Part 2: The IPSA

55.     Paragraph 9 makes it clear that the IPSA, its members and staff are not to be regarded as the servants or agents of the Crown, and that its property is not to be regarded as held on behalf of the Crown. This means that the IPSA is not to have “Crown status”.

56.     Paragraph 12 enables the IPSA to establish such committees as it sees fit, and the committees to establish such sub-committees as they see fit. The members of such committees and sub-committees must be drawn from the membership of the IPSA.

57.     Under Paragraph 13(2) the validity of proceedings of the IPSA, or any of its committees or sub-committees, is not affected by a vacancy among the members of the IPSA or a defect in the appointment of a member. This is to enable the normal functioning of the IPSA should such circumstances arise.

58.     Paragraph 14 requires the appointment of a chief executive, and enables the appointment of other staff by the IPSA. Their terms and conditions of appointment are to be determined by the IPSA, but the IPSA is to have regard to the desirability of keeping such terms and conditions broadly in line with civil service terms and conditions.

59.     Paragraph 15 makes provision enabling the Speaker to appoint an interim chief executive, to act in the name of and on behalf of the IPSA, until such time as the IPSA appoint a chief executive. This provision will expedite the establishment of an organisation to support the new Authority. It is for the IPSA to determine when the powers exercised by the interim chief executive are to come to an end.

60.     Paragraph 16 provides for the staff of the IPSA to have access to the Principal Civil Service Pension Scheme.

61.     Paragraphs 17 and 18 separate the IPSA’s administration and regulation functions. Paragraph 17 requires that the administration functions of the IPSA be carried out separately from the regulation functions insofar as possible, and that the administration functions are to be carried out by the chief executive. Paragraph 18 sets out the division. Administration functions are those relating to the payment of MPs’ salaries, the payment of allowances, the processing of allowances claims and publishing and maintaining the register of interests. The regulation functions are the preparation and revision of the MPs’ allowances scheme, preparation and revision of the financial interests rules, determining procedures for investigations and the function of making directions or recommendations.

62.     Paragraph 19 enables the IPSA to delegate functions to any of its members, any committee it establishes, or any of its staff, with the exception of the regulation functions and the appointment of a chief executive. Paragraph 19 also enables the chief executive to delegate his or her statutory functions to any of the staff of the IPSA.

63.     Paragraph 20 provides for the IPSA to contract out its payment functions. This means that it would not be necessary for the processing of payments to be carried out by the staff of the IPSA. It could instead be contracted out to another body. Paragraph 20(4) makes it clear that the power to contract out functions does not include any powers in relation to the determination of claims for allowances.

64.     Paragraph 21 provides for the chief executive to contract out the arrangements for managing the pensions of the staff of the IPSA.

65.     Paragraph 22 sets out that the IPSA is to be funded by money voted by Parliament. This means that it will be voted annually by Parliament in the same way as departmental resources. It is for the IPSA to prepare an estimate of the resources it will require. It is to submit this to the Speaker’s Committee. The Speaker’s Committee is to lay the estimate before the House of Commons after a process of review in which it must involve the Treasury.

66.     Paragraph 23 requires the IPSA to prepare accounts in accordance with the directions given to it by the Treasury. Paragraph 23(4) appoints the chief executive as the accounting officer for the IPSA.

67.     Paragraph 24 requires the IPSA to submit its accounts annually to the Comptroller and Auditor General. The Comptroller and Auditor General is to examine and certify the accounts and lay a copy before each House of Parliament.

68.     Paragraph 25 requires the IPSA to lay an annual report before Parliament.

69.     Paragraph 26 provides for the application of the seal of the IPSA which is to be authenticated by the signature of any member of the IPSA or its staff who has been authorised for the purpose.

70.     Paragraph 27 extends the Freedom of Information Act 2000 to cover the IPSA. This will mean that the IPSA will have to introduce a publication scheme explaining how it intends to handle the information in its possession, as well as being obliged to consider requests for information in accordance with the provisions of the Act. In adopting or reviewing a publication scheme, the IPSA must consult the Leader of the House of Commons, the Speaker and the Commons Committee on Standards and Privileges.

