2006 Chapter 12

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This document relates to the Interests of Members of the Scottish Parliament Act 2006 which received Royal Assent on 13 July 2006

INTERESTS OF MEMBERS OF THE SCOTTISH PARLIAMENT ACT 2006

EXPLANATORY NOTES

INTRODUCTION

1.     These Explanatory Notes have been prepared by the Non-Executive Bills Unit on behalf of Brian Adam, the convener of the Standards and Public Appointments Committee (the Committee). They have been prepared in order to assist the reader of the Act. They do not form part of the Act and have not been endorsed by the Parliament.

2.     The Notes should be read in conjunction with the Act. They are not, and are not meant to be, a comprehensive description of the Act. So where a section or schedule, or a part of a section or schedule, does not seem to require any explanation or comment, none is given.

BACKGROUND TO AND SUMMARY OF THE ACT

Background

3.     The Bill for this Act was a Committee Bill initiated by a Parliamentary committee under Rule 9.15 of the Parliament's standing orders. The Bill arises from investigations and reports by the Committee and the Committee's predecessor in the first session of the Parliament (the Standards Committee). The Standards Committee published three reports during the first session:

• Report on Replacing the Members' Interests Order: Interim Proposals for Consultation (2nd Report 2002, SP Paper 512), published on 19th February 2002;

• Report on Replacing the Members' Interests Order: Proposal for a draft Committee Bill (7th Report 2002, SP Paper 621), published on 3rd July 2002; and

• Replacing the Members' Interests Order: Draft Committee Bill (1st Report 2003, SP Paper 821), published on 14th March 2003.

4.     The Committee published a further report in the second session of the Parliament on 14 January 2005, Replacing the Members' Interests Order (1st Report 2005, SP Paper 266). The proposal for a Committee Bill was debated and approved by the Parliament on 24 February 2005.

5.     Section 39(1) of the Scotland Act 1998 (c.46) (the 1998 Act) requires provision to be made for a register of interests of members of the Parliament and for the register to be published and made available for public inspection. Section 39(8)(a) of the 1998 Act states that such "provision" must be made by or under an Act of the Scottish Parliament.

6.     The Scotland Act 1998 (Transitory and Transitional Provisions) (Members' Interests) Order 1999 (SI 1999/1350) (the Order) was made under powers conferred by section 129(1) of the 1998 Act as a transitional measure in connection with the coming into force of section 39 of the 1998 Act. The Order establishes the existing register of members' interests for the registration of interests of members of the Scottish Parliament and the Lord Advocate and Solicitor General. The Order also provides for the declaration of interests, for prohibiting paid advocacy and for penalties for breach of any of the requirements. The Order will cease to have effect on the day after the date of the first dissolution of the Parliament following the date of Royal Assent of this Act. The provisions of the Act in so far as they are not fully in force also come fully into effect at that date. .

7.     Rule 1.6 of the standing orders (the rules of procedure which govern the proceedings of the Parliament) provides that the Parliament may, on a motion of the Committee, lay down a Code of Conduct (the Code) for Members. The existing Code was approved by the Parliament on 24 February 2000. That Code adopts as part of its rules the requirements of the Order. A new Code will require to be in place to reflect the terms of the Act when the Order ceases to have effect

8.     In their 2nd Report 2002 the Standards Committee sought written and oral submissions on their initial proposals for replacement legislation. They recognised the need for an appropriate balance between respect for individual privacy and the need to ensure transparency and high standards of probity in the Parliament. They also believed that the input of members and others was essential in developing the replacement legislation.

9.     The Standards Committee received eight responses to its consultation on the 2nd Report and heard evidence on 24 April 2002. In July 2002, after reflecting on the evidence it received and finalising its recommendations, the Standard's Committee published its 7th Report 2002 setting out recommendations on the content of the replacement legislation. It then produced the 1st Report 2003 which incorporated a draft Bill.

