Welsh ombudsman calls for £10k cap on costs for members accused of conduct breaches

The Public Services Ombudsman for Wales has called on Welsh local authorities to halt the practice of offering uncapped indemnity costs to councillors accused of breaching conduct rules.

In a letter to the Welsh Local Government Association, the Ombudsman, Peter Tyndall, described the arrangement as “extravagance” that could not be justified at a time of great pressure on public expenditure.

The Ombudsman’s role is to consider alleged breaches by members of their code of conduct and investigate where there is evidence of a breach sufficiently serious as to be likely to attract a sanction. In serious cases, he will then send the case on to a tribunal.

Tyndall said in the letter that he fully accepted that councillors must be able to put forward a case in their defence. An indemnity, although not always necessary, enabled members to benefit from legal representation in appropriate cases.

“However,” he added, “in some current and recent cases, the availability of unlimited indemnity, sometimes backed by insurance, has led to hugely disproportionate expenditure, with cases, in some instances, lasting many months.”

The Ombudsman proposed that a cap of £10,000 would be appropriate. “As a councilor could face disqualification, I believe that in seeking a parallel, it is helpful to consider employment tribunals, where claimants may have lost their employment,” Tyndall wrote. “In these instances, awards of costs are limited to £10,000, offering a useful comparator.”

In his letter the Ombudsman expressed concern that progress towards an agreed position across local government in Wales had been “slower than would be desirable”. He called on the WLGA to ask all member authorities to introduce the cap on indemnity before the next elections.

Tyndall also reiterated his undertaking that any representation by his office would be proportionate to that of the member facing the allegations. “In other words, I will cap my expenditure on hearings at the same level, as I do at the moment when some councils do cap indemnity,” he said.

The WLGA was due to discuss the contents of the Ombudsman’s letter – and also his encouragement that local authorities manage ‘low level’ code complaints locally – at a meeting today (24 February).

In a report prepared for the meeting, it said there were markedly different approaches across Wales. “Some authorities offer no indemnity, others provide insurance cover, whilst others offer varying levels of cover but have different processes for considering whether indemnities should be provided (e.g. requests must be considered by standards committee).”

According to the latest available information (provided by 20 authorities), five authorities do not provide any indemnity, nine provide an uncapped indemnity, one authority provides a cap of £5,000, two provide a cap of £50,000 and three determine caps on a case-by-case basis.

The WLGA’s management sub-committee made a number of observations ahead of the full council meeting, namely that:

• Any approach around the introduction of a cap should not compel all councils to provide indemnities where they currently do not provide such cover;
• A tiered range of indemnity levels might be more appropriate, depending on the complexity and severity of the individual alleged breach of the code;
• Not all cases are serious or complex enough to require legal support, a cap of £10,000 may encourage members to claim up to the maximum level allowable; and
• Any such introduction of a cap should be introduced following May’s elections.

The report said some of the issues could be managed through a more consistent approach to considering requests for individual members, “for example in a number of authorities a member must submit a request for an indemnity to be approved by the standards committee”.

It added that if the proposal regarding the introduction of a cap was endorsed, standards committees could determine whether a member should receive an indemnity, and at what level up to a maximum of £10,000. “Standards Committees could potentially also determine that there may be a limit on the number of times or the total amount of indemnity provided to any individual member during a particular municipal term,” it said.

The WLGA said another, emerging issue was that, with the standards regime changing significantly in England, some insurance companies were beginning to withdraw cover for members’ legal fees.

In an interview, Tyndall told the BBC: “We have seen cases where the costs are probably disproportionate to the subject matter.

“That’s clearly not a sensible use of public funds at a time when councils are hard pressed in terms of finding sufficient funds to deliver services.”

Responding, Cllr John Davies, chair of the WLGA, said £10,000 may be or may not be the right limit.

“It depends on the nature of what members have been accused of,” he told the BBC. “We need to look at it and put a gate-keeping process in place that may involve the independence of a standards committee to decide upon the level.”

Philip Hoult