Members' interests, bias and pre-determination

In his latest article Geoff Wild seeks to clarify when it is appropriate for members to declare interests (and when it is not) and what the consequences are of doing so.

One thing that never ceases to fascinate me is the fact that Members often declare interests at a meeting and yet don’t seem to realise the significance of this: they invariably stay, join in the debate and vote on the matter in which they have just declared an interest.

Fair and unbiased decision making

Most councils’ codes of conduct require members to comply with the Nolan Seven Principles of Public Life: selflessness, integrity, objectivity, accountability, openness, honesty and leadership.

Elected members should always consider decisions on their individual merits. They should not, or appear to have, come to a firm view on a matter before they have taken all material considerations into account.

Planning and licensing are often particularly emotive matters and it is important that processes are not only carried out fairly but appear fair to an unbiased observer. This minimises the risk of challenge to the council but also to individual members from a conduct point of view.

Disclosable pecuniary interests

The Localism Act 2011 requires a member (or their spouse/civil partner) with a Disclosable Pecuniary Interest (DPI) to do two things. Firstly, they must register that interest. Secondly, if they have a DPI in any matter to be considered, they must not take part in discussion or vote on the matter without a dispensation.

A DPI is broadly defined as including:

• Business interests (e.g. employment, trade, profession, contracts or any company with which you are associated)
• Wider financial interests (for example trust funds, investments and assets, including land and property)

A full list of DPIs that must be disclosed is set out in the Relevant Authorities (Disclosable Pecuniary Interests) Regulations 2012 and are summarised below:

• Any employment, office, trade, profession or vocation carried on for profit or gain, which you/your spouse/civil partner, undertakes.
• Any payment or other financial benefit (other than from the council) in respect of expenses incurred in carrying out your duties as a member, or towards your election expenses.
• Any contract made between you/your spouse/civil partner (or a body in which you/they have a beneficial interest) and the council under which goods or services are provided or works are executed; and which has not been fully discharged.
• Any beneficial interest in land which you/your spouse/civil partner have on the island.
• Any licence for a month or longer (alone or jointly with others) that you/your spouse/partner hold to occupy land on the island.
• Any tenancy where the landlord is the council and the tenant is a body in which you/your spouse/civil partner have a beneficial interest.
• Any beneficial interest in securities (i.e. shares, bonds, etc) of a body that has a place of business in the authority’s area and either the value of the securities exceeds £25,000 or 100^th of the share capital of the body.

“Should I stay or should I go?”

If a member has a DPI and is present at a meeting of the council, cabinet or any committee or sub-committee, they must not participate in any:

• discussion of the business of the meeting or, if they become aware of a DPI during the meeting, not participate any further in the discussion
• vote taken on the matter at the meeting

This limit applies to any form of participation, including speaking as a member of the public or as an interested councillor.

They should also leave the room if their continued presence is not compatible with the code of conduct or the Nolan Principles.

If a new DPI comes to light, they have 28 days in which to tell the Monitoring Officer and add it to the register. If it is a new interest that hasn’t yet been registered and is engaged at a meeting when business is being considered at which they are present, the DPI must be declared at the meeting.

“If I go there will be trouble, but if I stay it will be double”

If a member has a DPI and fails to register it or they participate in a meeting without dispensation, then under the Localism Act they have committed a criminal offence punishable by a fine up to level 5 (currently an unlimited amount) and an order disqualifying them from being a councillor for up to five years. A prosecution may be brought by the Director of Public Prosecutions up to 12 months after the prosecuting authorities have evidence to warrant prosecution, and a prosecution may be brought up to 3 years after the commission of the offence.

What does "having a DPI in any matter" mean?

It means the business being considered has to relate to, not merely affect, the DPI. So, quite a narrow test. This is a more than simply "having a DPI in the matter" - the matter under consideration must be directly about the interest, rather than just affecting it.

To illustrate the difference, let's look at four different type of planning issues:

1. Firstly, a planning application made by you yourself, about your own property. On a practical and public interest level it is hard to argue that you don't have some sort of financial interest in the outcome of that planning application. And taking part in discussion and voting through your own planning application goes against all principles of effective governance. It is clear that this is meant to be a DPI - the matter clearly relates to your registered interest – that is ownership of 1 Acacia Avenue.
2. However, what if it's not your planning application but instead is your next door neighbour’s? Again, it’s hard to argue that any reasonable member of the public would think it right somebody should be able to participate in a decision that so clearly affects them and their property. But note the wording – affects their property. The Government's guide indicates they it did not intend to capture this as a DPI.
3. The third situation is something local but not next door. For example, there may be plans to turn a house one hundred metres down the street from your house into a bail hostel. As with the second example, most people would think you would have your judgment clouded by your proximity to the development and the potentially controversial nature, but it fails the Government’s intended DPI test even more than the property next door. So again, this was not intended to be a DPI.
4. The final scenario is something wider in its effect - the classic example of a supermarket development in a town. If you take a wide view of DPIs there is an argument that if you live in a neighbourhood where such a development is taking place you have an interest to declare, as there is some effect on your interest, even if remotely. However, most people would think it quite appropriate that a local councillor should be able to take part in matters which significantly affect their community.