10.     The present Committee for the current session was constituted on 4 June 2003 and has continued the work of the Standards Committee from the first session. The Committee published a consultation paper during July 2004 seeking comments on certain issues arising from the Committee's initial consideration of proposals for legislation. A total of 32 responses were received and these were considered at the Committee's meeting on 26 October 2004. The Committee then published the 1st Report 2005 on 14 January 2005.

11.     The 1st Report 2005 adopted the former Standards Committee report in relation to the structure and layout of the draft Bill and the former Committee's policy position where no comment was made in the report. The final Report focused on resolving discrete policy issues in relation to: the test to be applied when declaring or registering interests; registration of interests at the date of return; deletion of interests from the register; declaration of interests outwith Parliamentary proceedings; paid advocacy; gifts; heritable property; interest in shares; future interests; and non-financial interests.

Summary of the Act

12.     The Act provides for the establishment of a register of interests for members of the Scottish Parliament. It provides a system for the registration and declaration of financial interests. It provides for entries in the register to be added, amended, corrected and deleted. It also prohibits advocacy by members in return for payment or benefit in kind. Finally, the Act enables parliamentary sanctions to be imposed if a member contravenes the provisions of the Act. Criminal penalties are already imposed for non-compliance with the provisions contained in section 39(6) of the 1998 Act in relation to the registration and declaration of financial interests and paid advocacy and the existence of the penalties is not a matter which the Scottish Parliament has the power to amend. The Act makes it clear which of its provisions fall within the ambit of the penalties imposed by section 39. The Act also appoints a day when the Order ceases to have effect.

COMMENTARY ON SECTIONS

Section 1: The register

13.     Subsection (1) establishes a Register of Interests of Members of the Scottish Parliament (the register). This will replace the present Register under the Order. For the purpose of this Act, "member" is defined in section 19(1) and includes, subject to section 18, a Scottish Law Officer (the Lord Advocate and the Solicitor General for Scotland) where that person is not a member of the Parliament.

14.     Subsection (2) requires the register to be kept at the office of the Clerk. The principal register will be kept at the Clerk's office and copies will be made available for public inspection in accordance with section 11 of the Act.

15.     Subsection (3) requires the register to contain an entry for each member and provides for the content of the entries. Paragraph (a) states that each entry must contain the information required by or under the provisions in this Act. Paragraph (b) provides for additional matters to be included in the entry as the Parliament may determine. This could, for example include information about amendments made to the register.

16.     Subsection (4) gives the Clerk discretion in relation to the form of the register, which may include electronic form. However if kept other than in documentary form, the register must be able to show what it contains when printed or displayed. Allowing the Clerk to determine the form of the register gives greater flexibility to adapt to new technology.

Section 2: Registrable interests

17.     Subsection (1) makes it clear that throughout the Act the term "registrable interest" covers registrable financial interests.

18.     Subsection (2) introduces the schedule to the Act. The schedule sets out the circumstances in which a member has, or had a financial interest which requires to be registered. The schedule details registrable financial interests under 8 separate headings.

19.     Paragraph (a) of section 39(2) of the 1998 Act requires provision to be made requiring members to register financial interests (including benefits in kind) as defined for the purposes of that paragraph. Subsection (3) defines financial interests for this purpose as registrable financial interests. They are required to be registered by sections 3, 5 and 6 of the Act. Financial interests are further defined in section 19(1) of the Act as including benefits in kind.

Section 3: Initial registration of registrable interests

20.     Subsection (1)(a) of section 3 requires each member to register those registrable interests held on the date that they were returned as members. In the case of constituency members, that is the date of their election and in the case of regional members, the date on which they were returned and in either case whether following a general election or by election. In addition, subsection (1)(b) requires each member to register any registrable interest, which the member had before the date of return but which the member no longer has at that date, if the interest meets the prejudice test in subsection (2). If a member does not have either of those interests, subsection (1) requires the member to declare that fact.

