2nd Report, 2015 (Session 4): Members’ Interests Bill

SP Paper 681

CONTENTS

Remit and membership

Report

Executive Summary

Background
GRECO – lowering the threshold for registering gifts
Streamlining reporting requirements for MSPs
Sanctions
Keeping previous registers
Conclusion

Report

GRECO
Changes required to facilitate the ending of dual reporting
Dual reporting - conclusion
Proposed changes to sanctions
Committee Bill proposal - final conclusion

Annexe A: Draft Interests of Members of the Scottish Parliament (Amendment) Bill

Annexe B: Committee consideration of Bill

Remit and membership

Remit:

1. The remit of the Standards, Procedures and Public Appointments Committee is to consider and report on—

(a) the practice and procedures of the Parliament in relation to its business;

(b) whether a member’s conduct is in accordance with these Rules and any Code of Conduct for members, matters relating to members’ interests, and any other matters relating to the conduct of members in carrying out their Parliamentary duties;

(c) the adoption, amendment and application of any Code of Conduct for members; and

(d) matters relating to public appointments in Scotland.

2. Where the Committee considers it appropriate, it may by motion recommend that a member's rights and privileges be withdrawn to such extent and for such period as are specified in the motion.

(Standing Orders of the Scottish Parliament, Rule 6.4)

Membership:

Brian Adam (until 25 April 2013)
George Adam (from 16 May 2013)
Cameron Buchanan (from 10 September 2013)
Helen Eadie (until 9 November 2013)
Patricia Ferguson (From 8 January 2015)
Cara Hilton (from 19 December 2013 - 8 January 2015)
John Lamont (until 10 September 2013)
Richard Lyle (until 27 November 2014)
Margaret McCulloch (until 3 September 2013)
Margaret McDougall (from 3 September 2013)
Fiona McLeod (until 18 December 2014)
Gil Paterson (From 8 January 2015)
Stewart Stevenson (Convener) (From 7 November 2013)
Dave Thompson (Until 7 November 2013) (From 27 November 2014)

Committee Clerking Team: 

Clerk to the Committee
Alison Walker
Gillian Baxendine

Senior Assistant Clerk
Roz Thomson
Alastair Macfie

Support Manager
Sam Currie

Members' Interests Bill

The Committee reports to the Parliament as follows—

Executive Summary

Background

1. The Standards, Procedures and Public Appointments (SPPA) Committee is proposing a Committee Bill to amend the Interests of Members of the Scottish Parliament Act 2006 (the Interests Act). This Act sets out the financial interests that members are required to register and declare and the sanctions for breaches. It also bans paid advocacy (an MSP advocating a cause for payment).

GRECO – lowering the threshold for registering gifts

2. The Group of States against Corruption (GRECO) monitors countries’ compliance with anti-corruption standards. In response to a GRECO recommendation, the bill proposes lowering the threshold for registering gifts from £570 to £280 (0.5% of a member’s salary rounded down to the nearest £10).

Streamlining reporting requirements for MSPs

3. MSPs currently have to report financial interests in two places: to the Electoral Commission (under the Political Parties, Elections and Referendums Act 2000 or PPERA) and to the Parliament. There is an overlap between the two regimes, referred to as “dual reporting”. Changing the Parliament’s register to allow dual reporting to end would bring the reporting requirements into one place for MSPs and would make information about MSPs’ financial interests more easily available to the public. Benefits include:

  • MSPs’ financial interests could be found in one place, on the Parliament’s website;

  • MSPs would only have to register in one place, and could receive advice on all their interests from Parliamentary officials;

  • all complaints about an MSP not meeting the reporting requirements would be dealt with in the same way, by the Commissioner for Ethical Standards in Public Life in Scotland (the Commissioner),

4. The Electoral Commission would continue to be responsible for investigating impermissible donations or loans, and would still have its own sanctions for breaches in this area.

5. The relevant UK Secretary of State needs to approve the removal of dual reporting, once the Electoral Commission is satisfied. Officials at the Parliament have been working closely with the Electoral Commission to make sure that the bill will meet the PPERA requirements.

Changes required to the Register of Interests

6. The Parliament’s register includes significant financial interests that might influence MSPs’ parliamentary activities. PPERA is based on registering donations over the value of £1,500 for political activities – this is wider than the Parliament’s current register.

7. The Committee wants to leave the Parliament’s existing regime as undisturbed as possible while including the PPERA requirements. However, the changes we are proposing to bring the two regimes together in one place do make the Interests Act more complex. The definitions of gifts and overseas visits will have to be adjusted and a new category added for loans and certain other transactions. Two different sets of rules on aggregation (adding together separate donations from the same person) are required. All these changes will only apply to donations for political activities over £1500 (i.e. donations with a single or combined value over £1500).

8. The Interests Act requires members to register interests within 30 days of acquiring them. Under PPERA, members have 30 days to check if they may accept a donation and a further 30 days to report it. The Committee has decided that for simplicity all interests should be registered within 30 days, even though this is less than PPERA allows.

Enforcement

9. Just now PPERA breaches are investigated by the Electoral Commission. Sometimes breaches overlap both regimes and are investigated by the Electoral Commission and the Commissioner. In future we propose that all registration breaches would be investigated by the Commissioner. One effect of this is that the Procurator Fiscal would be able to investigate all breaches (whereas currently some minor PPERA breaches can be pursued on a civil, rather than criminal, basis).

Independent members

10. Unless changes are made to the Electoral Administration Act 2006, dual reporting can only be ended for members of registered political parties and not for independent members. The Committee would prefers to treat all members the same and so proposes to include such changes in the bill on introduction.

Dual reporting - conclusion

11. The changes required to end dual reporting are complex. PPERA is a complex piece of legislation. However, members have to comply with PPERA at the moment and our changes should make it easier for members to meet PPERA requirements. Interests will be available for the public to read in one place. The Committee believes that one regime, with one set of sanctions, will be clearer and more effective.

Sanctions

Criminal offence

12. The Committee consulted on removing the criminal offences for failure to register or declare an interest. Breaches have generally been minor and inadvertent and the Parliament has robust mechanisms for investigating and sanctioning MSPs. No breach has been prosecuted since the Parliament was established in 1999.

13. However, after consulting, the Committee accepts that removing the criminal offence might be interpreted as the Parliament taking breaches of the Act less seriously. The Committee is therefore not recommending the removal of these criminal offences.

Extending sanctions

14. If a member breaches certain conduct rules, the Parliament can withdraw their rights and privileges (eg removing salary or excluding them from Parliamentary premises). The sanctions in the Interests Act are currently limited to excluding a member from Parliamentary proceedings.

15. The Committee recommends that the full range of sanctions should be available if an MSP fails to register or declare an interest or undertakes paid advocacy.

Wider criminal offence for paid advocacy

16. The Committee proposes to amend the definition of paid advocacy so that agreeing to receive inducements, as well as actually receiving them, would be an offence.

Motion of censure

17. The Committee recommends that the Parliament should be able to agree a motion of censure – a form of public “naming and shaming” agreed by the Parliament as a whole. This would be an alternative response where the Parliament does not think a serious sanction such as exclusion or removal of other parliamentary privileges is appropriate.

Keeping previous registers

18. At present the Parliament is required by the Interests Act to dispose of old register entries 5 years after they were last amended. The Committee believes that a 10 year period would be more appropriate so that information from the previous two sessions is easily available on the Parliament’s website.

Conclusion

19. The Parliament is invited to agree to the introduction of the attached bill, which aims to make it easier for members to meet their obligations under PPERA and to make the members’ interests regime stronger and more transparent.

Report

20. The Interests of Members of the Scottish Parliament Act 2006 (the Interests Act) sets out the requirements for members to register and declare certain financial interests, proscribes paid advocacy, and sets out sanctions for failing to comply with the Act. The Standards, Procedures and Public Appointments (SPPA) Committee (the Committee) is proposing a number of amendments to the Interests Act by way of a Committee Bill, under rule 9.15 of the Parliament’s standing orders. As required by that rule, this report sets out the Committee’s recommendations on the provision to be contained in the Bill, together with an explanation of the need for the Bill. A draft Bill is attached at Annexe A.

