Remuneration report

The Commissioner for Ethical Standards in Public Life in Scotland is appointed by the SPCB with the agreement of the Scottish Parliament. The Commissioner’s remuneration is set by the SPCB.

Caroline Anderson was appointed Commissioner with effect from 1 April 2019 for a period of five years. From 1 April 2014 until 31 March 2019, Bill Thomson was appointed Commissioner.

During the year 1 April 2019 to 31 March 2020 the Commissioner was employed on a full-time basis and drew a single salary. The Commissioner’s salary and pension entitlements are set out in the table below.

Single total figure of remuneration

The ‘Salary’ category covers both pensionable and non-pensionable amounts. It includes gross salary and, if awarded, overtime, recruitment and retention allowances, taxable allowances and any ex-gratia payments. It does not include employer National Insurance or pension contributions.

There were no benefits in kind or bonus payments paid in 2019/20 or 2018/19.

Pension arrangements

The Commissioner’s post is pensionable. Under the terms of her appointment, arrangements could be made for the Commissioner to join either the Civil Service Pension Schemes or for the equivalent pension contributions at the rate set by the Cabinet Office for the Civil Service Pension Schemes, to be paid into an approved scheme of the Commissioner’s choice.

The Commissioner’s application to join the Civil Service Pension Schemes is currently pending. The employer contribution rate for 2019/20 was 27.9% and contributions of £20,777 will be made for 2019/20 (2018/19: £18,984).

Remuneration Ratio

Public sector bodies are required to disclose the relationship between the remuneration of the highest paid director in the organisation and the median remuneration of the organisation’s workforce. Total remuneration includes salary, non-consolidated performance-related pay, benefits in kind as well as any severance payments. It does not include employer pension contributions or the cash equivalent transfer value of pensions. It is based on annualised, full-time equivalent remuneration of all staff (including temporary and agency staff) as at the reporting date.

Staff members annualised, full-time equivalent remuneration fell in bands ranging from £20-£24,999 to £75-79,999. The banded remuneration of the highest paid director (the Commissioner) in 2019/20 was £75-79,999 (2018/19: £75-79,999). This was 2.24 times (2018/19: 1.47) the median remuneration of the workforce, which was £34,549 (2018/19: £52,679).

In 2019/20, no employees (2018/19: Nil) received remuneration in excess of the Commissioner.

Staff report

Employee numbers and gender breakdown

The average number of full time equivalent (FTE) persons employed by the Commissioner during the year was as follows:

As at 31 March, the Commissioner’s office employed:

* A senior manager is defined as being the equivalent of a member of the Senior Civil Service.

Average sickness absence

The average sickness absence per person was as follows:

The average rose sharply this year due to a small number of periods of unusually lengthy sickness absence.

Staff policies for disabled persons

The Commissioner is committed to providing a fair and inclusive workplace free from discrimination, that promotes equality of opportunity for all. As part of standard recruitment practice, applications are encouraged from all people with protected characteristics including those with disabilities.

The Commissioner is committed to recognising and valuing what everyone has to offer. This includes a commitment to improving our policies and practices on disability. We are aware of our equality duties under the Equality Act 2010. In our policy development and our decision making we consider the implications for staff who are protected under the Equality Act.

This year we have had a greater focus on mental health and well-being, with the development of policies and practices to support all staff, but in particular those with mental health issues.

Employee costs

Salaries include a provision covering the value of outstanding leave (the leave accrual) and the cost of any exit packages.

As a result of the restructure, a number of staff members left under voluntary severance terms during the reporting year.

Provision of Information to Employees

The Commissioner has adopted the principles of openness and participation in the organisation and places a high level of importance on both informing and consulting staff. The Commissioner does so by providing access to relevant documents, through oral and written briefings, by staff meetings and events. Information is only withheld where this can be shown to be justified or where a duty of confidence is owed to a third party.

Staff pension arrangements

Pension benefits are provided through the Civil Service pension arrangements.

The Civil Service pension arrangements are unfunded multi-employer defined benefit schemes in which the Commissioner’s office is unable to identify its share of the underlying assets and liabilities. A full actuarial valuation was carried out as at 31 March 2016. Details can be found in the ‘Government Actuary’s Department Civil Service Pension Scheme Actuarial Valuation as at 31 March 2016’ available here - http://www.civilservicepensionscheme.org.uk/about-us/scheme-valuations/.

