Select Committee on Standards and Privileges Fourth Report


Conduct of Mr Derek Conway



Introduction

1. We have considered a memorandum submitted by the former Parliamentary Commissioner for Standards before he left office relating to a complaint against Mr Derek Conway, Member for Old Bexley and Sidcup, by Mr Michael Barnbrook. The Commissioner's memorandum is reproduced at Appendix 1.

2. Mr Barnbrook's complaint was that Mr Conway was paying his son £981 a month from his parliamentary staffing allowance while his son was still in full-time education at Newcastle University, and was refusing to indicate what work his son undertook on his behalf or how many hours he worked for Mr Conway.[1] The complaint was informed by an article which had been published in the Sunday Times on 27 May 2007.[2]

3. As is our usual practice, we have shown Mr Conway a copy of the Commissioner's report and he was offered the opportunity to give oral evidence. Mr Conway has made two written submissions to us, which are reproduced at Appendices 2 and 3.

4. There appears to be no dispute over the basic facts of this matter. Mr Conway employed his younger son, Frederick, (FC) as a part-time research assistant from 1 September 2004 to 24 August 2007.[3] [4] When first employed, FC was 19 years of age, had recently completed his A levels, and was about to begin a full-time undergraduate course at Newcastle University. FC's job description was based on a standard job description provided by the DFA[5] for a Member's research assistant.[6]

5. Neither the original complaint and its associated newspaper article, nor the Commissioner's investigation, has revealed any evidence to suggest that FC performed, or was asked to perform, any tasks that went beyond assisting his father in the performance of his parliamentary duties.

6. FC's contract of employment provided for him to work for seventeen hours a week.[7] He had originally been employed on a salary of £10,000 per annum, subsequently increased to £11,773 per annum, backdated to the start of his employment. His basic salary, equivalent to a full-time rate of £25,970 per annum, had remained at that level throughout his employment, and was within the pay range set by DFA for the relevant grade.[8] FC had also received, on his father's instruction, four one-off sums, namely, £2000 in September 2005, £5000 in May 2006, £1300 in January 2007 and £1765.94 in May 2007.[9] Mr Conway told the Commissioner that these sums had all been intended in lieu of annual salary uprating and as bonuses for work satisfactorily done.[10]

7. In essence, the Commissioner reached three conclusions—

  • that Mr Conway authorised bonus payments to his son which exceeded the limit set by the House;
  • that it is unlikely, on the balance of probabilities, that the work done by Mr Conway's son was so extensive, or his availability in term-time was such, as to enable him consistently to meet his contractual commitment to an average of seventeen hours a week; and
  • that Mr Conway paid his son substantially more than an appropriate rate for the job he was employed to perform, having regard to his son's experience, qualifications and level of responsibility.[11]

To this extent, he recommends that Mr Barnbrook's complaint be upheld.

Mr Conway's response

8. Mr Conway, for his part, accepts that he failed to keep adequate records as an employer and to take due account of the contents of the Green Book; had used the wrong form to authorise one-off payments that were, in effect, bonus payments; and that the bonuses paid to FC had exceeded the maximum level permitted.[12] He has apologised to the Commissioner for his failure to keep proper records[13] and to comply with all DFA requirements, and to us for not reading the Green Book provisions.[14]

9. Mr Conway does not, however, accept the Commissioner's conclusion that FC did not work the contracted hours,[15] nor does he accept that his son was inappropriately remunerated overall. He has commented:

"I hope the Committee will conclude that actual salary payments to Freddie were well within the published grade, and therefore appropriately approved by the DFA and that no infringement of the rule applied."

In a subsequent letter to the Chairman, he added:[16]

"….the payments were within the permitted maximum limits overall and….the figures, including the excess bonus payment, could have been paid in a fashion that would not have given rise to this problem…."

10. Mr Conway in effect argues that, provided the remuneration paid to an employee falls within the relevant scale approved by the DFA, there is no limit on Members' discretion in setting its level. Whether or not that proposition is true in relation to salaries generally, a question we examine further below, it is certainly not true in relation to one-off bonus payments. The Green Book makes clear that their purpose is "to incentivise or reward staff" and that they are limited to 15% of the gross annual salary received by that employee in the year in question."[17]

11. Mr Conway maintains, however, that the four lump-sum payments to FC had all been intended in lieu of annual salary updating and as bonuses for work satisfactorily done.[18] The House's system does not recognise hybrid payments of this nature, and at no stage in the inquiry has Mr Conway sought to disaggregate the two elements. Like the Commissioner, we have therefore viewed the whole of the sums as bonus payments. In his letter to the Chairman of 16 January,[19] Mr Conway asks us to "bear in mind that…had I paid the maximum permitted salary, when in fact I paid him no increase in those years, he would have received a salary increase larger than the excess of the bonus payment". However, the fact is that he did not do so. We comment below on the appropriateness of FC's basic salary.

