Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report

EXECUTIVE SUMMARY

1) Summary of Decision Area

1.1. A decision is sought as to the terms of the Council's response to consultation by the Department for Communities and Local Government on proposed amendments to the Accounts and Audit Regulations. The main effect of the proposed changes would be to require local authorities to disclose in their annual accounts greater details of the remuneration of senior officers.

2) Issues Covered in Report

2.1. The report considers whether the case has been made for the level of disclosure proposed, the groups of staff to which the proposed requirement would apply, and the extent of the information to be disclosed.

3) Recommendations

It is recommended that:

3.1. A response to the consultation in the terms set out in the report be approved.

MAIN REPORT

1) Contextual Information

1.1. The Department for Communities and Local Government ("CLG") is consulting on a proposal to amend Regulation 7 of the Accounts and Audit Regulations 2003 ("the Regulations"). The effect of the proposal would be to extend the requirement on public bodies, when producing their annual statement of accounts, to include additional information about the remuneration of senior officers.

2) Current Position

2.1. The Regulations currently require relevant public bodies (that have expenditure or income in excess of £1million per year) to include, within their annual statement of accounts, a report of the number of employees whose remuneration falls into particular brackets. This requires a count of the number of staff earning over £50,000 a year in £10,000 bandings. The information disclosed by the Council in its annual accounts includes the value of employee pension contributions.

3) What is being proposed

3.1. CLG proposes that the current requirement will be extended to require more detailed remuneration reporting for senior officers.

3.2. It would be made a requirement to include in the annual accounts a report of the salary, bonuses, additional payments, compensation/ex gratia payments, benefits in kind, and pension information for each `senior' employee from 2009/10. It is stated that the amendment would bring the remuneration reporting requirements for public bodies into line with those for central government and listed companies.

3.3. It is also proposed to adjust the reporting requirement to count the number of employees earning £50,000 or more per annum in bands of £5,000, rather than £10,000.

4) To which officers would the new requirements apply?

4.1. It is proposed that the new requirements would apply to the Head of Paid Service and those officers who report to him directly. Within the County Council, this would mean the Chief Executive, Chief Officers, and certain heads of service and administrative posts within the Chief Executive's Department.

5) The Council's current position

5.1. The question of whether details of remuneration of senior officers should be disclosed, under the Freedom of Information Act, was considered by the Governance Committee on 26 June 2008. The position agreed by the Committee was that information relating to specific named staff should not be made public, on the grounds that this was personal information. This position was agreed having regard to guidance from the Information Commissioner.

5.2. It was noted that the accounting requirements of the current legislation require publication of the number of staff earning over £50,000 a year in £10,000 bandings. It was felt that this struck an appropriate balance between the public interest in transparency and accountability in the use of public funds, and the public interest in protecting the privacy of individuals.

5.3. In addition to publication of the information required by current legislation, a generic table of job categories and salaries for Council staff earning above £50,000, which does not identify individual post holders, has been published.

5.4. The effect of the proposed changes would be that the Council could no longer decline to publish the specific details of senior officers' remuneration, with effect from 2009/10.

5.5. A copy of this report will be circulated amongst staff who would be affected by the proposals for comments, which will be reported orally at the decision meeting.

6) Comments on the Proposal Generally

6.1. The current position, as to whether details of officers' remuneration should be published, is governed by the Freedom of Information Act. Guidance issued by the Information Commissioner provides that disclosure should only be to the extent necessary to fulfil a legitimate public interest. More senior staff who are responsible for major policy and financial initiatives should expect greater scrutiny, whereas disclosure of exact salary information of more junior staff will nearly always be unfair.

6.2. The Guidance states that particular factors should be taken into account in deciding whether to disclose salary information. These include specific concerns that individual officers may have as to the effects of their personal information being published.

6.3. The Act and the Information Commissioner's Guidance provide a framework within which individual public authorities can make their own decisions as to the level of disclosure required in the public interest, taking into account local factors and individual concerns. CLG's proposals would mean that this is no longer a decision made locally taking account of all relevant factors, and that remuneration details are published as a matter of course.

6.4. The proposed amendments are justified on the basis that central Government and listed companies in the private sector are subject to the same reporting requirements. However, there is no reason why parity of treatment with such other bodies should not be a factor to be taken into account, along with other relevant factors, in making a decision in the overall public interest. There is another subtle difference in that, unlike many Council staff, these individuals do not live in the local community served by the body for which they work, and within which the information is likely to receive public attention, resulting in greater risk of intrusion into family life - e.g. at schools.

6.5. It is submitted therefore that decisions as to level of disclosure should continue to be made by public authorities, balancing the relevant public interest factors, rather than being directed through the revised accounting requirements being proposed.

6.6. However, in the event that it is decided to proceed with amendment of the Regulations, the following comments apply as to the extent of this.

7) Comments on the Scope of the Remuneration Information to be Disclosed

7.1. Views are sought on whether the proposed areas of reporting , when presented together, will provide a true and fair view of each senior officer's package of benefits.

