Bombshell for the Assemblies across the country

The following letter was received yesterday from the City of Sunderland. When you read it you will understand the devastating consequences it has for all the councillors who sit on regional assemblies across the country.

To various degrees, depending on their understanding of the legality of their assemblies make-up, and the advice they have received from their own Local Authority legal advisors, they have been committing one or more of the offences described below.

Therefore, the same line needs to be followed with all local authorities. It would be beneficial to inform all assembly members of their vulnerable personal positions...then watch the domino effect.

Perhaps the Conservatives will see sense and unilaterally withdraw from the assemblies which will then be in breach of their own constitutions (must have a political balance) and therefore will be forced to wind up.

The original questions to Sunderland Council can be viewed here

The partial response to those questions is below, with the rest to follow:

City of
SUNDERLAND

CITY SOLICITOR
Bob Rayner LLB

ASSISTANT CITY SOLICITOR
Elaine Waugh LLB

Po Box 100, Civic Centre
Sunderland,

SR2 7DN

Telephone (0191) 553 1000
Fax (0191) 553 1033
DX60729, Sunderland

Mr R Rayner
1003
(0191) 553 1003
RCR/AGH/62600/A
11 March 2005-03-14 Bob.Rayner@sunderland.gov.uk

Mr N Herron
12 Frederick Street
Sunderland
SR1 1NA

Dear Mr Herron

Complaints concerning ANEC/NEA and Declarations if Interest

Further to my acknowledgement of 7 march and having regard to the numerous issues you have raised I consider it would be beneficial if I set out the legal framework in respect of your complaints.

Alleged Breaches of S137 and 143 Local Government Act 1972 and S2 Local Government Act 2000

First, I would reiterate that leading Counsel confirmed in April 2003 that it was lawful for the Council to rely upon Section 137 and 143 of the Local Government Act 1972 in respect of previous contributions and could rely on the power contained in S2 of the 2000 Act to support the Association and the Assembly to pursue the objectives set out in their Constitution and Rules of Procedure respectively.

The legal test for the exercise of the discretionary power in Section 2 is whether an authority considers that it is “likely to achieve the promotion or improvement of the economic, social or environmental well-being of their area. The inclusion of the word “likely” means that the activities do not actually have to achieve that objective, but the discretion must be exercised properly within the public law framework.

The referendum result is a relevant matter for members to consider but is not determinative of the issue.

In my view the issue for an Authority is whether it considers the overall effect of membership id likely to achieve the objects set out in Section 2, and is not to be determined by reference to one single aspect.

Turning to the specific matter you raise, in summary the salient points are as follows:

- It is not the Assembly’s regional Spatial Strategy (RSS)
- The RSS is a statement of the Secretary of States policy
- The assembly is undertaking the function of Regional Planning Body (RPB) for the North east as designated by the Minister and Council’s involvement is lawful.
- Participation provides the opportunity for Sunderland’s perspective to be articulated as part of the process.
- Individual authorities retain the right to make representations and objections and pursue their interests, as they deem appropriate at the examination in public.

The detailed legal position is that under Section (2) of the Planning and Compulsory Purchase Act 2004 the Regional Spatial Strategy (RSS) must set out the Secretary of State’s policy in relation to the development and use of land within the region. RPG1 is prescribed as the initial RSS for the North East.

Under Section 2 of the 2004 Act, the Secretary of State may give a direction recognising a body as the Regional Planning Body (RPB) and he has designated the North East Assembly as the RPB for the North East. Not less that 60% of the members of that body must be members of district, county or metropolitan district councils in the Town and Country planning (Regional Planning) (England) Regulations 2004 S12004/2203. The Regulations provide that at least 30% of the members of the RPB must include at least one member from each type of “relevant authority”, including district councils, county councils and metropolitan district councils. All Members of the RPB are entitled to vote when any decision relating to the exercise of the RPB of its functions under the Act is taken.

The RPB’s general functions are to keep the RSS under review; monitor its implementation throughout the region and consider whether the implementation achieving the purposes of the RSS; and report annually to the Secretary of State on the implementation of the RSS. In addition the RPB must keep under review the matters, which may be expected to affect both development in the region or any party of it and the planning of that development, and must give advice to any other person/body if it thinks that will help to achieve RSS implementation. The RPB must prepare a draft revision of the RSS.

However the RSS is a statement of the policies of the Secretary of State, not of the local planning authorities. The Secretary of State’s role is to set the national policies within which the RSS (or its revision) is prepared, to consider the draft and any representations and consider holding an examination in public, and to approve the revisions or proposed changes to it.

The Regulations provide that before submitting a draft revision of the RSS to the Secretary of State, and RPB must consult inter alia all of the Councils, each of which will have an opportunity of making representations and pursuing the matter if they deem it appropriate at the examination in public.

2. Alleged Breaches of the Local government Act 1972 and of the Code of Conduct

Sections 94 to 98 of the Local Government 1972 were repealed by paragraph 12 of Schedule 5 of the Local Government Act 2000. The provisions were disapplied when the Council adopted the new code of conduct under the 2000 Act (see Article 4 of the Local Authorities (Model Code of Conduct) (England) Order 2001 on 20 March 2002.

Accordingly, the issue of criminal charges needs to be considered only in respect of matter prior to 20 March 2002. No declarations of pecuniary interests were made and nor does it appear that members were advised to do so by my predecessor.

