Standing Committee of Tynwald on Emoluments First Report for the Session 2020-21 Provision for an Independent Pay Body, and Other Matters

PP 2021/0014

STANDING COMMITTEE OF TYNWALD ON EMOLUMENTS

FIRST REPORT FOR THE SESSION 2020-2021

PROVISION FOR AN INDEPENDENT PAY BODY, AND OTHER MATTERS

STANDING COMMITTEE OF TYNWALD ON EMOLUMENTS FIRST REPORT FOR THE SESSION 2020-21 PROVISION FOR AN INDEPENDENT PAY BODY, AND OTHER MATTERS

1. There shall be a Standing Committee of the Court on Emoluments.

2. The Committee shall be chaired by the Speaker of the House of Keys and composed of the Members of the Management and Members’ Standards Committee of the Keys, and three Members of the Council elected by that Branch.

3. The Committee shall -

(i) consider and report to Tynwald on -

(a) the emoluments of H E Lieutenant Governor, their Honours the First and Second Deemsters and the Judge of Appeal, H M Attorney General, the High Bailiff, the Deputy High Bailiff and the Clerk of Tynwald;

(b) the Tynwald Membership Pension Scheme; and

(ii) and as it thinks fit, the emoluments of Members of Tynwald;

(iii) carry out its consultative functions under section 6(3) of the Payments of Members’ Expenses Act 1989, as the body designated by the Payment Of Members' Expenses (Designation of Consultative Body) Order 1989.

The powers, privileges and immunities relating to the work of a committee of Tynwald include those conferred by the Tynwald Proceedings Act 1876, the Privileges of Tynwald (Publications) Act 1973, the Tynwald Proceedings Act 1984 and by the Standing Orders of Tynwald Court. Committee Membership

The Hon J P Watterson SHK (Rushen) (Chairman)

Mr D J Ashford MHK (Douglas East)

Miss T M August-Hanson MLC

Ms J M Edge MHK (Onchan)

Mr R W Henderson MLC

Mrs M M Maska MLC

Mr C P Robertshaw MHK (Douglas East)

Copies of this Report may be obtained from the Tynwald Library, Legislative Buildings, Finch Road, Douglas, IM1 3PW (Tel: 01624 685520) 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. Table of Contents

I. BACKGROUND...... 1

II. THE SETTING AND JUDGING OF MEMBERS’ SALARIES, PENSIONS AND EXPENSES ...... 2

INDEPENDENCE IN THEORY AND IN PRACTICE 2

THE MANX SOLUTION 4

ALTERNATIVES CONSIDERED 5

PROVISION FOR A BODY 7

III. OTHER MATTERS ...... 7

RESETTLEMENT GRANT SCHEME 7

PAYMENTS TO MEMBERS WHO HAVE BEEN SUSPENDED 9

ANNEX 1: DETERMINING THE EMOLUMENTS OF MEMBERS IN OTHER JURISDICTIONS, RESEARCH PAPER ISSUED ON 15TH JANUARY 2021 BY THE TYNWALD CHAMBER AND INFORMATION SERVICE...... 13

ANNEX 2: PUBLIC PROCEEDINGS SINCE 1996 RELATING TO MEMBERS’ EMOLUMENTS ...... 19

ANNEX 3: PROVISION FOR AN INDEPENDENT BODY TO JUDGE AND SET MEMBERS’ SALARIES AND EXPENSES ...... 25

APPENDIX 1: EMAIL DATED 18TH DECEMBER 2020 FROM HEAD OF NON- GOVERNMENT BILLS UNIT, THE SCOTTISH PARLIAMENT...... 27

To: The Hon Stephen C Rodan OBE, President of Tynwald, and the Hon Council and Keys in Tynwald assembled

STANDING COMMITTEE OF TYNWALD ON EMOLUMENTS FIRST REPORT FOR THE SESSION 2020-21 PROVISION FOR AN INDEPENDENT PAY BODY, AND OTHER MATTERS

I. BACKGROUND

1. It was resolved on 17th November 2020 –

That the Report of an Independent Panel on the Emoluments of Members of Tynwald [PP No 2019/0158] be received and that the necessary action be taken by the Treasury and the Public Sector Pensions Authority to implement the proposal set out at Annex 2A of the Report; and that the proposal should be implemented in accordance with the consultation and transition arrangements outlined at paragraph 55 of the Report; and that Tynwald considers it appropriate that Members’ salaries, pensions and expenses be set and judged independently; and that provision for a body responsible for this be brought forward by the Emoluments Committee by February 2021.

2. We presume that implementation of the proposal of the Independent Panel Report referred to in the first part of the resolution (also referred to as the Cochrane Report) is in hand.

3. The primary purpose of this Report is to address the independent setting and judging of Members’ salaries, pensions and expenses as required by the last part of the resolution. We also report on two other matters, both of them consequential on the implementation of the Cochrane Report.

1 4. In preparing this Report we have had regard to the systems for determining Members’ pay in the parliaments of the UK, the Channel Islands and other comparator jurisdictions.1 II. THE SETTING AND JUDGING OF MEMBERS’ SALARIES, PENSIONS AND EXPENSES

Independence in theory and in practice

5. During the October 2020 and November 2020 debates which led to the resolution quoted in paragraph 1 above, many Members, including many Members of the Emoluments Committee, spoke in support of the principle that politicians should not determine their own pay.