The Government only intended to capture one of the four examples above as a DPI. But what does all this mean in practice? Well, rather than focussing on DPIs, think instead about the public interest.

Of the four examples quoted above, most reasonable people would argue that in two, if not three, of the four examples you should not take part. The third example has, of course, more subtlety because there are more factors to weigh up, but there is clearly a line to be drawn between two and four as to what is and isn’t acceptable in terms of participation or voting.

So, we need to refer back to the underlying Nolan Principles and conclude that such behaviour would not uphold the principles of selflessness, integrity or objectivity and, therefore, members should not participate in these issues. Most councillors know where the public interest lies and it’s wider than DPIs.

Dispensations

Members can apply for a dispensation under s.33 of the Localism Act 2011 to allow them to continue to take part in the business of the council even if they have a DPI. These could relate to matters such as:

• Without a dispensation, so great a proportion of the council would be prohibited from participating in that business as to impede the council’s transaction of that business.
• The granting of a dispensation is in the interests of people living in the council’s area.
• Without a dispensation, each member of the council’s executive would be prohibited from participating in the business.

Other registrable interests

Other Registrable Interests are fairly narrowly defined in the LGA Model Code of Conduct as:

a) any unpaid directorships

b) any body of which you are a member or are in a position of general control or management to which you are nominated or appointed by your authority

c) any body of which you are a member or in a position of general control or management

(i) exercising functions of a public nature

(ii) directed to charitable purposes or

(iii) one of whose principal purposes includes the influence of public opinion or policy (including any political party or trade union)

Where a matter arises at a meeting which directly relates to the financial interest or wellbeing of one of these Other Registrable Interests, a member must disclose the interest as well as including it on the register itself. They may speak on the matter only if members of the public are also allowed to speak but otherwise must not take part in any discussion or vote and must not remain in the room unless they have been granted a dispensation.

Non-registrable interests

These were formerly known as ‘personal interests’ and often defined along the following lines:

A Member has a 'personal interest' in an item of business where a decision in relation to it might reasonably be regarded as affecting the wellbeing or financial position of the Member, a member of the Member’s family or person with whom they have a close association, more than other council tax payers, ratepayers or inhabitants of the authority’s area.

You must disclose a personal interest at any meeting of the council, committee or sub-committee, where you consider the interest to be relevant to an item of business being considered at the meeting.

Disclosure of a personal interest will only affect a member’s ability to participate in discussion or vote on the item if it is so close that it directly affects them or a member of their family, in which case they should take no part in the matter and leave the meeting.

However, the LGA Model Code has provided as more lengthy and complicated definition which takes several readings and arguably lacks the precision, clarity and reach of the previous version:

Where a matter arises at a meeting which directly relates to your financial interest or well-being (and is not a Disclosable Pecuniary Interest set out in Table 1) or a financial interest or well-being of a relative or close associate, you must disclose the interest. You may speak on the matter only if members of the public are also allowed to speak at the meeting. Otherwise you must not take part in any discussion or vote on the matter and must not remain in the room unless you have been granted a dispensation.

Where a matter arises at a meeting which affects:

a. your own financial interest or well-being;

b. a financial interest or well-being of a relative or close associate; or

c. a financial interest or wellbeing of a body included under Other Registrable Interests

you must disclose the interest. In order to determine whether you can remain in the meeting after disclosing your interest the following test should be applied:

Where a matter affects the financial interest or well-being:

a. to a greater extent than it affects the financial interests of the majority of inhabitants of the ward affected by the decision and

b. a reasonable member of the public knowing all the facts would believe that it would affect your view of the wider public interest

you may speak on the matter only if members of the public are also allowed to speak at the meeting. Otherwise you must not take part in any discussion or vote on the matter and must not remain in the room unless you have been granted a dispensation.

Put another way, where members have a personal (or ‘non-registrable’) interest, unless it is so close (as described above) they may remain, take part in the debate and vote. However, they need to bear in mind how it could be perceived by a fair-minded observer and how it may prejudice their own view.

Broadly, this links to the principle relating to integrity which says that:

“Holders of public office must avoid placing themselves under any obligation to people or organisations that might try to inappropriately influence them in their work.”

Therefore, when considering council business, members need to make sure they are not taking decisions that will gain financial or other material benefits for themselves, their family or ‘close associates’. They must therefore openly declare and resolve any interests and relationships.

