Jacob Williams https://jacobwilliams.com

This morning’s Corporate Governance Committee meeting was quite an eye-opener. The Wales Audit Office was there to present its audit report of the council’s 2012/13 accounts, making absolutely clear it’s refusing to sign them off pending legal queries into the ‘pensions arrangements.’

Despite the difference of legal opinion between the council and the WAO, members of the committee were presented with a recommendation from officers to give the accounts the council’s formal seal of approval – with a caveat which somehow allows the legal contentions over the pensions arrangement to be “parked” at one side.

Following many probing questions – all of which were from opposition councillors – the accounts were given the ruling party’s seal of approval, winning 7 votes to 6.

All six opposition councillors were united in voting to refuse approval of the accounts, on the basis that the pensions arrangement was a very serious matter and should not be part of a caveat: myself (unaffiliated independent,) Cllr. Vivien Stoddart (unaffiliated independent), Cllr. Mike Stoddart (unaffiliated independent,) Cllr. David Howlett (Conservative leader,) Cllr. Michael Williams (Plaid Cymru leader) and Cllr. Paul Miller (Labour leader.)

All seven councillors from the ruling party (the IPG) used their majority to vote to force through the council’s approval: Cllr. Jamie Adams, Cllr. Huw George, Cllr. Tom Richards, Cllr. Peter Morgan, Cllr. Mike James, Cllr. Brian Hall, and Cllr. Keith Lewis.

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So what did we learn during the meeting?

Given Carmarthenshire’s equivalent meeting held last Friday, it was expected that the WAO representatives presenting the audit would be unable to delve very deep into the legal dispute. And so it turned out to be, however it didn’t stop the questions coming, and they did – thick and fast.

As well as an admission from the WAO representatives that the legal argument is linked to the way in which the ‘Pensions Arrangement’ was adopted, by far the biggest revelation came from officers – that, prior to the introduction of this scheme in 2011, no legal advice was sought.

This came following my question on whether it was a ‘coincidence’ that the two neighbouring authorities appear to be the only ones in Wales operating such an arrangement allowing the highest paid to have their pension contributions as cash, or whether they worked together.

It appears that they acted separately when they embarked on their respective schemes in 2011, however we now know in August of this year, both PCC and CCC jointly instructed lawyers to seek legal advice, which is expected to be made available later this week.

No figures were available when Cllr. Paul Miller asked how much it would cost to obtain this legal opinion, though whatever the amount, it would rather fly in the face of the statement in defence of this scheme that it wouldn’t cost the authority any extra money.

The argument that this arrangement was introduced as a tool to aid in retaining existing senior officers and recruiting new ones became particularly difficult to understand, following the Director of Finance’s revelation that this arrangement would actually cost those who went for it.

Given that the only employee to take up the cash sum option in 2012/13 was the Chief Executive of some sixteen years’ service, there is little evidence to suggest that the introduction of this arrangement was imperative or a ‘clincher’ either.

The confidential report presented to the Senior Staff Committee in 2011 was authored by the Director of Finance and the Head of Human Resources. This was still restricted information until it was read out by the Head of Legal and Committee Services during this morning’s meeting. We also earned that only staff on the pay levels of Heads of Services, Directors and the Chief Executive are able to opt out of the pension scheme and receive their contributions in their own hands. When I asked whether there was anything preventing a similar scheme being introduced for lower paid staff to avoid paying taxes, the answer was, effectively, no, but this ‘arrangement’ was only available for the highest-paid.

The main question on my mind going into the meeting, was, as highlighted in my previous post on the topic, where did the idea come from? Accordingly, when the new tax legislation was brought in, via some method or other, councils and other applicable agencies were made aware of the changes and the implications they would bring.

Now whether my hearing is going or I lost track in the heat of the moment, I can’t understand how this can have been taken by officers as a hint to devise ways of getting around the new impositions, but, that’s what I think we are being led to believe. The fact that this was embarked upon – and adopted – without any legal advice is, as Cllr. Viv Stoddart said, ‘staggering.’

As for the arrangement of the meeting – in secret session in the Chief Executive’s office, the leader, Cllr. Adams, stated that all other committee rooms “were unavailable.” Considering that there are quite a few different-sized rooms available to be used, and that this committee’s membership was minuscule compared to most others, I find this very hard to believe.

In addition, the council’s website lists that the Senior Staff Committee was the only committee meeting held on that date.

The committee rooms are located off the main entrance hall through no locked doors, for obvious and sound reasons. However the leader also tried to claim that the Chief Executive’s private office is accessible to the public too, yet to get to even the same floor level, requires a security pass – not to mention the knowledge of where to go.

“A number of Senior Staff Committee meetings” had been held in the Chief Executive’s office previously, according to Cllr. Adams. Again, the evidence available suggests that this is blatantly not the case. As the Pembrokeshire Herald reported on Friday, a check on the council’s website reveals that of 38 meetings of this committee that have ever been held, this is the only such meeting which states it was held in this room, with all others being in committee rooms. However, it is possible that what the leader says is true – that it is commonplace for Senior Staff meetings to be held in the Chief Executive’s office – in which case, the minutes and agendas must be routinely inaccurate.

The law requires councils to make space available for councillors to be able to meet with fellow councillors, or their constituents. The revelation that the Chief Executive’s sizeable suite is public space, has rather whetted my appetite. I’m thinking of asking if I can book it out the next time I fancy conducting some constituency business at the Kremlin. In light of the leader’s assurances that it is, indeed, open to the public, I might be in with a chance!