Our Analysis

12. It appears to us that there are three possible scenarios:

13. The Table below shows the breakdown of bonus requests in respect of FC submitted to DFA by Mr Conway, the maximum allowable bonus, the sums paid, and the extent to which the lump-sum payments over each year concerned exceeded the 15% cap. In the table, each payment has been attributed to the financial year in which the request was submitted.
Allowance Year Basic salary per annum (£) In-year Actual Salary Paid (£) Allowable bonus (£) Total Bonuses requested (£) Total Bonus paid (£) Gross bonus overpayment (£)
04-05 *11173 68681030
05-0611173 111731766 20002000 234
06-0711173 111731766 63006300 4534
07-08 111734684 7035000 17661063
TOTAL BONUS OVERPAYMENT 5831

Source: Department of Resources

All figures rounded to Nearest £

* From 1 September 2004

† To 24 August 2007

14. This figure is higher than the figure of £4620 quoted in the Commissioner's memorandum.[20] The principal reason for the difference is that the original DFA calculation was based on a comparison of the total bonuses paid with 15% of FC's total earnings in the course of his employment. The revised calculation excludes his earnings in 2004-05, a year in respect of which he received no bonus payment.

15. We agree with the Commissioner that Mr Conway paid bonuses to FC in excess of the maximum permitted levels in 2005-06, 2006-07 and 2007-08. We consider this matter further in our conclusions below. We are also concerned about the justification for paying bonuses at all, given that FC could not recall why he had received them[21] and Mr Conway commented that they had been made because he "had been happy with FC's work".[22]

16. As the Commissioner points out,[23] the staffing allowance is available to meet the costs "wholly, exclusively and necessarily incurred" on the provision of staff to help them perform their parliamentary duties. A predecessor Committee which considered a complaint about the use of the staffing allowance suggested that improper use of the staffing allowance would constitute a breach of the Code of Conduct.[24]

17. As we have already pointed out, Mr Conway maintains that FC's basic salary was solely a matter for him, provided it remained within the approved scale. The various salary scales typically have a wide range, are of national application and are intended to include scope to reflect ability, experience, responsibility, local and national market conditions and a range of other factors that influence salaries. The current pay range for a research assistant is between £13,705 and £33,018 for a full-time employee, with a DFA-recommended minimum salary in London of £18,689. The corresponding figures in September 2004, when FC's employment commenced, were £12,184 and £29,353 for the scale minimum and maximum, and £16,614 as the recommended minimum starting salary in London.[25] DFA issues guidance to Members to assist them in setting appropriate salary levels.[26]

18. We do not believe, as a matter of principle given the extent of the salary range, that Members' discretion in setting salaries can be regarded as completely unfettered. They are required to have regard to whether the costs concerned are "necessarily" incurred, a test which a salary significantly above the market rate would arguably not meet. Clearly, each case needs to be examined on its facts but we take the view that payment of an unreasonable salary would constitute an improper use of the Staffing Allowance, and thus a breach of the Code.

19. Was the salary paid to FC by his father so out of line with what was required, having regard to the duties of the job, as to constitute an unreasonable use of the allowance? As the Commissioner points out, there are two separate aspects to this:

  • was FC's salary excessive in principle, having regard to his qualifications and experience; and
  • was the volume of the work he was required to do reasonable given the number of hours for which he was being paid.

20. The Commissioner tested these questions against a series of guidelines approved by our predecessors in another case involving the Staffing Allowance.[27] We consider this to be a sensible approach.

21. One major difficulty in this case is that no records appear to exist of either actual work that FC did for his father, or of the work he was required to undertake. Mr Conway attributes this to his personal style of working, and the way in which FC worked.[28] Nor does anybody outside the Conway family appear to have been aware of whether, how and when FC did this work. We note the Commissioner's surprise[29] that Mr Conway was unable to supply any specific evidence of his son's work. While we recognise that neither the complainant nor the associated newspaper article advanced any specific evidence in this respect, and it was not for Mr Conway to establish his innocence, we are astonished that there appears to be no evidence, independent or otherwise, of any aspect of FC's work for his father.