21.     Subsection (2) specifies the prejudice test. A member must use this test to determine whether an interest which the member no longer holds on the date of return should be registered. The member has to decide whether to register an interest, if after taking into account all the circumstances, that interest would reasonably be considered to prejudice, or to give the appearance of prejudicing, the ability of the member to participate in a disinterested manner in any proceedings of the Parliament. Under Article 5 of the Order, Members already have a duty to apply such a prejudice test when deciding whether they need to make a declaration of interest prior to participating in proceedings such as speaking in a debate.

22.     In applying the prejudice test in the Act, a member has to consider not just whether a registrable interest could in fact influence the member's actions in connection with the proceedings of the Parliament but also whether a fair minded and impartial observer would reasonably consider that the interest would prejudice or could appear to prejudice the actions of that member. The concept of prejudice has often been considered by the courts in the context of determining whether a tribunal is biased or impartial.

23.     The prejudice test is used in the Act in a variety of different situations, such as where, for example, a member had held a relevant number or value of shares but sold them shortly prior to the date of return. Some of the registrable financial interests set out in the schedule make use of the prejudice test as a way of determining whether an interest should be registered or whether it no longer requires to be registered.

24.     Subsection (3) requires a member to submit a written statement of registrable interests held, or a written declaration that no such interests are held, to the Clerk no later than the relevant date set out in subsection (4).

25.     Subsection (4) explains that the relevant date is 30 days after the date on which the member has taken the oath of allegiance or made a solemn affirmation in accordance with section 84(1) of the 1998 Act. That section requires every person who is returned as a member to take the oath or affirm.

Section 4: Written statement

26.     Section 4 makes provision for written statements required under sections 3, 5, 6 or 7.

27.     Subsection (1) allows the Parliament to determine the form of the written statement referred to in section 3(3). Conferring a power on the Parliament to make determinations will allow the form of the statement to be changed to take account of technology advances or other changes thought necessary in the light of experience and practice.

28.     Subsection (2) provides that the written statement will contain such information about the interest or relating to it as Parliament may determine. It is envisaged that this may include how the registrable interest will be identified, its nature, source and how the value of the interest is expressed or calculated along with other details. For example, such a determination may cover whether members' shares should be recorded in the statement by reference to the number held, or their value, at the relevant date. The statement details must strike a balance between the confidentiality of the member's affairs and the right of the public to have sufficient information about that which might reasonably be considered to influence the actions of a member.

29.     Subsection (3) provides that Parliament can make different determinations for different kinds of interests. This provides the Parliament with flexibility to determine both the form and type of information required for each category of interest. For example it may make different determinations for sponsorship, or gifts.

30.     Subsection (4) allows the member to choose to include additional information in the written statement.

31.     Subsection (5)(a) requires the Clerk, within 30 days from the date any written statement is lodged by the member, to enter the written statement into the register in the entry relating to that member along with the date on which the statement was lodged. The Clerk must also within the 30 day period send a copy of the entry in the register to the member who lodged the statement. Sending a copy of the entry allows the member to check the accuracy of the entry and assures the member that their interests are correctly registered.

Section 5: Registration of registrable interests acquired after date of return

32.     Section 5 makes provision for registration of registrable interests acquired by a member after the date of return.

33.     Subsection (2) requires the member to register an acquired interest, within 30 days of the date of acquisition. The member registers new interests by lodging with the Clerk a written statement containing the required information about the interest in the same way as the initial registration.

34.     This requirement to register applies even where that registrable interest is acquired and disposed of before the expiry of the period for registration.

Section 6: Late registrations

35.     Section 6 makes provision for registration outwith the 30 day periods in sections 3 and 5.

36.     Under subsection (2) the member must register any omitted interest by lodging a written statement with the Clerk within seven days of becoming aware of the omission. As with sections 3 and 5 above, that written statement must contain the required information about that interest. The obligation to register under subsection (2) applies even if the member now no longer holds the interest if the requirement of section 3, or, as the case may be, section 5 would have applied.

