Select Committee on Standards and Privileges Second Report


Memorandum submitted by the Parliamentary Commissioner for Standards
Complaint against Dr John Reid and Mr John Maxton



Were Dr Reid and/or Mr Maxton involved to any extent in an arrangement to cross-subsidise the Labour party`s Scottish Parliament election campaign from the Office Costs Allowance?

249.  The core of the complaints which I have investigated[90] is that Dr Reid and Mr Maxton misused public funds by allowing salaries drawn from the Office Costs Allowance to be diverted to party political purposes.

250.  The Resolution of the House of Commons relating to the OCA[91] makes clear that it is intended to cover expenses incurred by a Member "for his Parliamentary duties" and that such expenses include the cost of "research assistance for work undertaken in the proper performance of such [Parliamentary] duties".

251.  The Green Book (Parliamentary Salaries, Allowances and Pensions), which is issued to all Members, states at page 15:

    "To qualify for OCA, any expenditure must be incurred wholly, exclusively and necessarily in the performance of Parliamentary duties.[92] This is a strict and long-established rule approved by successive Speakers. You cannot therefore claim for expenditure which is personal or party-political".[93]

252.  The Code of Conduct for Members contains the following provision:

    "No improper use shall be made of any payment or allowance made to Members for public purposes and the administrative rules which apply to such payments and allowances must be strictly observed."

253.  As is implicit in both the Green Book and the Code of Conduct, the reason for the strict rules which apply to the use of the OCA is that it is public money, probity in the handling of which requires openness and proper accountability on the part of Members.

254.  In reaching a judgment on the substance of the complaints I have considered all the evidence submitted to me during the course of my inquiries. I have studied with care the full responses by Dr Reid and Mr Maxton. I have also inevitably had to form a view of the respective credibility and reliability of the main witnesses.

255.  Taking all these factors into account, my conclusion, based on the combined weight of:

    —  the adjustments made to the Scottish Labour Party budget

    —   the notes in the SLP budget documents referring to Dr Reid and Mr Maxton, for which no reasonable or legitimate explanation—other than that given by Mr Rowley—has been produced

    —   the evidence of credible witnesses such as Mr Rowley and Mr Rafferty, senior Labour Party officials with responsibility for the deployment of campaign staff

    —  the evidence of others involved in the campaign such as Mr McKinney and Mr Sullivan which corroborates key aspects of the information provided by Mr Rowley and Mr Rafferty

is, on the balance of probability, that:

    (i)  there was an arrangement, agreed by Labour Party officials and sufficiently formal to have been incorporated within the budget assumptions, whereby the OCA was used to supplement the Party salaries of Mr Reid (until he went onto a full-time contract) and Mr Winslow, and, in Ms Hilliard`s case, to pay her for at least some of the Party work she was ostensibly doing as a volunteer; and

    (ii)  as the employers of the three researchers, Dr Reid and Mr Maxton must, at the very least, have been aware of the arrangement, if not involved in its instigation.

256.  Whilst it is theoretically possible that the arrangement could have been devised and operated by the three researchers without involving the two Members, this is highly unlikely. Moreover, this has not been put forward by any witness as an explanation, nor by Dr Reid or Mr Maxton as a defence to the complaints.

257.  The motivation for the arrangement has to be seen against the background of the crucial first elections to the Scottish Parliament, tight party finances and an agreement between the main political parties to observe a voluntary limit of £1.5 million on campaign expenditure. Pressure to remain within this limit, whilst at least matching the effort of the other parties, particularly the Scottish National Party, would, I believe, have placed a high premium on: ensuring the cost-effectiveness of spending; efforts to squeeze the maximum results out of each pound of expenditure; and, ultimately, finding ways of reducing the level of staffing costs to be met from the SLP`s own budget. The climate of constrained resources was exemplified by the fact that the Party had recently lost its newly recruited Director of Communications after a very short period because he was so dissatisfied with the staffing levels available to him.

Did Mr Reid, Ms Hilliard and Mr Winslow fulfil their contractual obligations as Parliamentary researchers?

