Section 26     Appeals by the Water industry Commissioner

60.     This section sets out the provisions for an appeal by the Water Industry Commissioner against a finding of a contravention of the Water Commissioner's Code, and the imposition of sanctions, by the Commission. The provisions are analogous to those set out in section 22 relating to appeals from councillors and members of devolved public bodies.

Section 27     Protection from actions of defamation

61.      This section provides that any statement made in pursuance of the purposes of the Act by the Commission or any of its employees or by the CIO or any of that Officer's employees shall be absolutely privileged.

Part 3

GENERAL AND MISCELLANEOUS PROVISIONS RELATING TO PARTS 1 AND 2

Section 28      Definitions

62.      Subsection (1) provides a list of definitions of terms used in Parts 1 to 3 of this Act.

63.      Subsections (2) to (5) provide that Scottish Ministers may add bodies to or delete bodies from the list of devolved public bodies in schedule 3. This is done by order and such an order may contain such additional provisions as appear to Scottish Ministers to be necessary or expedient.

Section 29      Suspension and disqualification of councillors: supplementary and

consequential provisions

64.      Section 35 of the Local Government (Scotland) Act 1973 makes provision as to the vacation of office by councillors who fail to attend council meetings. This section amends section 35 so that absence from meetings during a period of suspension under sections 19 and 21(2) of this Act or under section 103F or 103G of the Local Government (Scotland) Act 1973 is left out of the account for the purposes of section 35(1) and does not result in the vacating of office. Section 36 of the 1973 Act, which deals with the date when casual vacancies in office occur, is amended to provide that, where a councillor is disqualified from office under section 19, a casual vacancy is deemed to arise on the date on which the office becomes vacant by operation of section 19(3).

Section 30     Modification of enactments etc

66.     This section enables Ministers to make modifications to existing statutory provisions governing the conduct of a councillor, a member of a devolved public body, or the Water Industry Commissioner for Scotland. Modifications may also be made to any existing statutory provisions governing the tenure of office, suspension, removal from office, disqualification or discipline of any such person. These modifications may be made by order to ensure consistency of those provisions with this Act and the provisions of any code made under it.

Section 31     Preservation of previous law and rules in relation to members of devolved public bodies

67.     This section preserves any previously existing statutory provisions relating to the conduct of members of devolved public bodies, and their tenure of office, suspension, removal, disqualification and discipline except insofar as such provisions may be modified under section 30 and subject to any repeals made in section 36 and schedule 4 to this Act.

Part 4

CODES OF CONDUCT FOR MEMBERS OF OTHER BODIES

Section 32     Codes of conduct for members of certain Scottish public authorities

68.     This section provides for codes of conduct for members of other public bodies which are not devolved public bodies. It requires the Scottish Ministers to issue a code or codes of conduct for members of Scottish public bodies specified by them by order. It places members of those bodies under a duty to have regard to the relevant code. Codes may provide differently in respect of members of different bodies.

Part 5

FUNCTIONS OF CONTROLLER OF AUDIT AND ACCOUNTS COMMISSION FOR SCOTLAND

Section 33      Procedure for special reports and modification of surcharge provisions

69.      This Part provides for repeal of the surcharge provisions in Part VII of the Local Government (Scotland) Act 1973. It amends that Act to provide the Accounts Commission for Scotland and the Controller of Audit with a new procedure for special reports where an item of account is contrary to law, or where failure by any person to bring any sum into account, or where negligence or misconduct by a councillor or an officer of a council has led to a loss or deficiency in public funds. The Accounts Commission can consider, and if necessary impose, a similar range of sanctions as are available to the Standards Commission when considering breach of codes of conduct.

70.      Subsection (1) amends section 102 of the 1973 Act to give the Controller of Audit discretion whether to submit a special report to the Accounts Commission.

71.      The report may not be submitted to the Accounts Commission until the council, and any person named in the report as being culpable in the matter, has been given a copy of the proposed report and an opportunity to make representations to the Controller on the proposed report and on any of the matters dealt with in it.

72.      Subsections (2) and (4) repeal the provisions, contained in sections 103 and 104 of the 1973 Act, relating to the imposition by the Accounts Commission surcharges on councillors and officers of local authorities.

73.      Subsection (3) provides a new procedure for the handling of special reports by inserting several new sections after section 103 of the 1973 Act. These new sections are largely modelled on sections 15 to 22 of this Act.

74.      Section 103A provides for the publication of special reports. The Accounts Commission may publish a special report submitted to it by the Controller of Audit, if it thinks fit, and in whatever form it thinks fit.

