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1. Summary

1.1 This report sets out the potential costs arising from the recommendations of the Independent Remuneration Panel. It also identifies some of the issues the Committee may wish to consider in accepting or amending the recommendations of the Panel.

1.2 The current scheme of councillors' allowances was introduced in October 2000, but most of the higher band and special responsibility allowances were actioned in September 2001 when the model of Cabinet with Leader took effect.

1.3 The appendix shows the scheme of allowances for 2001/02 together with the proposals for 2002/03 set out by the Independent Remuneration Panel.

1.4 The Standards Committee can accept or amend the recommendations of the Independent Remuneration Panel, but must recommend to the County Council the Hampshire scheme for councillors' allowances for 2002/03. In doing so the Committee must have regard to the advice of the Independent Remuneration Panel, but may also wish to consider some of the other issues set out in the report.

1.5 The main issue the Committee may wish to consider is the extent of any increase in allowances for inflation. An increase in line with the national pay award for staff (expected to be at least 3% from April 2002) may be more appropriate than one related to the increase in the retail price index (RPI) (5% since July 2000) as recommended by the Panel.

2. Scheme for 2002/03

2.1 The Independent Remuneration Panel made a number of recommendations. The following paragraphs indicate some of the issues the Committee may wish to consider in reaching its decisions.

Inflation

2.2 The Independent Remuneration Panel recommended that there should be no change in the basic allowance in the current review beyond an uprating for inflation since the adoption of the present scheme. It recommended that the Council should consider incorporating an automatic annual uprating provision in the scheme of allowance to take account of inflation, in line with the retail price index rise of 5% since July 2000. The Panel also recommended that there should be no change in the higher band allowances beyond an uprating for inflation, but that serious consideration would be given to reviewing these allowances next year.

2.3 An alternative would be to link councillors' allowances to the national Local Government pay award. Since the allowances are treated as `pay', it would seem more logical to make this link. The Committee might also wish to adopt this principle as a policy for future years and consider each year whether to uprate allowances in line with the national pay award as there appears to be some doubt about automatic annual inflation increases within the regulations. The pay award from April 2002 is currently the subject of negotiation, but it seems likely that it will be at least 3%.

Basic Allowances

2.4 The basic allowance is currently £10,000 per annum. It was determined by the Independent Remuneration Panel in July 2000 and paid from October 2000. The Independent Panel recommended no change to the basic allowance except to increase it for inflation. The Panel recommended updating the allowances for inflation based on the increase in the retail price index of 5% from July 2000 (£500 each). This would increase the allowance to £10,500 from 1 April 2002.

2.5 Alternatively, the Committee may consider it more acceptable for the increase to be linked to the local government pay award, at least 3% (£300 each) from April 2002. If it was linked to both the April 2001 and April 2002 pay awards, the increase would be 3% plus 3%, or £600 each (rounded), which might be viewed as too large, year on year compared with the Panel's recommendation.

2.6 The Committee may therefore wish to consider whether to:

· Accept the Independent Remuneration Panel's recommendation of a 5% inflation rise, or

· Recommend in principle an uplift for inflation in line with the national pay award for local government staff as more in line with "pay", and consider each year whether to apply this percentage increase from each April, and

· If an annual uprating in line with the national pay award is preferred, then whether to apply the first increase from either:

- April 2001, or

- April 2002, or

- April 2003.

Higher Band and Special Responsibility Allowances

2.7 The Independent Remuneration Panel recommended no change to the levels of higher band allowances for Cabinet members or other special responsibility allowances (with specific exceptions described below), except to increase them for inflation.

Cabinet

2.8 Since the higher band allowances for Cabinet members were first paid in September 2001, the Committee may consider that it is too soon to uprate the allowances for inflation. The higher band allowances could therefore also be linked to the national Local Government pay award but, say from April 2003, with no change for 2002/03.

