< The Good Councillors Guide

4. The rules
5. Rules for councillors
6. Rules for employers
7. Rules for dealing with public money

4    The rules

• A council must do what the law requires it to do.
• A council may do only what the law says it may do.
• A council cannot do anything unless permitted by legislation.

The crucial question is – does the council have a legal power to act? A council must always ask this question when making a decision, especially if it involves public money.

In April 2012, the Government introduced the general power of competence for eligible local councils. The general power of competence is designed to make it easier for eligible councils (Councils are eligible if they have a qualified Clerk and two thirds of councillors have stood for election. The criteria are set out in the Parish Councils (General Power of Competence) (Prescribed Conditions) Order 2012.) to act. It is intended to permit eligible local councils to do anything that an individual might do, as long as other legislation does not forbid it. This could include, for example, the development of land for residential or commercial purposes.

The general power of competence has replaced the power of well-being, although councils that had the power of well-being at that date can continue to do so until the end of their elected term of office and also beyond that date to complete any project. If you have any questions relating to the situation in your council, ask your Clerk for more information.

The general power of competence enables local councils to respond more effectively to their communities’ needs, encouraging innovation and assisting in shared service delivery. However, you must check with your Clerk to make sure you are acting appropriately. If the council does something which is not permitted by legislation (even if it would be popular with the community), then the council could face a legal challenge that it acted beyond its powers.

Councils who are not eligible to use the general power of competence can undertake an activity only when specific legislation allows it. There is a useful list of activities and specific legal powers in Part Five of this guide.

Acting without the legal power is an unnecessary risk which could lead to financial and legal difficulties. The good news is that there are lots of sources of advice. Start by asking your Clerk whose job includes giving advice to the local council. Your Clerk will have access to a county association (Association of Parish and Town, or Local, Councils) for advice on legal and financial matters. If your Clerk is a member of the Society of Local Council Clerks, they will have access to additional guidance.

If you identify barriers in legislation, national policy or the workings of government, you can let the Department for Communities and Local Government know via their Barrier Busting portal.

So what must you do as a council?

The law gives local councils choice in activities to undertake; but surprisingly there are very few duties, or activities that they must carry out in delivering services to local people. Exceptions are that a council must:

• comply with its obligations under the Freedom of Information Act 2000, the Data Protection Act 1998 and the Equality Act 2010
• comply with employment law
• consider the impact of their decisions on reducing crime and disorder in their area
• have regard to the protection of biodiversity in carrying out their functions
• consider the provision of allotments if there is demand for them from local residents and it is reasonable to do so
• decide whether to adopt a churchyard when it is closed, if asked to do so by the Parochial Church Council.

Your local council also has a duty to ensure that all the rules for the administration of the council are followed. The council must:

• appoint a Chairman of the council
• appoint officers as appropriate for carrying out its functions
• appoint a responsible financial officer (RFO) to manage the council’s financial affairs; the RFO is often the Clerk, especially in smaller councils
• appoint an independent and competent internal auditor (see below)
• adopt a Code of Conduct (see below)
• hold a minimum number of four meetings per year, one of which must be the Annual Meeting of the Council (see below).

These rules are set out in law to guide the procedures of the council and your council can add its own regulations. Together these rules make up standing orders as formally agreed by your council (see Part Three). If you discover that your council does not have its own (non-financial) standing orders don’t panic; this is unwise, but duties set out in statute, such as appointing a Chairman and a proper officer, still apply. The National Association of Local Councils (see Part Five) provides model standing orders.

Council, committee and sub-committee meetings must generally be open to the public and the Openness of Local Government Bodies Regulations 2014 mean that councils must allow members of the public to record and report the proceedings of public meetings. Equality legislation reminds the council that it must make its meetings accessible to anyone who wishes to attend. Similarly, the Freedom of Information Act 2000 requires the council to have a publication scheme explaining how certain types of council information are made available.

If you are beginning to think there are too many rules, remember that they protect people’s rights (including yours) and give confidence that the council is properly run.

5    Rules for councillors

As a councillor you have a responsibility to:

• attend meetings when summoned to do so; the notice to attend a council meeting is, in law, a summons, because you have a duty to attend
• consider, in advance of the meeting, the Agenda and any related documents which were sent to you with the summons
• take part in meetings and consider all the relevant facts and issues on matters which require a decision including the views of others expressed at the meeting
• take part in voting and respect decisions made by the majority of those present and voting
  ensure, with other councillors, that the council is properly managed
• represent the whole electorate, and not just those who voted for you.

