PP 70/10

STANDING COMMITTEE ON ECONOMIC INITIATIVES

FIRST REPORT

2009-2010

REPORT OF THE STANDING COMMITTEE ON ECONOMIC INITIATIVES

The Hon S C Rodan SHK (Garff) Chairman

Mr C G Corkish MHK (Douglas West)

Mr G D Cregeen MHK (Malew & Santon)

Mr T M Crookall MHK (Peel)

Mr J P Watterson MHK (Rushen)

At the sitting of Court in July 1999 it was resolved that a Standing Committee of five Members be established. As amended in January 2004, the remit of the Committee is -

To monitor and consider economic, fiscal and monetary initiatives of the European Union, international agencies and states, and economic factors generally, which may affect the and to report with or without recommendations each July, and such other times as the Committee deem necessary.

The powers, privileges and immunities relating to the work of a committee of Tynwald are those conferred by sections 3 and 4 of the Tynwald Proceedings Act 1876, sections 1 to 4 of the Privileges of Tynwald (Publications) Act 1973 and sections 2 to 4 of the Tynwald Proceedings Act 1984.

Copies of this Report may be obtained from the Tynwald Library, Legislative Buildings, Finch Road, Douglas, Isle of Man, IM1 3PW (Tel 01624 685520, Fax 01624 865522) or may be consulted at www.tynwald.org.im

All correspondence with regard to this Report should be addressed to the Clerk of Tynwald, Legislative Buildings, Finch Road, Douglas, Isle of Man, IM1 3PW

FIRST REPORT OF THE STANDING COMMITTEE ON ECONOMIC INITIATIVES JUNE 2010

To The Hon Noel Q Cringle MLC, , and the Hon Keys and Council in Tynwald assembled

INTRODUCTION

1. On Wednesday 17th February Tynwald agreed that Government functions be reorganised under nine Departments, six of which will be entirely new. The new structure was put in place on 1st April 2010; the re-structuring was designed to enhance the focus which the Government gives to economic activities and to social care.

2. One member of this Committee (Mr Watterson) submitted a paper to us in March, which we print as the Annex to this report. We note that he has put down a motion for consideration by Tynwald Court in June as follows:

That a system of Standing Committees relating to the work of Government Departments should be established; and that the Tynwald Management Committee should investigate and report on the best means of establishing such a system.

3. One of the most widely recognised benefits claimed or advocated for the new structure is the enhanced concentration on economic development which the

3 new Department of Economic Development can carry forward. Clearly, in practical terms the work of this Committee will need to take this new Department’s work into account, whatever decision is made about the structure of Tynwald committees. We intend to concentrate this Committee’s efforts on scrutinising the new Department of Economic Development, which has a key role to play in the development of the Island's economy.

4. Nonetheless, we are aware that several committees have a potentially overlapping interest in this area of work. Careful thought needs to be given to the division of responsibility between the Public Accounts Committee, the Scrutiny Committee and the Economic Initiatives Committee. We would not wish to duplicate the work of other committees and either run the risk of placing too great a burden on the civil service or create a confusing message arising from possibly conflicting conclusions and recommendations. The detailed scrutiny of the actions of one Department will necessarily create areas of substantial overlap within the current committee structure and we hope that the Court will consider that issue when it debates Mr Watterson’s motion, the principle of which we support.

S C Rodan (Chairman) C G Corkish G D Cregeen T M Crookall J P Watterson June 2010

4 ANNEX 1

Paper for Standing Committee on Economic Initiatives MHK Background 1. In 2006, a Select Committee of Tynwald investigated the structure of scrutiny within Tynwald.1 That report made a significant number of recommendations (see Appendix 1) and essentially forms the basis for our current scrutiny system in providing for the following bodies: 1.1. Public Accounts Committee (PAC) 1.2. Scrutiny Committee (SC) 1.3. Standing Committee on Economic Initiatives (SCEI) 1.4. Standing Committee on Constitutional Matters (SCCM) the remits for most of these committees are in Appendix 1.