Schedule 2: Commissioner for Parliamentary Investigations

71.     Schedule 2 makes provision for the appointment of the Commissioner, for his or her terms and conditions, resignation and removal from office, remuneration, status, and annual reporting which is the same as that made for the members of the IPSA in Schedule 1.

72.     Paragraph 3 sets limits to the term of office of the Commissioner. The Commissioner will be appointed for a single fixed term not exceeding five years. A person appointed as the Commissioner may not be reappointed to that office.

73.     Paragraph 7 lays a duty on the IPSA to provide the Commissioner with adequate resources to fulfil its functions, and in particular the staff to assist in carrying out those functions. Because its resources will be provided by the IPSA, there is no separate requirement on the Commissioner to prepare annual accounts. Paragraph 10 requires the Commissioner to prepare an annual report which must be laid before each House of Parliament, and published in any manner the Commissioner considers appropriate.

74.     Paragraph 10 extends the Freedom of Information Act 2000 to cover the Commissioner. This will mean that the Commissioner will have to introduce a publication scheme explaining how he or she intends to handle the information in his or her possession, as well as being obliged to consider requests for information in accordance with the provisions of the Act.

Schedule 3: Speaker’s Committee for the Independent Parliamentary Standards Authority

75.     This Schedule makes provision for the Speaker’s Committee which is to have the functions set out in this Act - in particular, the function of approving the selection of candidates for appointment as a member of the IPSA or as the Commissioner.

76.     Paragraph 1 sets out the membership of the Speaker’s Committee. They are to be the Speaker of the House of Commons, the Leader of the House of Commons, the chair of the Committee on Standards and Privileges and five MPs who are not Ministers of the Crown.

Clauses 2-4: Salaries and allowances for MPs

77.     Clause 2(1) provides that MPs’ salaries are to be paid by the IPSA, in accordance with the relevant resolutions of the House. Clause 2(2) ensures that if the House should determine that an MP’s salary should be withheld, the IPSA can give effect to that. The functions in this clause are to be exercised by the chief executive on behalf of the IPSA, see paragraph 17 of Schedule 1.

78.     Clause 3 provides that the IPSA is to pay allowances according to an MPs’ allowances scheme it prepares and keeps regularly under review. Clause 3(4) provides that during preparation or revision of the scheme, the IPSA is required to consult the Leader of the House of Commons, the Speaker of the House of Commons, any committee of the House nominated by the Speaker, the SSRB, and the Treasury. The IPSA may also consult with any other person it considers appropriate. Once prepared or revised, the scheme must be laid before the House of Commons, but does not require the formal agreement of the House.

79.     Clause 3(7) sets out the matters which the scheme may include. These include for what types of expenditure and in what circumstances allowances may be payable; the conditions under which allowances may be paid (for example on the receipt of documentary evidence); and imposing limits on the amounts which can be paid.

80.     Clause 4 sets a formal framework for dealing with claims under the allowances scheme, and sets out that further provision for dealing with claims may be included within the allowances scheme prepared by the IPSA. These functions are to be exercised by the chief executive on behalf of the IPSA, see paragraph 17 of Schedule 1.

81.     Clause 4(1) requires a claim to be made to the IPSA before any allowance is paid to an MP. Those claims must usually be made by the MP, clause 4(2). Clause 4(3) requires the IPSA to determine whether to allow or refuse the claim, and, if it is allowed, how much should be paid, and to pay it accordingly. Clause 4(4) and (5) provide for a review mechanism if the IPSA determines that a claim should be refused or paid only in part. If an MP asks for a review, the IPSA must review its determination and decide whether or not to alter its decision.

82.     Clause 4(6) provides that the scheme may make further provision as to how claims are to be dealt with. This could include such matters as the sort of evidence required, or the format in which a claim must be made. This subsection also provides that the scheme may contain a mechanism through which overpayments may be recovered by permitting the setting off of payments to which an MP is not entitled against payments to which the MP is entitled.