258.  There is an implication in the responses of Dr Reid and Mr Maxton that the complaints can be substantiated only if it can be proved that, whilst under contract to the two Members, the three researchers carried out none of their Parliamentary duties. This is not so. If, over any significant length of time, the number of hours worked by Mr Reid, Ms Hilliard or Mr Winslow fell more than marginally short of their respective obligations, the terms of their contract, and hence the conditions under which their salary was payable through the OCA, would have been broken. (It should be emphasised that even in the case of a variable contract such as that under which the three researchers were employed, the period over which fluctuations in the hours worked are acceptable, provided the total requirement is met, is not infinitely extendable. Where the contractual obligation is expressed as a certain number of hours per week, that means, in my view, that a shortfall in one week should be made good over a reasonably short and defined period or, failing that, there should be a very clear written record of the reasons for adopting some other arrangement—and then only on a temporary basis.) This is not a question of whether the strict letter of the contract has been carried out, but of fulfilling the conditions under which public money is made available through the OCA.

259.  In one sense, however, it is irrelevant whether the evidence gathered during the course of the inquiry shows that the three researchers did not work the required number of hours for Dr Reid and Mr Maxton while they were under contract to the two Members. If, for the reasons I have given, it is accepted that Dr Reid and Mr Maxton agreed to allow Parliamentary researchers to be used for party political purposes during the time for which they were paid from public funds through the OCA, it follows that such an arrangement was improper in itself and contrary both to the Code of Conduct and the specific rules relating to the use of the OCA. The impropriety of the arrangement is not affected by the extent to which it was put into effect (that is to say the number of hours the three researchers spent on Party work at the expense of their work for Dr Reid and Mr Maxton).

260.  Moreover, any attempt to quantify the amount of the researchers` time "paid for" by the House of Commons which was wrongly used for Party work is fraught with difficulty. Because of the variable nature of the researchers` contracts with the two Members it is not possible to identify, in any given period, a specific block of time during which they could be said to have owed their first duty to the House of Commons rather than to other commitments, including work for the Labour Party. Similarly, a certain amount of the work done by Mr Reid, Ms Hilliard and Mr Winslow was of a kind, such as press monitoring, which could have been of equal value both to the Party and the two Members (or which could, in the interests of efficiency, legitimately have been done as a single exercise logged against either "Party time" or "House of Commons time", but of use to both employers).

261.  But there would have been no point in entering into the arrangement unless the intended outcome was to ensure that additional staffing resources were made available to the Party`s campaign effort at no extra cost to Party funds. The assumptions built into the later budget documents that the Party salaries would be topped up by the salaries paid through the OCA made sense only if, during the period when Mr Reid, Ms Hilliard and Mr Winslow were under contract to Dr Reid and Mr Maxton, it was the Party which had first call on the researchers` commitment and their Parliamentary work had to be carried out, if at all, in whatever time remained.

262.  As it happens, the evidence given by the senior Party staff in charge of the campaign staffing arrangements is that the very long hours worked for the Party by the three researchers (and especially so in the case of Ms Hilliard and Mr Winslow during the final few weeks of the campaign) would have made it extremely difficult (but perhaps not impossible over a very short time-scale) for them to have fulfilled their Parliamentary obligations. I reject the argument put forward by Dr Reid and Mr Maxton that the only people in a position to know the hours put in on behalf of the Party by the three researchers are the researchers themselves. Both Mr Rowley and Mr Rafferty (from January 1999 onwards) had a clear responsibility to keep track of the effectiveness with which staff were deployed and this must have required knowledge of their output and hence some awareness of the hours they were working. In addition, for the purposes of the bonus scheme, the National Labour Party required local management to allocate staff to broad bands according to the hours they had worked and bonuses were distributed accordingly (Annex 188). Mr Rowley therefore had overall responsibility for certifying that the hours claimed were correct and the Scottish Labour Party memo to staff on the bonus made it clear that claims would be signed off by line managers.

263.  In any case, it is not good enough for Dr Reid and Mr Maxton to place, as they appear to do, all the responsibility on the three researchers to vouch for the number of hours they worked for the two Members as a means of justifying the payment of salaries through the OCA. The duty of accountability placed upon Members by the Code of Conduct, particularly in relation to their stewardship of public money, can only be discharged if they exercise sufficiently close and continuous supervision over both the quality and quantity of work produced by any of their employees whose salaries are paid through the OCA.

