Procedure and House Affairs Committee on Nov. 19th, 2013

[The Chair, Conservative, Joe Preston]

Thank you, Mr. Christopherson.

I thank our witnesses, and I thank the committee for staying on time in the first hour.

We will suspend just for a moment so that Mr. Christopherson can have his wish to speak to London, England, and see what things they put in place.

Thank you witnesses for coming today.

[The Chair, Conservative, Joe Preston]

We have Mr. Sills.

Mr. Sills, you have an opening statement. Would you please go ahead and give it to us? Then the members around the table will ask you a few questions.

[John Sills, Director of Policy and Communications, Independent Parliamentary Standards Authority]

Chairman, I'm very pleased to be asked to appear before the Standing Committee on Procedure and House Affairs today. At IPSA we're very proud of what we've achieved over the past four years and I'm glad to have the opportunity to share some of our experiences with you.

As you know, IPSA was created by the Parliamentary Standards Act in 2009 in response to the MPs' expenses scandal in 2008. Parliament decided that the scandal was so serious that the only way to restore public confidence was to take both regulation and the payment of MPs' costs and expenses out of Parliament's hands, to create an independent regulator.

The Constitutional Reform and Governance Act in 2010 refined IPSA's role, giving it the power to determine MPs' pay and pensions as well, and creating the role of the compliance officer, which I'm happy to discuss further during questions. That independence is what defines IPSA. It allows us to take decisions about the rules we set, about the administrative services we provide, that we believe are in the public interest. We frequently consult, we always listen to all sides of an argument, especially when they are backed by evidence, but ultimately the decisions are ours.

A second crucial characteristic of how IPSA operates is transparency. The House of Commons in the U.K. had begun to publish receipts before the last general election in 2010, but that was after resisting their publication in the courts and then, unavoidably, after the full details had been leaked to the media.

For IPSA, publication of information about MPs' claims for business costs and expenses has been a priority from the start. We first published claims in November 2010, and have been doing so on a two-monthly cycle ever since. We also publish aggregate data for the preceding financial year, ending in March, every September. This transparency, as well as complying with the aims of the U.K.'s Freedom of Information Act, allows the public to see what their MPs are spending and to decide for themselves what they think of it. It means that there's strong accountability and better understanding of the financial support an MP needs to undertake his or her parliamentary duties.

A third important element is how we provide support to MPs in carrying out their parliamentary duties. Quite unusually, we provide the payroll services, model contracts, and pay ranges for MPs' staff and, of course, we pay their costs and expenses. So we both regulate and provide those services.

Our system is based on reimbursement on the provision of evidence. But we also pay some suppliers, like landlords, pooled research services, and stationery suppliers directly. This means the MP doesn't have to pay the money out of his or her account first. MPs also have access to an online rail ticket service and have a payment card that can be used for a range of transactions. What this means is that it's possible for an MP to now pay for up to 70% of claims by value through direct payment.

We didn't have all of this from the start. IPSA moved from a blank sheet of paper on the chief executive's desk in October of 2009 to a fully functioning organization with an office, with an online claims system and a new scheme of rules, in time for the new Parliament on May 6, 2010, a really quick process.

The Office of Government Commerce in the U.K., reviewing our implementation program, said we had achieved the impossible. There were certainly challenges operationally in the early days, not least because of the registration requirements before claims could be made, and the time needed by some MPs to get used to claiming online. Some MPs also experienced cashflow problems, and we addressed those in the short term through the swift introduction of an interest-free loan of up to £4,000.

It was a learning process for both MPs and for IPSA. There were tensions. But over time most of these problems have subsided, and we have a system that works well. Most MPs and their staff are familiar with the rules and the IT system. Claims are generally paid within seven to nine working days of receipt. As I noted earlier, many of the high-value transactions can be paid directly by IPSA. Salaries are paid promptly and accurately, and every two months we publish the details of over 30,000 claims.

In policy terms we keep an eye on how the rules are working, and we review them and consult every year. We're about to open a new consultation next week. But our focus has shifted in the last year or so to MPs' pay and pensions, where IPSA's powers were brought into force in 2011. We have run two consultations, the first an open exploration of the issues; the second a focused consultation on a proposed remuneration package that features a pay increase of about 9% to begin after the 2015 general election in the U.K., and a reform of MPs' pensions to bring them more into line with the rest of the public sector. Our board will be taking decisions independently later this year.