21. The overall aim of the proposed bill is to ensure that information about MSPs’ financial interests is transparent and accessible, and to streamline the reporting process to assist MSPs in complying with requirements to report donations. The proposals in the bill would also strengthen the sanctions available to the Parliament to deal with any breaches to the rules set out in the Interests Act, widen the scope of the offence of paid advocacy, and amend the requirements for the Parliament to retain members’ registers of interest.

22. Following changes to the members’ interests provisions made by the Scotland Act 2012, the Committee considers this to be a timely opportunity to make a number of changes and improvements to the Parliament’s interests regime. In 2013, the Committee consulted on a number of suggested changes; this report outlines the proposals consulted on and the resulting proposal for a Committee Bill. The report also covers the recommendations made in the Group of States against Corruption (GRECO) report.

23. The Committee consulted on a number of proposals, specifically to:

  • improve the transparency and accessibility of information on MSPs’ significant financial interests by requiring certain donations for political activities, currently reported to the Electoral Commission, to be registered with the Scottish Parliament;

  • expand the Parliamentary sanctions available to the Parliament for breaches of the members’ interests requirements, including for paid advocacy;

  • extend the scope of the criminal offence of paid advocacy; and

  • remove the criminal offences for failure to register or declare a significant financial interest.

24. The Committee received three responses to its initial consultation, from the Scottish Government, the Electoral Reform Society Scotland and the Commissioner for Ethical Standards in Public Life in Scotland (the Commissioner). In addition, members of the Committee held discussions with individual MSPs and with party groups to inform the Committee’s thinking on its proposals. In January 2014, the Convener wrote to all MSPs informing them of the Committee’s proposals in relation to making changes to the Parliament’s register of interests to allow dual reporting to be ended and lowering the threshold for registering gifts.

25. Should the bill receive support and become law, the Committee’s intention would be to bring the changes into force at the start of the next Parliamentary session. The Code of Conduct for MSPs would require to be amended to reflect the changes proposed in the bill. The Committee would intend to bring a further report to Parliament on a revised Code of Conduct once the bill has completed its passage through Parliament.

GRECO

26. The Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor States’ compliance with the organisation’s anti-corruption standards. In March 2013, GRECO published a report called, “Corruption prevention in respect of members of Parliament, judges and prosecutors” which contained three recommendations aimed directly at the Scottish Parliament.1 Given that the GRECO recommendations relate to registering financial interests, the Committee has decided to address them as part of the proposed bill.

Gifts - thresholds

27. Firstly, GRECO recommended that consideration be paid to lowering the current thresholds for registering gifts. Currently, members must register gifts over the value of 1% of a member’s salary at the start of the parliamentary session, currently £570 (subject to the prejudice test). The GRECO report states that:

“particularly when favoring transparency over restriction, the thresholds for reporting gifts are set rather high in the House of Commons and the House of Lords. The same concern of high reporting thresholds is applicable to the Parliament of Scotland where the threshold is £570,”

and goes on to say,

“this state of affairs is particularly worrying because, as noted above, there are no restrictions on the acceptance of gifts without regard to whether they are required to be registered”.2

28. The Committee has given this matter some consideration, in light of the GRECO recommendation. The Committee notes that the House of Commons, proposes to lower the threshold for members to register gifts by over a half from £660 to £300.3 Similarly, the House of Lords has agreed a reduction in the value for registering gifts or hospitality in the Register of Lords’ interests from £500 to £140, in direct response to the GRECO recommendation.4 The current threshold for registering gifts in the Northern Ireland Assembly is £240.

29. The Committee understands the reasoning behind maintaining the higher threshold of 1% of a member’s salary at the start of the last session, which was to guard against members having to register minor, inconsequential gifts.5 However, the Committee notes developments elsewhere in the UK towards lowering the threshold for registering gifts and believes that lowering the threshold in the Scottish Parliament would increase transparency. The Committee is therefore minded to accept the recommendation in the GRECO report that the threshold for registering gifts should be lowered.

30. The Committee recommends that the bill should amend the Interests Act to reduce the threshold for registering gifts to 0.5% of a member’s salary (rounded down to the nearest £10) at the beginning of the current parliamentary session (currently £280).

Threshold for registering remuneration received as expenses

31. Under existing requirements, members are not required to register remuneration consisting solely of expenses below the specified limit (1% of a member’s salary at the beginning of the current parliamentary session, rounded down to the nearest £10). This threshold replicates the threshold for registering gifts. For consistency, the Committee proposes to lower the ceiling for this exemption to 0.5% of a member’s salary, so that it continues to mirror the threshold for registering gifts.

32. The Committee recommends that the bill should amend the threshold for registering remuneration received solely as expenses from 1% to 0.5% of a member’s salary.

Gifts – guidance

33. In relation to guidance for members on accepting gifts, the GRECO report states, “in reading the provisions of the respective Codes and their accompanying guidance, the GRECO Evaluation Team (GET) found very little by way of advice or counselling to Members as to their expected conduct when receiving gifts”. GRECO therefore recommended that clearer guidance should be provided for members concerning the acceptance of gifts.6

34. The following guidance on accepting gifts is already included in section seven of the Code of Conduct for MSPs:

“Over and above compliance with the statutory provisions, members should treat with caution any offer of hospitality, a gift, a favour or benefit. Members are not prohibited from accepting reasonable hospitality or modest tokens of goodwill, particularly where refusal could cause offence. But a member should not accept any offer that might reasonably be thought to influence the member’s judgement in carrying out Parliamentary duties. The value of any benefit, its connection to a member’s Parliamentary duties, its source, the transparency of its receipt and the frequency of receipt of similar offers may all be factors which could be relevant to this judgement. (Members should also have regard to the standards in relation to acceptance of hospitality and gifts set out in the section of the Code on lobbying and access to MSPs at paragraph 5.1.6, as well as the requirement to register gifts set out at section 2.3 of the Code.)”7

35. There is further guidance in section five of the Code:

“Members should decline all but the most insignificant or incidental hospitality, benefit or gift if the member is aware that it is offered by a commercial lobbyist. Section 7 of the Code on General Conduct states that a member should not accept any offer that might reasonably be thought to influence the member’s judgement in carrying out Parliamentary duties. Since the basis on which many people believe that commercial lobbyists sell their services is by claiming to provide clients with influence over decision-makers, it might reasonably be thought that acceptance of a benefit of any significance from such a source could influence a member’s judgement in carrying out Parliamentary duties. (If a member only becomes aware of its source after receiving hospitality, a benefit or gift, then the member should consider reimbursing the costs of any hospitality or benefit or returning any gift.)”8

36. The Committee considers that these paragraphs offer sufficient guidance to members on whether to accept a gift and does not recommend any changes in that regard.

Shareholdings

37. In relation to shareholdings, the GRECO report argues that “the high threshold for reporting these types of interests (as opposed to remunerated services) reflects a policy priority on registering interests where actual payments are involved (earned income, lobbying for a fee, and expenses), rather than investments.” However it considers that “a Member may be more influenced by the effect of a matter on his/her stocks than by the receipt of a payment for a speech.” The report also notes that a member could have holdings just below the threshold in several different companies all in the same sector and not have to declare any of these holdings.9

38. The Interests Act currently requires registration when the nominal value of shares is greater than 1% of total nominal value of the issued share capital or the market value of shares exceeds the specified limit (half a member’s salary at the start of the session, currently £28,760).

39. The nominal value of issued share capital relates to voting control of a company. In most cases, one share carries one vote. This threshold indicates the degree of voting power a member has in a company. Requiring members to register shares based on nominal value (and not just market value) is intended to capture shares which may not be of great financial value but do afford the member a degree of influence in the company.

40. Whereas the nominal value threshold concerns voting control, the market value threshold relates to the amount a member would receive if they sold the shares. The Committee believes that the nominal value threshold is helpful in providing the public with information on a member’s voting power within a company.

