Dispensations and Dispensations

Just as there are different species of dog and cat, so there are different species of dispensation. For whilst there are dispensations, there are of course also . . . dispensations. Nicholas Dobson explains.

For two different members of the dispensation species are to be found in differing habitats. One relating to member pecuniary interests grazes the plains of Part 1 (within section 33) of the Localism Act 2011. The other (concerning generic conflicts of interest) can be spotted nestling in the undergrowth of Regulations 12 and 13 of the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012 (S.I. 2012 No. 2089)).

Both, whilst different, essentially proceed from the same core purpose i.e. so that members and others taking decisions on public functions are and are seen to be actuated only by the public interest and without any perceived taint of personal or other extraneous interest.

Disclosable Pecuniary Interests (DPIs)

Before the new standards regime there were things called ‘prejudicial interests’. Remember them? A prejudicial interest was a personal interest (defined extensively in Paragraph 8 of the 2007 Model Code of Conduct – S.I. 2007 No. 1159) which a member of the public with knowledge of the relevant facts would reasonably regard as so significant that it would be likely to prejudice a member’s judgment of the public interest (Paragraph 10 of the 2007 Model Code). A member suffering from one of these would have (amongst other things) to vacate the meeting place - unless he or she had obtained a dispensation from the authority’s standards committee (see the now defunct Relevant Authorities (Standards Committee) (Dispensations) Regulations 2002 (S.I. 2002 No. 339), Regulation 3 of which specified the circumstances in which dispensations could be granted).

Prejudicial interests were subsequently of course done to death on 1 July 2012 by the Localism Act 2011 (see section 26 and Schedule 4, the fuses of which were ignited by S.I. 2012 No. 1463). And, on the same date, stepping onto the propriety stage to replace them were. . .your friends and ours: Disclosable Pecuniary Interests (CUE APPLAUSE). These are defined by section 30(3) of the Localism Act 2011 and by the Relevant Authorities (Disclosable Pecuniary Interests) Regulations 2012 (S.I. 2012 No. 1464) which specified the interests in question in its schedule.

A member knowingly having a DPI in any matter to be considered at a meeting of the authority (or one of its committees, sub-committees, joint committees or joint sub-committees) must not take part in any discussion nor vote on the matter at the meeting (section 31 of the Localism Act 2011). That is unless that member has obtained a dispensation from the authority in question which (per section 33 of the 2011 Act) may be granted in specified circumstances for up to four years on written request from the member in question to the proper officer. These circumstances are specified in section 33(2) and in summary are that:

• Without the dispensation, the proportion of those prohibited from participating in the relevant business would be so great as to impede the transaction of that business or the representation of different political groups on the body in question would be so upset as to alter the likely vote outcome on the relevant business;
• A dispensation is in the interests of those living in the authority’s area;
• Under executive arrangements and without the dispensation, each member of the executive would be prevented from taking part in any particular executive business;
• It is otherwise appropriate to grant a dispensation.

Those criteria seem relatively straightforward and appear substantially to be an updating and streamlining of the previous 2002 dispensation criteria. But what of the other dispensation?

Conflict of Interest Dispensation

As mentioned, this species of dispensation is a creature of Regulations 12 and 13 of the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012 (S.I. 2012 No. 2089) and relates to the recording of executive decisions made respectively at meetings and by individuals. Essentially where an executive meeting has been made a written statement must be produced containing specified information including (amongst other things):

• A record of any relevant conflict of interest either declared by any member of the body which made the decision or declared by any executive member consulted by the member or officer taking the decision which relates to that decision;
• In respect of any such declared conflict of interest, a note of dispensation granted by the head of paid service.

This too has ‘previous’. For similar text was included in the predecessor regulations (the Local Authorities (Executive Arrangements) (Access to Information) (England) Regulations 2000 (S.I. 2000 No. 3272) concerning decisions by relevant bodies, members and officers. However, they seemed then to figure much less prominently on local authority radar.

So what is a ‘conflict of interest’ for these purposes? And is it anything to do with a DPI?

Answer, not directly. For although every DPI will represent a conflict of interest between the personal interests of the member in question and the duty on the member to take decisions actuated only be the public interest, a conflict of interest (COI) does not need to be pecuniary in nature. In short a COI occurs where a conflict is identified between two differing interests of a person or organisation.[1] So, for solicitors, the SRA (Solicitors’ Regulation Authority) handbook defines such a conflict as any situation "where:

1. you owe separate duties to act in the best interests of two or more clients in relation to the same or related matters, and those duties conflict, or there is a significant risk that those duties may conflict (a 'client conflict');or
2. your duty to act in the best interests of any client in relation to a matter conflicts, or there is a significant risk that it may conflict, with your own interests in relation to that or a related matter (an 'own interest conflict')'’.

For an elected member, therefore, a COI can be any interest which conflicts (or may reasonably be perceived to conflict) with that members’ duty to take decisions only in the public interest in the light of material considerations. It is therefore much broader than a pecuniary interest.

Clive Sheldon QC (in an opinion given on 11 September 2012 to the Association of Council Secretaries and Solicitors – ACSeS) advised that: "In my opinion, the reference to ‘conflict of interest’ is not confined to pecuniary interest as defined by the regime under the 2011 Act, but is likely to refer to an actual ‘conflict of interest’ as defined by common law."

The 2012 Regulations (S.I. 2012 No. 2089) envisage that it will be for the authority’s head of paid service to grant dispensations in this context. As Mr. Sheldon advised: "Councils will need. . . to make arrangements for the heads of paid service to determine whether to grant dispensations in particular circumstances where individual executive members are being consulted over a decision to be taken by individuals (executive members or officers)."

Given the legal and corporate governance nature of such matters it is likely that heads of paid service will have made arrangements either to delegate this function to monitoring officers to exercise on their behalf or at least to involve monitoring officers closely in any such decisions. There should also be a detailed protocol (amongst other things) explaining the nature of a conflict of interest, how the presence of such a conflict may vitiate a relevant decision and requiring the reason for granting the dispensation in the light of the statutory criteria to be recorded with sufficient clarity and detail so as to be explicable to the public and any others interested in the decision in question. Regulation 14 of course requires that executive decision records (containing, amongst other things, the conflict of interest and note of relevant dispensation) together with the relevant meeting report(s) to be made publicly available including on any authority website.

Comment

As mentioned, although COIs and DPIs are different, they are related in that both flow from the same public policy source. This is so that decisions taken by authorities are and are seen to be taken only in the public interest and without any reasonable perception of personal or other extraneous interest.

The 2012 Access to Information Regulations (S.I. 2012 No. 2089) (and the confusion and dismay they have precipitated in many quarters) do seem to result from carrying forward statutory language from the previous standards regime and grafting it on to the present regime so far as possible without necessarily having the benefit of an holistic understanding of the relevant local government legal and functional context. Local authorities will of course make practical sense of these regulations. However, monitoring officers (already hard-pressed with multifarious pressures) would undoubtedly have preferred not to have been faced with unravelling regulational riddles before setting up the necessary legal infrastructure within their authorities.

Dr Nicholas Dobson is a Senior Consultant with Pannone LLP specialising in local and public law is also Communications Officer for the Association of Council Secretaries and Solicitors.

© Nicholas Dobson