75.      Section 103B provides for action by the Accounts Commission on receipt of special reports. On receiving a report from the Controller of Audit, the Accounts Commission may direct the Controller of Audit to carry out further investigations may hold a hearing or may state a case on a question of law for the opinion of the Court of Session. It has discretion to do none of these but must hold a hearing if asked to do so by the local council concerned or by any person named or referred to in the special report as in some way responsible for the report being required; and it must state a case if it is directed to do so by the Court of Session.

76.     Section 103C makes provision as to the procedure to be followed at hearings on special reports (referred to in these notes as "special hearings") held by the Accounts Commission. Subject to certain conditions, the procedure at a special hearing shall be determined by the Accounts Commission. Those conditions are:

• The Accounts Commission may, at a special hearing, consider allegations of blame against, or allegations of failure, negligence or misconduct by, more than one officer or member of a local authority.

• A special hearing shall be conducted by no fewer than three members of the Accounts Commission, selected by the Chairman of the Accounts Commission. The Chairman may be one of the three members, and for the purposes of such a hearing the quorum of the Accounts Commission shall be three.

• An officer or member of a local authority whose responsibility for an item of account being contrary to law, or whose alleged failure, negligence or misconduct is being considered by a special hearing, is entitled to be heard either in person or to be represented by any other person (including counsel or a solicitor).

• The members of the Accounts Commission conducting a special hearing may administer oaths and may require any person to attend, to give evidence and to produce documents. However no person can be compelled to give any evidence or produce any documents if they could not be compelled to do so in civil proceedings in the Court of Session.

• Anyone who, without reasonable excuse, fails to obey a requirement to attend a special hearing, give evidence or produce documents is guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale.

• The Accounts Commission may pay persons appearing at a special hearing or attending it for the purposes of giving evidence or producing documents, such expenses or allowances as it thinks fit.

• Special hearings are to be held in public, unless the members of the Accounts Commission conducting the hearing consider that it is in the public interest for the hearing, or any part of it, to be held in private.

77.     Section 103D requires the members of the Accounts Commission conducting a special hearing to state their findings in writing and to give a copy to: any councillor or officer of a council who were the subject of allegations considered at the hearing; the appropriate council; any other person the Accounts Commission considers should receive a copy; and any other person seeking a copy of the findings upon payment of a reasonable charge.

78.     Section 103E describes the action to be taken by a council on receipt of findings under section 103D. The council must consider the findings, including any recommendations, at a meeting of the full council within three months of receipt unless the Accounts Commission has specified a longer period in writing. The meeting, and its subject matter, must be advertised at least seven days in advance in a newspaper with local circulation. The advertisement must include a summary of the Accounts Commission's findings and of any recommendations made.

79.     After the meeting the council must notify the Accounts Commission of any decisions made in response to any recommendations, and publish a summary of those decisions in a newspaper with local circulation. The published summary must have been approved by the Accounts Commission. It does not need to include any decision made in private under section 50A(2) of the Local Government (Scotland) Act 1973 (which covers confidential matters) or in pursuance of a resolution under section 50A(4) of the Act (exempt information) but must indicate where documents are open for public inspection in accordance with sections 50C and 50D of that Act.

80.     Section 103F deals with the sanctions available to the Accounts Commission if it finds that an item of account is contrary to law; that failure, negligence or misconduct by a councillor or officer of a council have led to a loss or deficiency in public funds; or that the accounts are mis-stated and the Accounts Commission is not satisfied that remedial steps have been or are being taken.

81.      The Accounts Commission has discretion to select one of the following options:

• impose no sanction;

• a councillor or an officer of a council may be censured only, but otherwise no action taken;

• a councillor may be suspended from attending meetings of one or more but not all of the following :- meetings of the council and of any committee or sub-committee of that council, or any other body on which that member is a representative or nominee of the council. The maximum period of suspension is one year. Where the period of suspension goes beyond the date of the next local government election, then the period of suspension will cease on that date; or

• a councillor may be suspended from attending meetings of the council and of any committee or sub-committee of that council, or any other body on which that member is a representative or nominee of the council. The maximum period of suspension is one year. Where the period of suspension goes beyond the date of the next local government election, then the period of suspension will cease on that date; or

• a councillor may be disqualified from being nominated as or being elected as a councillor. The maximum period of disqualification is five years.