22. We have examined carefully the Commissioner's assessment of the work requirement placed on FC by his father, and we agree with him that the duties he was asked to perform were unlikely to have required him to work all the hours for which he was being paid. In university vacations, Mr Conway maintains that his son worked for some 20 hours a week on average, but these periods would have overlapped significantly with time when the House was in recess. In university terms, FC was apparently working for 10 hours a week in Newcastle and 4 hours at home at the weekend: looking at Mr Conway's constructed log[30] of specific briefings he believed Freddie had prepared, which never exceeded seven in a calendar month, we find it inherently improbable that this and other unspecified research occupied FC for 10 hours a week. We therefore agree with the Commissioner that, on the balance of probabilities, FC would not have needed consistently to work his full contracted hours to complete such work.

23. Some limited independent correlation is, however, available of the possible demands on his time. In his comments on the Commissioner's memorandum, Mr Conway has said that the marking up of Parliamentary Bills was "an important part of the work Freddie had to do in regard to my duties as a member of the Speaker's Panel".[31] The number of Bills, and the associated Committee sittings, chaired by Mr Conway during the period FC worked for him, is as in the Table below:

SessionNo. of Bills Committee sittings
2003-0424
2004-0517
2005-06511
2006-0723

Source: Sessional Returns plus Official Report of Committee proceedings.

Note:  1)   Meetings of Programming Sub-Committees have been ignored.

    2)   For Bills where more than one Chairman was appointed, only sittings chaired wholly, or in part, by Mr Conway have been counted.

    3)   A typical sitting lasts for about 2½ hours, but there can be significant variations.

We therefore doubt if this aspect of FC's work could have occupied a large amount of his time.

24. We turn now to the question as to whether the salary paid to FC was reasonable, given his age, experience and academic qualifications; the nature of the tasks he was expected to perform; and the hours he was contracted to work (as distinct from those he may actually have worked). As we have already noted, FC was paid at a full-time equivalent rate of £25,970 per annum throughout his employment.

25. Mr Conway expressed the view to the Commissioner that FC's salary was "in terms of what young people in London were earning…not out of line".[32] He maintained that he had not paid FC beyond what was permitted by the rules "but whether he had been wise was another matter".[33] In a subsequent letter,[34] Mr Conway argued that FC was paid "6% above the mid-point and well below the [current] upper quartile for his grade".

26. We agree with the Commissioner that, on the evidence available, FC appears to have been paid a significantly higher salary than was justified by his qualifications and experience, and by the nature of the work he was required to perform, a significant amount of which, such as the post-handling and record keeping, appears to have been clerical work of a basic nature. We also note that FC was based in Newcastle during term time. His lack of experience and the level of his academic qualifications are in our view strong arguments for paying a salary at or close to the entry level. FC's 2004-05 salary, after the backdated increase, was over 50% above the DFA-recommended minimum for a London based new entrant, and nearly 40% above the current recommended minimum.[35] Mr Conway has been unable to produce any evidence to justify why it was right to pay such a salary; he appears not to have paid proper heed to the DFA guidance, and to have made an arbitrary judgement based on his own perceptions of earnings elsewhere. Even assuming that the contracted work was performed. FC's salary was sufficiently far out of line with what would have been justifiable to represent an unreasonable exercise of Mr Conway's discretion in relation to the Staffing Allowance, and thus was of itself an improper use of the Allowance and a breach of the Code of Conduct.

Conclusions

27. In paragraph 12, we set out the three possible scenarios. Having set out the facts in as far as we have been able to determine them, we now have to consider the wider implications.

28. We reject Mr Conway's continued arguments, in relation to his employment of FC, that he did not infringe the rules relating to the Staffing Allowance. As we have shown above, there is conclusive evidence that Mr Conway authorised the payment of bonuses to FC that went way beyond the permitted ceiling, as clearly set out in the Green Book throughout the period of FC's employment.[36] In support of our conclusions, we note that all bonuses for staff authorised by Mr Conway in the previous three years were within the permitted level.[37]

29. We note that FC seems to have been all but invisible during the period of his employment. For the majority of that time he was based at Newcastle where he was engaged in a full time degree course at the university. He had little or no contact with his father's office, either in the House or in the constituency. No record exists of the work he is supposed to have carried out, or the hours kept. The only evidence available to us of work carried out was that provided by FC and his family.

30. This arrangement was, at the least, an improper use of Parliamentary allowances: at worst it was a serious diversion of public funds. Our view is that the reality may well be somewhere between the two.