6. Independent determination of Members’ pay is not a new idea. Considering arguments about what level of pay was appropriate for Tynwald Members, our predecessors wrote in 1997 that such arguments:

are in essence only capable of resolution on the basis of value judgements which are perhaps best not made by those who stand to be the beneficiaries of their resolution.2

7. That Committee’s preferred solution was to commission a group of three Members of other small Commonwealth parliaments to propose an appropriate payment structure. In its 1999 report, that Commission recommended that permanent arrangements for reviewing the remuneration of Members be established, suggesting a permanent commission of three persons appointed by the President of Tynwald.

8. In 2002 a Select Committee on the Reduction of the Number of Standing Committees recommended that our predecessors should give serious consideration to the establishment of a Top Salary Review Body, similar to that operating in the UK, which would subsume the work of the Emoluments Committee.

1 See Annex 1. We have also read an Independent Review of Jersey Members’ Remuneration Process published in October 2020 by the Privileges and Procedures Committee of the States of Jersey (R.121/2020). 2 First Report of the Joint Committee on the Emoluments of Certain Public Servants for the Session 1997/98, paragraph 3.3. This report was reproduced as Appendix 1 to the First Report of the Joint Committee on the Emoluments of Certain Public Servants for the Session 2003/04, which is available at https://www.tynwald.org.im/business/pp/Reports/2003-NN-0009.pdf .

2 9. In 2004 our predecessors appointed a panel of three on-Island persons to review Members’ pay. The panel delivered its proposals in 2005 but our predecessors decided not to publish them.

10. In 2019 the Cochrane Panel was appointed in the light of a 2018 debate on a recommendation of the Select Committee on the Functioning of Tynwald that an independent review be established.

11. While independence is attractive in theory, it is difficult to operate in practice. Here in the Isle of Man the independently generated proposals of 1999 and 2005 were not implemented. In both cases it seems that the independent thinking in the reports was overridden by political concerns that, if the proposals were implemented, Members would have been seen as acting out of self-interest.

12. In the United Kingdom, the Parliamentary Standards Act 2009 established the Independent Parliamentary Standards Authority (IPSA) as the body which not only determines MPs’ pay but also disburses it. Therefore politicians are separated, in that jurisdiction, not only from the process of deciding how much MPs should be paid, but also from the implementation of that decision. Even this apparently comprehensive statutory framework, however, has not worked in the way which might have been envisaged. In October 2020, for example, IPSA proposed an increase of around £3,000 per year in MPs’ pay based on its own, politically independent, assessment. The proposal was withdrawn in December 2020 following political pressure from MPs.3

13. For the Scottish Parliament there is no equivalent of IPSA; instead, MSPs’ pay is determined by the Scottish Parliament Corporate Body, a group of MSPs broadly equivalent to the Tynwald Management Committee. In 2015 the Corporate Body decided that pay should be linked to the index for the mean annual earnings of public sector full time workers in Scotland as provided for by the Annual Survey of Hours and Earnings (ASHE) produced by the Office of National Statistics. In 2020, when that index was pointing to a 5.1% rise, the Corporate Body made a political decision not to implement its own policy.4

We conclude that although the independent determination of politicians’ pay is an attractive proposition in theory, in practice it is impossible to separate the determination of politicians’ pay from the political process. Any perception of Members acting out of self-interest is politically unacceptable. Any pay rise can

3 https://www.bbc.co.uk/news/55278314 4 Appendix 1; see also https://www.bbc.co.uk/news/uk-scotland-scotland-politics-55189280

3 give rise to such a perception, no matter how independent the means by which it is arrived at.

We conclude that what is needed is a system which allows pay to keep pace with inflation, and which allows the baseline rate to be independently reviewed from time to time.

The Manx solution

14. As far as keeping pace with inflation is concerned, the Manx solution since 1980 has been to link the remuneration of Tynwald Members to that of Isle of Man civil servants. In that year the annual basic pay was laid down as an absolute sum, to be increased in line with the rate of increase paid to civil servants.5 From 1983 the annual basic pay was expressed with reference to the spine points of the civil service pay scale.6

15. As far as reviewing the basic rate from time to time is concerned, Members’ pay was moved up the scale in 1987, 1990 and 1997. Since then it has been independently reviewed on three occasions but has stayed, effectively, in the same place.

16. This Manx solution has succeeded in allowing Tynwald Members’ remuneration to keep pace with inflation without any need for any annual determination or debate. At the same time it has given Tynwald the flexibility to adjust different elements of the Members’ remuneration package as it has seen fit. So, for example, we were able in 2009 to update the travelling expenses regime in the wake of the expenses scandal in the UK. The 2006 to 2011 and 2011 to 2016 periods were both dominated by concerns about pensions, which were significantly reformed in 2016 by being brought inside the framework of the Government Unified Scheme.7

17. The principal disadvantage of the system we have been operating for the past 40 years is that there does exist a connection between Tynwald Members and the body which determines civil service pay, namely the Public Services Commission. This is to some extent in conflict with the principle of independence. In practice the two Tynwald Members who serve on the Public Services Commission do so in the role of employer to thousands of employees. Any scope to act out of self- interest, if it exists at all, is severely restricted. It is the case that despite several

5 GC 236/80 6 GC 180/83 and successor instruments, most recently SD 2014/0079 7 For a list of public proceedings in relation to Members’ emoluments since 1996, see Annex 2

4 thousand civil servants benefiting from any pay rise, it is inevitably the politicians that draw the media headlines.

18. A further disadvantage of our present system is illustrated by the fate of the independent reviews which Tynwald has commissioned from time to time. Those of 1999 and 2005, although independently prepared, were not implemented. This is clearly contrary to the principle of independence.