2. In brief, this structure provided for: 2.1. the PAC to oversee the use of Government funds 2.2. the Scrutiny Committee to review secondary legislation 2.3. the Standing Committee on Economic Initiatives to look at initiatives and legislation of the European Union, international agencies and states, and economic factors generally, which may affect the Isle of Man 2.4. the Standing Committee on Constitutional Matters to report on the Council of Ministers’ policy and approach to matters of constitutional importance, and any treaties, international agreements etc

3. In February 2010, the Council of Ministers published their proposals for a significant change in the structure of Government. This therefore seems like an ideal time to review the success of the present structure and consider alternatives going forward.

Present Scrutiny Structure 4. The present structure splits the work of Tynwald Court according to its type, i.e.: 4.1. Financial (PAC) 4.2. Secondary legislation (SC) 4.3. Economic and European (SCEI) 4.4. Constitutional (SCCM)

1 Select Committee on Scrutiny and the Functions of the Standing Committee on Expenditure and Public Accounts http://www.tynwald.org.im/papers/reports/2005-2006/r0027.pdf

5 This still leaves significant gaps between the issues that Tynwald Members scrutinise, debate and vote on and the scrutiny structure that assists the non- Ministers in undertaking that. Examples of areas left uncovered include Council of Ministers appointments, Departmental policies not established by way of Tynwald decision and the activities of Departments. Scrutiny of these functions are undertaken on an ad hoc basis via questions in Tynwald Court or the branches.

5. Whilst the PAC enjoys considerable status and has an equivalent in most Commonwealth jurisdictions, the picture is far more mixed with regards to other committees. The UK’s European Scrutiny Committee considers each of the approximately 1,100 pieces of EU legislation, assesses their impact and determines which are debated.

A Government focussed alternative? 6. A more common structure would be to shadow the work of one or more Government Departments. This would cover their finances, primary and secondary legislation, appointments, strategy and operations.

7. A successful array of shadowing committees exists in many Commonwealth models, with the UK being the most easily identifiable. However, as the Manx Government is considerably smaller in overall scale, it is feasible that a Manx system of select committees could shadow the work of a number of Government Departments.

8. Under the new structure, the is made up of the following bodies: 8.1. Economic Development 8.2. Social Care 8.3. Health 8.4. Community, Culture and Leisure 8.5. Environment 8.6. Infrastructure 8.7. Treasury 8.8. Home Affairs 8.9. Education 8.10. Chief Secretary’s Office 8.11. Personnel & Executive Agencies

9. A proposed structure could therefore be developed along a significant number of permutations. A simplistic example could be (accompanied by approximate remit):

6 9.1. Select Committee for Constitution and Executive Government  Chief Secretary’s Office  Constitutional Matters  Personnel Office  Executive Agencies (e.g. Data Protection, Industrial Relations, Appointments Commission) 9.2. Standing Committee on the Economy  Treasury  Department of Economic Affairs 9.3. Standing Committee on Health & Social Care  Department of Health  Department of Social Care 9.4. Standing Committee on Regulation & Environment  Department of Home Affairs  Department of Environment, Food & Agriculture 9.5. Standing Committee on Education & Communities  Department of Education  Department of Communities, Culture & Leisure  Manx National Heritage 9.6. Standing Committee on Infrastructure & Utilities  Department of Infrastructure  Manx Electricity Authority  Water & Sewerage  Local Government

10. This system would envision the retention of the PAC. The example above is simply illustrative and is replicated pictorially in Appendix 2.

