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| A New Ethical Framework for Local Government in Scotland |
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| Chapter 4 - Other Enforcement and Disciplinary Processes |
| 64 Alongside the new disciplinary arrangements outlined in Chapter 3, there will
continue to be other local government enforcement and investigatory processes – the
local government audit regime and the local government ombudsman. Both the new
arrangements and existing processes will operate against the wider context of the
criminal justice system. In the criminal justice system the Government are considering a
number of developments – in particular the reform of the criminal law of corruption and
a proposed new statutory offence of misuse of public office – which will have particular
significance as regards the interaction of the criminal law and all the local government
disciplinary and enforcement processes.
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| 65 Moreover, conduct in local government must also be seen against the background of
the whole of the Government’s modernising agenda. By its commitments to renew and
strengthen local democracy, to put in place for all councils a best value framework, and
to make reforms to finance systems resulting in an increase in local accountability, the
Government will be reinforcing the drive – founded on the new ethical framework – for
the highest standards of conduct by all in local government. |
| Local Government Audit Regime
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66 The Government believes that all these developments, perhaps in particular the
introduction of the new disciplinary arrangements, will have implications for the audit
regime. The Nolan Report recommended:
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67 Responses to the Nolan recommendation suggested that there was no perception
of significant abuse in Scotland of electors’ right to challenge an authority’s accounts.
The Government accept that there is at least a risk of certain abuses as suggested by the
Nolan Report, in particular:
- by electors who might use it to challenge a decision with which they do not agree,
regardless of its financial implications;
- to seek redress for personal grievances where the ombudsman has missed a
complaint, or in parallel to such a complaint; and
- by private contractors seeking commercially useful information about a council’s
operations.
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| 68 We believe it is important that local people are able to inspect their council’s annual
accounts, question the auditor, and lodge objections where they reasonably believe that
unlawful expenditure or excessive waste may have occurred. However, it may also be
appropriate, in line with the rest of Great Britain, to reduce the scope for the potential
abuse that the Nolan Report describes. |
69 Against the wider background of more open and accountable councils, we think it
would be acceptable to simplify the objection regime along the lines suggested by the
Audit Commission:
- a power for auditors to refuse, for good reasons, to hear objections (subject to a
right of appeal) if, for example, they consider the objection vexatious or identical
to one previously dealt with;
- a limit on the period of time within which objections can be raised; and
- a simpler and faster process, possibly doing without oral hearings; the auditor
might be empowered to set time limits for submission of evidence; it might also be
possible to avoid the complexity of the present process in which the objector acts
as prosecutor.
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| 70 As to the proposed right of appeal, this might in the first instance be an appeal to
the Accounts Commission. |
| Q19. The Government would welcome views on the audit objection process and how it
might be streamlined without becoming less accessible to ordinary electors.
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| The Surcharge Regime |
71 The Nolan Report also made recommendations on the surcharge element of the
audit regime.
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72 The Government has undertaken extensive consultations on the proposed
new statutory offence of misuse of public office covering the public sector as a whole,
both as part of the consultations on the Nolan Report and more widely. In the light of all
the comments and advice received, the Government will announce its conclusions as soon
as possible. |
| 73 The Nolan Report set out a number of concerns about surcharge in local
government. The history of surcharge is that it was seen in theory essentially as a process
of restitution – although in practice it is undoubtedly a penalty. We accept the
conclusions of the Nolan Report that it is arguable whether or not surcharge in theory is consistent with this principle of restitution. Like the Report, the Government take the
view that the concept of restitution should apply in cases of personal gain as a result of
improper behaviour, and that this is a general principle applicable throughout the public
sector and beyond. Restitution of improper personal gains could be achieved, as the
Nolan Report suggests, by the courts having powers to order by way of a compensation
order the restitution of the sums involved.
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| 74 Unlike England and Wales, it is not the case in Scotland that councillors who are
surcharged for amounts over £2,000 are disqualified (in certain cases at the discretion of
the Court) from being a member of a local authority for five years. The Government are
clear that, where an individual in public office has abused the trust placed on him or her,
that individual should not be able to continue to serve in that office. The new
disciplinary arrangements will be constructed to achieve this.