41. The focus of the GRECO recommendation is on the market value threshold. Neither the House of Commons nor the House of Lords Committees have recommended lowering their market value thresholds in response to GRECO (£70,000 and £50,000 respectively). The current Scottish Parliament threshold is considerably lower than that (£28,760). The Northern Ireland Assembly has the lowest threshold in the UK (£24,000). In the spirit of capturing significant financial interests, the Committee believes that the current threshold is set at the right level.

42. On balance, the Committee has decided that the existing thresholds are set at the right level to capture significant interests and does not recommend any change to the thresholds for registering shares.

Changes required to facilitate the ending of dual reporting

43. MSPs are currently subject to two separate reporting regimes for financial interests. Due to partial overlaps in the reporting requirements on MSPs under the Parliament’s Register of Interests and the Political Parties, Elections and Referendums Act 2000 (PPERA), certain financial interests are required to be reported to both the Electoral Commission and the Parliament. This duplication of responsibilities is referred to as ‘dual reporting’. The PPERA requirements are defined in terms of donations for political activities (which includes parliamentary activities), whereas the Parliament’s requirements refer to financial interests that could be perceived to influence MSPs in carrying out their parliamentary activities.

44. The two regimes have different criteria for registration which can lead to complex-decision making about what needs to be registered in which place. In terms of accessibility for scrutiny, at present the public need to look in two places for information on MSPs’ financial interests – the Electoral Commission website and the Scottish Parliament website.

45. In relation to the ability to make complaints, there are currently two separate regulatory processes depending on whether an MSP is reported to the Electoral Commission or the Commissioner (who investigates breaches of the Parliament’s Interests Act) for failure to register a financial interest. It is complex for an individual seeking to navigate two distinct complaints processes, especially since the split in responsibility between the Electoral Commission and the Commissioner is not at all clear, and in some circumstances overlaps.

46. The Committee believes that making the changes to the Parliament’s register to facilitate the removal of dual reporting would create simpler reporting processes overall for MSPs and greater transparency and accountability to the public than at present. There are a number of specific benefits including:

  • it would make details of MSPs’ financial interests more transparent as they would be more easily accessible in one place, on the Parliament’s website;

  • MSPs would only be required to register in one place, and in the main they could receive advice on registration from Parliamentary officials as opposed to contacting officials from the Parliament and the Commission separately;

  • the means of pursuing a complaint in relation to reporting a financial interest would be streamlined for the public.

47. The proposal to make the changes required to facilitate the ending of dual reporting was supported by the Scottish Government, the Electoral Reform Society Scotland and the Commissioner in their responses to the consultation.10 The Commissioner considered that these changes would achieve benefits “not only for MSPs but also for members of the public seeking to have their inquiries and complaints pursued in a more simplified ethical framework”.11

48. In its report on the changes required to facilitate the end of dual reporting at Westminster, the Standards and Privileges Committee of the House of Commons stated that “an unintended consequence of the Political Parties, Elections and Referendums Act 2000 (PPERA), was to require Members to register certain interests both with the Registrar of Members' Interests and with the newly formed Electoral Commission. This led to confusion and duplication, with Members facing criticism or sanctions for registering an interest with one body but not with the other.”12

49. To address these concerns, provision was made in the Electoral Administration Act (2006) to allow for dual reporting for to be ended for members of political parties elected to the House of Commons or devolved administrations (and other institutions), provided that the Electoral Commission was satisfied that it would receive information it required via these bodies’ alternative reporting arrangements. As a result, dual reporting ended for MPs on 1 July 2009. The Northern Ireland Assembly and Welsh Assembly are currently in discussion with the Electoral Commission on the possibility of eliminating dual reporting for their members.

Changes required to eliminate dual reporting

50. The proposed Bill would make the required changes to enable the Electoral Commission to draw all the information they need from the Scottish Parliament register, thus facilitating the ending of dual reporting for MSPs who are members of registered political parties. This would require more information to be provided in the Scottish Parliament register but would mean that MSPs only had to provide direct reports to the Electoral Commission in limited circumstances (in relation to impermissible and unidentifiable donations, as outlined in paragraph 52 below).

51. If dual reporting were to end, the Commissioner would take on sole responsibility for investigating breaches of those PPERA requirements (currently investigated by the Electoral Commission) that would be incorporated into the revised register of interests. This would broaden the Commissioner’s remit and therefore simplify the process for the public, providing one place to direct complaints. In effect, the responsibility for considering whether rules on registering certain financial interests have been broken would transfer from one independent body, the Electoral Commission, to another, the Commissioner. As at present, any complaint that the Commissioner takes to full investigation would be reported to the SPPA Committee which must then publish a report on its findings and can, wherever necessary, recommend sanctions to be imposed on the MSP in question by the Parliament as a whole.

52. PPERA sets out rules relating to permissible donors, i.e. donors from whom MSPs are permitted to accept donations for political activities. The Electoral Commission would continue to have responsibility for investigating possible impropriety relating to impermissible donations or loans, and would retain its own sanctions, to be imposed where breaches in this area have occurred. The Commission has indicated that to date the frequency of such breaches being found, and of sanctions being imposed, is fairly low.

53. The removal of the relevant PPERA reporting requirements and the ending of dual reporting would be triggered by the making of a commencement order by the relevant UK Secretary of State.13 This requires the Electoral Commission to be satisfied that the reporting requirements of the Scottish Parliament are sufficient and to confirm this with the relevant Secretary of State. Officials at the Parliament have been working closely with the Electoral Commission to ensure that the draft Bill and associated changes to the Parliament’s interests regime correspond to the PPERA reporting requirements.

Changes required to the Register of Interests

54. At present there are five categories of interest in the Parliament’s Register of Interests: remuneration and related undertakings, gifts, overseas visits, interest in shares and heritable property. The financial thresholds and registration criteria for each category have been set at levels that ensure that significant financial interests of MSPs that are relevant to their parliamentary activities must be registered.

55. The basis of the PPERA reporting requirements is the need to report all “controlled donations” over £1,500 – a donation offered to a member by a permissible donor, in connection with political activities as a member of a party or as the holder of elective office. Political activities include some of the activities that the Scottish Parliament considers to be parliamentary and also party political activities.

56. PPERA requires donations, including benefits in kind, over £500 to be verified as from an identifiable, permissible donor.14 Donations from impermissible or unidentifiable donors cannot be retained and must be reported to the Electoral Commission. Permissible donations of £1,500 or more (whether one-off or over £500 and aggregated from the same source over a year) require to be reported to the Electoral Commission.

57. The Parliament’s Code refers to the need to register significant financial interests that might be thought to influence MSPs’ parliamentary activities. Therefore, if dual reporting was ended, the categories of registrable interest would change, and be broadened, in order to incorporate the reporting of donations for certain political activities.

The Committee’s approach

58. The Committee’s aim in seeking to amalgamate the two sets of reporting requirements is to leave the existing Parliamentary interests regime as undisturbed as possible. However, PPERA is a complex piece of legislation and incorporating its provisions into the Interests Act has required the knitting together of two very different pieces of legislation. The result is a more technical schedule to the Interests Act than exists at the moment.

59. Although the changes to the schedule to the Interests Act set out in the draft bill are complex, the Committee believes that, with the assistance of guidance in the Code and from the Standards Clerks, members will be able to acquaint themselves with the new provisions. As ever, members will be encouraged to seek advice from the Standards Clerks if they acquire any financial interests which may require to be registered.

60. PPERA requires members to register donations over the value of £1,500 which are for political activities. The majority of interests acquired by members will be subject to the existing rules as experience has shown that the value of MSPs’ registrable interests is mostly below PPERA’s £1,500 threshold. As outlined above, the Code of Conduct for MSPs will be updated to reflect the changes and the Standards Clerks will be able to advise members on the revised regime.

61. It is important to stress that the draft Bill does not impose any additional reporting requirements on members, (with the exception of the requirement to register controlled transactions being applied to independent members, as outlined in paragraphs 83 to 91 below). Members already have to comply with PPERA. The intention of the Committee is to assist members in complying with both regimes by combining them and providing a single source of advice on registration within the Parliament itself.

62. It is expected that the majority of donations captured by PPERA would fall to be registered in the gifts and overseas visits categories in the Parliament’s register. The proposed changes to the register are largely confined to these two categories (and the addition of a new category of interest, controlled transactions).