Section 7: Voluntary registration

37.     Section 7 provides for the registration of any other interests which the member wishes to register. This covers interests not required to be registered under sections 3 or 5 if the member considers they are relevant to the proceedings of the Parliament and wishes to register them. As with other registrations, this is done by lodging a written statement with the Clerk.

38.     An interest that is lodged under this section as a voluntary interest and is not subject to the provisions of sections 15 (prevention or restriction from participating in proceedings), 16 (exclusion from proceedings) and 17 (offences) of the Act.

Section 8: Deletion of interests from the register

39.     This section provides for the deletion of interests from the register. This is permitted provided the interest is ceased. Subsection (1) defines a ceased interest as one which is registered but which, if it had not been registered, would not now require to be registered. To meet this requirement the interest must no longer be a registrable interest under section 3, 5 or 6. Where an interest was one which only required to be registered initially as it met the prejudice test, a member must decide whether the prejudice test is still met in determining whether an interest is a ceased interest. The second type of interest which can be deleted as ceased, is one registered under section 7.

40.     Subsection (2) sets out the procedure for deleting the interest and requires a written notice to be lodged by a member with the Clerk. The notice must identify the interest in question; state that it is a ceased interest and the date on which it ceased.

41.     Subsection (3) sets out the procedure that the Clerk must follow when a member lodges a written notice identifying a ceased interest. The Clerk is required, within 30 days after the notice was lodged, to record in the entry in relation to that member that the interest is a ceased interest, the date it became a ceased interest and the date the amendment was made. A copy of the amended entry is required to be sent to the member.

42.     Notwithstanding the amendment of an entry under subsection (3), the entry remains in the register for a further 12 months after a ceased interest notice is lodged. After that period has elapsed the Clerk deletes that interest and associated information from the register. A copy of the amended entry in the register is required to be sent to the member.

Section 9: Other amendments to the register

43.     Section 9 provides for other amendments to the register such as providing further or updated information about an interest. An example of such an amendment may be where a member owns shares in a company and the name of that company changes. Section 9(1) would allow the member to amend the entry in the register to reflect the new name of the company. The member can amend details of an interest in the register at any time by lodging with the Clerk a written notice of the proposed amendment.

44.     Subsection (2) requires the Clerk, within 30 days of the notice being lodged, to make the amendment in the register and to record the date when the notice is lodged. Paragraph (b) of subsection (2) requires the Clerk, within 30 days of the date on which the notice was lodged, to send a copy of the amended entry to the member. This allows the member to check the accuracy of the entry.

45.     Subsection (3) allows the Clerk to correct any clerical or typographical errors in a member's entry in the register. This provision is intended for use with simple errors, for example, spelling mistakes. A revised version of the entry must be sent to the member concerned.

46.     Subsection (4) makes it clear that no amendment made under this section, except under subsection (5), can delete an entire entry relating to a registrable interest. An amended entry must still comprise the information that the Parliament has determined should be included in a written statement as provided for by section 4(2).

47.     Where a member ceases to be a member of the Scottish Parliament, for whatever reason, subsection (5) requires the Clerk to delete the entry in the register of interests relating to that member. As amendments to the register are kept by the Clerk (see paragraph 49 below) all entries relating to that member will be accessible for a further period of five years.

Section 10: Old entries

48.     This section requires that when the Clerk amends an entry in the register, the Clerk retains a copy of the original entry and any subsequent amendments for a period of five years from the date on which the last amendment is made.

49.     Subsection (2) applies section 1(4) to old entries and allows the Clerk to choose the appropriate form that amended entries will be kept in. However, if the old entries are kept other than in documentary form, the old entries must, when printed or displayed, be able to show what they contain. Subsection (3) defines "old entries" as the original entry and any subsequent amended entry in the state in which it was before it was amended.

Section 11: Publication of the register etc.