82.     Disqualification of a councillor would have the effect of vacating that councillor's office and terminating his or her membership of any committee, sub-committee, joint committee, joint board or any other body on which he or she sits either as a councillor, or as a representative or nominee of that council.

83.     The Accounts Commission may recommend to Scottish Ministers that the council be directed to rectify its accounts. If it does so, it must forthwith send a copy of those recommendations to the council and to any person it thinks fit. Scottish Ministers may make an order giving effect to such recommendations, with or without modifications or may decline sych recommendations. If Scottish Ministers make any such order, the council concerned must give effect to it.

84.     The Accounts Commission may also include in its findings such recommendations as it thinks fit.

85.     New section 103G makes similar provision for interim reports and interim suspension as in section 21.

86.     Section 103H provides that any statement made by the Accounts Commission or its agents, or the staff of Audit Scotland working on the Accounts Commission's behalf, or the Controller of Audit, in pursuance of the new special report procedure shall be absolutely privileged.

87.     Section 103J provides for an appeal to the Sheriff Principal against a finding of, the imposition of a sanction by, or the imposition of interim suspension by, the Accounts Commission following a special hearing.

88.     A number of grounds of appeal are available. In the case of an appeal against findings, these are that the finding was based on an error of law; that there was procedural impropriety in the conduct of the special hearing; that the Accounts Commission acted unreasonably in the exercise of its discretion; and that the Accounts Commission's finding was not supported by the facts. In the case of an appeal against sanction the grounds of appeal are that the sanction imposed was excessive, or that the Accounts Commission had acted unreasonably in the exercise of its discretion. In the case of appeal against an interim suspension, the ground of appeal is that the Accounts Commission has acted unreasonably in the exercise of its discretion.

89.     An appeal must be lodged within 21 days of the finding being sent to, or the sanction or suspension being imposed upon, the officer or member. The finding or sanction continues to have force notwithstanding the appeal.

90.     In disposing of the appeal, the Sheriff Principal may confirm or quash the finding, and may remit the matter back to the Accounts Commission to reconsider. In the case of a sanction, confirm or quash the sanction and he may substitute a lesser sanction. He may award expenses.

91.      An appeal from the decision of the Sheriff Principal is available to the Court of Session.

92.     The Accounts Commission may be a party to an appeal to the Sheriff Principal or to an appeal arising from the decision of the Sheriff Principal.

93.     Subsection (4) repeals section 104 of the Local Government (Scotland) Act 1973 which makes provision as to the role of the Scottish Ministers in surcharge procedure. The repeal of section 104 completes the removal of the surcharge procedures which are now replaced by section 103A to J.

Part 6

CHANGES IN LAW ABOUT TEACHING AND WELFARE OF CHILDREN

Section 34      Repeal of section 2A of Local Government Act 1986

94.      This section repeals section 2A of the Local Government Act 1986, which was inserted in that Act by section 28 of the Local Government Act 1988.

Section 35      Councils' duties to children

95.      This section places a new duty on each Scottish council in respect of its functions which relate principally to children. Under this duty each council must have regard to the value of stable family life in a child's development; and to the need to ensure that the content of teaching is appropriate to each child's age, understanding and stage of development.

96.      Subsection (2) provides a definition of "children" and "child". The effect of the definition is that the new duty applies in the performance of functions which relate principally to children of school age - i.e. those who have attained the age of 5 years but have not attained the age of 16 years - and that the second limb of the duty (section 35(1)(b)) requires councils to have regard to what is appropriate having regard to each such child's age, understanding and stage of development. The reference to "child's" in the first limb of the duty (section 35(1)(a)) is not so restricted. Thus, that limb of the duty will require councils to have regard to the value of stable family life in any child's development.

Part 7

GENERAL AND MISCELLANEOUS PROVISIONS RELATING TO PARTS 1 TO 6

Section 36     Repeals

97.      This section deals with the repeals, details of which are set out in schedule 4. The repeal of section 39, which defines "pecuniary interest", of the Local Government (Scotland) Act 1973 does not extend to that section as it has effect for the purposes of section 68(1) of that Act which governs the disclosure of pecuniary interests by local government officers. Section 39 is repealed in all other regards.

Section 37      Citation, commencement and transitional provision

98.      This section makes provision as to citation, commencement and transitional provisions. The Act will come into force on a day (or different days) specified by Scottish Ministers by order made by statutory instrument. Scottish Ministers may make transitional arrangements if they consider it necessary or expedient to do so.