63. The Interests Act contains the ‘prejudice test’ which members are required to apply to gifts and overseas visits when determining whether an interest is registrable. An interest meets the prejudice test if, after taking into account all of the circumstances, that interest is reasonably considered to prejudice, or give the appearance of prejudicing the ability of the member to participate in a disinterested manner in any proceedings of the Parliament.

64. However, as outlined above, under PPERA, members are required to register donations over the value of £1,500 if they are for political activities. The Committee proposes that the focus of the Interests Act on what is of prejudice to participation in the Parliament’s proceedings should be retained. The Committee therefore proposes that members need only apply the political activities criterion where the £1,500 threshold is crossed. This will be an additional test for members to apply under the gifts and overseas visits categories where the value of the gift or visit exceeds £1,500 (either singly or in the form of a number of donations over £500 in aggregate from a single source in one calendar year).

65. In relation to gifts, for example, it is envisaged that a gift would be registrable where: its value exceeds 0.5% of a member’s salary and the prejudice test is met; and/or, its value exceeds £1,500 and it is for the member’s political activities. A gift over £1,500 could be registrable in either or both of these circumstances.

66. The Committee proposes that, in order to comply with PPERA requirements, where a gift or overseas visit is over the value of £1,500 and is for political activities, it must be registered.

Political activities

67. The definition of ‘political activities’ is not set out in full in PPERA, although it does contain the following non-exhaustive examples in connection with a member’s membership of a registered political party: promoting or procuring the election of any person (including the member) to any position in, or to any committee of, the party in question; promoting or procuring the selection of any person (including the member) as the party’s candidate for election to a relevant elective office; and promoting or developing policies with a view to their adoption by the party.

68. Examples of donations for ‘political activities’ given in Electoral Commission guidance on the PPERA regime include: a donation towards the holding of an event hosted by a member to bring together representatives of businesses, community groups and councillors in that member’s constituency; a donation from a party supporter to a member specifically for the purpose helping the member purchase equipment for his own office; the secondment of a consultancy firm employee to a member’s office to work as a research assistant (paid for by the consultancy firm); a series of overseas visits by a member with an interest in international development as a guest of an overseas aid organisation, including a two day trip to Brussels to meet officials in the European Parliament.15

69. In relation to holders of relevant elective office, the Commission’s guidance also provides, “the political activities of holders of relevant elective office include both party political activities and activities concerned with government. Political activities could include making a party speech on a certain issue in the institution where the regulated donee holds office or undertaking visits in an office holder’s constituency.”16

70. Under PPERA, in determining whether a donation is for a member’s political activities, regard is had to the intentions of the donor and the donee (in making and deciding to keep the donation respectively). The Electoral Commission presently takes these factors into consideration in assessing whether a donation is for political activities. The Standards Clerks would be able to advise members on a case by case basis, as with the existing Parliamentary regime.

71. The Committee has decided that the Bill should import the concept of ‘political activities’ as used in PPERA. It is not proposed that the Bill should set out a specific definition of ‘political activities’. A specific definition could prove overly prescriptive and risks departing from the meaning of this phrase as used in PPERA. The term will be further explained in the revised Code of Conduct, and, as outlined above, the Standards Clerks will be able to advise members. The Committee expects that there will be discussions between the Standards clerks and the Electoral Commission in providing guidance to members in the more difficult cases. Members are aware that when they receive a donation, they should always seek advice if in any doubt about whether it is registrable. Again, this point will be stressed in the revised Code of Conduct.

72. The Committee notes that the Standards Clerks meet each new member at the beginning of a parliamentary session to set out the requirements for initial registration of financial interests. The new regime would form part of that discussion. The Committee also recommends that the Standards Clerks and the Electoral Commission should give joint seminars to members on the combined requirements for registering financial interests.

73. The Committee recommends that guidance on ‘political activities’ should be set out in the revised Code of Conduct for MSPs, and that information should be provided to members at the point of initial registration when the new regime is implemented.

Other changes to the gifts category

74. The Committee expects that the majority of donations required to be registered by PPERA would fit into the gifts category of the register of interest. In addition to the inclusion of the political activities test outlined above, a number of further adjustments are required to incorporate PPERA donations fully.

Gifts - exceptions

75. The introduction of the political activities element to the Interests Act will require some changes to the current exceptions to the requirement to register gifts. There is currently an exception from registering donations towards the expenditure for campaigns for election to party office. With the ending of dual reporting, that requirement will transfer back into the Parliament’s register. However, members will still not be required to register any donations included in an election expenses return (unless such donations are retained for another purpose 35 days after the result has been declared). In addition, members will continue to be exempt from registering any support provided by the services of a volunteer which are provided in that volunteer’s time and free of charge.

76. There is an existing exception relating to registering the costs of travel and subsistence in connection with a member’s attendance at a conference or meeting, where those costs are borne in whole or in part by the organiser of that conference or one of the other parties attending that meeting. The Committee proposes retaining this exception for gifts below £1,500, and for those over £1,500 provided the political activities test is not met – but members will have to register such gifts valued in excess of £1,500, where the political activities test is met.

Gifts that are returned

77. A member may occasionally receive a donation from an impermissible source which then has to be returned to the donor. The Committee proposes that, given that the member is required to return the donation under PPERA, a specific exception from registration is included in the bill to cover these circumstances.

Gifts - conclusion

78. The Committee recommends the adjustments to the gifts category outlined in paragraphs 74 to 77; these changes to the Parliament’s register are necessary to ensure that it incorporates the financial interests that are currently reportable under PPERA.

Overseas visits category

79. Overseas visits may require to be registered under PPERA, depending on the circumstances of the visit. In addition to the inclusion of the political activities test for donations in this category over the value of £1,500, the Committee proposes some changes to existing exceptions to registering overseas visits to make sure this category covers the visits currently caught by PPERA.

80. The Committee’s policy is that the exemptions from registering visits where the costs are met by members, the Parliamentary corporation, the Scottish Consolidated Fund, and those approved prior to a visit by the Parliamentary corporation should remain across the overseas visits category. The Electoral Commission has confirmed that these exemptions would be compliant with PPERA.

81. Overseas visits paid for by MSPs’ close family members are currently exempt from registration in the Parliament’s register. However, PPERA has no equivalent exception for visits paid for by close family members. This exception would therefore no longer apply to overseas visits for political activities over the value of £1,500. However, this exception would be retained for visits made with a value up to that amount, and also beyond it, where the visits are not in connection with a member’s political activities.

82. The Committee recommends that the exception to registering overseas visits paid for by close family members remains but in order to comply with PPERA, the exception does not apply to overseas visits over the value of £1,500 for political activities.

Controlled transactions

83. PPERA requires members to register loans and certain other ‘controlled transactions’ over the value of £1,500 (either singly or in aggregate within a calendar year) for political activities. This includes ‘connected transactions’, which are arrangements where a third party gives security to the person who has entered into a loan or other controlled transaction with the member. It is important to note that the member must intend, at the time of entering into the controlled transaction, to use any of the money or benefit obtained (either in whole or in part) in connection with the member’s political activities.

84. Some examples of controlled transactions, which are currently registrable under PPERA, are a mortgage owed to a bank on an MSP’s constituency office, the loan of cash by a supporter to pay for a party member’s leadership campaign or a credit facility extended to an MSP (e.g. a bank overdraft or a credit card) for political activities.

85. It is worth noting that no MSP has ever reported a controlled transaction to the Electoral Commission since the relevant provisions of PPERA, as amended by the Electoral Administration Act 2006, came into operation in 2006. The Committee therefore does not expect this new requirement to apply in many cases but in order to make the changes to allow dual reporting to be ended, it is necessary to provide for the possibility of this registrable requirement in the future.

86. The Committee proposes to incorporate the requirement to register controlled transactions as a new category in the Parliament’s register, which will require members to register controlled transactions over the value of £1,500 for political activities.