Clause 5: MPs’ financial interests rules

83.     Clause 5 requires the IPSA to prepare, regularly review, and revise as appropriate a set of rules in relation to MPs’ financial interests. Subsection (4) provides that during preparation or revision of the rules, the IPSA is required to consult with the Leader of the House of Commons and the House of Commons Committee on Standards and Privileges. The IPSA may also consult with any other person it considers appropriate. Once prepared or revised, the scheme must be laid before the House of Commons. Subsection (6) provides that the rules must be approved by a resolution of the House of Commons before they are to have effect.

84.     Subsections (7) to (9) set out provisions which must be included in the financial interests rules. It sets out a formal framework requiring MPs to register financial interests with the IPSA, and to declare such interests before taking part in any Parliamentary proceedings relating to that matter. An MP must declare specified information if he or she presently has a financial interest, has had such an interest in specified circumstances (this could be, for example, within a specified number of years) or when he or she knows that he or she will have such an interest. This last point could cover, for example, a circumstance where someone knows that he or she has been offered a directorship which will be taken up in the next couple of weeks.

85.     Subsection (10) sets out that the rules must prohibit paid advocacy. It covers both the actions of the MP in advocating or initiating any cause or matter for any consideration, whether financial or in kind, and also urging someone else to advocate any cause or matter on his or her behalf.

86.     Subsection (11) requires the IPSA to publish the register in any way that it considers appropriate.

87.     Subsection (12) defines “financial interest” as including a benefit in kind or an indirect financial interest (such as a financial interest of a member of the family of the member). So, for example, an MP could be required to include on the register information about employing a member of his or her family or his or her staff.

Clause 6: MPs’ code of conduct

88.     This clause provides a legal framework for the House of Commons code of conduct. In subsection (1) it provides that the House of Commons is to continue to have such a code incorporating the Nolan principles and such other principles or matters as are determined by the House of Commons from time to time.

89.     Subsection (2) sets out the meaning of the Nolan principles. The Nolan principles are the seven general principles of public life set out in the First Report of the Committee on Standards in Public Life (Cm 2850-I). Those principles require holders of public office to embody the principles of selflessness, integrity, objectivity, accountability, openness, honesty and leadership.

Clauses 7-9: Investigation and enforcement

90.     Clause 7(1) provides that the Commissioner may conduct an investigation if he or she has reason to believe that a member of the House of Commons has been overpaid an allowance under the allowances scheme or has failed to comply with the financial interest rules.

91.     Clause 7(2) sets out who may initiate an investigation. This can be either the Commissioner on his or her own initiative, the IPSA, or as the result of a complaint from an individual.

92.     Clause 7(3) requires members of the House of Commons and the IPSA to provide any information reasonably required by the Commissioner for the purposes of the investigation.

93.     Clause 7(4) requires the Commissioner to make a report to the IPSA of his or her findings. The Commissioner will determine the facts of the case and it will be for the IPSA to decide what action to take in the light of the Commissioner’s findings.

94.     Clause 7(5) requires the IPSA to determine procedures for the conduct of investigations by the Commissioner and the handling of complaints from individuals. This may include procedures for refusing to conduct an investigation in response to a complaint, for example, where the complaint is vexatious or is frivolous. The IPSA must also determine procedures about the circumstances in which a report of findings to the IPSA is to be published.

95.     Clause 7(6) requires that such procedures afford any member of the House of Commons subject to an investigation the opportunity to make representations to the Commissioner, and to make representations to the IPSA following the Commissioner’s report.

96.     Clause 8 sets out the options for the IPSA in the light of the Commissioner’s report. Clause 8(1) gives powers to the IPSA to direct a member of the House of Commons to repay amounts paid under the allowances scheme that should not have been paid, and to correct omissions or inaccuracies in the register of financial interests.

97.     Clause 8(2) makes provision for the IPSA to recommend to the House of Commons Committee on Standards and Privileges that the House exercise any of its disciplinary powers. Examples of those disciplinary powers are set out in clause 8(10), discussed below. Clause 8(3) provides that if the IPSA proposes to give a direction or to make a recommendation, the MP in question must be given the opportunity to make further representations to the IPSA. This will ensure that the MP has a right to comment on the way in which the IPSA proposes to exercise its powers (in addition to the MP’s right to participate in investigations and comment on the findings of the Commissioner, see clause 7(6)). The IPSA may publish a direction or recommendation that it has given.

