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 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