87. The requirement to register controlled transactions does not currently apply to independent members. The Committee has decided that, for reasons of consistency, this requirement should apply to MSPs who are members of political parties and to independent members. The Committee’s Convener has discussed this proposal with the Parliament’s current independent MSPs; they agree that a consistent approach makes sense.

88. Members are also required to report changes to controlled transactions under PPERA. The proposed bill would insert a new section into the Interests Act to set out that requirement. A reportable change can include a change in the participants to the transaction, a variation in the value of that transaction and various other changes to the terms and conditions of that loan, credit facility or other transaction. This provision to report changes to controlled transactions would be subject to the same sanctions (criminal and parliamentary) as the other registration requirements.

Controlled transactions – trade credit

89. The Committee had a concern that trade credit, where a member receives goods or services on account with, for example, 30 days to pay, could be caught by the new controlled transaction category in the register, as such an arrangement could be regarded as a loan of money. Although the Electoral Commission’s guidance indicates that such arrangements are not controlled transactions, PPERA does not address this issue expressly. The Committee wants to avoid the position arising where a member breaches the Parliament’s interests regime for failure to register trade credit. The Committee proposes that the new controlled transactions category therefore makes clear that the provision of trade credit for the purchase of goods and services in the ordinary course of a business does not amount to a controlled transaction, and therefore does not require to be registered.

90. The Committee recommends that a new category is included in the Parliament’s register to cover ‘controlled transactions’ over the value of £1,500 for political activities that are currently reportable to the Electoral Commission under PPERA. The Committee recommends that there be a specific exception for trade credit provided in the normal course of a business and on its usual terms. The Committee also recommends that, as required by PPERA, changes to controlled transactions should be registrable in the Parliament’s register.

91. The Committee recommends that the requirement to register controlled transactions should apply to all MSPs, including independent members.

Aggregation of donations and controlled transactions

92. Under PPERA, members are required to report donations and certain transactions over £500 for political activities that, in aggregate, exceed the reporting threshold (£1,500) within one calendar year, whereas the Interests Act requires gifts and remuneration (received as expenses) to be aggregated over the parliamentary session. Another difference is that the lowest value of donation that contributes towards an aggregate total under PPERA is £500, whereas there is no minimum threshold for contributing to the aggregate required by the Parliament’s register.

93. The Committee proposes to allow for both sets of aggregate provisions in the draft Bill. The existing aggregate provisions only apply to gifts under the Interests Act, whereas under PPERA, members are required to aggregate donations over the relevant threshold across various categories (gifts, overseas visits, controlled transactions and remuneration received as expenses). Provision has been made for this requirement to aggregate donations in the draft bill.

94. As is currently the case, members will be expected to keep track of gifts received and to approach the Standards Clerks for advice where there is an aggregation which could be above the relevant thresholds. The Committee proposes to amend the Code of Conduct for MSPs to set out how these revised rules on aggregations would work in practice.

95. The Committee recommends that, as set out in PPERA, members should be required to report donations and transactions over £500 for political activities that, in aggregate, exceed the reporting threshold (£1,500) within one calendar year.

Timescales for registering interests

96. The Interests Act requires members to register interests within 30 days of acquiring them. Under PPERA, members have 30 days from receiving the donation to determine whether it is from a permissible source, i.e. whether to accept or return the donation. Members then have a further 30 days from the date of acceptance to report the donation. This does not apply to a controlled transaction as members are required to ascertain whether it is from a permissible source before entering into the transaction.

97. The Committee recommends that the existing 30 day registration period in the Interests Act should be retained across the categories, without any additional time period being built in for the additional 30 day period under PPERA. The Committee had concerns that applying different time periods to different categories would be confusing for members, risking late registration. However, members will still have a 30 day period within which to determine permissibility, as long as a donation is registered by the end of that period.

98. This does mean that members would have to be careful not to rush to accept and register a donation, within 30 days, that turns out to be impermissible. However, the Committee believes that, overall, a cross-cutting 30 day period would be more straightforward for members to apply. In addition, this approach would provide more transparency as adopting the PPERA timescales could result in 60 days passing before an interest is registered. Officials at the Electoral Commission have agreed that the Committee’s proposed approach would be sufficient to meet the reporting requirements of PPERA.

99. Members would be reminded in the Code of Conduct for MSPs that where there is any doubt about the permissibility of a donation, it should be returned rather than accepted within the 30 day period.

100. The Committee proposes a minor adjustment to the starting point at which the existing timescale of 30 days is calculated. This is to ensure consistency with the approach taken in PPERA where the 30 day reporting period is calculated from and including the date on which the interest is acquired. The current position under the Interests Act is that day one of the 30 day period is the day after the date on which the interest is acquired. The Committee is proposing a further minor adjustment to timescales for registering an interest acquired on the date on which a member is returned.

Information sharing

101. Once dual reporting ends, the Electoral Commission would still be required to maintain its own register of information on controlled donations and transactions. The intention is that the Electoral Commission will extract the majority of information it needs from the Parliament’s register.

102. The amount of written information which MSPs need to provide under certain categories would be increased to align with PPERA reporting requirements (such as company registration numbers, addresses of individuals making donations, details of the interest rate payable for loans, etc). It is important to stress that the information required would be the same as that currently provided to the Electoral Commission when donations are reported (with the exception that independent members would be required to provide information about controlled transactions, which they are not currently required to do). Some of the information required by the Electoral Commission may be unsuitable for publication, e.g. the addresses of donors who are individuals (for data protection and privacy reasons).

103. The Committee proposes that the Parliament will share certain information with the Commission. It is envisaged that this would include the published register entry information, and information currently obtained by the Commission that is not published (e.g. the addresses of donors who are individuals). Discussions with the Commission are ongoing on the necessary administrative arrangements. The Parliament’s drafting solicitors are considering whether any further adjustment of the draft bill is needed to facilitate the retention and sharing of this additional information.

Enforcement

104. As outlined above, donations and transactions that are currently reportable under PPERA would form part of the Parliament’s registration regime once dual reporting ends. As a result, breaches of the Parliament’s registration requirements relative to those donations and transactions for political activities would be investigated by the Commissioner, and any breaches would be subject to sanctions under the Interests Act.

105. At present, with two separate regulatory regimes, a member could find themselves being investigated by both the Commissioner and the Electoral Commission in relation to non-registration of a donation (although no MSP has been subject to such dual investigation to date). Although the Electoral Commission would continue to investigate permissibility of donations, there are great advantages in non-registration only being investigated by one body (i.e. the Commissioner).

106. Currently, PPERA reporting requirements are enforced by the Electoral Commission using a variety of measures, including the imposition of a fixed penalty fine, and a variable monetary penalty. The Electoral Commission is able to deal with breaches by applying criminal or civil sanctions, depending on the nature of the breach. The Commission is also able to issue compliance notices to individuals who have breached PPERA so that the breach does not continue or recur.17

107. The Committee wrote to the Commissioner seeking his views on whether he would require additional resources for investigating complaints under the new provisions. The Commissioner stated that there is a real possibility of more complex investigations being required, particularly if different minimum thresholds exist under the amended legislation. The Commissioner noted that the Electoral Commission is able to deal with more minor matters by issuing advice and guidance, but that under the Parliament’s interests regime, he would be obliged to carry out a full scale investigation in every case. He therefore concluded that additional resources would be required.18

108. The Committee notes the Commissioner’s comments that the new provisions could result in more complex investigations being carried out by his office. However, as stated above, the Committee believes that there are advantages in one regulator being responsible for all complaints relating to registering financial interests. The public would only have to complain to one body, and members would only be subject to one investigation. The Committee plans to make provision for these additional costs in the financial memorandum which would accompany the bill on introduction.

109. The Commissioner is obliged to report all breaches under the Interests Act that would give rise to a criminal offence to the Procurator Fiscal; this will include breaches relating to donations and transactions currently reportable under PPERA after dual reporting is ended. As discussed below, the Committee was initially minded to remove the criminal offence which attaches to such breaches under the Interests Act, but has now concluded that it should remain. Since the Interests Act came into force in 2006, there have been no prosecutions in relation to breaches of the Interests Act; most breaches have been minor and related to late registration and it has not been considered to be in the public interest to prosecute.