So, to end, what are our priorities right now? First, it's to complete the work on pay and pensions. Second, it's to continue our preparations for the 2015 general election. We'll be doing that in cooperation with the House of Commons and with MPs themselves. And thirdly, we continue to look at ways of streamlining our processes to make sure we are maximizing value for money and delivering our services as efficiently as possible.

I hope that gives you something to get the ball rolling. I welcome questions, Chairman, from you and from your committee.

[The Chair, Conservative, Joe Preston]

You're about to get some.

Mr. Lukiwski, would you like to go first, please. A seven-minute round.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Thank you.

Thank you very much, Mr. Sills, for being with us. I hope you can hear me clearly.

[John Sills]

I can, yes.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

I have a few questions. First, let's talk about the composition of your organization. How were the members of IPSA selected? Was it the governing party who selected all of the members? Did the opposition parties have a chance to nominate some members? Did you go through a selection process? Quite simply, how were you and others on IPSA selected and what kind of a vetting process was there?

[John Sills]

Well, we have a board, which is enshrined in legislation, with five members. The chairman is Sir Ian Kennedy. We have an ex-High Court judge—this is required by statute—Sir Neil Butterfield; an auditor, Anne Whitaker. An ex-MP, Tony Wright, a well-known MP, was the ex-chair of the public administration committee, amongst other things. And then we have one other board member who doesn't have to have a particular role, who is Liz Padmore, who chairs a National Health Service trust in the U.K.

Now, those have all been selected by open competition. Sir Ian was selected as chairman in 2010, and was appointed by the Speaker of the House of Commons. This is not a government appointment and it's not an opposition party appointment, but the Speaker was heading up that process. So Ian was selected then, and a number of other board members.

They will have three-year terms and all decided not to apply again. So we have a new board, apart from Sir Ian, from the beginning of this year, the people I've just described. Again, they were all selected through open competition by a panel that was again chaired by the Speaker, John Bercow, and included our chairman and a number of other public figures with expertise in senior appointments.

As for the other members of the team, initially, IPSA was, as I said, created extremely quickly, and our chief executive, Andrew McDonald, was a civil servant connected with the Ministry of Justice, which then had the policy responsibility for constitutional matters. So Andrew was appointed as interim chairman. The senior members of the team, including me, came by a number of routes. I personally was seconded from the Ministry of Justice. I've been there for three and a half years. Other directors since then have been appointed through open competition.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Thank you very much for that.

Is your organization audited on a yearly basis?

[John Sills]

It is, yes. It's audited by the National Audit Office and we are also often scrutinized by parliamentary committees. Our budget has to be agreed by a special committee, which is the Speaker's Committee for IPSA, again chaired by the Speaker, obviously, and that comprises MPs from various parties and some lay members as well.

So they're not in the business of telling us exactly what to do, obviously, because we're independent, but they do agree to our budget. As I say, we're audited by the National Audit Office. We have been scrutinized by the public accounts committee, and we've had a number of other parliamentary committees looking at us over the last three years.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Thank you.

I would assume that, as in any new organization—as you say, you started with a blank sheet of paper—there were growing pains. What were the audit findings with respect to the administration of your organization? Did they have any specific suggestions on how you could improve your function? Were there any problems that they determined needed to be corrected?

[John Sills]

In our first year, quite quickly, we had the value-for-money review by the National Audit Office. Now, this is most unusual for an organization of our size in its first year, but obviously given the political sensitivities of what we do, there was a lot of interest in that.

The National Audit Office, if I recall—I'm afraid I don't recall all the detail now—gave us a pretty good report, and we were very pleased with that. But it did make a number of suggestions. An example was how we validate claims. When we started—and you may not be surprised, given why we were created—those individual claims were checked two or three times to make sure we got it right. Over time we've streamlined that, and one of the things that the NAO has been very keen to see us doing is to use a much more risk-based approach to the validation of claims. So with the fairly bog standard claims with a low risk, you don't need to spend too much time on those, but what you can do is audit them later. And we're doing a lot more of that now, where our audit team takes a look at patterns and outliers and things like that, and that picks up some of the more unusual claims. But yes, we've been pretty heavily scrutinized.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

I'm curious. You may not have enough time to answer this fully, but if not, hopefully we can get back to it a little later.