98.     Clauses 8(4) and (5) provide that if a member fails to comply with the financial interests rules, the duty to provide information reasonably requested by the Commissioner or a direction by the IPSA, the House of Commons may exercise any of its disciplinary powers. Apart from this, such failures are to have no legal effect. This preserves to the House of Commons the right to discipline its members unless there has been a breach of the criminal law.

99.     Clause 8(6) requires that the IPSA must, with the agreement of the Speaker’s Committee, prepare a protocol setting out how the IPSA, the Commissioner, the House of Commons Committee on Standards and Privileges, the Director of Public Prosecutions, the Commissioner of Police of the Metropolis, and any other person the IPSA considers appropriate are to work together concerning the conduct of MPs. Clause 8(7) provides that in drawing up the protocol, the IPSA is to consult each of the other parties.

100.     Clause 8(8) preserves the right of the House of Commons to exercise any disciplinary powers which it may have. It is not to be limited to acting only following an investigation by the Commissioner or a recommendation from the IPSA.

101.     Clause 8(9) provides that where the MP has been, or is, subject to criminal proceedings in relation to conduct, whether or not convicted of an offence, this does not stop an investigation under clause 7 or enforcement in accordance with clause 8. This means, for example, that if an MP is found innocent of a criminal offence, he or she may still be disciplined in accordance with the provisions of the Bill for the conduct the subject of the criminal charge.

102.     Clause 8(10) sets out examples of the disciplinary powers which the House could exercise after a recommendation is made to the Committee on Standards and Privileges by the IPSA. These include the power to determine that a member’s salary should be withheld for a certain period; the power to suspend a member; and the power to expel a member. These are all powers which the House already possesses and they are not conferred by the Bill. The House’s powers of discipline are not limited to these three instances.

103.     Clause 9 establishes a series of new offences in relation to claims made under the allowances scheme and compliance with the financial interests rules. The offences which relate to the financial interests rules are based on similar offences which exist in Scotland concerning the Scottish Parliament. These offences are set out in section 39 of the Scotland Act 1998 (c. 46) and the Interests of Members of the Scottish Parliament Act 2006 (asp 12).

104.     Clause 9(1) sets out that an MP commits an offence if he or she provides information which he or she knows to be false or misleading in a material respect in support of a claim for allowances.

105.     Clause 9(2) provides that an MP commits an offence if, without reasonable excuse, he or she fails to comply with the rules relating to registration of financial interests.

106.     Clause 9(3) provides that an MP commits an offence if he or she breaches the rules prohibiting paid advocacy.

107.     Clause 9(4) sets out the penalties. Knowingly providing false or misleading information in support of a claim for allowances can be tried either in a magistrates’ court or in a Crown Court. If it is tried in a magistrates’ court, the maximum penalty is 6 months imprisonment (12 months in Scotland and 12 months in England and Wales on coming into force of section 154(1) of the Criminal Justice Act 2003) or a fine not exceeding the statutory maximum, or both. If it is tried in the Crown Court, the maximum penalty is 12 months imprisonment or a fine or both. Clause 9(6) provides that the offences of failing to register or declare an interest, or breaching the no paid advocacy rule, are triable only in a magistrates’ court. The maximum penalty is a fine not exceeding level 5 on the standard scale (currently £5000).

Clauses 10: Proceedings in Parliament

108.     Clause 10 provides that parliamentary privilege does not prevent evidence being inadmissible in court in proceedings against an MP simply because that evidence relates to “proceedings in Parliament”. The normal rule of parliamentary privilege is that proceedings in Parliament cannot be impeached or questioned in any court or place out of Parliament (Article IX of the Bill of Rights 1689). Where, as may be the case for offences under this section, evidence for the offence will take the form of proceedings in Parliament (for example comments in a debate where it is argued that the MP has breached the “no paid advocacy” rule), it is necessary formally to set privilege aside so that the evidence can be adduced in court.

