STANDARDS IN PUBLIC LIFE

Question

This post is for information but is relevant to me as I am currently going through the pains of trying to pursue a Cllr "code of practice" issue. In my case I have  a Cllr being appointed by the PC to a charity based on the foundation model and partaking in some dubious activity. One opinion says he is not acting as a Councillor but as an independent trustee whereas another says if he was appointed because he was a Councillor then he is acting as a Councillor . We shall see how it turns out. Having written to the relevant GD about this  part of their reply detailed the following.

You may however be interested to learn that on 30 January 2019, the Committee on Standards in Public Life published its review into local councils and how they are supporting good ethical standards in light of changes over the past ten years. A link to the report is below: https://www.gov.uk/government/collections/local-government-ethical-standards

Chapter 5 covers parish councils and acknowledges that the oversight regime is light touch, in line with their lower budgets and limited remit, when compared to principal authorities. The report goes on to say that for most parish councils, the current balance works well but makes recommendations on the qualifications of the parish clerk and the relationship between the parish council, the principal council monitoring officer and potential sanctions. Ministers are currently considering its recommendations and will provide a response in due course

Answer 1

A trustee of a charity must, at all times, act in the interests of the charity and its beneficiaries. This is a fundamental principal of charity law. If a councillor is appointed by their council as a trustee of a local charity, they do not act as a councillor in their role as a trustee. The charity's rules override the council's. The basic principles of good conduct (Nolan etc) apply to us all in every aspect of our lives whilst serving in any public office. However, there will be times when a councillor, appointed to a charity, must vote in support of the interests of the charity, against the interests of the council. Grant funding is often a case in point. They have the option to abstain, but abstention should, in any circumstances, be a last resort. You're there to make a decision, not to hide from it.

Comments

An officer of the relevant Government dept writes
However in relation to the councillor’s conduct, my informal view is that if he was acting as a councillor whilst a Trustee of the Charity (i.e. he was appointed to the Charity because he was a councillor) my view is that the councillors code of conduct would be applicable and the principal council monitoring officer would be able to consider a complaint and investigate the allegation, although I agree that the action available to them would be limited to censure or removal from a committee.
Having said that I don't really care who he is answerable to its the act of wrong doing that has to be answered and sooner or later it will. The matter has now been formally reported and the PC has asked for a fixed time to "meet the trustees to plan and inform future decisions"

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Yes, I agree that the Code of Conduct still applies, as the individual is both councillor and trustee and the C of C doesn't conflict with charity law.

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Dave. At the heart of this and I don't know if it is deliberate, is the all too common use of the foundation model when establishing charities created through "initial PC activity". If the constitution has  a provision for PC approval of trustees or the mandatory ability to appoint trustees this effectively means that the PC has a degree of input into the running of the charity whilst also often being the main funder.  The downside is that the public has no input whatsoever despite the fact that they are paying the grant through the precept. This can lead to the charities presenting a balancing entry grant application which will be duly processed. This often means normal fund raising is not needed. I argue that members based charities should be more common with elected trustees who are accountable to the members. I suppose you pays your money....

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In my experience, this is a rare scenario. There are some white elephant vanity projects out there, but these are mainly a thing of the past. There are now very few funders that will fund a charity but not a parish council. Indeed many funders prefer to give large grants to a well-governed applicant such as a local council rather than a newly-formed charity comprising individuals with relatively little experience. Parish councils can raise funds through public subscription. The deciding factor is often the VAT position, as charities cannot normally reclaim VAT, whereas councils can. The only potential benefit of the charity route is that the charity can register for Gift Aid on individual donations.

The members of your PC may be exploiting a loophole, but it is for the council as a whole to decide how to respond. More importantly, it is for the electorate to decide whether they would like to see their money spent in this way.

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It would be interesting to know if it is a rare phenomenon or not. Locally the policy seems to be to set up a committee/charity to manage a given local facility on a day to day basis and for that committee/charity to apply for grants. We have the Community Centre/Youth Club/Churchyard Trust and no doubt a library one is on the horizon. How else would PCs get financially involved in taking over services previously run by District Councils. As regards the electorate deciding on how their money is spend I must say "you are having a laugh" as in practical terms there is no remedy

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Parish councils have the power to run all of the services you mention, so there is no need to establish a new body to take them on. Creating too many committees may not be sustainable. External funding is available to assist the parish council with new services. It is normal for village halls and community centres to be run by a dedicated charity, but this is usually wholly independent of the parish council.

Using my parishes as an example, the village hall/community centre buildings belong to the councils but are leased on a full repairing and maintaining basis to the charities. If work is required to the fabric of the building, the council may make a one-off contribution if the work is either unaffordable for the charity or would jeopardise the charity's financial stability, however there is no ongoing funding relationship. Two of these community centres stand in council-owned recreation grounds that are included in the lease to the hall charity, so that the indoor and outdoor spaces can be managed together. The other two parishes manage their recreation grounds as part of the work of the council.

We have some historic welfare/education/general purpose charities, to which the council appoints some trustees, but always a minority of the total number, so the council can exercise no control over the charity. There is no funding relationship with the charities. The council also appoints members to the assessment panels of the local wind farm and power station community benefit funds, but again, a minority of the total membership. We're involved, for the benefit of our communities, but we don't seek to control.

With my many hats on, I talk to a lot of parish councillors and the vast majority operate along broadly similar lines to my own. Beyond that, I can't comment.

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The problem is Dave that it is entirely possible (although obviously not in your case) that the same senior Cllrs could be involved in both managing the committee(s) having been appointed by the PC and ensuring that any required grant was paid. However, when questioned they could legitimately say we have no governance or financial responsibilities towards the charity i.e. we just choose to support it under our powers. If that scenario applies then the committees don't have to make tough commercial decisions or fund raise and the pubic in the meantime has no recourse. The total independence is only there when it suits.

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A trustee of a charity may never claim to have no governance or financial responsibilities towards the charity.  All trustees are fully responsible and individually accountable for every aspect of the administration of the charity. See Charity Commission publication CC3.

If the councillors have a controlling interest in an organisation that applies for funding from the council, they must declare a non-pecuniary interest and, if numbers permit, I would ask them to withdraw from the meeting, in the interests of transparency (unless your code of conduct requires it anyway). They certainly cannot vote on the matter. No dispensation should be granted, as it is improper for a councillor to apply for a dispensation knowing that they will be party to a five-figure funding application (unless they declare this fact in their request for dispensation, in which case the council would be compelled to reject the application).

The public recourse comes when an agenda is published showing the council's intention to consider a substantial grant to a community project from public funds. The public have the opportunity to attend that meeting and make their feelings known in such a manner that the councillors would be under no doubt whatsoever that the grant was not in the public interest.

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It is of course the PC who would claim no governance or financial responsibilities towards the Charity not the trustees. I appreciate all the public recourse stages which of  course can be simply ignored. As regards dispensation this is allowed for in the SOs and is widely granted (to speak and vote).  My argument is that the whole concept of trustees having  no real accountability (via the foundation model) allows such a situation to possibly arise. In one case the constitution allows for an Annual meeting which states that trustees should consider the points raised by the public and "during the following year bear due heed to the wishes of". Having raised 8 questions I asked the Chairman at the meeting is she intended to respond? She said No