110. After it has been considered by the Commissioner, a complaint is referred to the SPPA Committee which can recommend sanctions, including exclusion from Parliament for a set period of time. Under the new provisions, parliamentary sanctions would be applicable to breaches of the requirements of PPERA.

111. There are parallels between the sanction regimes of the Electoral Commission and the Parliament. For example, the Electoral Commission is required to take enforcement action only where it is considered necessary or proportionate to do so, and can take into account aggravating or mitigating circumstances. Similarly, when a breach is referred to the SPPA Committee, it will consider the circumstances of the breach before recommending a sanction (or deciding not to recommend a sanction where that is not considered to be appropriate). Members are given the opportunity to make representations to the Committee explaining the circumstances surrounding the breach.

112. In producing its own report on the Commissioner’s findings, the Committee must set out whether it has decided to impose sanctions on an MSP. There is an expectation that this should detail any mitigating or aggravating circumstances. In relation to registration and declaration of interests, the Committee will have regard to all relevant considerations, which can include:

  • whether there is evidence that an MSP has deliberately decided to keep concealed information that should be registered/declared;

  • whether the interest is of such substantial value and so clearly relevant to an MSP’s parliamentary role that it is deemed to be obvious that the MSP should have registered;

  • whether an MSP has knowingly reported the value of an interest to be below the threshold for registration despite being aware that the value was in excess of the threshold; and

  • whether a member has repeatedly failed to register/declare, including where they have received advice from the clerks that they needed to do so or have been previously advised by the Committee of the need to register/declare following earlier complaints against them in relation to their register.

113. The Committee may also make recommendations in its report with regard to ensuring future compliance.

114. Under the Committee’s proposals, the enforcement mechanisms under the Parliament’s regime will be applied where breaches arise in relation to donations and transactions that are currently reportable under PPERA.

Independent MSPs

115. When it came to light that there was significant overlap in reporting requirements on individual members (i.e. to the Parliament’s register and the Electoral Commission), section 59 of the Electoral Administration Act 2006 was brought in to remove the requirement for holders of relevant elective office to report donations to the Electoral Commission, unless the person in question is not a member of a political party. If this section is commenced for MSPs, dual reporting would end for MSPs who are members of political parties, but independent members would still be required to report donations to both the Electoral Commission and the Parliament.

116. The Committee’s initial view was that it would not be possible to end dual reporting for independent members as they were expressly excepted from the relevant legal mechanism for ending dual reporting. However, we were concerned at this, since we consider it highly desirable that all members should be treated the same. We have therefore revisited this issue in finalising this report and have concluded that legislative changes should be made to allow the ending of dual reporting for independent members.

117. At this stage in the session, our priority is to introduce the bill as soon as possible so that it can complete its passage this session and the changes can come into effect at the start of next session. However, we will continue to hold discussions on possible changes with the Electoral Commission and the UK Cabinet Office with the intention of including the necessary amendments in the bill as introduced so that dual reporting can be ended for all members.

118. As outlined above, the Committee proposes in any case that a new requirement is placed on independent members that they should register controlled transactions (loans) as is required of members of political parties.

Dual reporting - conclusion

119. The Committee acknowledges that the changes required to facilitate ending dual reporting are complex. PPERA is a complex piece of legislation. However, members are required to comply with PPERA at the moment and bringing the PPERA requirements into the Parliament’s own regime would bring both sets of financial reporting requirements together in one place. In addition, the public would have a fuller picture of a member’s financial interests without having to look in two different places, which would increase transparency. The Committee believes that having an amalgamated regime, with the same sanctions, would make the complaints regime more accessible to the public and would inspire greater confidence in the regulatory process.

Proposed changes to sanctions

Criminal Offence

120. Section 39 of the Scotland Act 1998 requires that provision be made in the Scottish Parliament’s members’ interests regime which proscribes certain conduct (failure to register or declare certain interests, paid advocacy), makes contravention of those provisions a criminal offence, and enables the Parliament to apply its own sanctions for any breach irrespective of whether a person had been found guilty of an offence.

121. As outlined above, where the Commissioner receives a complaint about an MSP and becomes aware that a criminal offence may have been committed, it must be reported to the Procurator Fiscal. Investigations are then halted until the Procurator Fiscal has ended their investigations (either by prosecuting the offence or by deciding not to prosecute).

122. The Scotland Act 2012 amended section 39 to give the Scottish Parliament more flexibility in relation to the imposition of sanctions and the criminal offence attached to failure to register or declare an interest, with policy options ranging from removing the criminal offence to providing for a reasonable excuse for more minor breaches.

123. The Committee consulted on the possibility of removing the criminal offences for failure to register or declare an interest. In its consultation paper, the Committee noted that, to date, breaches of the Interests Act have generally been minor and inadvertent in nature and that more serious breaches would be likely to be caught by other criminal offences, such as fraud or bribery. The Committee also noted existing mechanisms within the Parliament’s own complaints procedures for sanctioning MSPs. The maximum fine for the criminal offence of £5,000 on summary conviction could be perceived to be a lesser sanction than those that can be imposed by the Parliament itself (including exclusion from Parliament or removal of salary for a specified period). The Committee also noted that the Crown Office has never commenced criminal proceedings on any complaint since the Parliament’s inception in 1999, presumably because it has decided that it is not in the public interest to do so.

Consultation responses

124. The proposal to remove the criminal offence of failing to register or declare a financial interest was supported by the Commissioner but strongly opposed by the Scottish Government and the Electoral Reform Society. The Commissioner’s view was that the evidence “is compelling in supporting the need for the proposed change” and “removing the need to refer alleged Interests Act breaches to the Procurator Fiscal would enhance the ability of Parliament to deal quickly and effectively with complaints”.19

125. However, the Electoral Reform Society suggested that, “the lack of prosecutions to date is not a reason to remove the possibility of prosecution, but rather a sign that the current system is robust. Equally the issue of delay is not a sufficient reason to weaken the system. Delays occur in all criminal proceedings, and MSPs should not be exempt”.20

126. The Scottish Government commented at length on this issue, including that:

“The Government would suggest that at a time of heightened interest in public sector propriety and transparency, any removal of punitive aspects of the Members’ interests framework (however well intentioned) would likely be interpreted as introducing ‘leniency’ into the current framework and thereby prove counter-productive.”

And:

“whilst there have been isolated (and typically minor or unintentional) instances of Members being found to have breached the rules, there does not appear to be any substantive evidence of Members finding the existing statute ambiguous, onerous or disproportionate. Indeed, the Government would argue that minor infringements by Members, whilst unwelcome and certainly unfortunate for the Member concerned, do serve to enhance awareness amongst MSPs of the existing rule framework and encourage an upward trend in terms of compliance.

“The Government considers it vitally important for all alleged breaches of the rules to be subjected to rigorous independent scrutiny by the Public Standards Commissioner and if appropriate for the most serious breaches, by the PF and then ultimately a criminal court. These mechanisms, alongside scrutiny by the Committee and the Parliament, all combine to provide a robust framework which appears to have served the Parliament well. Any fundamental alterations to that framework could, in the Government’s view, introduce unwelcome imbalances into what is an effective regime. The Government would therefore suggest that the public interest is best served in maintaining the role of the PF and our criminal courts in this particular area by retaining the existing offences.

“The Government would argue strongly that the current statutory framework, including the existing range of criminal sanctions should not be eroded. Demonstrating adherence to the highest possible standards of probity is an essential tool for elected representatives and reinforces the integrity of the Parliament as a whole. Ultimately, the Government recognises that whether changes are made to the existing Members’ Interests regime is properly a matter for Members' judgement. However, the Government wishes to make clear that it sees no appropriate foundation upon which to justify the removal of the criminal offences concerned and would regard such action as a backward step.”21

127. The Committee has carefully considered the views of the Commissioner, the Electoral Reform Society and the Scottish Government. Although the Committee believes that there are valid reasons for considering this issue, it accepts that the proposal to remove the criminal offence would not enhance the public perception of elected members at this time.

128. The Committee is therefore not recommending the removal of the criminal offence attached to failure to register or declare an interest as part of its bill proposal.