109.     Clause 10 also makes provision in relation to the activities of the IPSA and the Commissioner. It makes clear that they are able to carry out their functions without themselves breaching privilege.

Clauses 11-14: Final provisions

110.     Clause 11(1) provides that the Speaker, after consulting the Commissioner and the House of Commons Committee on Standards and Privileges, may agree with the IPSA that the IPSA is to carry out agreed registration functions. These registration functions are functions performed by the Standards Commissioner which relate to registration. This clause would permit the IPSA to take over the functions of the Standards Commissioner concerning other registers held by the Standards Commissioner, for example, the Register of Interests of Members’ Secretaries and Research Assistants.

111.     Clause 11(4) provides a similar power by which the Speaker, after consulting the IPSA and the House of Commons Committee on Standards and Privileges, may agree with the Commissioner that the Commissioner is to carry out agreed functions. Those functions are functions of the Standards Commissioner and which the Commissioner could not carry out under any provision of this Bill. This paragraph permits the Commissioner to take on additional functions which are at present exercised by the Standards Commissioner.

112.     Clause 12 sets out the interpretation of terms used in the Bill. It provides for the Speaker to make the final determination of which body would best be substituted for certain bodies named in the Bill if one of those bodies is replaced by another body carrying out the same functions.

113.     Clause 13 sets out the powers to make transitional provision. It confers the functions on a Minister of the Crown so that it is possible for them to be exercised by the Leader of the House of Commons.

114.     Clause 13(1) provides that a Minister of the Crown may by order make supplementary, incidental, transitional, transitory or saving provision in connection with this Act.

115.     Clause 13(2) provides that an order made under this section may include certain transitional provisions to facilitate the transition from the current system of allowances and rules governing financial interests to the new system. Subsection (2)(a) enables an order to provide that the current rules of the House of Commons relating to allowances are to have effect for specified purposes as if they were set out in accordance with the provisions of this Bill. This is to ensure that there is a valid system of rules relating to allowances in place as soon as possible after the IPSA is established.

116.     Subsection (2)(b) makes similar provision for the current rules relating to the registration of members’ interests. Subsection (2)(c) makes similar provision for the current rules relating to the declaration of members’ interests. Subsection (1)(d) makes similar provision for the current rules concerning the prohibition of paid advocacy.

117.     Subsection (3) makes clear that the specified purposes for which any of the current rules are to have effect, does not include the purposes of clause 9 (offences). This means that the offences regime for MPs set out in clause 9 cannot take effect in relation to allowances or rules under subsection (2).

118.     Subsection (4) enables consequential changes to be made to the relevant existing rules to substitute the Commissioner or the IPSA for references to an officer or committee of the House of Commons.

119.     Subsection (5) provides that an order under this clause may provide that the Commissioner and the IPSA are to carry out their functions as set out in the Bill in relation to matters arising under the rules before the Bill comes into force. This means, for example, that the Commissioner and the IPSA will be able to investigate alleged breaches of the rules on allowances that took place in the past (although see the discussion of subsection (6) below).

120.     Subsection (6) provides that an order under this clause must require the Commissioner and the IPSA to handle investigations and proceedings in relation to alleged incidents that occurred at a certain time according to the rules in force at that time. This means that the conduct of MPs will be assessed according to the rules they should have followed at the relevant time, not according to potentially stricter rules agreed at a later time.

121.     Subsection (7) enables consequential provision to be made whereby payments of allowances to which a member of the House of Commons was not entitled may be set off against other claims for allowances made by that member. This would mean that where previous overpayments were being recouped against later claims for allowances under the current scheme, this setting off could continue even after the transition to the new scheme.

122.     Subsection (8) enables consequential provision to be made to transfer staff, property, rights, liabilities, documents and information from the House of Commons to the IPSA in accordance with a scheme. Such a scheme would be made by a Minister of the Crown and would have to be agreed with the Speaker in his or her capacity as the chair of the House of Commons Commission.

123.     Subsection (11) and (12) provide that an order under clause 13 is to be made by statutory instrument and is to be subject to the negative procedure.