19. Some Members who spoke in the October 2020 and November 2020 debates argued that the independent panel of 2019, while it had succeeded in operating independently, had been overly constrained in its work by a politically determined remit. That remit had been determined by Tynwald itself in a debate of February 2018; those concerns could have been aired at that time.

We conclude that the solution which has been in place in the Isle of Man since 1980 has allowed pay to keep pace with inflation while allowing the baseline rate to be independently reviewed from time to time. Some elements of the present solution do, however, conflict with the principle of independence.

Alternatives considered

20. Having studied carefully the debates of October and November 2020 we have given intense consideration to the possibility of creating a new regime which would be fully, or more closely, compatible with the principle of independence.

21. We noted that without new legislation, proposals made by any future body would remain open to the risks that

 they could be picked up by Tynwald for debate, and Tynwald could express an alternative view; or,

 even if Tynwald expressed a positive view, or declined to express any view, the recommendation could be rejected by the Treasury in which case it would not be implemented.

We accept, therefore, that the only way to guarantee that the salary determined by an independent body would always be paid, without Tynwald or the Treasury having a veto is by statute. There is no provision for this at the moment, so new primary legislation would be needed.

22. We have found that it would be a relatively straightforward matter to design the outline of a statutory framework in which such a body could operate. Its members could, for example, be appointed by the Appointments Commission established under the Tribunals Act 2006. A new body could be required to consult the public, Tynwald Members, the Treasury, the Public Services Commission and the Public

5 Sector Pensions Authority. The Treasury could be placed under a duty to implement the new body’s determinations.

23. A new statutory body could be established on a permanent basis and required to make a determination once every five years, to be implemented for the duration of each new House of Keys. It could be allowed to set a flat rate for the next five years, or to determine a starting point together with some indexation mechanism to allow the pay to keep pace with inflation within that period.

24. As an alternative, the new statutory framework could be established without a permanent reporting cycle, to be used only when needed. A trigger mechanism could be built into the legislation to allow Tynwald, or perhaps a Committee, to initiate a review when the time was right.

25. In considering these models it is necessary, however, to address the question of what, if any, constraints the legislation should put on the operation of the new body. This we have found to be in no way straightforward.

26. We have determined first of all that any new body should not have a role in determining pension arrangements. The Public Sector Pensions Authority already has a statutory responsibility to advise on these and has developed considerable expertise in its first decade of operation. To separate Tynwald Members’ pensions from the PSPA, and the checks and balances of the Government Unified Scheme, would be a retrograde step.

27. Leaving aside pensions, we have considered establishing a body which would operate to determine pay under no constraints: a pure independence model. It is inherent in the principle of independence that such a body would have the ability to determine, and apply, an above-inflation pay rise, something not only potentially financially irresponsible but politically unforgivable. Even if the probability of an above-inflation pay rise was vanishingly small, it is inevitable that Members would be perceived as having created the body out of self-interest. This would bring the entire political machinery into disrepute.

28. We have considered establishing a body which would operate under just two constraints: to act within a financial limit and be subject to the negative resolution procedure. Such a model was proposed by Mr Hooper in the form of an amendment tabled in the November 2020 debate. While it has the merit of being financially responsible, however, it is politically little better than the first model. The financial limit would have to be set by the Treasury and voted on as part of the Budget process; and the negative resolution procedure preserves the possibility of a political veto. This model has the further disadvantage of having been rejected by Tynwald in November 2020.

6 29. We have considered establishing a body which would be unconstrained for the purposes of its initial determination (the salary for the first year of the next House of Keys), but which would be constrained in respect of any indexation mechanism which would operate from one year to the next within the next House of Keys term. One idea we have debated is whether the rate of increase should be capped at the rate of increase paid to a civil servant on a similar salary. This model has the advantage over the “pure independence” model that civil service pay agreements are grounded in the reality of what is affordable in an Isle of Man public sector context. On the other hand this model could clearly be criticised for running contrary to the principle of independence.

We conclude that, after intense consideration of a range of options, informed by international comparisons, no alternative which we have considered would represent an improvement on the arrangements already in place.

Provision for a body

30. We were asked by Tynwald to bring forward provision for a body which could independently judge and set Members’ salaries, pensions and expenses.

Having examined the recent history of such bodies in the Isle of Man and elsewhere, and having considered and rejected the option of a new statutory framework, we conclude that the most appropriate means of commissioning independent expertise in this area is that set out in Annex 3. This model can be implemented without legislative change. III. OTHER MATTERS

31. We have identified two consequential changes to legislation which we believe to be necessary as a consequence of Tynwald’s decision to implement the proposal in the Cochrane report. We have written to the Treasury about these points and we are including them here in the interests of transparency.

Resettlement Grant Scheme

32. The Members of Tynwald (Resettlement Grant) Scheme 2018 provides that if a Member under 60 years of age who has served at least two years is unsuccessful in seeking re-election to either the Keys or the Council, they will be paid the equivalent of six months’ basic salary. A “claw back” provision within the Scheme ensures that, if a person receives this grant but is elected to either Branch within

7 six months or is in receipt of a pension provided under the Isle of Man Government Unified Scheme 2011, a proportion of the money must be repaid.8

33. Paragraph 5 of the Scheme provides:

The Treasury shall pay out of money provided by Tynwald to a person to whom this Scheme applies a lump sum equal to ½ of the annual sum payable to a member of Tynwald who does not hold any office other than that of elected member of the Council or member of the Keys and is not a member of any Department under section 1 of the Payment of Members’ Expenses Act 1989 at the relevant date.