For 2019/20, employers’ contributions of £87,100 were payable to the Civil Service Pension arrangements (2018/19: £77,800) at one of four rates in the range 26.6 to 30.3 per cent (2018/19: 20.0 to 24.5 per cent) of pensionable pay, based on salary bands. The scheme’s Actuary reviews employers’ contributions every four years following a full scheme valuation. The results of its most recent valuation are published in the document detailed above.

The contribution rates reflect benefits as they are accrued, not when the costs are actually incurred, and reflect past experience of the scheme. Outstanding scheme contributions at 31 March 2020 amounted to £10,355 (2018/19: £6,733).

Employees can opt to open a partnership pension account, this being a stakeholder pension with an employers’ contribution. No employers’ contributions (2018/19: Nil) were paid to an appointed stakeholder pension provider in 2019/20. Employers’ contributions are age-related and range from 8.0 to 14.75 per cent (2018/19: 8.0 to 14.75 per cent) of pensionable pay. Employers also match employees’ contributions up to 3 per cent of pensionable pay. In addition, no employers’ contributions (0.5 per cent) (2018/19: Nil, 0.5 per cent) of pensionable pay, were payable to the Civil Service Pension arrangements to cover the cost of the future provision of lump sum benefits on death in service and ill health retirement of these employees. There were no contributions due to the partnership pension providers at the reporting date (2018/19: Nil). Contributions prepaid at that date were nil.

No persons (2018/19: No persons) retired early on ill-health grounds; the total additional accrued pension liabilities in the year amounted to nil (2018/19: Nil).

Further details about the Civil Service pension arrangements can be found at the website http://www.civilservicepensionscheme.org.uk/.

Authorisation

Caroline Anderson FCA
Ethical Standards Commissioner

Date: 7 October 2020

The information in this section covering salary, pension entitlements, fair pay disclosure and analysis of staff numbers and costs is subject to audit.

Governance statement

The Commissioner, as Accountable Officer, is personally responsible for this governance statement which covers not only the accounting year to 31 March 2020 but extends to the date on which the accounts are signed. This statement aims to depict the internal control structure and resource management processes used during this period to support the achievement of organisational aims, objectives and statutory duties whilst safeguarding public funds and assets.

This statement has been informed by:

• an in-depth internal review of governance and operational legacy arrangements which was instigated by the Commissioner in April 2019 and continues at this date,
• guidance during the reporting year from the Advisory Audit Board (AAB),
• external auditor’s opinion,
• feedback from the senior management team.

Governance framework overview

This report and accounts cover the year ended 31 March 2020.

Caroline Anderson was appointed Commissioner for Ethical Standards in Public Life in Scotland and Accountable Officer from 1 April 2019.

Given the independence of the Commissioner’s Office and its relatively small size, the scheme of controls inherited does not feature formal oversight structures such as governance boards and committees, which are commonplace in larger sponsored entities and public authorities.

Instead the Commissioner’s scheme of control historically relied on “in-house” features including:

• The Commissioner’s role as Accountable Officer.
• The Commissioner’s management team, individual members of which have delegated authority to make decisions as set out in the Commissioner’s scheme of delegation.
• Bi-monthly meetings of this team, chaired by the Commissioner, at which strategic and operational issues were considered. 
• Frequent informal management team meetings handling operational matters on an ad-hoc basis.
• A system of internal financial accountability which follows agreed administrative procedures and a structured system of delegation and accountability.

These “in-house” controls were supplemented by external scrutiny as follows:

• External financial audit; The Commissioner’s accounts for the year ended 31 March 2020 were audited by independent auditors appointed by the Auditor General for Scotland in accordance with section 22 of the Scottish Parliamentary Commissions and Commissioners etc. Act 2010. The Auditor General has appointed Deloitte LLP as the Commissioner’s auditor for the five-year period from 2016/17 to 2020/21.
• Advisory Audit Board (AAB); the AAB, whose members are drawn from the SPCB’s Advisory Audit Board, provided the Commissioner with advice on audit and financial issues on a purely discretionary basis. In the year to 31 March 2020 the AAB met with the Commissioner on three occasions, providing guidance regarding the prior year accounts.

Governance enhancement going forward

The governance framework will be supplemented by an internal audit function, plans for which have been delayed since the onset of the pandemic.