Personal Interest Questions

If a member is unsure about a relationship with a person and whether they may be classed as a friend or ‘close associate’, they should consider:

• How often do you see this person?
• In what circumstances do you meet them? e.g. Friday night drinks in the pub, passing at the school gates, business links, etc.
• Do you socialise together?
• Are your wider families friends?

Equally, where they consider that they have a relationship with somebody which is so damaged that they consider themselves as 'enemies’, they will need to consider how this affects their decision-making and the perception of others when they review this relationship.

Interests - prior thinking

In preparing for a committee meeting, it is important that when reading the papers members look for:

• applicants’ names/addresses
• planning agent details
• objectors/supporters’ details

They can then consider whether they should continue to sit as a member of the committee and consider part or all of the business to be transacted. Importantly, they can only be expected to declare interests that are known to them.

Natural justice

Although not strictly ‘quasi-judicial’ bodies, Planning and Licensing Committees are more likely than others to be the subject of challenge and must act in accordance with the rules of natural justice. This means they must:

• Act fairly towards the applicant and interested parties
• Appear to be acting fairly towards the application and interested parties
• Approach all matters with an open mind

Lord Esher, in R v West Vestry of St Pancras (1890) said:

“….they must fairly consider the application and exercise their discretion on it fairly and not take into account any reason for their discretion which is not a legal one. If people who have to exercise a public duty be exercising their discretion take into account matters which the court consider not to be proper for the guidance of their discretion, then in the eyes of the law they have not exercised their discretion.”

Bias

Bias is a particular tendency, prejudice or inclination, especially one that prevents impartial consideration of a question.

This means that members should not be, or demonstrate a perception, that they are inclined to approve or reject an application on the grounds that they have an outside interest (this could be a person, relationship, prior experience or other interest).

This test was outlined in the Porter v Magill (2001) case where Lord Hope said:

“…the question is whether the fair minded and informed observer, having considered the facts would conclude that there was a real possibility that the tribunal was biased.”

Only the member concerned can say whether they are biased or not. Neither the chairman nor officers can force them to make a judgment about their potential bias. The officer's role is limited to providing advice and guidance to members and encouraging them to fully consider the potential for bias.

Where a member makes a declaration in a meeting, it is imperative in order to prevent legal challenge that the declaration is clearly minuted. The Democratic Services officer's role in the meeting is to clarify the declaration being made at the time so it is clear both for the purposes of the minutes and for those in attendance at the meeting.

Predetermination and predisposition

If a member is predetermined or biased on an application they should withdraw from the committee whilst it considers that particular matter.

Predetermination occurs when a member has fixed views on a matter and retains a closed mind when it comes to making a determination. If a member has, or appears to have, a pre-determined view on a matter, then they should not take part in the debate or decision.

Members must be open to the possibility that, however unlikely, they will hear arguments during the debate about the issue that will change their mind about how they intend to vote. As long as they are willing to keep an open mind about the issue then they are entitled to take part in any vote on it.

So long as members retain such an open mind, it is not a problem for them to be predisposed to a particular view. That predisposition can be strong and can be publicly voiced. They may even have been elected specifically because of their views on a particular issue. It might be in favour of or against a particular point of view, for example an application for planning permission.

In summary, expressing an intention to vote in a particular way before a meeting (predetermination) is not the same as when you make it clear you are willing to listen to the views of all sides before deciding on how to vote (predisposition). Predisposition in terms of committee decision-making is ok. Predetermination is not and can call into question the integrity of a whole committee’s decision and may lead to a decision being quashed.

Section 25(2) of the Localism Act says that a councillor should not be regarded as having a closed mind just because they have previously said or acted in a way that may have, directly or indirectly indicated the view they may take in relation to a planning matter. It is important that in these circumstances, members consider their stance from the position of a ‘reasonable onlooker’ and decide whether there is, or there would be, the appearance of bias.

The section makes it clear that if a councillor has given a view on an issue, this, considered in isolation, does not show that a member has a closed mind on that issue. So, the mere fact that a member has campaigned on an issue or made public statements about their approach to an item of council business does not prevent them from participating in discussion of that issue and voting on it. Having said this, the use of the words ‘just because’ in section 25 suggests that other factors when combined with statements made, etc, can still give rise to predetermination.

This has also been the approach that the courts have taken to this issue (see R (Lewis) v Persimmon Homes Teesside Ltd [2008] EWCA Civ 746). When considering whether predetermination has taken place they will consider all events leading to the decision (and also, where appropriate, those following the decision) rather than looking at individual events in isolation. The case law has also made it clear that the words used by particular members and the interpretation put on those words is of particular importance.

Geoff Wild is a Legal and Governance Consultant. He is celebrating his 40th anniversary as a local government lawyer.