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Complaint no. LA/NL/520 concerning an alleged contravention of the Councillors' Code of Conduct by Councillors James McCabe and James Smith of North Lanarkshire Council

1. Complaint number LA/NL/520 alleged a contravention of the Councillors' Code of Conduct ("the Code") by Councillor James McCabe and Councillor James Smith ("the respondents").

2. It was alleged that the respondents had contravened the Code, in particular, paragraph 5.16 relating to the declaration of a financial interest.

3. The person complaining ("the complainant") questioned whether Councillors McCabe and Smith, and other Councillors whom he could not identify, may have contravened the Code by voting on the implementation of a new pay and grading structure for approximately 15000 of the Council's employees when they had family members who work for the Council and had a conflict of interest. He was concerned that because the Council's electronic voting system does not record the names of those who voted he was unable to identify those members who voted to implement the pay and grading proposals. Councillor McCabe is the Leader of the Council and Councillor Smith is the Depute Leader.

4. The complainant, who is an employee of the Council, alleged that he personally stands to lose salary of £6000 per annum, together with a significant loss of pension benefits, from the implementation of the proposed salary scale for his post. The Monitoring Officer confirmed that the proposed salary scales for a small number of employees could give rise to an adverse differential of this magnitude but pointed out that there were safeguards built into the process which would preserve the existing salary placing of employees affected in this way for a period of three years.

5. Section 5 of the Code sets out, inter alia, the rules for the declaration of interests and the effect of declarations. Paragraph 5.13 is relevant to this complaint and states that the interests known to a councillor, both financial and non-financial, of relatives and close friends may have to be declared and that the key principle is the need for transparency in regard to any interest which might (regardless of the precise description of relationship) be objectively regarded by a member of the public, acting reasonably, as potentially affecting the member's responsibilities as a councillor. The paragraph does not attempt to define the terms "relative" or "friend."

6. Paragraph 5.16 advises that declaring a financial interest has the effect of prohibiting any participation in discussion and voting and states that a member should leave the meeting room until discussion of the item of business is concluded.

7. Paragraph 5.17 states that a declaration of a non-financial interest involves a further exercise of judgment which requires a member to consider the relationship between the interest which has been declared and the particular matter to be considered and relevant individual circumstances surrounding the particular matter. Paragraph 5.18 states that "in the final analysis the conclusive test is whether, in the particular circumstances of the item of business, and knowing all the relevant facts, a member of the public acting reasonably would consider that you might be influenced by the interest in your role as a councillor and that it would therefore be wrong to take part in any discussion or decision making. If you are not confident about the application of this objective yardstick, you should play no part in discussion and should leave the meeting room until discussion of the particular item is concluded. If you, in conscience, believe that your continued presence would not fall foul of this objective test, then declaring an interest will not preclude your involvement in discussion or voting."

8. In relation to the complaint the issue which had to be considered was whether the respondents had relatives or close friends who work for the Council (who were likely to be affected by the pay and grading proposals) and, if they had, whether the nature of the relationship or friendship, or other circumstances, gave rise to a financial or a non-financial interest. The Code requires councillors to consider declaring any interest, financial or non-financial, of any relative or close friend which relates to the matter under consideration.

9. Where the interest is of a financial nature the councillor must consider carefully whether it would be reasonable to assume that the councillor could benefit - or be seen to benefit - financially as a result of the interest of the relative or close friend. If that is the case - such as where the relative or close friend lives with the councillor as a result of which the councillor could be seen as benefiting financially from living in the same household - the councillor should declare a financial interest.

10. If the relative's or close friend's interest is financial but where (unlike the position in the foregoing paragraph) no financial benefit could reasonably be seen as accruing to the councillor, the councillor has to consider only whether his or her interest could amount to a non-financial interest. In such a case, the test that has to be applied is the objective one of whether a member of the public, acting reasonably and knowing all the relevant facts, would regard the interest as effectively the same as the councillor's interest as regards affecting his or her responsibilities as a councillor.