The Commissioner has initiated liaison with the intention of entering a shared service agreement for provision of internal audit services. An internal audit programme providing comprehensive coverage of key risk areas is to be designed and implemented. Findings from this internal audit program will help inform assessment of the robustness and adequacy of the governance and internal control framework going forward.

Key aspects of the governance framework

Finance

The Commissioner’s office is funded through the Scottish Parliament and, each year, submits an evidence-based budget bid for scrutiny and approval. The budget is based on the requirements of the strategic and annual business plans as well as projections of anticipated appointment activity and prior year performance. The budget is reviewed and approved by the Commissioner prior to submission to the Scottish Parliament to ensure that it demonstrates best value.

The Commissioner operates a scheme of delegation which outlines the type and level of authority delegated to specific staff members. These provide clear guidelines for the Commissioner’s financial management and are supported by a set of financial instructions.

Financial management controls were in place during the year for purposes of identifying and managing financial variances from budget. As part of the restructure, a further revision of the scheme of delegation is in progress to reflect the new staff complement, so ensuring clear guidelines for financial management going forward.

Strategic and business planning

During 2019/20, the office worked to its Strategic Plan 2016 - 2020 supported by an annual business plan. The annual business plan outlined the objectives for the year. Both documents are published online and progress against the objectives is described in the Performance section of this document. A new Strategic Plan for the 2020-2024 period was issued on 31 March 2020 and will be supplemented by a business plan which reflects both the office restructure and altered working arrangements facilitating unbroken service throughout the past and any future lockdown.

Risk management

A risk management policy and risk register were in place during the previous year, in addition to which the incoming Commissioner identified further key risks at 1 April 2019 as detailed below:

• A backlog of proposed breach investigation reports regarding local councillor complaints, equal in number to that heard by the Standards Commission in an average year.
• Post vacancy equivalent to 71% of onsite complaints handling staff, including the Senior Investigating Officer. 
• Significant delay in deployment of a new complaints case management system, with consequent diversion of the residual on-site staff.
• The processes and procedures for complaints handling required review and modernisation, including remodelling of the associated staff complement.

The above issues were addressed by the incoming Commissioner through restructuring of the complaints management function and by embedding dynamic risk management as a presiding factor in daily and periodic operational and strategic decision making.

Overall assessment of effectiveness of governance arrangements

By embedding risk management as a key focus within the decision-making process, future risks are anticipated well in advance, comprehensively identified, assessed and mitigated. The overall enhanced governance approach already in operation will also further strengthen risk management going forward.

The internal control systems previously featured gaps and weaknesses, most notably:

• An incomplete audit trail existed in relation to certain records in the complaints-handling function of the office.
• Working practices regarding the management and supervision of staff, including the review and limitation of actual working hours, gave rise to control weakness in this specific area.

These internal control issues were addressed and resolved by the initial phase of the restructure.

I was appointed as Commissioner and Accountable Officer as at 1 April 2019. As such, I have considered the systems of internal control, risk management and governance as outlined in this statement, and my assessment is one of moderate assurance during the early months of the year, moving to full assurance thereafter.

Authorisation

Caroline Anderson FCA
Ethical Standards Commissioner

Date: 7 October 2020

Statement of Accountable Officer’s responsibilities

Under paragraph 22 of the Scottish Parliamentary Commissions and Commissioners etc. Act 2010 the Commissioner must prepare annual accounts for each financial year, in accordance with any directions given by the Scottish Ministers. The Scottish Ministers have directed the Commissioner to prepare accounts in the form and on the basis set out in the Accounts Direction (Appendix 1).

The accounts are prepared on an accruals basis and must give a true and fair view of the Commissioner’s affairs at the year-end and of its net resource outturn, application of resources, changes in taxpayers’ equity and cash flows for the financial year.

In preparing the accounts, the Commissioner is required to comply with the requirements of the Financial Reporting Manual (FReM) and in particular to:

• observe the Accounts Direction issued by the Scottish Ministers, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis
• make judgements and estimates on a reasonable basis
• state whether applicable accounting standards, as set out in the FReM, have been followed, and disclose and explain any material departures in the accounts; and
• prepare the accounts on a “going concern” basis, unless it is inappropriate to presume that the office will continue in operation.