34. Following the implementation of the Cochrane proposals, this wording will be ambiguous because “the annual sum payable to a member of Tynwald who does not hold any office …” will be different for MHKs and MLCs. We presume it would be acceptable to read paragraph 5 as if it referred to the annual sum payable to a Member of the Branch to which the outgoing Member has just failed to be re- elected. It would be desirable to amend the Scheme to make this explicit.

35. More significantly, the impact of the Cochrane review will be an increase in the amount payable. At present, using the April 2019 figures in the Cochrane review itself, the amount would be (£43,479/2) = £21,740. This is the amount payable to unsuccessful candidates in the 2021 General Election, subject to any changes to civil service pay agreed in the interim. Under the Cochrane proposals, which are planned to take effect after the General Election, this would rise to £32,549 for an MHK and £30,728 for an MLC. The reason the amount would rise is that the basis of calculation for the Resettlement Grant Scheme is the Members’ “basic pay”. At present this constitutes around two-thirds of most Members’ pay. Under the Cochrane proposals the annual sum for expenses will be abolished and most Members will not have an uplift for a particular office. The basic pay will therefore constitute a higher proportion of their overall package. Changing this calculation from a half to a third produces a broadly similar result to the current calculation, namely £21,700 for an MHK and £20,485 for an MLC.

We conclude that the Resettlement Grant Scheme should be amended to provide that the basis of payment be one third of the annual sum payable to a member of the outgoing Member’s Branch holding no office in respect of which an additional uplift is payable; and that this amendment should apply to all Members who have transferred to the pay regime proposed by the Cochrane Panel, commencing with the first time they seek re-election thereafter.

8 2018-SD-0041

8 Payments to Members who have been suspended

36. The Payment of Members’ Expenses Act 1989 provides, at section 7A:

7A Suspended members of Tynwald

(1) This section applies to a member of Tynwald –

(a) who has been suspended from the service of Tynwald under the Standing Orders of Tynwald; or

(b) who has been suspended from the service of the Branch to which the member belongs under the Standing Orders of that Branch, and

whose suspension continues, in accordance with the Standing Orders of Tynwald, the Keys or the Council, for more than one day and is not merely a direction to withdraw from the relevant chamber for the remaining sessions of the day on which the suspension is ordered.

(2) A member of Tynwald to whom this section applies is not entitled for the period of suspension to –

(a) any payment under section 2, 3 or 5; or

(b) any payment under section 1 which would otherwise be made to that member of Tynwald in connection with the holding of any office referred to in section 1(2).

37. The payments referred to in this section are:

 section 1(2) – payment as a Minister, Member of a Department etc

 section 2 – payment as a Statutory Board Chair

 section 3 – the tax-free annual sum for expenses

 section 5 – travelling expenses

38. The section was inserted into the 1989 Act on a recommendation of the Tynwald Standing Orders Committee which was approved on 15th May 2018. Explaining its proposal, the Committee wrote:

Since any suspension will involve a loss of the Member’s duty to represent their constituents, we propose that any Member whose suspension continues because of a failure to comply with an Order of Tynwald should not be eligible to receive any allowances for expenses or other work, on the basis that they will not be able to carry out their functions in an appropriate way. This follows

9 the previous resolution of Tynwald set out above and should provide an adequate safeguard for Tynwald’s collective ability to maintain discipline.9

39. The present system was put in place at a time when:

 all Members were in receipt of a payment under section 3, and

 nearly all Members were in receipt of a payment under section 1(2) and/or section 2.

40. Using the figures in the Cochrane report, and taking a Member of a Department as an example, the impact of suspension on gross pay in the year 2019/20 would have been a reduction from £63,926 (equivalent to £65,777 when the tax relief on the annual sum for expenses is taken into account) to £43,479. This equates to a reduction in equivalent gross pay of £22,298 or 34%. A higher impact would have been felt by a suspended presiding officer or Minister. Even a Member who was not a Member of a Department would have gone from £52,734 to £43,479, a reduction of 18%.

41. Under the Cochrane proposals (using for convenience the terminology of the existing Payment of Members’ Expenses Act even though this may change):

 no Member will be in receipt of a payment under section 3; and

 a maximum of 16 Members will be in receipt of a payment under section 1(2) or 2 (that is to say, two presiding officers, nine Ministers and five chairs).

For the 16 Members in remunerated offices, the impact of the financial penalty system will be reduced (because future uplifts for offices will be a smaller proportion of overall pay). For the other 16 Members the system will have no impact at all.

42. Unless action is taken, therefore, the implementation of the Cochrane proposal will undermine the effect of the Payment of Members’ Expenses (Amendment) Act 2019. The effect could be restored by amending section 7A to provide, for example, that a suspended Member’s remuneration should fall by a third in all cases.

We conclude that with the implementation of the Cochrane proposal, further primary legislation should be introduced to restore the effect of the Payment of Members’ Expenses (Amendment) Act 2019. The legislation should provide that

9 PP 2018/0074, paragraph 10

10 the income of a suspended Member, as defined by the 2019 Act, be reduced by a third.