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| 75 If the new Misuse of Public Office offence can provide adequate safeguards, then
there may be no further need for surcharge in Scotland. However, the Government
recognise that the current audit regime in Scotland contains a system of checks and
balances, different to that in England and Wales, involving both the Accounts
Commission and the Secretary of State.
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| 76 We recognise that the surcharge regime also covers council employees. For them, the
effect of the abolition of surcharge would be that in certain situations where once
employees could be subject to a financial penalty, they would no longer be so subject.
However, if, as we envisage, any abolition of surcharge would be in circumstances where
courts could order compensation in respect of personal gain arising from misconduct,
this financial penalty would be in effect replaced with a court ordering restitution of the
improperly acquired personal gain.
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| 77 As the Nolan Report recognised, the case for abolishing surcharge would be further
strengthened by the introduction of a new statutory offence of misuse of public office.
Such an offence would provide for the possibility that in certain incidents of misconduct,
where currently the penalties are restricted to a financial penalty under the surcharge
regime, there would be the full range of penalties, including imprisonment, available
under the criminal law. The offence may also be expected to apply to situations of other
types of misconduct where currently the surcharge regime, which focuses on financial
loss or unlawful expenditure, does not bite.
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| 78 As regards the proposal to abolish surcharge, a new offence may also be of
significance in providing a framework in which the courts can order the appropriate
compensation to be paid in restitution for personal gain arising as a result of
misconduct. The Nolan Report identified a possible interim scenario where the surcharge
regime would be replaced in advance of the new offence, and hence the abolition would,
as explained above, need to be accompanied by the introduction of procedures to provide
for compensation. Whilst not wishing at this stage to rule out such an interim scenario,
the Government believe that it may prove the most practicable course to move
straightaway to a situation where, along with the introduction of the new disciplinary
arrangements, surcharge is abolished in parallel with developing the criminal law –
perhaps by the full introduction of a misuse of public office statutory offence – thereby playing in arrangements for ordering compensation payments where appropriate. In
Scotland in particular, where the current arrangements for the imposition of surcharge
are less controversial than in England and Wales, there does not appear to be a strong
case for the replacement of surcharge until a better permanent solution is put in place
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| Q20. The Government welcomes comments on its proposals for the audit regime, in
particular the abolition of surcharge. Should surcharge be abolished in parallel
with the development of the criminal law in due course, or should interim
arrangements be set up?
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| The Local Government Ombudsman Regime
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| 79 The introduction of the new disciplinary arrangements will have implications for the
operation of the local government ombudsman. The principal function of the
ombudsman is to investigate complaints, and to recommend remedial measures, by
individuals alleging injustice arising due to maladministration by local authorities. The
Local Government and Housing Act 1989 introduced an additional dimension by giving
the ombudsman a form of enforcement role in respect of the National Code of Conduct
for Councillors. This role was that where an incident of maladministration involved a
councillor breaching that code, the ombudsman was required, unless satisfied that it
would be unjust to do so, to name the councillor concerned and give particulars of the
breach. The ombudsman is also able to give advice and guidance to councils about good
administrative practice.
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80 We believe that with the introduction of comprehensive, new disciplinary
arrangements, centred on a Standards Commission, it will be important to avoid any
duplication with the role of the ombudsman. Accordingly, we envisage amending the
present statutory regime for the ombudsman, so that he or she will no longer be
concerned as a primary question whether a councillor’s conduct breached the Code, or
with taking action against any councillor failing to observe the Code. The ombudsman
function will be to address complaints from individuals alleging injustice as a result of a
council’s maladministration. It may be that an act of maladministration involves a breach
of the Code, but this will not necessarily be so. The Ombudsman’s concerns will be;
- to establish whether there was maladministration and whether this resulted in
injustice; and
- to recommend action by the council to remedy, or compensate for, that injustice.
The imposition of penalties on those responsible will not be a matter for the local
government ombudsman.
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| Q21. The Government would welcome views on its proposals for redefining the role of
the local government ombudsman to avoid duplication with the new disciplinary
arrangements.
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