One of the final points to be raised – and one which nearly all opposition members were keen to ascertain – was over interests, and declarations. The minutes for the tax-save meeting record none. The rules governing a member’s conduct when partaking in business he or she has a pecuniary or vested interest in, are quite clear and well documented, and complaints over such matters make up a large chunk of the Ombudsman’s workload.

The position for officers shouldn’t be shrouded in doubt either, however a guidance note relating to section 117 of the Local Government Act was read out by the Head of Legal and Committee Services, implying that officers, on this occasion, didn’t need to declare:

“If an officer knows that a contract in which he has a pecuniary interest is before the authority, he must give notice of his interest to the authority. This does not apply to a contract with him in his own name, since the authority will then know of his interest.”

As I pointed out, this ‘pensions arrangements’ decision doesn’t relate to an individual’s contract, but a wholesale change of council policy relating to a bunch of its highest earners – which was introduced as a knee-jerk reaction to the imposition of higher tax levies.

Since the meeting I’ve also delved into the bulk of information given to me upon my election. On the topic of ‘personal interests,’ the council’s code of conduct for staff members states:

“Employees must declare to their Director (or equivalent) or, as appropriate, the Chief Executive, any financial and/or non-financial interests that they consider could bring about conflict with the Authority’s interests.”

As has since been pointed out to me by someone very knowledgeable on the topic, even if interests were written in blood on the walls and in the committee clerk’s notes and subsequently in the minutes, what matters is the conduct following the declaration of interest, and not just the declaration itself. That applies to officers present, or indeed those who were not present but who had the opportunity to influence a recommendation or vote in their job.

As well as the declaration of the interest, it could prove necessary, particularly if there is an opportunity to financially benefit from a decision under deliberation, to remove oneself from the meeting place, and to withdraw from any involvement with the matter in their role.

Cllr. Mike Stoddart also queried whether it was right for the committee to have entered into private session to discuss the pensions arrangement. The public reaction to this story makes it difficult to see how the public interest was better served by conducting the meeting behind closed doors rather than in the open, but it appears even the grounds cited for convening in private, are sketchy.

Cllr. Stoddart brought with him a list of exempt information for which private session can be invoked, which includes “13 – Information which is likely to reveal the identity of an individual,” and “14 – Information relating to the financial or business affairs of any particular person,” however the clause cited in the agenda to the Senior Staff Committee was “12 – Information relating to a particular individual.”

None of these exemptions appear to relate to the item being discussed, because it didn’t relate to a ‘particular individual’ but a change of policy – and one which remains highly controversial.

Prior to the meeting I also presented the following list of 14 questions (on paper) to the council’s Director of Finance, and to the Wales Audit Office’s two representatives in attendance (with a copy to be handed to the appointed auditor Anthony Barrett.)

1) Which officer(s) took up the ‘arrangement’ during the 2012/13 and 2013/14 financial years?

2) Where within the 2012/13 accounts do the disputed transactions appear, and what are the amounts?

3) As it was not a councillor’s proposal, whose idea was it to introduce this way of avoiding tax, and who compiled the legal and professional advice prior to the adoption of the arrangement in 2011?

4) Did these direct cash payments in lieu of LGPS contributions reflect an appropriate deduction for taxation under ‘PAYE’ arrangements? If not, why not?

5) Did officers agree these arrangements with HMRC? On the assumption that they did, did this include the rate at which ‘PAYE’ was to be deducted? If not, in one or both cases, why not?

6) If the council’s advice is considered sound, presumably such an arrangement could be made available as an option for all members of the workforce, not just the highest-paid? If not, why not?

7) How does the payment aid workforce recruitment or retention, precisely? Is it being suggested that:
a) senior staff would have resigned in 2011 if the arrangement was not introduced? OR
b) the council would fail to recruit effective replacements? (Whilst offering, in the Chief Executive’s case, a salary in excess of that of the Welsh First Minister or UK Prime Minister.)

8) What is the auditors’ advice regarding approval of the accounts, given that the sum involved is likely to be immaterial to the overall financial statements?

9) As an opinion of ‘unlawful’ appears to have been reached on the pension arrangements at a neighbouring authority, will the auditors indicate which parts of the PCC and CCC arrangements differ and therefore could presumably mean that PCC’s may yet be lawful?

10) Irrespective of the outcome of the legal debate over the substance of the arrangements, the decision must be considered unlawful if the CEO took part in a meeting in which he cannot escape conceding that he had a direct, significant, pecuniary interest. (Audit conclusion at Caerphilly CBC makes this reference) Why is the audit report at Pembrokeshire silent on this aspect?

11) Did/does the Monitoring Officer have a duty to report to council on what are, clearly, ‘novel’ or ‘contentious’ arrangements?

12) How has the council’s s.151 officer discharged his statutory responsibilities in this matter?

13) Crafting a scheme to allow senior officers to ‘dodge’ legitimate tax deductions on their pension contributions is clearly in the public interest, yet it was recommended by officers and subsequently resolved to be discussed in private session. No details are known of the reason(s) for excluding the public, and they should have been expressly provided. Was this a legitimate use for the invocation of private session? Would the public interest not have outweighed the reasons given in any case?

14) When will the public audit report be available in respect of this issue?