264.  Nor is it a defence against the complaints for Dr Reid and Mr Maxton to argue, as they have done, that during the period in question the three researchers did all the Parliamentary work that was required of them, even if that amounted to less than the contracted number of hours. It would be wrong for a Member to seek to justify the payment through the OCA of a researcher`s salary on the basis of a contract stipulating a certain number of hours if he was either unwilling or unable to find work to occupy that researcher for the requisite time, or very close to it. To do so would be to condone a misuse of public funds and, if such a practice were allowed to continue, would render the OCA system open to wide-scale abuse.

265.  I must at this point also deal with another issue raised by Dr Reid, namely his assertion that there is no rule preventing a researcher contracted to a Member from entering into other paid or unpaid employment. This is, of course, correct as a matter of principle. Plainly, however, it is for each Member to ensure that any additional outside commitment taken on by a researcher paid through the OCA is not so onerous as to call into question his ability to meet his or her Parliamentary obligations. Unless he does so, a Member cannot comply with his duty under the Code of Conduct to be properly accountable for the use of public money provided through the OCA.

266.  Although, as I have indicated, I do not believe that the determination of the complaints turns on the question of how far precisely the three researchers fulfilled their contracted number of hours for the two Members, I set out, for the record, in the following paragraphs my conclusions as they relate to the individual positions of Mr Reid, Ms Hilliard and Mr Winslow. Because their personal circumstances, notably their employment status and contractual arrangements, were different, as was the evidence relating to them, my assessment also differs among the three researchers.

Mr Kevin Reid

267.  It is my opinion, having assessed all the evidence, that, during the period May to October 1998, Mr Kevin Reid increasingly did more than his contractual hours for the Party and that this may have had some effect on his ability to fulfil his commitments as a Parliamentary researcher to Dr Reid. Given, however, that this period pre-dated by several months the point at which Party staff came under the greatest pressure to work very long hours for the SLP in the immediate run-up to the elections, I am not in a position to say with certainty that Mr Reid`s level of commitment to his Parliamentary duties fell significantly short of what was required. (I am also mindful of the fact that some of the evidence is not clear as to whether it relates to the period before October 1998 or after. In addition, Mr Rafferty can speak with authority only about the period after 12 January 1999.)

Ms Hilliard

268.  My assessment of the evidence leads me to the conclusion that, considering her status as an unpaid volunteer, Ms Hilliard was already working long hours on behalf of the Party before she took up employment with Dr Reid in November 1998. After that point Ms Hilliard`s primary commitment, in my view, was to the Party, although there is evidence that she assisted Dr Reid with his constituency case-load while his constituency secretary was working only part-time as a result of illness and, more particularly, while she was continuously absent from early December 1998 until February 1999. In the immediate run-up to the election my judgment is that Ms Hilliard was putting in significantly in excess of a normal "full-time" week for the Party, as evidenced by the payment to her of a bonus, the trigger for which in the case of Party employees was working at least 25 hours above the standard contract hours. The award of the bonus itself—a highly unusual step for a volunteer—reflected the Party`s view of her as having been committed full-time, at the very least, to the campaign.

269.  I have had to conclude that Ms Hilliard lied to me about this matter since she not only replied "No" to my direct question "Did you get any bonus payment from the Labour Party?", but she failed to correct her answer when subsequently reviewing the transcript of our conversation.

270.  It is very doubtful, in my view, whether Ms Hilliard could have fulfilled her Parliamentary contract, or anything like it, in the five or six weeks leading up to polling day on 6 May 1999. Ms Hilliard has herself conceded that she fell short of her contractual obligations during this period—a fact belatedly acknowledged by Dr Reid in his response in July 2000.

271.  I am strengthened in this conclusion by the evidence from Ms Hilliard`s mobile telephone account showing that no calls were made to Dr Reid during the last five weeks of the campaign.