Schedules

Schedule 1      The Standards Commission for Scotland

99.      Schedule 1 makes provision as to status, powers and proceedings of the Standards Commission for Scotland and the appointment, tenure and remuneration of members of the Commission and employees of the Commission.

Schedule 2      Chief Investigating Officer

100.      Schedule 2 makes provision as to the appointment, status and staff of the Chief Investigating Officer.

Schedule 3      Devolved Public Bodies

101.      Schedule 3 lists the devolved public bodies to which Parts 1 to 3 of the Act apply.

Schedule 4      Repeals

102.      Schedule 4 details consequential repeals made under the Act.

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FINANCIAL MEMORANDUM

Introduction

103.      The main costs of implementing the provisions of this Act relate to the setting up and running of the Standards Commission for Scotland. These costs will fall to the Scottish Executive.

COSTS ON THE SCOTTISH ADMINISTRATION

104.      The Act provides for the creation of a Standards Commission for Scotland. This Commission will have overall responsibility for dealing with allegations of breaches of the new codes of conduct for councillors and members of relevant public bodies. The Act provides that the expenses of the Commission will be paid out of money provided by Ministers.

105.      The Act also provides for the appointment of a Chief Investigating Officer (CIO) who will be responsible for investigating alleged breaches of the codes of conduct. The CIO will be appointed by Scottish Ministers and will not be a member of the Commission. The CIO's salary and expenses will be paid out of money provided to the Commission by Scottish Ministers.

106.      There is considerable uncertainty about the level of allegations the Standards Commission is likely to face. Given the difficult in predicting workload, the Act is not prescriptive about the Commission's size, although it will require a minimum of three members, who may be full or part time, to carry out its functions. One of these members may be the Convener of the Commission. If caseload demands further members may be appointed. The Commission will require administrative staff and these will be provided by Scottish Executive staff on secondment. This will allow sufficient flexibility to create the complement of staffing required by the workload of the Commission.

107.      The main costs of the Commission itself will comprise staffing, accommodation, and travel and subsistence costs. In addition to these there will be capital costs, which will principally arise at the outset, for items such as furniture and computers.

108.      The Act provides for the Commission to hold a hearing into an alleged breach of a code of conduct on receipt of a report from the CIO. These hearings will be inquisitorial not adversarial and the Commission will have discretion to conduct these hearings in the manner it thinks fit. It is expected that the Commission will wish to take evidence from relevant individuals during a hearing and it will have discretion to pay expenses in this connection.

109.      The total annual costs of the Commission, including those of the CIO, are expected to be £400,000-£450,000. Initial start up costs are expected to be £70,000.

110.      The new ethical framework is expected to be established and to come into force in Spring 2001. The start up costs of the Commission will arise in 2000/2001; annual running costs will begin in the latter part of the same financial year.

COSTS ON LOCAL AUTHORITIES AND RELEVANT PUBLIC BODIES

111.      The Act will impose a new duty on local authorities and relevant public bodies to assist their members to observe the relevant code of conduct. The Act provides flexibility for each of these bodies to carry out that duty in a way that is appropriate to individual circumstances, for example by establishing a standards committee, and by provision of advice and training to members. While this will be a new statutory duty it is recognised that local authorities and public bodies currently provide assistance to their members in relation to existing codes of conduct. Any new expenditure arising from this duty is expected to be minimal.

Teaching and welfare of children

112.      Repeal of section 2A is expected to be cost neutral. Repeal of section 2A will remove a constraint on local authorities and will not require them to commit any expenditure. The Executive has set out the review of the package of safeguards in relation to education that will be undertaken before repeal comes into force. This review will incur some costs for the Executive but these are not expected to be significant.

113.      Section 26 will place a new duty on councils in regard to the performance of their functions in respect of children. The Executive believes that this provision builds on local authorities' duty of care and gives a statutory basis to the sensitive and appropriate teaching and delivery of services to children. Accordingly, it should not place a new financial burden on local authorities.

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EXECUTIVE STATEMENT ON LEGISLATIVE COMPETENCE

114.      On 29 February 2000, the Minister for Communities (Wendy Alexander) made the following statement:

"In my view, the provisions of the Ethical Standards in Public Life etc. (Scotland) Bill would be within the legislative competence of the Scottish Parliament."

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PRESIDING OFFICER'S STATEMENT ON LEGISLATIVE

COMPETENCE

115.      On 29 February 2000, the Presiding Officer (Sir David Steel) made the following statement:

"In my view, the provisions of the Ethical Standards in Public Life etc. (Scotland) Bill would be within the legislative competence of the Scottish Parliament."