From the transparency standpoint, you mentioned that you publish the findings you have on MP expense claims. What do you publish and how to you publish them? At what level of detail do you publish all of the claims that are submitted to your organization?

[John Sills]

Apart from highly sensitive security-related claims and claims having to do with disability, where we just provide an aggregate figure once a year for all MPs, we basically publish everything. The way we do it is that we extract the relevant information from those claims and report that. What we don't do at the moment is actually publish the receipts themselves. We thought long and hard about that at the beginning and took the view that, firstly, it was an unnecessary and very expensive process because you have to redact a lot of information, because of personal information and that kind of thing, and that costs a lot of money.

But also we were concerned because redaction is, to be honest, a mind-numbing process for the people who have to do it. There's always a risk that personal information could be missed. The way we do it cuts out that risk. We publish the information itself.

[The Chair, Conservative, Joe Preston]

Thank you, Mr. Sills.

We're going to move to another questioner and hopefully more of that answer can come out under other questions.

Mr. Julian, you have seven minutes.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chair.

Thank you, Mr. Sills, for being here with us today. We're looking at an independent oversight of MPs' expenses, and we just had our very respected Auditor General of Canada come before this committee, and he said he very much would like to see independent oversight of MPs' expenses. So obviously we're looking at the types of models we could put into place for that independent oversight to bring an end to self-policing of MPs' expenses.

I want to know this, just to start off. With the transition to IPSA, was there real resistance to having independent oversight of members of Parliament, and where did that resistance come from, if there was, and what was the character of that resistance?

[John Sills]

I think it's fair to say there was resistance at the beginning. It's a very different relationship, when you've got an independent regulator, from when it's done in-house. And although Parliament obviously did vote for our creation, I think there were a good number of MPs who weren't really that happy that we existed. The resistance, I guess, took a number of forms. One was that quite a lot of MPs didn't really want to have to submit their claims online. They were used to doing them in a paper-based system, and since this required more time and effort, we did have some difficulties with that at first.

As I said earlier, we were heavily, heavily scrutinized for an organization of our size, and that takes up a lot of time for a small organization. And there was a certain amount of hostility, it's fair to say. One of the things we did early on was have a lot of seminars with MPs from different parties, and it's fair to say we didn't get a warm welcome.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Fair enough.

I'd like to talk more specifically now about how IPSA functions. Mr. Lukiwski just asked about the findings on claims, which is important. I understand that the minutes of IPSA meetings are made public. Are the meetings held in public? If some meetings are held in camera and some are public, what are the criteria for going in camera?

[John Sills]

We don't hold meetings in public. Our board meetings are private, but we do publish the minutes of those meetings. We don't routinely publish board papers, but under our freedom of information act people can ask to see them and then we will make a judgment about whether it's in the public interest to release those papers. We have released a fair number in the past.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

You are subject to your freedom of information act. Is there an appeal process if IPSA chooses for whatever reason not to release that information?

[John Sills]

Yes, there is. It is quite a complex process. It works in a number of stages. First, if we say we won't publish information, for whatever reason, the requester can ask for an internal review that has to be carried out by a senior member of IPSA who wasn't involved in the original request.

If after that review we are still saying no, then the requester can take the issue to the information commissioner, which is the body that oversees freedom of information and data protection in the UK.

If they are still not getting the answer they want, they can take it to a tribunal. Then it can work its way up the justice system. So there are a number of steps. People often ask for internal reviews. It is quite a frequent occurrence.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

May I ask if you have had situations where it has gone to the information commissioner and then to a tribunal? How long did that process take to get access to the information?

[John Sills]

There haven't been many, but there's one in process at the moment. In fact, it's a very interesting one. It relates to one of my previous answers, which had to do with somebody requesting to see some receipts. We said no. The internal review agreed not to show them. So the requester went to the information commissioner, who said yes. We are now appealing that decision.

We have been to a lower-tier tribunal and we're about to go to an upper-tier tribunal. That hearing is going to be taking place later this year. So it could be an interesting outcome.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

How long has that process taken?

[John Sills]

I think it's taken at least a year and a half.