7.2. Publication of salary and other payments is straightforward. The concern is around the publication and understanding of pensions and the so called pension pots.

7.3. There has been a recent Freedom of Information request to ask how many pension pots exceed £1m. This is in connection with the calculation of the lifetime allowance for taxation purposes (albeit the actual limit is higher at £1.6m) . This represented just 9 active members of the whole Hampshire Pension Fund - 0.02% of the membership. For a defined benefit scheme such as the Local Government Pension Scheme ("LGPS"), it is based on valuing benefits at £20 per each £1 of pension paid, irrespective of a person's age. For the purposes of valuing benefits all money purchased benefits will be taken at their asset value. So there are some difficulties in comparison if assessed on that basis, but it would at least be a consistent calculation, even if open to misleading interpretation because of the resulting size of the sums.

7.4. However the Government's proposal would mean publication of the total value of an individual's pension benefits based on their accrued length of service and pensionable pay, at the beginning and end of the year, and projected to the individual's normal retirement age i.e. the current accrual and future projection. It is highly dependant upon length of service and age as well as pay. It can provide misleading information between officers within a local authority let alone between authorities. It is also based on personal decisions to move in or out of the LGPS depending on the career path. Someone being appointed a chief officer from the private sector with a few years' service will appear to have a very low pension entitlement compared with a long serving and perhaps older individual, although the private sector individual might have a much higher overall pension taking other pensions schemes into account. Despite this qualification stating the annual pension at normal retirement age is probably more understandable than the calculation for lifetime allowances in tax terms.


7.5. It is suggested therefore that information as to pension entitlements be excluded from the reporting requirements.

8) Comments on the Practicality of Gathering the Information

8.1. Views are sought on whether consultees foresee any barriers or costs to collecting and reporting the proposed areas of remuneration information in published annual accounts.

8.2. Given the qualifications about the difficulties of interpreting and comparing pensions accruals and the personal nature of that pension disclosure, it would otherwise not be too difficult to comply for the most senior people in the Authority.

9) Comments on which Officers should be affected

9.1. Comments are sought on how to define "senior officer" i.e. to which staff should the new disclosure requirement apply. Comments are sought on whether this should include those acting at a senior level whose position may not be permanent but who make recommendations or take decisions about public money, for example interim managers and consultants.

9.2. It is suggested that the range of officers whose information would be included in the published details is too broad. Within the Council's current structure, this would apply not only to members of CMT, but those within the Chief Executive's Department who report directly to the Chief Executive as heads of internal services or in administrative or secretarial roles. Many of such posts are not (within the wording of the Information Commissioner's Guidance on the point) "responsible for major policy and financial initiatives" and do not have a "public profile or public-facing role". Further, this would impose a requirement that is wider than that applying to the civil service and the private sector. It is submitted that such posts should be excluded from the proposed reporting requirements.

10) Comments on Reporting Numbers of posts in bands of £5,000

10.1. Comments are sought on the proposal to adjust the reporting requirement to count the number of employees earning £50,000 or more per annum in bands of £5,000, rather than £10,000.

10.2. The proposal would increase the burden and detail required, and it is submitted that £10,000 bands remain more than adequate. Further, £50,000 is too low a starting point and we would suggest that this should be set at £100,000, to focus on the more senior and higher earning people in public authorities. The private sector compliance argument isn't applied here and on that basis it could be argued that the bandings are not required at all if the other method of disclosure for senior officers is introduced.

11) Outline of Options

11.1. Option 1

The Council can respond to the consultation so that its views can be taken into account in the making of a decision as to the proposed changes to the legislation.

11.2. Option 2

The Council can choose not to respond.

12) Option Analysis / Comparison:

12.1. While there is no guarantee that the Council's views expressed in the consultation will be accepted, it is felt appropriate to register the Council's views upon these matters. Consultation on the subject of disclosure of remuneration details, undertaken previously with senior staff, has identified significant concerns about the publication of personal information concerning those staff and their families, invasion of privacy, and as to the use to which this information may be put by the media. Given the strength of staff feeling on the matter, it is considered appropriate to reflect this in a response to the consultation.

13) Conclusions

13.1. It is submitted that decisions as to level of disclosure should continue to be made by public authorities, balancing the relevant public interest factors, rather than being directed through the revised accounting requirements being proposed. However, in the event that it is decided in principle to amend the Regulations, the disclosure requirements should be limited in the ways suggested above.

14) Recommendations

Please see Executive Summary for recommendations.

CORPORATE OR LEGAL INFORMATION:

IMPACT ASSESSMENTS:

1. Equalities Impact Assessment:

a) No significant impact

2. Impact on Crime and Disorder:

a) No significant impact

3. Climate Change:

a) How does what is being proposed impact on our carbon footprint / energy consumption?

· No significant impact

b) How does what is being proposed consider the need to adapt to climate change, and be resilient to its longer term impacts?

· It has no significant impact