It is not considered they were required for the following reasons. Section 94 of the Local Government Act 1972 provides that if a Member of a Local Authority has any pecuniary interest, direct or indirect, in any contract, proposed contract or other matter, he must declare it and take no part in the discussion or voting on the matter.

Section 95 provides that for the purposes of Section 94, a person shall be treated, subject to the provisions of the section and section 97, as having an indirect pecuniary interest in a matter if he is a member of a company ­­­or other body shall not by reason only of his membership be treated as having interest in any contract, proposed contract or other matter if he has no beneficial interest in any securities of that company or other body.

If ANEC is a public body, then any member of the body or employee of the body will not have a pecuniary interest by virtue of Section 95 (1). There are two definitions of “Public body” under the 1972 Act. Section 98 provides that “public body” includes any body established for the purpose of carrying on under national ownership any industry or part of an industry or undertaking, the governing body of any university, university college or college, and various other matters, none of which could apply to ANEC. For the purpose of S95 the narrower definition is applicable but it is pertinent to note for the overall context that ANEC would qualify as a public body under section 270(1) which provides that “public body” includes and trustees, commissioners ­­or other persons who, for public purposes and not for their own profit, act under any enactment or instrument for the improvement of any place”. The Members of ANEC/NEA act under instruments for the improvement of a place.

However, on the basis that ANEC is not deemed a public body, that is not the end of the matter because under Section 95 (2) a member of a company or other body shall not by reason only of his membership be treated as having an interest in any matter if he has no beneficial interest in any securities of the company or body, A member does not have an indirect pecuniary interest just because they are members of the body.

You have stated that the Members of ANEC have a pecuniary interest because they have a potential liability in view of the fact that ANEC is an unincorporated association.

There is however no restriction on the application of Section 95 (2). The only reason that the councillors have a potential pecuniary interest is by virtue of their membership. There is nothing in the section to suggest that it does not apply to situations where there is a potential liability upon the individual. It clearly states that they will not be treated as having an interest if they have no beneficial interest in any securities. The definition of “securities” is set out in Section 98 and it includes the usual things such as shares, instruments relating to indebtness, instruments giving entitlement to invests, certificates representing securities, rights to money deposited with a building society etc. Clearly the councillors have no beneficial interests in these matters and therefore they should not be treated as having an indirect pecuniary interest in the matter.

Turning now to the position under the code of conduct, the obligation on members is to register their relevant interests by providing written notice to myself and to notify changes within 28 days. There is no requirement to state that the nature of the interest is ‘pecuniary’ or ‘prejudicial’. Members are obliged to disclose personal interests (which arise in relation to matters which they have or ought to have registered and which includes membership of a position of general control in various specified bodies) at meetings of the Authority at the commencement of that consideration or when it becomes apparent (see paragraph 9 of the Code)

A member must then consider whether a member of the public with knowledge of the relevant facts would reasonably regard the interest as so significant that it is likely to prejudice the member’s judgement of the public interest. If so, the member should declare a prejudicial interest and withdraw from the meeting at which the matter is being considered.

Paragraph 10 (2) deals with situations where members have an interest arising from service on other authorities and public bodies. This paragraph provides that members may treat such interests as personal only, if the matter relates to various specifies bodies.

I would draw your attention to the category in paragraph © which includes ANEC.

Paragraph 10 aims to balance three principles:

· That Members must withdraw from consideration of issues where their interests conflict with their public duties;
· That the rules on interest should not obstruct Members who are involved on other forms of public service, such as another tier of local government;
· That the rules on interests are not intended to interfere with the proper conduct of council business.

In respect of the budget meetings held in 2003 and 2004 my advice was that Members on ANEC could exercise their discretion under this paragraph and treat the interest as personal only.

In November 2004 the Standards Board’s guidance on “Lobby groups, dual hated Members and the “Code of Conduct” (was received and copies sent to members). I also wrote to all Members summarising the guidance. Having regard to that guidance, my advice to members for the Budget item in respect of ANEC this year was to declare a personal and prejudicial interest in the matter, which they all did and withdrew from the meeting whilst the matter was considered. For the avoidance of doubt this included the earlier consideration of the matter at Cabinet, which occurred prior to the receipt of your letter.

Relevant information, which you have requested, is being assembled and a colleague will be writing to you shortly in respect of certain requests.

In relation to the allegations of possible offences under the Local Government Act 1972, I have spoken to Superintendent Campbell of Northumbria Police who has confirmed that if notwithstanding the foregoing you consider offences have been committed then you should refer your concerns to the Police as the relevant investigating body. They would seek independent legal advice on the matter if they considered it necessary and determine whether to refer the matter to the DPP. Accordingly it would not be appropriate for me to correspond with you further on this aspect of your complaint.

Part III of the Local Government Act 2000 introduced a new regime for the regulation of the conduct of members, which involves reporting alleged breaches to the Standards Board. I have enclosed a further copy of the relevant booklet, which explains what to do if you decide in the light of all the information to proceed with a complaint and it will be for the Standards Boards to decide whether and by whom it should be investigated.

Yours sincerely

R C Rayner

City Solicitor

C.c District Auditor, Mr D Jennings
Supt J Campbell, Northumbria Police
Ms Michelle Witton, (Standards Board for England)
ANEC Members Chief Executive