Work of Members 11. There would need to be a different spread of work amongst Tynwald Members. Membership of current committees is thus: 11.1. Public Accounts Committee (PAC)  Mrs Christian  Mr Gill  Mr Butt  Mr Cregeen  Mr Henderson  Mr Watterson

7 11.2. Scrutiny Committee (SC)  Mrs Cannell  Mr Braidwood  Mr Crowe  Mr Malarkey  Mr Lowey 11.3. Standing Committee on Economic Initiatives (SCEI)  Mr Speaker  Mr Corkish  Mr Crookall  Mr Cregeen  Mr Watterson 11.4. Standing Committee on Constitutional Matters (SCCM)  Mr Speaker  Mr Braidwood  Mr Crookall  Mr Gill  Mr Quayle

12. It can be seen from the above that twenty one places must be filled by the existing committee structure. If the revised system were altered to ensure that each Standing Committee consisted of three members, then there would still need to be 21 committee members (24 if the PAC remains at six members).

13. There are 33 voting Members of Tynwald. After excluding the Council of Ministers and Lord Bishop we are left with 22. Given that there is also the Ecclesiastical Committee it does not therefore seem unreasonable that nearly every back bencher could play a role in the scrutiny of the Executive on a permanent basis. At present there are six members serving on more than one scrutiny committee.

Implications 14. There are obvious advantages and disadvantages to the revised arrangements. On the positive side, the work should be more focussed on the work of a Government Department, and all Departments would be covered by the scrutiny committees in a systemic manner. Committees would presumably still sit approximately monthly.

15. On the downside, moving from four Standing Committees to seven would necessitate an increase in the resources of the Clerk of Tynwald’s office. There would possibly need to be changes in the Hansard Office if more oral evidence is

8 taken, and the work of Hon. Members will be increased by the number of reports being presented to Tynwald. Ministers and Chief Executives time will also be taken up with attendance at Committee hearings as and when required.

16. Members would not be able to serve in Government Departments at the same time as the corresponding scrutiny committee.

Options 17. Do nothing – the existing system has its strengths and weaknesses, but it is well known. There is a case for parliamentary consistency whilst Government is shaken up. There are no additional costs.

18. Reform along the lines stated above – the new system would mean changing standing orders and election of new members. Cost increases would have to be justified by a quest by the committees to find savings and efficiencies in the Departments.

19. Reform along a version of the above – perhaps retaining the same number of committee, but broadening their span to cover more Government Departments. This will mitigate an element of the cost increase.

Recommendation

That the Standing Committee on Economic Development consider the contents of this paper with a view to meetings with the Scrutiny Committee, Constitutional Matters Committee and Public Accounts Committee in order to attempt to achieve consensus on progressing some or all of the themes of this paper.

9 Appendix 1 – Recommendations from 2006 Select Committee Report

5.1 Recommendation 17.9: Membership of Committees We recommend that a. the President and Ministers should not be eligible for appointment to any Scrutiny Committee, and b. the President, the Speaker, Ministers and Treasury Members should not be eligible for appointment to the PAC.

5.2 Recommendation 18.5: Scrutiny Committee We recommend that a Standing Committee on Scrutiny be established and that the remit of this Committee should include consideration of: i. items of approved secondary legislation which have been referred by Members; and iii. other items of secondary legislation as the committee sees fit.

5.3 Recommendation 19.5: Scrutiny of EU Legislation We recommend a. that the remit of the Standing Committee on Economic Initiatives be amended to read as follows: “To a. monitor and consider economic, fiscal and monetary initiatives of the European Union, international agencies and states, and economic factors generally, which may affect the Isle of Man; and b. consider items of EU legislation which have been approved (or which have been laid before Tynwald in draft form, prior to consideration by Tynwald) which have been referred by Members, or as the Committee sees fit: and to report with or without recommendations each July, and such other times as the Committee deem necessary.” and b. that the Tynwald Standing Orders Committee report to Tynwald on an amendment to Standing Orders which would give effect to the procedure set out in paragraph 19.4 above.

5.4 Recommendation 21.7: International Agreements We recommend that when an international agreement is to be included on the Council of Ministers’ agenda: a. a copy should be circulated to all Members of Tynwald for information, wherever practicable, or b. if that is not practicable, then a copy should be deposited in the Members’ Room and Members so informed at once, and c. when the agreement has been signed, a copy should be placed in the Tynwald Library for access by the general public.