J P Watterson (Chairman) D J Ashford T M August-Hanson J M Edge R W Henderson M M Maska C R Robertshaw

January 2021

11 12 ANNEX 1: DETERMINING THE EMOLUMENTS OF MEMBERS IN OTHER JURISDICTIONS, RESEARCH PAPER ISSUED ON 15TH JANUARY 2021 BY THE TYNWALD CHAMBER AND INFORMATION SERVICE

TYNWALD CHAMBER AND INFORMATION SERVICE

Determining the Emoluments of Members in Other Jurisdictions

RESEARCH PAPER ISSUED 15/01/2021

For: The Standing Committee of Tynwald on Emoluments

Request: Independent body responsible for setting member’s pay: a paper on how these issues are handled in other jurisdictions to include: the UK, Jersey, Guernsey, Canada and Australia

Contents

Introduction ...... 2

UK (Westminster) ...... 2

Senedd Cymru – Welsh Parliament ...... 2

Northern Ireland Assembly ...... 3

Scottish Parliament ...... 3

Jersey ...... 4

Guernsey ...... 4

Canada ...... 4

Australia ...... 5

[email protected] v213 Determining the Emoluments of Members in Other Jurisdictions Page 2

INTRODUCTION

This paper describes how the level of pay received by parliamentarians is set in several jurisdictions, paying particular attention to jurisdictions where an independent body is the method selected to determine pay.

UK (WESTMINSTER)

Since 2010, MPs’ pay has been set by an independent body: the Independent Parliamentary Standards Authority. The IPSA was created in 2009 by the Parliamentary Standards Act, amended in 2010 by the Constitutional Reform and Governance Act. The IPSA is independent of both Parliament and Government and is overseen by a board of five members required to include a former high court judge, a qualified auditor and an ex-MP. 1 The board also appoints a compliance officer who is independent and investigates complaints made by the public and others about MPs’ claims and reviews decisions by IPSA.2 The IPSA is run day to day by its CEO and Directors, who report to the board.3

The board determines basic salaries by conducting a review, which it is required to complete within one year of the start of each new parliamentary term.4 Changes in salaries during the term are then linked to changes in average annual earnings in the public sector based upon ONS figures.5

The IPSA is also responsible for the members’ pension scheme, business costs and expenses.6 The IPSA set budgets for different areas of expenditure which MPs are not allowed to exceed. The body monitors the budgets and investigates possible breaches of the rules. The IPSA follows a three stage approach to validate expenses claims, conducting checks before and after a payment is made.7

The majority of Members of the House of Lords do not receive a salary. They can however claim an attendance allowance and travel expenses. A small number of peers do receive a salary for holding a particular office.8 The rules regarding expenses are set by the House of Lords Commission, a select committee of the House, in the “Guide to Financial Support for Members”.9

SENEDD CYMRU – WELSH PARLIAMENT

Senedd Members’ pay is set by an independent board: The Remuneration Board of the National Assembly for Wales.10 The Board was established in 2010 following a recommendation by an independent panel set up to look at financial support available to members.11 The Remuneration Board’s primary function is ensuring that members have the resources they need to do their jobs

1 https://www.theipsa.org.uk/about-us/ 2 https://www.theipsa.org.uk/about-us/compliance-officer/ 3 https://www.theipsa.org.uk/about-us/board-and-chief-executive/ 4 https://www.theipsa.org.uk/publications/consultations/review-of-mps-pay-and-pensions/ 5 https://www.theipsa.org.uk/mp-costs/mps-pay-and-pensions/ 6 https://www.parliament.uk/about/mps-and-lords/members/pay-mps/ 7 https://www.theipsa.org.uk/about-us/how-we-regulate/ 8 https://www.parliament.uk/about/mps-and-lords/about-lords/lords-allowances/ 9 https://www.parliament.uk/globalassets/documents/lords-finance-office/members-guide-Apr2019.pdf 10 https://business.senedd.wales/documents/s100823/Determination%20on%20Members%20Pay%20an d%20Allowances%20-%20April%202020.pdf 11 https://senedd.wales/en/memhome/pay-expenses-financial-interests- standards/independentreviewpanel/Pages/independentreviewpanel.aspx [email protected] v214 Determining the Emoluments of Members in Other Jurisdictions Page 3 effectively.12 The Board conducts an annual review to consider if any changes to pay or expenses are necessary at the start of the next financial year.13

The Board members are all independent of the Assembly and appointed by the Senedd Commission (the corporate body of the parliament made up of the presiding officer and four other members from across political parties) for a term of 5 years.14 The current board is composed of experienced professionals from the public and private sectors.

Assembly Members who are also UK MPs or MEPs have their salary reduced by two thirds.15

NORTHERN IRELAND ASSEMBLY

MLA salaries are set by the Independent Financial Review Panel, which was established in 2011 by the Assembly Members (Independent Financial Review and Standards) Act (Northern Ireland) 2011.16 The panel are currently in the process of being appointed for the next five-year term however the previous panel was composed of three members with experience on a number of public sector boards.17 Members are appointed by the Northern Ireland Assembly Commission, the organisation responsible for providing staff and services to the members of the Assembly.18

The panel writes an annual report and issues “determinations” setting out its decisions about members’ pay.19 These decisions are then implemented by the Assembly Commission and Secretariat.20 When issuing a determination, the panel has to ensure accountability and value for money while also ensuring that members have the resources they need to do their jobs and to ensure that nobody is deterred from standing for election on financial grounds.21 To achieve this, the panel takes into account what members are paid in other jurisdictions, in addition to public sector pay and the wider job market in Northern Ireland.22 The panel is also responsible for making recommendations about members’ pensions, expenses, support staff and allowances.

SCOTTISH PARLIAMENT

Members’ pay is set under the Scottish Parliament Salaries Scheme, made under section 81 of the Scotland Act 1998 by the Scottish Parliament Corporate Body.23 The Scheme sets out the basic salary paid to members, presiding officers and ministers. Since 2015, the Scheme has included a provision for annual pay increases to be implemented on 1st April. Any increase is based upon the index of the mean annual earnings of public sector full time workers in Scotland, calculated from the Annual Survey of Hours and Earnings produced by the Office for National Statistics, or such other index as the SPCB considers appropriate.