Councillors’ conduct and interests

There seven Nolan principles apply to the conduct of people in public life. They are:

• Selflessness: you should act in the public interest
• Integrity: you should not put yourself under any obligations to others, allow them improperly to influence you or seek benefit for yourself, family, friends or close associates
• Objectivity: you should act impartially, fairly and on merit
• Accountability: you should be prepared to submit to public scrutiny necessary to ensure accountability
• Openness: you should be open and transparent in your actions and decisions unless there are clear and lawful reasons for non-disclosure
• Honesty: you should always be truthful
• Leadership: as a councillor, you should promote, support and exhibit high standards of conduct and be willing to challenge poor behaviour.

Code of Conduct

Each local council must adopt and publicise a code of conduct that is in line with the Nolan principles. The code should deal with councillors’ obligations about their conduct including the registration and disclosure of their interests (see below). Complaints about councillors’ conduct are dealt with by the principal authority.

The National Association of Local Councils has developed a template code of conduct (You can find the template at National Association of Local Councils under Legal Briefing L09-12. This area of the website is only accessible to NALC members) specifically for Parish Councils, which covers these issues. Your council is not obliged to use this template. Alternative models are also available from your principal authority or from the Department for Communities and Local Government website.

You should ask to see your council’s code of conduct to ensure that you are aware of your responsibilities and any personal disclosure requirements.

Councillors’ interests

As a councillor, you must abide by rules that apply to the disclosure of some business or financial interests. These are called “disclosable pecuniary interests” or “DPIs”. DPIs include your employment, ownership of land, and business interests in your parish. Other interests are usually non-pecuniary or personal interests. Your council’s code will establish what actions you must take for personal interests.

You must disclose to your principal authority’s monitoring officer any DPIs and any other disclosable interests that are referred to in your council’s code of conduct within 28 days of becoming a member of the council. The monitoring officer will make a register of your interests available to the public – usually on the principal authority’s website. This rule on disclosure also applies to your spouse, civil partner or cohabitee, as if their interests were yours. You should be aware that the register of interests does not distinguish between a councillor’s interests and those that are held by your partner.

If the monitoring officer decides that, by making a disclosable interest public, you might be subject to a threat of violence or intimidation the fact that you have the interest can be registered without details of the interest. This is known as a sensitive interest.

You should give a copy of your register of interests to your Clerk for your council’s website.

If an Agenda item relates to one of your DPIs – such as the expansion of a supermarket chain in which you own shares – you must not participate in the discussion or vote. You must withdraw if your council’s standing orders say so. Also, if the interest has not been registered with the monitoring officer, you must disclose the interest at the meeting (or, for sensitive interests, disclose the issue but not the detail). You must then notify the monitoring officer within 28 days of the meeting.

The declaration of interests at meetings is intended to give the public confidence in your council’s decision making. It helps if the Agenda gives councillors an opportunity to declare an interest early in a meeting.

Dispensations

A council can decide that a councillor with a DPI can participate and vote on a council motion. This is called granting a dispensation. If you have a DPI but think you should be able to participate in the discussion and vote on the matter, you put your request in writing to the council. Your Clerk will advise. As a councillor, you can vote on your own request for a dispensation.

Criminal Offences

There are a number of potential criminal offences associated with:

• the failure to register or disclose a DPI
• discussion and/or voting on a DPI.
• Successful prosecutions can result in a fine of £5000 and disqualification for five years from your local council and from other local authorities.

6    Rules for employers

Council employees enjoy the full security of the law whether they are full-time or part-time workers. Employment law protects them in terms of pay, annual leave, sick leave, maternity and paternity leave and pay. It protects them from bullying or harassment and discrimination. An agreed grievance procedure ensures that concerns raised by an employee are handled properly if they occur. Health and Safety law also protects employees (and councillors and members of the public); your Clerk should be able to advise on such matters.

Remember, the Clerk is employed by the council and answers to the council as a whole. Other staff, although employed by the council, are often managed by the Clerk. No one councillor can act as the line manager of either the Clerk or other employees. These rules and principles should build on mutual respect and consideration between employee and employer.

For more information on your role and responsibilities as an employer see the guide “Being a good employer”; details are in Part Five.

7    Rules for dealing with public money

Being financially responsible for a public body can be daunting. The rules set by Government are designed to make sure that the council takes no unacceptable risks with public money. The words risk management should be engraved upon every councillor’s mind. The good news is that the rules protect you and your council from possible disaster. Your council should establish a risk management scheme which highlights every known significant risk in terms of the council’s activities and makes clear how such risks will be managed. This includes ensuring that it has proper insurance to protect employees, buildings, cash and members of the public. For example, playgrounds and sports facilities must be subject to regular checks that are properly recorded. It’s not just about protecting assets; it’s about taking care of people.