11. In considering both Councillor McCabe and Councillor Smith's positions it was important to take account of the fact that the item which was before the Council was a strategic issue affecting the pay and conditions of some 15000 of the Council's employees, rather than a matter which affected an individual employee or a small group of employees. The information before members (in the form of a report from the Chief Executive) was, accordingly, high level information as opposed to detailed information about individual employees' salary placings and the issue which members had to consider was not whether an individual employee, or a small group of employees, were entitled to a salary increase but whether the Council should opt to implement a Council wide equal pay settlement, without having secured the agreement of the trade unions, in order to prevent potential liabilities, in the form of compensation claims against the Council, from continuing to accumulate. In my opinion, where the item of business before members for consideration is of a strategic nature members have more latitude to participate in the discussion and voting provided, always, that they do not have a financial interest and that, in respect of any other interest, they can satisfy the test under paragraph 5.18 of the Code.

12. Councillor McCabe stated in his response that he had no close relatives or close friends who work for the Council and the complainant had no other information to offer on this aspect. At interview the respondent said that he thought he might have a distant relative who is a Council employee, possibly a cousin's daughter. I consider that a distant relationship of this nature does not give rise to any significant interest and, therefore, that it does not require any declaration of interest, other than in circumstances where the matter before members for consideration relates to that person alone or where the matter can be closely identified with that person. That was not the case in relation to the item of business before the meeting on 28 September 2006 and I, therefore, found that, given the distant nature of the relationship, Councillor McCabe did not require to declare an interest in respect thereof and, accordingly, that there had been no contravention of the Code of Conduct.

13. Councillor Smith readily acknowledged in his response and at interview that he had two daughters and two sons-in-law who are employees of the Council. He confirmed that none of these relatives reside in his home and that he has no financial relationship with them. He also stated that, at the date of the meeting on 28 September 2006, he did not know how individual members of his family would be affected by the proposals which were before the Council. He realised that he had an interest which he should declare but he considered it was a non-financial interest and, having considered the circumstances, he believed that a member of the public acting reasonably would not consider that he might be influenced by these interests in his role as a councillor and that these interests did not preclude him from participating in the discussion and voting. Accordingly, he exercised the discretion afforded to him by paragraph 5.18 of the Code and participated in the voting on the item of business.

14. Having considered carefully Councillor Smith's position and, in particular, the absence of a financial relationship with those members of his family who are employed by the Council, I found that:

- he declared an interest in respect of relatives known to him;
- he was entitled to apply the conscience test in paragraph 5.18 of the Code and form a view as to whether to participate in the consideration and vote on the implementation of the pay and grading proposals;
- having considered his position he concluded that he could participate in the consideration and vote on the pay and grading proposals; and
- no information came to light during the course of my investigations which caused me to challenge the judgment exercised by Councillor Smith in the application of the conscience test in paragraph 5.18 of the Code;
and, accordingly, that there had been no contravention of the Code of Conduct.

15. With regard to that aspect of the complaint which related to the complainant's inability to identify the 29 councillors who voted in favour of Councillor McCabe's motion to adopt option 2 of the Chief Executive's report it was relevant to point out that there is no statutory direction which stipulates how a local authority should record votes at Council or Committee meetings. North Lanarkshire Council's standing orders provide that a roll call vote must be taken if at least one quarter of the members entitled to vote call for it. There was no call for a roll call vote in respect to the item of business in question at the Council meeting on 28 September 2006 and I found that the Council properly complied with the provisions on voting as laid down in its standing orders. I added that the Council might, however, wish to consider whether it might be helpful to record how councillors have voted in respect of items where they have declared an interest and proceeded to participate in the substantive decision.

16. Having considered the information that arose from my investigation, I concluded that Councillors James McCabe and James Smith had not contravened the Councillors' Code of Conduct.

D Stuart Allan,
Chief Investigating Officer.
Forsyth House
Innova Campus
Rosyth Europarc
Rosyth
Fife
KY11 2UU
22 February 2007