12 https://senedd.wales/en/bus-home/committees/Pages/Committee-Profile.aspx?cid=375 ; Remuneration Board remit - Remuneration Board 13 https://business.senedd.wales/mgIssueHistoryHome.aspx?IId=10737 14 https://www.remunerationboard.wales/board-members/ 15 https://senedd.wales/Job%20Documents/Cams/Determination/Determination-2018-19- en.PDF#page=14 16 https://ifrp.org.uk/ 17 https://ifrp.org.uk/membership/membership-2011-2016/ 18 http://www.niassembly.gov.uk/about-the-assembly/assembly-commission/ 19 https://ifrp.org.uk/reports-and-determinations/ 20 http://www.niassembly.gov.uk/your-mlas/independent-financial-review-panel/ 21 https://ifrp.org.uk/functions/ 22 https://ifrp.org.uk/wp-content/uploads/2016/03/The-Report-on-Northern-Ireland-Assembly- Members-Salaries-Allowances-Expenses-and-Pensions-March-2016.pdf#page=10 23 https://www.parliament.scot/images/Human%20Resources/2020_10_07_SP_Salaries_Scheme.pdf [email protected] v215 Issued 15/01/2021 Determining the Emoluments of Members in Other Jurisdictions Page 4

JERSEY

States Members’ pay is set by the States Members Remuneration Review Body, an independent body of five members established by resolution of the States in 2004 to make recommendations about remuneration and expenses. Members of the body are selected by the Jersey Appointments Commission and appointed by the Privileges and Procedures Committee. The body is required to take into account the level of income required to ensure that as wide range of people as possible can consider putting themselves forward for election, in addition to considering the current economic conditions and cost of living.24

The SMRRB makes recommendations to the Privileges and Procedures Committee, who then present the recommendations to the States. In presenting the recommendations of the SMRRB, the Privileges and Procedures Committee may include its own report detailing its view on the recommendations. The SMRRB’s recommendations are implemented automatically unless a States Member chooses to lodge an alternative proposition, in which case implementation can be delayed or prevented. Further information can be found in an independent report commissioned by the Privileges and Procedures Committee and competed in October 2020 which reviews the system used in Jersey and compares it to other jurisdictions including the Isle of Man.25

GUERNSEY

States Deputies’ pay is governed by the States Members Pay Rules.26 The rules set out that pay is set based upon the median earnings for every employed person on the Island for the previous year and comes into force on 1st May. At the start of the political term, members can choose whether to accept future changes to their pay as a result of changes to the median earnings during the term or to keep their salary at the starting amount throughout their term.

CANADA

Salaries are adjusted each year on 1st April based upon the index of average percentage increase in wages resulting from major settlements negotiated in the private sector. The index is published by Employment and Social Development Canada within three months of the end of each calendar year.27 The basic salary was set in 2004 at $141,200 and is adjusted in relation to the previous year’s salary according to the index under the Parliament of Canada Act 1985 sections 55.1 and 67.1.28

The House of Commons also has a Board of Internal Economy that makes decisions and provides direction on financial matters concerning the House, in addition to working to increase public understanding about the expenditure of the House and its members.29 The board is made up of the Speaker (chair), two members of the Privy Council, the leader of the opposition and additional members so that there are equal members from the government and opposition parties.30

24 States Members’ Remuneration Review Body: recommendations for remuneration beyond the 2022 General Election (gov.je) 25 https://statesassembly.gov.je/assemblyreports/2020/r.121-2020.pdf 26 https://www.gov.gg/CHttpHandler.ashx?id=104057&p=0 27 https://www.ourcommons.ca/Content/MAS/mas-e.pdf#page=20 28 https://laws-lois.justice.gc.ca/eng/acts/p-1/page-10.html#docCont 29 https://www.ourcommons.ca/Boie/en/about 30 https://www.ourcommons.ca/Boie/en/membership [email protected] v216 Issued 15/01/2021 Determining the Emoluments of Members in Other Jurisdictions Page 5

AUSTRALIA

Members’ pay is set by an independent review body: The Remuneration Tribunal, established in 1973 by the Remuneration Tribunal Act 1973.31 Its role is to determine, report on or provide advice about remuneration, including allowances and entitlements for a number of public officials.32 The panel has three independent members appointed by the governor general who serve for a five-year term. The body conducts annual reviews of members’ pay, and bases its recommendations upon the value of members’ work while also considering the performance of the broader economy and jobs market.33

There is a separate independent body, the Independent Parliamentary Expenses Authority, which deals with matters relating to expenses claims.34 The IPEA has 60 independent employees who process, monitor and audit all claims relating to work and travel expenses.35

CONTACT

Author: Kieran Skehan The research team in the Chamber and Information Service can be contacted by emailing [email protected]. Disclaimer: All research information is provided to Members of Tynwald in support of their parliamentary duties. Tynwald or the author(s) shall not be liable for any errors or omissions, or for any loss or damage of any kind arising from its use, and may remove, vary or amend any information at any time without prior notice. Tynwald accepts no responsibility for any references or links to, or the content of, information maintained by third parties.

31 https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/r p/rp1920/BaseSalary2019 32 https://www.remtribunal.gov.au/about-us 33 https://www.remtribunal.gov.au/file/3999/download?token=lgOknrLu 34 https://www.ipea.gov.au/ 35 https://www.ipea.gov.au/about-ipea#IPEA%20Functions [email protected] v217 Issued 15/01/2021 18 ANNEX 2: PUBLIC PROCEEDINGS SINCE 1996 RELATING TO MEMBERS’ EMOLUMENTS

17 November 2020 Ms Edge’s amendment fails on a combined vote. Tynwald resolves that the Cochrane proposal should be implemented and that the Emoluments Committee should bring forward in February 2021 provision for an independent body.