Mr Winslow

272.  From mid-June 1998, when he took up his employment with the Labour Party, until early November 1998 Mr Winslow was contracted to work a 15 hour week. I believe it is likely that he in fact put in significantly more hours than that on behalf of the Party—indeed Mr Winslow has indicated as much. After 2 November 1998 Mr Winslow`s contractual obligation to the Party doubled to 30 hours a week and his salary from the Party was increased from £6,000 to £12,000. This meant that Mr Winslow`s combined salary from both sources (that is, including the OCA) was now £18,600, very close to the salary Mr Reid was receiving from the Party under his full-time contract, a fact which, in my view, reflected Mr Winslow`s equal commitment to the Party from that point onwards. My judgment is that Mr Winslow`s hours thereafter increased to a level where he would have found it more and more difficult to meet in full his obligations to Mr Maxton. It is clear from the criteria used in the award of a bonus to Mr Winslow (at least 25 hours per week above the contracted number) that by the time of the 5 or 6 weeks prior to the elections he must have been working a minimum of 55 hours a week for the Party. (Though since Mr Winslow—in common with the other researchers—has not provided me with copies of the documents used to support the bonus claims, it is not possible to say with precision how many additional hours he was putting in during this period above the minimum 25 which triggered the payment of a bonus at the top rate.)

273.  Given these long hours, and the stressful nature of the work in a highly pressurised political climate, I find it difficult to see how Mr Winslow could have carried out any significant amount of work for Mr Maxton during this period. Mr Winslow has himself conceded that he did not succeed in meeting his Parliamentary obligations in those weeks. The fact that Mr Rafferty was aware that Mr Winslow was doing some Parliamentary work during the period of which Mr Rafferty has knowledge (mid-January 1999 onwards) does not invalidate this general conclusion. Nor am I persuaded that the accumulated leave due to Mr Winslow (of which no details have been provided to me) was sufficient to cancel out completely Mr Winslow`s obligations under his Parliamentary contract.

The conduct of Dr Reid and Mr Maxton during the investigation of the complaints

274.  Throughout my investigation the demeanour of many of the witnesses has suggested a degree of anxiety and unease on their part which went well beyond what would be expected of people giving evidence to a Parliamentary inquiry. This may have reflected concern about their own position and the possible personal consequences of giving evidence in support of the complaints. But a more disturbing possibility is that pressure of various kinds had been brought to bear on them by Dr Reid, by Mr Maxton, or both.

275.  Both Mr Rowley and Mr Rafferty had already indicated to me at an early stage in my inquiries that they were aware of approaches being made to witnesses, or potential witnesses, and that they personally felt under pressure not to give me a full account of the facts as they knew them.

276.  As Mr Rowley explained to me, his continuing loyalty both to his Party and to former colleagues within it (which contradicts the suggestions by Dr Reid and Mr Maxton of his being motivated by a grudge against them) made him extremely reluctant to provide me with formal evidence on these matters. It was only when he learned that Dr Reid and Mr Maxton had sought to undermine his credibility and reliability as a witness by alleging that he had been dismissed by the Labour Party, that Mr Rowley decided he had no alternative but to make a further statement on the record, with all the possible implications for him in terms of a future career in politics.

277.  The transcript of Mr Rowley`s telephone conversation with Dr Reid on 20 March 2000 does not contain any overt threats of the sort which Mr Rowley claims Dr Reid made to him on two previous occasions. But it shows an attitude towards my inquiry which is concerning. Instead of encouraging Mr Rowley to give me full and accurate evidence Dr Reid seeks to agree with him a pattern of answers to my questions which, though not obviously untruthful, nevertheless falls short of a candid and complete account—in the hope that other witnesses will not be able to substantiate the complaints. Of particular concern is Dr Reid`s encouragement of Mr Rowley to resist giving evidence on oath. I should have expected Dr Reid to have encouraged Mr Rowley to provide all his evidence on oath—particularly that supporting Dr Reid`s version of events.

278.  I regard as unfounded the attacks made by Dr Reid and Mr Maxton on the reliability as witnesses of Mr McKinney, Mr Rowley, Mr Sullivan and Mr Rafferty. The facts do not, in my view, support the allegations concerning the circumstances in which the first three left their posts with the Party. In Mr Rafferty`s case, whilst it is true that he was dismissed by the First Minister from a subsequent post in the Scottish Executive, it is difficult to see why this should have translated into a grudge against either Dr Reid or Mr Maxton. None of the four witnesses have, in their dealings with me during my investigation of the complaints, given any indication, direct or indirect, that their evidence might by tainted by ill-feelings towards either Member—indeed in Mr Rowley`s case the reverse is true. It is regrettable that Dr Reid and Mr Maxton chose to introduce these allegations at a late stage in the inquiry, only after they had seen the evidence of witnesses who did not support their accounts. In addition, as I have previously indicated[94], I am also satisfied that the particular reasons for Mr Rafferty`s dismissal were not such as to cause me to reject the evidence given to me by him which is corroborated by other credible witnesses.