The Scottish Parliamentary Corporate Body (SPCB) has appointed the Commissioner as Accountable Officer. The relevant responsibilities as Accountable Officer are set out in the Memorandum to Accountable Officers of other Public Bodies issued by the Scottish Government and published in the Scottish Public Finance Manual. These include the propriety and regularity of the public finances for which the Accountable Officer is accountable, the keeping of proper records, and safeguarding the Commissioner’s assets.

As Accountable Officer, I can confirm that:

• as far as I am aware, there is no relevant audit information of which the Auditors are unaware
• I have taken all the steps that I ought to have taken to make myself aware of any relevant audit information and to establish that the auditors are aware of that information
• the Annual Report and Accounts as a whole is fair, balanced and understandable
• I take personal responsibility for the Annual Report and Accounts and the judgements required for determining that they are fair, balanced and understandable.

Commissioner’s report

Officeholders

The officeholder is entitled ‘Commissioner for Ethical Standards in Public Life in Scotland’.

Caroline Anderson was appointed as Commissioner and Accountable Officer for a period of five years, with effect from 1 April 2019.

Senior Management Team (SMT)

The Commissioner has a dual role; to investigate complaints about the conduct of MSPs, councillors, board members of public bodies and lobbyists and to regulate the public appointments process. These functions are performed by two separate teams led by a Director of Investigations and Solicitor to the Commissioner and Public Appointments Manager respectively. The Commissioner’s office is further supported by a Head of Corporate Services.

Advisory Audit Board

In addition, during the year ended 31 March 2020 the Advisory Audit Board (AAB) provided advice to the Commissioner on governance and financial issues in relation to the prior year’s annual report and accounts. Members of the AAB are drawn from the SPCB’s Advisory Audit Board.

Register of interests

The Commissioner’s office maintains a register of directorships and other significant interests as held by the Commissioner and staff. The register is maintained to provide openness and transparency and to ensure that actual and perceived conflicts of interest can be identified and addressed. The register is updated regularly and is available on request. No significant interests were held during 2019/20 or 2018/19. A similar register of gifts and hospitality is also maintained.

Fraud, bribery and corruption

Our policies and procedures on fraud, corruption and bribery include the Anti-Fraud policy, our code of conduct, the terms and conditions for the supply of goods and services and the broader financial governance arrangements.

We declare any fraud, whistleblowing or control failure incidents to the Advisory Audit Board and this forms part of the annual assurance process. In 2019/20 and 2018/19 there were no instances of fraud or bribery identified or detected in the Commissioner’s office.

Personal data related incidents

There were no reportable lapses of data security during 2019/20 or 2018/19.

Corporate responsibility

Environmental matters

We recognise that our activities may have both positive and negative impacts in Scotland and further afield. Through our policies and procedures, the Commissioner encourages the use of public transport wherever practicable. Arrangements for the holding of interviews are made with a view to minimising the travel required. The records management system and the move to electronic communications have reduced reliance on paper copies and postage. The introduction of the complaints management system and of home-working following the introduction of Covid-19 lockdown restrictions in March 2020 are likely to have positive environmental impacts.

Social, community and human rights issues

The Code of Practice for Ministerial Appointments to Public Bodies adopted in October 2013 includes a principle of “Diversity and Equality”, which along with other code revisions is intended to make the appointment process more attractive and accessible to groups who are under-represented on the boards of public bodies. All of our activities are intended to ensure the application of high levels of ethical standards to the conduct of elected members and those appointed to public office by Ministers and to ensure fairness, transparency and equality of opportunity in the appointment process.

Equal opportunities

The Commissioner supports the principle of equal opportunities in employment and operating practices. This involves a commitment to developing policies and practices to ensure that no individual is discriminated against, directly or indirectly, unlawfully or unjustifiably because of their personal status in relation to race, ethnic or national origin, religion, age, gender, sexual or marital status or disability.

Whistleblowing

The Commissioner is a 'prescribed person' under the Public Interest Disclosure Act 1998. The Act provides protection for employees who pass on information concerning wrongdoing in certain circumstances. The protection only applies where the person who makes the disclosure reasonably believes:

1. that they are acting in the public interest, which means that protection is not normally given for personal grievances; and

2. that the disclosure is about one of the following:

• criminal offences (this includes financial improprieties, such as fraud),
• failure to comply with duties set out in law,
• miscarriages of justice,
• endangering someone's health and safety,
• damage to the environment, or
• covering up wrongdoing in any of the above categories.