50.     Subsection (1) requires the Clerk to publish the register. It shall be for the Parliament to determine how often and how the register is published.

51.     Subsection (2) requires a copy of the register and the old entries to be available for public inspection. These copies may be kept in a form and manner that the Clerk considers appropriate, although these must by virtue of section 1(4) be capable of displaying to anyone inspecting it what is contained in them.

52.     Public inspection of the register and the old entries is only available when the office of the Clerk is open. These are most working days.

Section 12: Declarable interests

53.     Section 12 defines a declarable interest and defines the circumstances in which a member has a declarable interest in relation to any particular matter. A declarable interest is defined as being a declarable financial interest. A member has a declarable interest in relation to any matter if that member has, or had, a registrable financial interest relating to that matter. A member must declare an interest when speaking or intervening in a debate where that interest relates to the subject being debated.

54.     The effect of subsection (2) of this section is that if the member has registered a registrable financial interest under sections 3 (initial registration), 5 (registration of additional interests) or 6 (late registration) of the Act, then this is a declarable interest. If the interest is no longer registered because it is a ceased interest a member will no longer be required to declare it. An interest which could be deleted under section 8 but has not been must be declared until such time as it is deleted from the register. Financial interests are dealt with under section 39(6) of the 1998 Act which creates an offence in relation to any failure to comply with the provisions for declaration.

55.     Section 39(2) of the 1998 Act requires provision to be made by the Parliament requiring a member who has a financial interest as defined for the purpose of paragraph (b) of that section to declare that interest. Subsection (4) defines a financial interest for the purpose of paragraph (b) of section 39(2) of the 1998 Act as a declarable financial interest.

Section 13: Declaration of interests

56.     This section sets out when and how members must make declarations of their interests in proceedings of the Parliament. Subsection (1) places a duty on any member, who has a declarable financial interest in a matter, to declare that interest before taking part in proceedings of the Parliament relating to that matter. Members do not have to declare their interests in a matter every time they participate in proceedings of the Parliament, but they must do so if those proceedings are related in any way to their registrable interests.

57.     Subsection (2) provides for a declarable interest to be declared either orally or in writing. This subsection provides for the Parliament to determine the method by which the interest should declared. It is likely that in many circumstances an oral declaration will be required, for example at the beginning of a debate. However there are some situations where oral declarations of an interest may not be appropriate, for example when voting, in which case the Parliament may determine that declaration in such instances should be in writing.

Section 14: Prohibition of paid advocacy etc.

58.     Section 14 sets out the requirements and restrictions in relation to paid advocacy. Paid advocacy occurs when a member undertakes an action in their capacity as a member, on behalf of any person or group for which they receive a payment or benefit in kind. Subsection (1) prevents a member by any means from advocating or initiating any cause or matter on behalf of any person or urging any other member to do so in return for any payment or any benefit in kind.

59.     Paragraph (a) of subsection (2) defines "any means" as anything done by a member in the capacity of a member whether or not in any proceedings of the Parliament.

60.     Paragraph (b) of subsection (2) defines what is meant by "any payment or benefit in kind". Paragraph (b)(i) makes clear that it includes all payments or benefits in kind which the member receives and which may be reasonably considered to result in some benefit for that member, except a vote for that member in an election to the Parliament. Paragraph (b) (ii) also makes it clear that it includes any payments or benefit in kind which the member's spouse, civil partner or cohabitant receives and which may reasonably be considered to be provided in connection with the Parliamentary duties of that member and to benefit that member in some way.

61.     Subsection (3) sets out the exceptions to these provisions. Assistance in the preparation of a Members' Bill, or assistance with amendments to any Bill, or a debate on subordinate legislation or a legislative consent motion will not be considered as paid advocacy. A legislative consent motion signifies the agreement of the Scottish Parliament that the UK Parliament may legislate in relation to a devolved matter, the legislative competence of the Parliament or the executive competence of Scottish Ministers. Such a motion was formerly known as a Sewel motion).