279.  In addition, both Dr Reid and Mr Maxton have attempted to undermine the reliability of Mr Nelson as the complainant, by questioning his journalistic integrity. As I have indicated, it is not for me to adjudicate on this point between Dr Reid and Mr Maxton, on the one hand, and Mr Nelson, on the other. My duty was to undertake an inquiry as soon as I felt that sufficient evidence had been tendered to warrant one.

280.  Once I was satisfied that Mr Nelson`s original statement in support of the complaint was substantially confirmed by other witnesses in their independent evidence to me, Mr Nelson`s own credibility ceased to be an issue. It is unfortunate that Dr Reid and Mr Maxton have sought to make it so, when their primary duty was to answer my questions truthfully and to give me a full and accurate account of the events forming the basis of the complaint.

281.  In other respects, Dr Reid`s conduct towards my investigation was proper. The same cannot, however, be said of Mr Maxton.

282.  Mr Maxton`s behaviour towards the inquiry process was hostile and unco-operative throughout. He initially refused to provide detailed answers to my written questions and only did so after the Chairman of the Committee had, with the agreement of the Committee and at my request, intervened. Although some anxiety on the part of a Member who is the subject of an investigation is understandable, Mr Maxton`s approaches have, in their tone and frequency, far exceeded what I would have expected—or have experienced—in any other case.

283.  Neither Member`s conduct during the course of my inquiries was of the standard the House has a right to expect when a complaint is being investigated under the procedures the House itself has laid down, nor was it what would be anticipated if the two Members were confident of the truthfulness of their own account and the ability of other witnesses, giving their evidence independently, to support it.

284.  In these respects Dr Reid and Mr Maxton failed in their duty to uphold the Code of Conduct for Members of Parliament, namely by breaching the requirement that:

    "Holders of public office are accountable for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office."

Summary of conclusions

285.  Dr Reid and Mr Maxton entered into arrangements to allow House of Commons researchers employed by them (Mr Reid, Ms Hilliard and Mr Winslow) to be paid for party political work on the Labour Party`s Scottish Parliament election campaign out of funds provided through the OCA. In doing so, Dr Reid and Mr Maxton:

    (a)  misled the Fees Office as to the employment arrangements of Ms Hilliard and Mr Winslow respectively (although I am satisfied that Mr Kevin Reid was included in the arrangement described above—in the sense that his "resource", as Mr Rowley put it, was intended to be available to the Labour Party—I am not able to say that the hours he worked for Dr Reid while employed by him fell so far short of the contractual requirement that Dr Reid can be said to have misled the Fees Office about his son`s employment status);

    (b)  breached the Resolution of the House establishing the OCA which expressly limits its use to "work undertaken in the proper performance of [Parliamentary] duties."

    (c)  breached the guidance set out in the Green Book of the House of Commons prohibiting the use of the OCA for party political purposes;

    (d)  breached the section of the Code of Conduct which states:

      "No improper use shall be made of any payment or allowance made to Members for public purposes and the administrative rules which apply to such payments and allowances must be strictly observed."

286.  In addition, by their behaviour during the inquiry, Dr Reid (in not seeking to encourage witnesses to give a full and accurate account to me) and Mr Maxton (in unreasonably and persistently attacking the investigation process laid down by the House) failed to meet their obligations under the terms of the Code of Conduct, as set out in paragraph 283 above.

287.  Complaint against Dr Reid upheld.

288.  Complaint against Mr Maxton upheld.

289.  Both Dr Reid and Mr Maxton have vigorously protested throughout my investigation that the complaints against them are unfounded. Mr Maxton has strongly criticised the inquiry procedures. In the interests of fairness to the two Members the Committee may wish to consider inviting Dr Reid and Mr Maxton to appear before them on oath.

25 October 2000

Elizabeth Filkin

90  See paragraph 7. Back

91  This was set out in full at paragraph 13. Back

92  Emphasis added. Back

93  Emphasis added. Back

94  See paragraph 150. Back

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