21 October 2020 Cochrane Panel report debated in Tynwald on a motion that its recommendations be implemented. An amendment in the name of Ms Edge is carried in the Keys and defeated in the Council; Ms Edge calls for a combined vote at the next sitting.

21 January 2020 Report of an Independent Panel (the Cochrane Panel) laid before Tynwald.

21 February 2018 Tynwald approves terms of reference for a Members’ pay review which have been recommended by the Select Committee on the Functioning of Tynwald after consultation with the Emoluments Committee.

Tynwald approves a revised Members’ Resettlement Grant Scheme which is moved by the Treasury Minister after consultation with the Emoluments Committee.

17 October 2017 Mr Hooper’s motion referring the question of a pay review to the Select Committee on the Functioning of Tynwald succeeds on a combined vote 23/7.

18 July 2017 Mr Hooper moves in Tynwald that Lord Lisvane’s recommendation regarding a pay review be referred to the Select Committee on the Functioning of Tynwald. Voting is 18/5 and 3/5; Mr Hooper calls for a combined vote at the next sitting.

20 June 2017 In the first substantive debate on the Lisvane report, the Chief Minister’s motion asks Tynwald to note Lord Lisvane’s recommendation “That an independent review of pay and allowances be undertaken urgently.” Mr Speaker’s amendment, whose approval leads to the setting up of the Select Committee on the Functioning of Tynwald, makes no mention of this recommendation.

19 SEPTEMBER 2016: GENERAL ELECTION

19 July 2016 Tynwald approves the Isle of Man Government Unified Scheme (Amendment) Scheme 2016 [SD No 2016/0200], adding a new section 8 to the Unified Scheme; and the Tynwald Membership Pensions Scheme Bulk Transfer Regulations 2016 [SD No 2016/0201], transferring members of the previous Members’ pension scheme to the new section 8.

The Emoluments Committee lays a report on remuneration for scrutiny roles [PP 2016/0111] which concludes that “this matter will merit further consideration by our successors after the 2016 General Election”; and a report on Members’ pay [PP 2016/0112] which concludes that “New Terms for New Starters” is a Public Services Commission initiative and should not apply to Tynwald Members.

The Lisvane report is received by Tynwald. It says: “An independent review of pay and allowances, including assessing relative comparators, needs to be undertaken urgently.”

17 May 2016 Tynwald approves the Public Sector Pensions (Admission) Regulations 2016 [SD No 2016/0132], enabling the Public Sector Pensions Authority to make and amend schemes for Members of Tynwald; and the Tynwald Membership Pension Scheme (Amendment) Scheme 2016 [SD No 2016/0131], providing for the existing Tynwald Members’ scheme to be treated as a statutory scheme.

15 December 2015 Tynwald approves a recommendation by the Select Committee to Review the Committee System [PP 2015/0174] “that the Emoluments Committee should look again at the question of remuneration for committee roles”.

10 December 2014 Tynwald receives a report by the PSPA which includes an outline of possible changes to Tynwald Members’ pensions; and Tynwald resolves that the PSPA should undertake further consultation.

22 January 2014 Mr Karran tables a motion about Tynwald Members’ pensions. Tynwald agrees to an amendment tabled by Mr Howard Quayle that the PSPA should undertake a wider piece of work on public sector pensions including Tynwald Members’ pensions.

20 15 October 2013 PSPA lays a report before Tynwald. It says: “cost sharing … could be applied to the Tynwald Scheme … The rules/basis of the Tynwald Scheme would need to be amended to allow cost sharing to apply.

19 March 2013 Mrs Beecroft tables a motion about Tynwald Members’ pensions. Tynwald agrees to an amendment tabled by Mr Alfred Cannan that the PSPA should undertake a wider piece of work on public sector pensions including Tynwald Members’ pensions.

16 October 2012 Tynwald agrees amendments to the Members’ pension scheme recommended by the Emoluments Committee (PP 0106/12). The amendments introduce contributions which are discretionary in the first instance but compulsory for anyone elected or re- elected on or after 1st November 2012.

20 March 2012 Tynwald agrees, on a recommendation of the Emoluments Committee, that pension contributions at 5% should be introduced as a matter of urgency. The Committee’s Report (PP 022/12) refers to the other pension reforms considered in the Hymans Robertson options report but notes that it is essential to minimise expenditure on consultancy.

SEPTEMBER 2011: GENERAL ELECTION

14 July 2011 Tynwald rejects Statutory Document giving effect to 30% for membership of a PAC or PRC.

17 May 2011 On a recommendation of the Emoluments Committee Tynwald approves 30% for membership of the PAC or a PRC.

13 July 2010 Following a debate on a 5% pension contribution, Tynwald invites the Emoluments Committee to proceed with its review including consideration of a contributory element.

20 April 2010 Emoluments Committee established as a Standing Committee of Tynwald (previously it had been a Joint Committee of the Branches).

21 16 July 2009 Annual sum for expenses debated in Tynwald on a motion tabled by Mr David Cannan MHK. Resolved: “That Tynwald: (1) refers the matter of the annual payment of £6,178.44 tax free paid to Members of Tynwald to the Joint Committee on the Emoluments of Certain Public Servants; and notwithstanding the usual practice of the Joint Committee, requests the Joint Committee to report as to the continuation of that payment and related matters to Tynwald Court.”

