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 (c) in addition to its consultative functions set out in paragraph 8.3 (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 THE MANX SOLUTION
2457
ALTERNATIVES CONSIDERED PROVISION FOR A BODY
III. OTHER MATTERS ........................................................................................... 7
RESETTLEMENT GRANT SCHEME
79
PAYMENTS TO MEMBERS WHO HAVE BEEN SUSPENDED
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.
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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 .
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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
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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 selfinterest, 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
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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
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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.
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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
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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 reelected. It would be desirable to amend the Scheme to make this explicit.