Sanctions set out in the bill

129. Although the substance of the criminal offences set out at section 39 of the Scotland Act 1998 are to remain largely unchanged, they will need to be restated in the Interests Act as they are only preserved until the coming into force of further provision by the Parliament on sanctions.22 The criminal offences are therefore set out in section 9 of the draft bill.

130. The offences in the existing Interests Act are currently set out with cross references to the offence contained in the 1998 Act. Proposed new section 17 (set out in section 9 of the draft bill) sets out the offence provision on the face of the Interests Act. This approach results in an offence provision that is in the one place, making it easier to follow. The intention is that the criminal offence remains the same in substance.

Additional parliamentary sanctions for failure to register or declare an interest and in relation to paid advocacy

131. Changes to section 39 of the Scotland Act 1998 introduced by the Scotland Act 2012 allow the Parliament to make legislative provision on excluding a member from the proceedings and such other sanctions as it considers appropriate.23 This has prompted the Committee to consider afresh what sanctions should be applied for breaches of the registration requirements, failures to declare interests and the paid advocacy offence.

132. The following non-criminal measures are currently available under the Interests Act: the Parliament may restrict or prevent a member’s participation in proceedings relating to the matter in which there was a failure to register or declare an interest under section 15, and exclude a member from proceedings in the Parliament for such period as it considers appropriate under section 16.

133. The Parliament has separate powers under paragraph 2 of Schedule 3 to the 1998 Act to make provision in the Standing Orders on withdrawal of a member’s rights and privileges. Rule 6.4.2 of the Parliament’s Standing Orders states that where the SPPA Committee considers it appropriate, it may recommend that a member’s rights and privileges be withdrawn to such extent and for such period as are specified in the motion. The Parliament will decide, based on the facts and circumstances of each case, what rights and privileges will be withdrawn from an MSP and the duration of withdrawal. Rights and privileges that can be withdrawn include:

  • exclusion of a member from proceedings of the Parliament generally or specifically: for example, proceedings at particular meetings of the Parliament or its committees;

  • exclusion from other activities which a member might normally have a right to attend, such as Cross-Party Groups;

  • withdrawal of a right of access as a member to the Parliamentary complex;

  • withdrawal of a right of access as a member to Parliamentary facilities and services;

  • removal of representational, ceremonial and related privileges which a member might normally enjoy as a member; and

  • withdrawal of a member’s allowance or salary or any part of an allowance or salary.

134. Members’ rights and privileges could be withdrawn under Rule 6.4.2 if there is a breach of the Code of Conduct. The bullet point list above demonstrates the range of responses and measures available to the Parliament, including potentially removing allowances or salary which effectively acts as the imposition of a fine.

135. The consultation suggested that it would be appropriate for a range of parliamentary sanctions to be available for any breach of the interests regime, including failure to register or declare an interest. The Standards Commissioner, the Electoral Reform Society and the Scottish Government all supported this proposal.

136. In addition to the restrictions that may be imposed under sections 15 and 16 of the Interest Act (preventing/restricting participation and exclusion from proceedings), the Committee recommends that a range of other parliamentary sanctions be available to the Parliament where members fail to comply with or contravene the requirements placed on them by the Interests Act. These parliamentary sanctions should be broadly equivalent to the matters currently available to the Parliament under its powers to withdraw rights and privileges. For reasons of consistency with the revised section 39, which envisages further provision on sanctions being made in or under an Act of the Scottish Parliament, it is proposed that these new sanctions be set out in the bill.

137. The Committee has sought to include provision in the draft bill for sanctions that are broadly equivalent to the measures that may be applied under the power to withdraw rights and privileges. In creating statutory sanctions, it is impossible to mirror what may be applied under the power to withdraw rights and privileges exactly (as that is a broad power without specific statutory definition). However, the sanctions in the bill cover the main tools at the Parliament’s disposal where it is exercising its separate power to withdraw rights and privileges.

138. Including these sanctions in the bill means that any or all of these sanctions may be applied by the Parliament should it consider that appropriate in an individual case. There is an exception in the case of the sanctions of withdrawal of salary and allowances, which the Committee proposes should only be applied where a member has been excluded. The Committee believes that it would not be appropriate to withdraw a member’s salary unless they had been excluded from proceedings and/or the parliamentary campus.

Expanding the definition of the criminal offence for paid advocacy

139. Paid advocacy is where an individual uses their position to advocate a particular matter motivated by a payment of some form or a benefit in kind. Section 14 of the Interests Act prescribes that an MSP must not, in consideration of any payment or benefit in kind, advocate or initiate any cause, or matter, on behalf of any person or urge any other member to advocate or initiate any cause, or matter, on behalf of any person. No MSP has ever been found to have breached these rules.

140. The Committee is very clear, given the gravity with which paid advocacy should be treated, that the criminal offence for paid advocacy is appropriate. Indeed the Committee is recommending an expansion to the scope of the criminal offence.

141. The Committee’s consultation paper proposed that the definition of paid advocacy should be amended for greater consistency with the Bribery Act 2010. What was of particular note to the Committee was the incorporation of the act of agreeing to receive inducements within the offence of being bribed under section 2 of the Bribery Act. The paid advocacy offence currently requires actual receipt of an inducement by an MSP (or by an MSP’s partner, where this results in some benefit to the MSP). It does not currently incorporate payments or benefits in kind that a member agrees to receive.

142. The consultation proposed that if an MSP is found to have agreed to undertake advocacy for financial gain or to have encouraged a fellow MSP to do so, they should be considered guilty of an offence regardless of whether inducements have actually been received. The Commissioner, the Electoral Reform Society and the Scottish Government all supported this proposal.24

143. The Committee recommends that if an MSP is found to have agreed to undertake advocacy for financial gain or to have encouraged a fellow MSP to do so, they should be considered to be guilty of an offence regardless of whether inducements have actually been received.

Rectification procedure

144. In its consultation paper, the Committee discussed the possibility of introducing a rectification procedure. The Committee considered that this could be a simple way of allowing MSPs who admit minor failures to register or declare interests to correct their mistake without requiring the Commissioner to carry out an investigation into the matter. Such a procedure would allow minor registration and declaration breaches to be rectified without having to hold formal investigations.

145. The Committee notes that, if it adopted this approach, the Parliament would be moving away from the current division of roles and responsibilities between the Commissioner and the Committee. At present the Commissioner is not responsible for making recommendations based on the seriousness or otherwise of an MSP’s actions; this is entirely a matter for the Committee based on the Commissioner’s findings in fact.

146. In response to this proposal, the Scottish Government was concerned that it risked undermining the integrity of the complaints system by introducing greater complexity and some blurring of roles and responsibilities.25 Similarly, the Electoral Reform Society had concerns about this proposal diluting the powers of the Commissioner, stating, the involvement of the Commissioner and the subsequent resource allocated to any inquiry should be restricted by MSPs not committing errors which require rectification, rather than allowing for ‘minor’ errors. Saving time and money is an admirable objective, but it should not be met by weakening the investigative powers of the Commissioner, or making assumptions about what is a minor error and what is not.”26

147. The Committee has considered the responses received to the proposal to introduce a rectification procedure and accepts the argument that it could be unhelpful in confusing the roles of the Commissioner and the Parliament. The Committee also acknowledges that such a proposal could reduce the confidence of the public in the Parliament’s regulatory processes.

148. Based on the responses received in consultation, the Committee is not minded to include a proposal for a rectification procedure in the bill.

Motion of Censure

149. A motion of censure is a motion reflecting criticism of an MSP which could be agreed by the Parliament as a whole. The motion of censure can be seen to be a means of public “naming and shaming”.

150. The Committee considers that a motion of censure could serve as a useful middle ground where the Committee found a member to be in breach but where it did not consider the breach to be sufficiently serious to justify a serious sanction such as exclusion or removal of other Parliamentary privileges.

151. Such a motion could be debated, providing the MSP who is the subject of the motion with a public opportunity to apologise in person (they may have already expressed regret to the Commissioner or Committee in responding to the original complaint).