26 May 2009 Emoluments Committee’s report on travelling expenses (PP 0071/09) debated by both Branches. Recommendation to publish on a routine basis is approved.

NOVEMBER 2006: GENERAL ELECTION

18 October 2006 In a Tynwald debate on public service pension schemes, an amendment is agreed that Tynwald requests the Joint Committee on the Emoluments of Certain Public Servants to consider and report, if necessary, with recommendations on the issues concerned with any adjustment of the retirement age in the two Tynwald Members’ Pension Schemes from 60 to 65 years.

21 January 2004 Tynwald approves the recommendation of the panel which has been put to it by the Emoluments Committee (Second Report of 2003/04) and Treasury makes revised Annual Sums Order rectifying spine point position.

23 October 2003 Emoluments Committee reports to Tynwald (First Report of 2003/04) proposing a technical amendment to move the relevant mid-point up from 27 to 29+2%. The proposal is not agreed. Instead, Tynwald reaffirms its commitment to recommendation (e) of the November 2002 Select Committee.

11 December 2002 Tynwald receives the Report of the Select Committee on the Reduction of Standing Committees. The Report recommends at paragraph 3.5.1 and recommendation (e) that the Emoluments Committee should give serious consideration to the establishment of a Top Salary Review Body, similar to that operating in the UK, which would subsume the work of the Emoluments Committee.

22 NOVEMBER 2001: GENERAL ELECTION

23 and 30 November 1999 Recommendations of CPA-appointed Commission (Demetris Eliades (Cyprus), Lawrence Gonzi (Malta) and John Leefe (Nova Scotia)) rejected by Legislative Council (23 Nov 1999) and approved by 11 votes to 10 in the House of Keys (30 Nov 1999).

28 October 1997 The House of Keys and the Legislative Council each approve the recommendations of the Emoluments Committee on Members’ salaries. Increases Members’ analogue to point 27, described as midway between the top of EO and the top of HEO level in IoM CS. Recommends a CPA-appointed Commission on Remuneration. Introduces Members’ Resettlement Grant.

NOVEMBER 1996: GENERAL ELECTION

22 May 1996 Tynwald Membership Pension Scheme 1995 approved by Tynwald. It reformed various aspects of the previous Scheme dating from 1985 including dependants’ benefits and the effect of offices held on pension entitlement.

23 24

ANNEX 3: PROVISION FOR AN INDEPENDENT BODY TO JUDGE AND SET MEMBERS’ SALARIES AND EXPENSES

Constitution The Body should be commissioned by the Standing Committee of Tynwald on Emoluments, or some other body, pursuant to a Tynwald resolution.

Remit

The remit of the Body should be laid down in the commissioning resolution. In considering that resolution, Tynwald should bear in mind that:

 the Public Sector Pensions Authority has a statutory responsibility to advise on pensions, including Tynwald Members’ pensions. To separate Tynwald Members’ pensions from the PSPA would be a retrograde step.

 any constraints it places on the Body can undermine the principle of independence.

The Body should be expected to consult the public, Tynwald Members, the Treasury, the Public Services Commission and the Public Sector Pensions Authority.

Output

The report of the Body should be in written form and must be submitted to the commissioning body by an agreed date.

Once submitted, the report should be laid before Tynwald without intervention by the commissioning body.

Membership

The duty to appoint Members of the Body should be assigned in the commissioning resolution.

In appointing members to the Body, regard should be had to the desirability of appointing persons with knowledge of:

 political life in the Island or elsewhere

 employment matters

 the private sector

25 Members of the Body should be able to claim an allowance for meetings attended at the rates equivalent to those applicable to members of tribunals.

The Body and its members should not make any public comment on the Panel’s work before the report has been published.

Secretariat

The secretariat to the Body should be provided by the Clerk of Tynwald.

APPENDIX 1: EMAIL DATED 18TH DECEMBER 2020 FROM HEAD OF NON-GOVERNMENT BILLS UNIT, THE SCOTTISH PARLIAMENT

27 28 From: [name redacted] Sent: 18 December 2020 18:09 To: Jonathan King Cc: [name redacted] Subject: RE: Members' pay

Hi Jonathan,

Apologies for the slight delay in replying. I wasn’t sure of the answer, so had to check with colleagues.

As you suspected, we do not have an independent body, such as IPSA, to determine MSPs’ pay (or expenses).

Pay for Members and Ministers is administered and set by the Scottish Parliamentary Corporate Body (SPCB) under the Scottish Parliament Salaries Scheme: The Scottish Parliament Salaries Scheme

The Scheme also provides a mechanism for uprating the salaries on an annual basis, which means MSPs do not vote on their own pay. The scheme was revised in 2015 to provide that any increase, from 1 April each year, would be based on the index for the mean annual earnings of public sector full time workers in Scotland as provided for by the Annual Survey of Hours and Earnings (ASHE) produced by the Office of National Statistics, or such other index as the SPCB considers appropriate.

Last year, the ASHE index applied to MSP salaries stood at 1.4%. This year the corresponding rate is 5.1%. However, last week the Presiding Officer announced that the SPCB has unanimously agreed that it would be inappropriate for the ASHE index to be applied to MSP and Ministerial salaries next year and as such there will be no increase. I hope this is helpful. If you do need more information on MSP pay you should get in touch with [name redacted] (copied) who heads up our pay and payroll office. Best wishes, [name redacted]

Head of Non-Government Bills Unit T2.60 Chamber Office Scottish Parliament, Edinburgh EH99 1SP

29 Parliamentary Copyright

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