10

5.5 Recommendation 21.9: Remit of the Standing Committee on Constitutional Matters We recommend that the remit of the Standing Committee on Constitutional Matters be amended to read as follows: “to consider and report on - a. the Council of Ministers’ policy and approach to matters of constitutional importance, and b. any treaties, international agreements etc which have been referred to the committee by a Member of Tynwald, and the Members of the Committee shall not be members of the Constitutional and External Relations Committee of the Council of Ministers.”

5.6 Recommendation 23.5: Lay Members We recommend that lay members should not be appointed as members of committees, but that Committees should retain the powers they already have to appoint specialist assistance whenever a Committee feels it is necessary.

5.7 Recommendation 24.2: Auditor General We recommend that an Auditor General should be appointed.

5.8 Recommendation 24.4: Responsibilities which the Auditor General’s office would undertake We recommend that the Auditor General would undertake responsibility for the following functions: a. Ultimate responsibility for auditing all statutory bodies (including local authorities), with the power to delegate some of the audit work to firms of local accountants; b. Value for Money Investigations. c. Regular consultation with the PAC and provision of assistance with investigations. d. Identification of issues which may be appropriate for PAC investigations. e. Examination of issues referred by Tynwald. The Auditor General will be able to decide whether or not to undertake a full investigation, but will report to Tynwald in any event. f. Examination of issues referred by individual Members of Tynwald or the public. The Auditor General will be able to decide whether or not to undertake a full investigation, but will include in the Annual Report a list of all the matters referred to the Office and the action taken.

5.9 Recommendation 24.5: The appointment of and resourcing procedure for the Auditor General We recommend that the following procedures be adopted for the appointment of an Auditor General and the operation of the Office: a. The selection of the proposed appointee would be undertaken by an Appointment Committee comprising the Chairman of the Tynwald

11 Management Committee, the Chief Minister and the Chairman of the Public Accounts Committee. b. Details of the successful candidate would be placed before Tynwald by the Tynwald Management Committee for approval of the appointment. c, The role and remit of the Auditor General, and the mechanism for terminating the appointment, would be set out in statute to ensure independence, and managed by the Tynwald Management Committee on behalf of Tynwald. d. The annual budget for the office would be dealt with in the same manner as the budget for the legislature; ie the estimates are submitted to Treasury and approved by Tynwald. f. The Office would follow the practice adopted by the Clerk of Tynwald’s Office of having regular internal audits of its accounts and procedures carried out by an independent body. e. The staff appointed to assist the Auditor General would not be civil servants, but employed under similar terms and conditions.

5.10 Recommendation 24.7: Reporting procedure for the Auditor General We recommend that the following procedure be adopted: a. The Auditor General will produce an annual report to be laid before Tynwald each October. b. In the case of other reports, the following procedure will be adopted: i. the report will be issued to the PAC and the relevant statutory body; ii. the PAC will produce its own Report, with the assistance of the Auditor General’s Office, if required; iii. the Auditor General will be given the opportunity to view the Report before it is issued; iv. the procedure for laying the PAC Report before Tynwald will be as outlined in paragraph 25.7 below.

5.11 Recommendation 25.6: Remit of Public Accounts Committee We recommend that the remit of the Committee should be amended to read: (1) There shall be a Standing Committee on Public Accounts. (2) The Committee shall have - (a) a Chairman elected by Tynwald, (b) a Vice-Chairman elected by Tynwald, (c) four other Members elected by Tynwald, and a quorum of three Members. (3) Members of Tynwald shall not be eligible for membership of the Committee, if, for the time being, they hold any of the following offices: President of Tynwald, Speaker of the , member of the Council of Ministers, member of the Treasury Department referred to in section 1(2)(b) of the Government Departments Act 1987.