Cabinet members without Portfolio

2.9 The Independent Remuneration Panel recommended special responsibility allowances of £10,000 each for the two Cabinet members without portfolio, backdated to 1 September 2001. The original scheme was costed assuming such allowances might be payable.

Opposition Group Leaders

2.10 The Independent Remuneration Panel agreed that there was a strong case to reduce the differential for the responsibility allowances between the Leader of the Liberal Democrat and Labour groups. However, the Panel recommended a formula (£5,000 plus £250 for each county councillor on the group) that would have cut the allowance of the Liberal Democrat Group Leader from £10,200 to £9,750. If the Committee would prefer not to reduce the amount payable, a slight arithmetical adjustment to £5,000 plus £275 per group member would protect the current position of the Liberal Democrat Leader but also increase slightly further the allowance payable to the Labour Leader. The calculation can be summarised as follows:

2.11 The Committee may wish to consider which of the three options shown above it wishes to adopt and then backdate any changes to September 2001 as recommended by the Panel.

Vice-Chairmen Policy Review Committees

2.12 The Independent Remuneration Panel recommended that no special responsibility allowances should be paid to Vice-Chairmen of Policy Review Committees. Although the Panel was conscious of the increased responsibility that might be accepted by the Vice-Chairman in the absence, perhaps through illness, of the Chairman, the Panel was of the opinion that there should be an expectation that the basic allowance included an "acting-up" element for occasionally assuming increased responsibilities. Nonetheless, the Panel recommended that where the Vice-Chairman is expected to assume the full responsibility for an appreciable period, he or she should also receive the Chairman's rate of special responsibility for that period. The County Council would be expected to establish the protocols for temporary substitution of responsibility, and if the payment of two allowances for effectively the same job should be permitted.

2.13 The Committee will need to decide if it wishes to determine such a payment to Vice-Chairmen assuming full responsibility and the protocol for doing so. One approach might be to substitute the special responsibility allowance and pay it to the Vice-Chairman rather than the Chairman for each full Policy Review Committee meeting chaired by the Vice-Chairman (this could be a pro rata amount per meeting or perhaps an agreed percentage for the year).

Standards Committee

2.14 The Independent Remuneration Panel did not recommend an allowance for the Chairman of the Standards Committee and suggested it should be kept under review. The Committee may consider that there is an additional responsibility attached to this role which merits more recognition than payment of the basic allowance. The Committee may therefore wish to review the position now, for example by considering the role and allowance in relation to the Chairman of the Regulatory Committee, who receives £5,000.

Regulatory Committee

2.15 The Independent Remuneration Panel recommended that no special responsibility allowance should be payable to opposition spokespersons on the Regulatory Committee.

The Hampshire Fire and Rescue Authority (HFRA)

2.16 The Independent Remuneration Panel recommended that opposition spokespersons on the HFRA should receive the same allowances as opposition spokespersons on Policy Review Committees. These allowances are only payable if the post holders are County Councillors.

3. Chairman of the County Council

3.1 The allowances of the Chairman and the Vice-Chairman of the County Council are not part of the formal scheme of allowances. Although these allowances are also treated as `pay' their primary purpose is to defray expenses incurred by the Chairman and Vice-Chairman.

3.2 Since 1997 these allowances have been linked to the national Local Government pay award. The allowances (pending the April 2002 pay settlement) are currently £14,387 and £2,877 respectively. It is not proposed to change these arrangements.

4. Financial implications

4.1 In summary the financial effect of the proposals is as follows:

4.2 The 2002/03 budget includes an allocation of £31,000 in the inflation contingency for a 3% increase in all members' allowances.

4.3 Other variations in allowances, as recommended by the Independent Remuneration Panel, or as amended by the Committee, would need to be considered by the Cabinet in July with the closure of the final accounts for 2001/02.

4.4 Provision can be made in the 2001/02 final accounts for the backdated element of the changes in special responsibility allowances for non portfolio holders in the Cabinet and the Labour Party spokesperson's allowance.

Appendix

Hampshire County Council

Councillors' Allowances Scheme