As a councillor, you share collective responsibility for financial management of the council. The council will have made arrangements for its finances to be administered by an officer known, in law, as the responsible financial officer (RFO). Your role is to ensure that the RFO acts properly so that the council avoids the risk of loss, fraud or bad debt, whether through deliberate or careless actions. Robust financial checks and oversight are of great importance. Your council may make electronic payments or pay by cheque, whatever arrangement is in place you should ensure that there is a system to reduce the risks of error or fraud, for example never sign a blank cheque (Further advice on safeguarding public money was issued by the Joint Practitioners Advisory Group as part of the Practitioners Guide in 2012 (JPAG Issue 20120725)).

As an aid, your council should have its own financial regulations (as part of standing orders) giving details of how the council must manage its finances. The National Association of Local Councils publishes model financial regulations available from your county association. If your council has not adopted financial regulations then you leave yourselves open to considerable risk and your council must take action to correct this as a matter of urgency.

The council must operate an overall system of internal control appropriate to your council’s expenditure and activity. There is extensive guidance on risk and internal control in Governance and Accountability for Local Councils: the Practitioners Guide published jointly by NALC and the SLCC. As part of its system of internal control, the council arranges for an internal audit where someone, (other than the RFO and acting independently of the council), scrutinises the council’s financial systems.

The findings of internal controls are reported to the council, so, together with regular feedback from the RFO on the accounts, all councillors should be aware of the council’s financial position. This ensures everything is open and above board and you have what you need as a councillor accountable for the council’s finances.

The budget is an essential tool for controlling the council’s finances. It demonstrates that your council will have sufficient income to carry out its activities and policies. By checking spending against budget plans on a regular basis at council meetings, the council controls its finances during the year so that it can confidently make progress towards what it wants to achieve.

Internal and External Audits

The internal auditor is an independent and competent person appointed by the council to carry out checks on its system of internal control. The independent internal auditor cannot be involved in any business of the council and cannot, therefore, be a serving member of the council. Another Clerk or an accountant could be suitable (but reciprocal arrangements between councils are not permitted). The internal auditor carries out tests focusing on areas of risk and after reporting to the council, signs a report on the annual return (required by law) to confirm that the council’s system of controls is in place and operating.

The law requires another audit to be carried out so that local taxpayers can be assured that the risks to public money have been managed. The Audit Commission (The Government has abolished the Audit Commission and new arrangements for procuring external auditors will be in place from 31 December 2016.) appointed auditors for all parishes in a county (known as external auditors) to review the council’s annual return. The annual return is the principal means by which the council is accountable to its electorate.

Councils must complete an annual return to confirm that everything is in order. Signed statements confirm responsibility for governance arrangements during the year. In particular, they show that:

• the accounts have been properly prepared and approved
  a system of internal control is in place – this includes the appointment of a competent and
• independent internal auditor – and the effectiveness of both the system and the appointment has been reviewed
• the council has taken reasonable steps to comply with the law
• the accounts have been publicised for general inspection so that electors’ rights can be exercised
• the council has assessed all possible risks to public money
• there are no potentially damaging or hidden issues such as an impending claim against the council
• significant differences in the figures from the previous year have been explained
• the council has properly managed any trust funds.

As a member of the council, you have responsibility for making sure that the annual return accurately presents the financial management by the council. Your Clerk will advise.

If you and your fellow councillors have acted properly leading up to the external audit then you will receive the external auditor’s certificate and an unqualified opinion on the annual return known as limited assurance. This means that nothing has come to the external auditor’s attention that gives cause for concern. The Transparency Code for Smaller Authorities and the Local Government Transparency Code 2015 also require certain councils to publish a range of financial information online. (The Transparency Code for Smaller Authorities means that from 2017, councils with an annual turnover of less than £25,000 will not be required to submit their annual return for audit.)

Value for money

It is essential that the council is seen to provide value for money. This means ensuring that public money is spent efficiently to provide an effective service. The aim is to get more council activity for the least possible expense without compromising quality.

It helps the council to assess ‘value for money’ if it regularly asks whether it is really necessary to spend the money or whether it can find a way of doing it better. Perhaps another supplier can do the job with greater efficiency and effectiveness. It is good practice to consult other councils and to engage with service users and the wider community to find out what they think. It might even be possible to join with other councils to deliver a more economic service to the community.

The financial rules and the variety of statutes and procedure protect the council. Most importantly the rules give your council the tools it needs to achieve its goals, protect community assets and make best use of public money.

Rules also guide a local council as it makes decisions in the proper manner. Part Three looks at how you make decisions on behalf of local people – at meetings.

< The Good Councillors Guide