152. This is a procedure adopted in a number of other places including the Northern Ireland Assembly and the Committee considers that it would be a useful addition to the complaints process in the Scottish Parliament. The Commissioner, the Electoral Reform Society and the Scottish Government all supported this proposal.27

153. The Committee recommends that a motion of censure should be made available to the Parliament as an alternative response where the Parliament does not think a serious sanction such as exclusion or removal of other parliamentary privileges is appropriate.

Retention of previous registers

154. The proposed Committee Bill would provide an opportunity to revisit the arrangements for publication and retention of the register of interests. The existing Interests Act states that “the Clerk shall keep a copy of old entries for a period of 5 years from the date of making the last amendment”.28 This means that currently, members’ registers of interests are disposed of when the five year period has passed.

155. A number of MSPs in the initial registration process at the start of Session 4 commented that they did not consider the prejudice test applied to a number of interests registered in the previous session but that since their old register from the previous session was no longer published they wished to apply the prejudice test to ensure these interests remained in the public domain.

156. A snapshot of registers from the previous session is now available online to seek to address this but the Committee considers that it would be helpful to amend the Interests Act to make clear that registers may be retained for a longer period.

157. The registers provide a history of information such as members’ external employment or significant gifts to members which is of genuine public interest. Researchers may require access to registers from earlier sessions in the future and it would provide a more complete picture of the Parliament and its members to make them available as a historic record.

158. The Commissioner, the Electoral Reform Society and the Scottish Government all supported the proposal to amend the legislation to allow records of previous registers to be retained for a period longer than the current five year one.29

159. The Committee has considered what would be a reasonable timescale for keeping members’ registers of interests. Data protection legislation would prevent the Parliament from retaining registers indefinitely, as there would require to be a strong justification for holding on to this information. The Committee notes that records, such as registers of interests, can be passed to the National Archive to be retained for historical purposes.

160. The Committee notes that the current five year period for retention would not cater for the retention of the register of a member who is not re-elected in one session but is returned in the following session. In such circumstances, a member would not be able to refer back to their previous register for interests. The Committee considers this to be a good practical reason for extending the retention period beyond the existing five years for transparency related purposes.

161. The Committee believes that a ten year retention period for the old entries would be a reasonable length of time for the Parliament to hold on to this information. For some flexibility (e.g. in dealing with the members who have resigned in the course of a session whose old entries might potentially be kept for a little longer than the ten year period), the Committee recommends that a minimum period of 10 years is set out in the Interests Act. However, the general intention is that old entries would only be held for the ten year period and then transferred to National Records for Scotland for historic preservation.

162. The Committee recommends that past registers are retained for a minimum of 10 years, to give an accessible record of members’ current and previous financial interests. The registers will be archived and held in the National Archives of Scotland as historic records.

Commencement, consequential and transitional provisions

163. The intention is that the bill’s provisions be commenced in the 2016 dissolution period, so that the changes they introduce are in place for the beginning of the next parliamentary session. Solicitor’s Office is working on the draft commencement provisions, together with the bill’s consequential and transitional provisions, to be included in the bill as introduced.

Committee Bill proposal - final conclusion

164. The Committee believes that the proposals aimed at eliminating dual reporting would improve the transparency of members’ financial interests for the public and would also assist members in complying with requirements to report financial interests. In addition, the Committee believes that the proposed additions to, and enhancing of sanctions for breaches of the Interests Act, and the widening of the paid advocacy offence, would strengthen the Parliament’s standards regime and therefore increase public confidence in it.

165. Accordingly, the Parliament is invited to agree this proposal for a Committee Bill.

ANNEXE A: DRAFT INTERESTS OF MEMBERS OF THE SCOTTISH PARLIAMENT (AMENDMENT) BILL

ANNEXE B: COMMITTEE CONSIDERATION OF BILL

The Standards, Procedures and Public Appointments Committee issued a consultation on the Bill on 24 April 2013, which closed on 22 July 2013.

The Committee received three responses to the consultation—

The Committee wrote to all MSPs in January 2014 to inform them of their policy intentions and to invite comments—

The Committee wrote to the Commissioner for Ethical Standards in Public Life in Scotland asking whether there would be additional costs arising from the proposals—

The Commissioner replied as follows—

The Committee then wrote to the Commissioner for further information—

The Commissioner replied as follows—

The Committee considered a number of policy papers in developing the bill at the following meetings—

20 December 2012 [criminal offences]
17 January 2013 [sanctions]
12 September 2013 [approach to the Bill]
26 September 2013 [sanctions]
10 October 2013 [dual reporting]
19 December 2013 [dual reporting]
8 May 2014 [dual reporting]
5 June 2014 [thresholds for registering interests]
2 October 2014 [dual reporting]
6 November 2014 [dual reporting]
4 December 2014 [sanctions]
29 January 2015 [independent members]


Any links to external websites in this report were working correctly at the time of publication. However, the Scottish Parliament cannot accept responsibility for content on external websites.

Footnotes:

1GRECO: Corruption prevention in respect of members of Parliament, judges and prosecutors, Evaluation report (GRECO report) http://www.coe.int/t/dghl/monitoring/greco/evaluations/round4/Eval%20IV/GrecoEval4(2012)2_UnitedKingdom_EN.pdf

2 GRECO report, paragraph 46

3 House of Commons, Committee on Standards, Guide to the rules relating to conduct of members, GRECO report and other developments, First Report of session 2012-13
http://www.publications.parliament.uk/pa/cm201213/cmselect/cmstandards/724/724.pdf

4 House of Lords, Committee for Privileges and Conduct, Thirteenth Report of Session 2013–14, Amendments to the Code of Conduct and the Guide to the Code, HL Paper 123

5 Standards, Procedures and Public Appointments Committee, 9th Report 2010, MSPs’ registrable interests: Proposed changes to the Code of Conduct, paragraph 3 http://archive.scottish.parliament.uk/s3/committees/stanproc/reports-10/stprr10-09.htm#report

6 GRECO report, paragraph 45

7 Code of Conduct for MSPs, section 7.2.6

8 Code of Conduct for MSPs, section 5.1.6

9 GRECO report, paragraph 41

10 Scottish Government, the Electoral Reform Society Scotland and the Commissioner, written evidence

11 Commissioner, written evidence

12 House of Commons Standards and Privileges Committee - Fourth Report, Session 2008-2009, Dual Reporting and Revised Guide to the Rules
http://www.publications.parliament.uk/pa/cm200809/cmselect/cmstnprv/208/20802.htm

13 Further to sections 59 and 77 of the Electoral Administration Act 2006

14 A permissible donor or lender must be one of the following: an individual registered in a UK electoral register (including bequests); a UK registered company which is incorporated within the European Union (EU) and carries on business in the UK; a Great Britain registered political party; a UK registered trade union; a UK registered building society; a UK registered limited liability partnership that carries on business in the UK; a UK registered friendly society or a UK based unincorporated association that carries on business or other activities in the UK.

15 Donations and loans: guidance for regulated donees in Great Britain, The Electoral Commission (September 2006, as revised at January 2010) – (Electoral Commission Guidance)
http://www.electoralcommission.org.uk/__data/assets/electoral_commission_pdf_file/0019/13708/026-regulated-donees-guidance-final.pdf

16 Electoral Commission Guidance, paragraph 2.17

17 Electoral Commission, Enforcement policy
http://www.electoralcommission.org.uk/our-work/roles-and-responsibilities/our-role-as-regulator-of-political-party-finances/making-an-allegation

18 Letter from Commissioner for Ethical Standards in Public Life in Scotland (accessed 5 March 2015)

19 Commissioner, written evidence

20 Electoral Reform Society, written evidence

21 Scottish Government, written evidence

22 Section 7(3) of the Scotland Act 2012

23Scotland Act 2012, Section 7

24 Scottish Government, Electoral Reform Society and Commissioner, written evidence

25 Scottish Government, written evidence

26 Electoral Reform Society, written evidence

27 Scottish Government, Electoral Reform Society and Commissioner, written evidence

28 Interests Act, section 10

29 The Commissioner, the Electoral Reform Society and the Scottish Government, written evidence.

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