now lower because it was known that the remainder
of the total amount which it had been agreed they should receive
(for working, in effect, full-time for the Party) would be made
up from their Parliamentary researchers` salaries.
64. I asked Ms Whyte why the first document showed
the projected monthly salary for each of Mr Reid and Mr Winslow
as £1,100 when
their contracted salaries from the Party bore no relation to that
figure (£333 per month for Mr Reid up to October 1998 and
£500 per month for Mr Winslow until November 1998). Ms Whyte
replied that in both cases the figure of £1,100 was included
"at an early stage" for planning purposes and assumed
that Mr Reid and Mr Winslow would be taken on for 33¾ hours
per week, although, as Ms Whyte added, "as it turned out
the SLP did not do so".
65. Mr Rowley disputed this interpretation, describing
Ms Whyte`s reference to taking on Mr Winslow for a 33¾ hour
working week as "simply not the case". As indicated
earlier, he added:
"We had already agreed that Chris would work for the Party
on a full-time basis and that this would be funded in part by
the Party and in part by John Maxton MP".
66. At my request, Mr Rowley also provided me
with a copy of an internal Party briefing note prepared in connection
with the first of the three budget documents (Annex 129A). This
consisted of numbered explanatory notes corresponding to different
items in the budget. Notes 7 and 8, referring to the salary projections
for Mr Winslow and Mr Reid respectively, read:
7: "Salary & employers contributionsincome
of £6,000 from J Maxton MP"
8: "Salary & employers contributionsincome
of £10,000 from J Reid MP".
67. Ms Whyte`s explanation for the notes was
that they were intended merely to record the fact that Mr Reid
and Mr Winslow "had other sources of income from their MP
employer". She further stated : "The Scottish Labour
Party did not receive any payments from John Maxton or John Reid,
nor did it regard itself as being subsidised by either MP".
Mr Rowley described Ms Whyte`s account of the purpose of the notes
as "not true". And of Ms Whyte`s claim that the SLP
received no money from the two Members he added : "... neither
John Reid nor John Maxton paid any money to the Party, they paid
the individuals [ie Mr Reid and Mr Winslow] direct".
68. I sought the advice and assistance of the
House of Commons Director of Finance and Administration in analysing
the SLP budget documents. I asked him to provide me with both
innocent as well as more questionable interpretations which might
be placed on the budget projections in the light of these complaints.
69. The Director of Finance`s view, having considered
the documents with the House of Commons Accountant, was that they
did not, on their own, constitute prima facie evidence
of a cross-subsidy to the Scottish Labour Party from the Office
70. He said that there was not a complete correlation
between the monthly salary payments included in the budget documents
and Mr Rowley`s contention that the figures had been adjusted
to take account of the amounts received by the three researchers
through the Office Costs Allowance.
71. And the Director of Finance offered the following
possible, entirely innocent, hypothesis to explain the budgetary
- the SLP were initially considering paying Mr
Reid and Mr Winslow £1,100 each per month; but in the event
(and for reasons not explained) they decided to engage the two
on a part-time basis only;
- when things began to get busier later in the
year, the Party asked Mr Reid to work full-time (which he did
from October 1998, giving up his employment with Dr Reid in the
process) and the budget was adjusted accordingly, both retrospectively
- the following month, Mr Rowley increased Mr Winslow`s
pay so that his total earnings from all sources were broadly equivalent
to Kevin Reid`s. This was done partly out of a sense of fairness,
and partly because Mr Winslow increased his hours for the SLP
(though he still remained part-time).
72. Mr Upton provided me with a schedule of monthly
salary payments showing the amounts actually received from the
Party by Mr Reid and Mr Winslow, including the bonus payments
(Annex 196). At my further request, Mr Upton agreed to supply
me with photocopies of the relevant personal payslips, which matched
the figures contained in the schedule (Annex 199). The Director
of Finance and Administration has confirmed that these figures
are consistent with the salaries offered in the four contract
letters (Annex 209).
73. I asked Mr Upton for details of the bonus
payments which had been made to the three researchers. He told
me that a sum of £8,000 had been set aside to reward staff
after the Scottish election campaign for effort "above and
beyond the call of duty", the benchmark for which was the
number of hours worked in excess of the contractual obligation.
Entitlement to a bonus, and the amount due, was determined, by
local management, according to 3 bands:
Band 1 : at least 5-15 hours extra per
Band 2 : at least 15-25 hours extra per week
Band 3 : at least 25 hours extra per week.
74. Mr Upton stated that Mr Reid and Mr Winslow
had been placed in Band 3 and had each received £406.78.
He said that Ms Hilliard, although not a contracted member of
the Labour Party staff, also received this sum, "to recognise
her enormous effort during the campaign" (Annex 188). Mr
Winslow told me he had submitted a record of his hours to obtain
his bonus (Annex 105, pp 17 and 18) and I have asked both Ms Annmarie
Whyte and Mr Upton for a copy. Ms Whyte said they had been sent
to Labour Party headquarters and Mr Upton said he would ask his
personnel manager whether the information was available. On 2
October 2000 Mr Upton wrote to me to say that the personnel manager
does not have the time sheets (Annex 199C).
Mr Reid`s mortgage application
75. I asked Mr Rowley whether he was aware of
any other information, such as financial references, which might
establish the salaries paid to the researchers. Mr Rowley said
he thought he recalled a mortgage reference for Mr Reid having
been provided around 1998. I wrote to Mr Reid asking whether the
Party had provided him with such a reference in that year. Mr
Reid replied "No". He did not at that stage inform me
of a reference having been provided in 1999. I put Mr Reid`s reply
to Mr Rowley who suggested that the year in question might have
been 1999. I wrote again to Mr Reid, this time couching the question
more generally, namely: "whether the Labour Party has provided
you (him) with a financial reference of any kind at any time?"
I informed him that Mr Rowley had checked this information with
Ms Quinn, the General Secretary of the Scottish Labour Party,
who had confirmed its accuracy. Mr Reid replied that he had "not
requested, or received, or been provided with, a financial reference
from the Labour Party". He went on "I assume Northern
Rock will have obtained a reference from the Labour Party".
76. A copy of the mortgage reference in question
was supplied to me by the Labour Party and subsequently confirmed
as authentic by the Northern Rock Building Society. Since the
reference is dated 14 April 1999 it relates to the period when
Mr Reid was working full-time for the Party and therefore records
his salary as £18,132 per annum, the same as that offered
in the contract letter of October 1998.
64 See paragraphs
so-called "Lobbygate" case. Back
paragraph 47. Back
Ms Hilliard was never formally an employee of the Labour Party
there are no salary projections in her case. Back
to £1,000 when employers' National Insurance Contributions
are subtracted (see paragraph 196). Back
paragraph 53. Back