12

(4) The Committee shall - (a) (i) consider any papers on public expenditure and estimates presented to Tynwald as may seem fit to the Committee; (ii) examine the form of any papers on public expenditure and estimates presented to Tynwald as may seem fit to the Committee; (iii) consider any financial matter relating to a Government Department or Statutory Body as may seem fit to the Committee; (iv) consider such matters as the committee may think fit in order to scrutinise the efficiency and effectiveness of the implementation of Government policy; and (v) lay an Annual Report before Tynwald at each December sitting and any other reports as the Committee may think fit. (b) be authorized in terms of section 3 of the Tynwald Proceedings Act 1876 and the Standing Orders to take evidence and summon the attendance of witnesses and further to require the attendance of Ministers for the purpose of assisting the Committee in the consideration of its terms of reference. (5) The Chairman, Vice-Chairman and any member of the Committee shall not sit when the accounts of any body of which that person is a member are being considered.

5.12 Recommendation 25.8: PAC Reporting Procedure We recommend that the following procedure be adopted: a. Notification that a Report of the Public Accounts Committee has been submitted to Treasury will be placed on the Tynwald Order Paper. b. Treasury will submit a response to the Clerk of the Committee within 3 months from date of receipt of the PAC Report. Some or all of the recommendations in a PAC Report will often be appropriate to other Departments, but Treasury will have the responsibility to consult with those bodies and respond to the PAC. c. The Treasury Response will indicate which of the Committee’s recommendations are accepted and the action to be taken to address those recommendations, and those recommendations which are not accepted with accompanying justification. d. When the Treasury Response has been received, the PAC Report together with the Treasury Response will be placed on the Order Paper for the next sitting of Tynwald for debate and approval. The recommendations contained in the PAC Report will be listed on the Order Paper and Treasury and/or other members will be able to move amendments to those recommendations.

13 e. Treasury will have the responsibility to ensure that the recommendations approved by Tynwald are implemented. f. Monitoring of the action taken on the approved recommendations will be through the Annual Policy Decisions Report, which details the action taken on Tynwald Resolutions.

5.13 Recommendation 26.4: Monitoring of action taken on Tynwald Resolutions We recommend that the format set out in Appendix 13 is adopted in future Tynwald Policy Decisions Reports.

5.14 Recommendation 26.7: Remit of Scrutiny Committee We recommend that the Scrutiny Committee proposed in section 18.5 above be tasked with monitoring action taken on Tynwald Resolutions and reporting annually to Tynwald. The report would contain recommendations as to - a. any Tynwald resolutions, which have not been fully implemented, which the Committee feels should be removed from the list, and b. any other action which the Committee feels is required. The remit of this Committee would therefore be: (1) There shall be a Standing Committee of Tynwald on Scrutiny. (2) The Committee shall have five Members elected by Tynwald and a quorum of three members. (3) Members of Tynwald shall not be eligible for membership of the Committee if, for the time being, they hold any of the following offices: President of Tynwald or Ministers. (4) The Committee shall - (a) consider - i. items of approved or rejected secondary legislation which have been referred by Members; and ii. other items of secondary legislation as the committee sees fit; and report to Tynwald as and when the Committee sees fit. (b) i. examine the Annual Tynwald Policy Decisions Report and consider whether the action taken has adequately responded to Tynwald resolutions, ii. consider whether any of the Tynwald Resolutions which have not been fully implemented are appropriate for removal from the list; and iii. lay an Annual Report before Tynwald, with recommendations for action where appropriate. (c) be authorised in terms of section 3 of the Tynwald Proceedings Act 1876 and of Standing Orders to take evidence and summon the attendance of witnesses and further to require the attendance of Ministers for the purpose of assisting the Committee in the consideration of its terms of reference. (5) Members of the Committee shall not sit when an item is being considered, in respect of which -

14 (a) they could be perceived as having a personal interest; and/or (b) they are a member of the Department with responsibility for that item, or were a member of that Department at the relevant time.

15 Appendix 2 – Proposed Scrutiny Structure

16

Parliamentary Copyright available from:

The Tynwald Library Legislative Buildings Finch Road DOUGLAS Isle of Man IM1 3PW British Isles June 2010 Tel: 01624 685520 Fax: 01624 685522 e-mail [email protected] Price: £2.30