31. Taking together our assessments of the salary level paid to FC, and the number of hours for which he was remunerated, we are of the view that Mr Conway misused the Staffing Allowance. He should have exercised his judgement more carefully, particularly as a family member was involved, as he could be seen as having a clear personal motivation for paying his son over-generously. He also seemed to be oblivious to the broader reputational risks to the House of any perception of personal benefit to his family.[38]

32. Mr Conway should repay the overpaid bonus sums, together with the associated pension contribution received by FC. We understand that it is the practice of the Department of Resources, in relation to overpayments of staff by Members, normally to require only the net overpayment to be repaid, as it can in most circumstances reclaim the tax and National Insurance overpaid.

33. On this basis, we are advised by the Department of Resources that the gross overpayment of £5,831 resulted in a net overpayment to FC of £3,962.97. [39] We recommend that Mr Conway be required to repay this sum. If, for any reason, the House is unable to reclaim the tax and National Insurance overpayment, Mr Conway should repay the full cost of the overpayment, which amounts to £7,161.05.[40]

34. As to the salary paid to FC, we have no doubt that it was excessive given both his limited experience and the work he was required to perform. We have given careful consideration to whether we should require a proportion of this also to be repaid by Mr Conway. Having regard to paragraph 79 of the Commissioner's memorandum,[41] we recommend that he also be required to repay a further sum of £6,000.

35. Mr Conway's admitted failure to keep proper records of FC's employment is also to be regretted. Had he paid more attention to the proper procedures, and used the correct forms, the DFA would have been unlikely to have paid the excess bonuses. To this extent he was the author of his own misfortune.

36. We regard this case as a serious breach of the rules and recommend that Mr Conway be suspended from the service of the House for 10 sitting days. Mr Conway should also apologise to the House for his shortcomings by way of a personal statement.

37. This case has demonstrated the importance of all Members ensuring that the terms on which they employ staff are reasonable and correct in all the circumstances, and of ensuring that they maintain adequate staff records. This is particularly important where there is any relationship with the employee that might suggest that the terms might be influenced by considerations of personal benefit. Members' use of allowances is a perennially sensitive issue, and allegations of real or perceived misuse risk damage to the reputation of the House as an institution, as well as to the personal reputations of individual Members. Mr Speaker has commented that "Members themselves are responsible for ensuring that their use of allowances is above reproach".[42] It is in our view important that Members can demonstrate robustly, if challenged, that this is indeed the case.



1   WE 2, p. 37. Back

2   WE 1, p. 35. Back

3   FC had been on sick leave from May to the end of his period of employment (see WE 13, para. 29, p. 65). Back

4   A similar arrangement had existed for his elder son (WE 13, para. 4, p. 63). Back

5   With effect from 1 January 2007, the DFA became part of the Department of Resources. Back

6   Appendix 1, paras. 7-9. Back

7   Appendix 1, para. 16. Back

8   Appendix 1, para. 17. See also paragraph 46. Back

9   Appendix 1, para. 18. The original request submitted by Mr Conway which led to the May 2007 bonus payment was for £5000. Back

10   Appendix 1, para. 40. Back

11   Appendix 1, paras. 78-9. Back

12   Appendix 2, p. 70. Back

13   Appendix 1, para. 81. Back

14   Appendix 2, p. 70. See also Appendix 3, p. 78. Back

15   Appendix 2, p. 72. Back

16   Appendix 3, p 78. Back

17   Section 6.9.5. Back

18   Appendix 1, para. 40. Back

19   Appendix 3, p. 78. Back

20   Appendix 1, para. 79. See also WE 15, p. 68. Back

21   WE 11, para. 27, p.61. Back

22   WE 13, para. 31, p.66. Back

23   Appendix 1, para. 4. Back

24   Fourth Report, Session 2003-04, para. 19. Back

25   Figures with effect from 1 April 2004. Back

26   Appendix 1, paras. 6-7. Back

27   Appendix 1, para. 5. Back

28   Appendix 1, paras. 12-13, 21-27. Back

29   Appendix 1, para. 15. Back

30   WE 10, p. 45-51. Back

31   Appendix 2, p. 70. Back

32   WE 13, para. 33, p. 66. Back

33   WE 13, para. 34, p. 66. Back

34   Appendix 3, p. 78. Back

35   Appendix 1, para. 46. Back

36   Green Book, para. 6.9.5. Back

37   Evidence not reported. Back

38   See WE 10, section 17, page 58. Back

39   Appendix 4. Back

40   Appendix 4. Back

41   See also WE 15, p. 66-7. Back

42   Green Book (July 2006), Speaker's Introduction. Back


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2008
Prepared 28 January 2008