The Prescribed Persons Regulations 2017 came into force on 1 April 2017. Prescribed persons are required to report annually on whistleblowing disclosures made to them.

During the reporting year 1 April 2019 to 31 March 2020 ESC received nine whistleblowing disclosures (2018/19: Nil). Disclosures are registered when a complainant indicates on the complaint form that they wish to be considered a whistle-blower. Depending on whether a complaint is admissible we will explore this further with the complaint.

No investigations were carried out and no actions or improvement objectives were required during this reporting year.

Authorisation

Caroline Anderson FCA
Ethical Standards Commissioner

Date: 7 October 2020

Corporate and financial performance

Financial position

Background

The Commissioner is an independent office-holder and receives all of her funding directly from the Scottish Parliamentary Corporate Body (SPCB). The Commissioner operates against an annual cash-based budget that is reviewed by the SPCB and subsequently approved by the Scottish Parliament. The budget may also include access to contingency funding. The accounts are prepared on an accruals basis but the body is funded on a cash basis and management closely monitor financial performance on a cash basis.

Funding

The Scottish Parliament allocated a budget of £957,000 to the Commissioner for financial year 2019/20 (2018/19: £915,200). In addition, two contingency funding awards were made:

• £20,260 from central government towards additional pension costs
• £63,000 towards an office restructure.

The contingency funds were not used and were subsequently released to the Parliament.

We earned no income in 2019/20 (2018/19: £Nil).

Total funding awarded for the year, including contingency funding, was £1,040,260 (2018/19: £974,800). Of the funds awarded, £1,009,600 was drawn down.

Expenditure

The accounts are prepared on an accruals basis meaning that expenses are recognised in the year in which they were incurred, rather than when the cash payment is made.

Including adjustments for accruals and prepayments, expenditure is £910,000 (2018/19: £971,000).

Expenditure against budget

The SPCB awarded the Commissioner funding of £1,040,260 (2018/19: £974,800). £1,010,000 was drawn down (2018/19: £916,000).

Revenue expenditure is prepared on an accruals basis but the body is funded on a cash basis. The table above allows a comparison between the two.

The original budget was underspent by £9,000 and contingency funding of £83,260 was not required. An analysis of spend against each heading is given below.

Staff costs were under budget by £42,000. There were two reasons for this:

• A significant staff vacancy led to a reduction in budgeted costs of around £23,700.
• An increase in pension contribution rates and accrued leave led to office-holder costs being £8,000 over-budget. This was offset by savings in other staff costs.
• As a result of staff vacancies and office restructure, other staff costs were under-budget by £26,300. In addition, we were able to absorb a further £20,260 in increased pension contribution costs and £59,200 in restructuring costs.

Staff related costs were under budget by £7,000. Almost £6,200 of this saving can be attributed to the office restructure, with the balance being a small reduction in training costs.

Property costs were over budget by £4,000 reflecting a revaluation of the building and ongoing adjustment to the capital charge apportioned to us.

Professional fees were under budget by £17,000. This is broken down as follows:

• Legal fees were £5,200 under budget
• The cost of regulating specific appointment rounds was £10,100 over budget due to early PAA engagement and the increasing complexity of the work. This was offset by savings of £21,900 in training and ad hoc project work, resulting in an overall underspend of £11,800.

Running costs were over budget by £2,000. The increase was driven by IT expenditure on a fully backup service and further Cyber Essentials accreditation.

Depreciation was significant this year, applying to our new case management system and a full refresh of our IT hardware.

There was an outlay of £38,000 on capital expenditure. This being £32,000 over budget. This relates to a full refresh of our IT hardware to take account of Microsoft ceasing to support a number of operating systems. £35,000 was spent on hardware and £3,000 on associated software. The transition proved timely and allowed us to transition smoothly to home-working following the implementation of Covid-19 lockdown restrictions.

A further breakdown of expenditure is given in note 6 to the financial statements.

Payment of creditors

The Commissioner has committed to the CBI Prompt Payment Code for the payment of bills for goods and services received. Payments are normally made as specified in the agreed contract conditions. Where there is no contractual position or other understanding, they are treated as requiring to be paid within 30 days of receipt of the goods or services. The Commissioner’s payment performance for 2019/20 was 98% (2018/19: 99%).