Proposal to abolish DIP role ‘quite bizarre’

This week, Rob Whiteman, chief executive of the Chartered Institute of Public Finance & Accountancy (CIPFA) wrote to the DCLG, slamming new proposals to remove the current layer of protection for council chief finance officers facing the sack.  The new proposals, on which the government carried out a short consultation ending earlier this month, have provoked a storm of protest from a wide range of organisations. But what are these proposals, and how would they affect council chief finance officers? Room151 gives you the lowdown.

What are the existing arrangements?
The Local Authorities (Standing Orders) (England) Regulations 2001 states that local authorities “must appoint a “designated independent person” (DIP) to investigate proposals for disciplinary action against the chief executive, monitoring officer or chief finance officer due to misconduct, disciplinary issues or poor performance. The DIP is appointed early in the procedure, when it appears to a local authority that an allegation of misconduct by the relevant officer requires to be investigated. A vote by the full council must be taken on any action, with councillors required to vote in accordance with the DIP recommendation. In practice, often the DIP appointed by councils is a barrister with experience of employment law.

What are the government proposals?
In December 2012, communities secretary Eric Pickles proposed the abolition of the DIP’ role, describing it as a “slow and costly bureaucracy”. Pickles claimed that councils often payed out large lump sums to senior officers in order to avoid the procedure, which it said could cost between £100,000 and £250,000 in legal fees in addition to the officer’s salary. Pickles said: “It is ridiculous that councils feel forced to give bumper pay-offs to dismiss inadequate…executives simply to avoid these unnecessary golden goodbye reviews from expensive lawyers.”

After an outcry from the sector, the Government returned at the end of 2013 with proposals for a replacement investigatory procedure. The new amendments to the regulations were sent to a select group of local government representative bodies, as well as the Taxpayers’ Alliance. They still propose the removal of the requirement to appoint a DIP, but introduce a new role for the council’s independent remuneration committee, which will be asked to provide a report into the proposed dismissal. A meeting of the full council will still have the final say, but will only need to “have regard” for the recommendations of the report. In a letter on the consultation, Paul Rowsell, deputy director for democracy at DCLG said: “Ministers believe that the current proposals provide an appropriate balance between removing unnecessary and costly bureaucracy which can hinder effective performance management of top officers, whilst providing adequate protection against unfair or improper dismissal.”

So what’s the problem?
Room151 has seen a number of responses to the consultation, all of which raise major concerns about the revised process for dealing with disciplinary matters against senior council staff:

Whistleblowing worries: Responding to the consultation, Mark Hynes, president of Lawyers in Local Government said watering down the requirement for disciplinary action to be taken in accordance with the recommendation of an independent person’s recommendations would reduce protection for whistleblowers. He said: “We believe that the regulations as drafted will diminish the protection afforded to the statutory officers, as the guardians of sound local governance, and that is likely to diminish their ability to discharge their statutory responsibilities.”

Committee concerns: Responses also questioned whether members of a council’s remuneration committee are the appropriate people to undertake the weighty role of investigating disciplinary matters. In her response, Mary Pett, honorary secretary of the Association of Local Authority Chief Executives, said: “It is not at all clear…that any of these people, who are volunteers with no background in employment legislation and no requirement for any relevant skills or experience, would be willing to have this onerous responsibility thrust upon them. To propose that these individuals could fulfil a role currently undertaken by an Employment Law QC is really quite bizarre.”

Bureacracy barriers: In its response, the Local Government Association said that the proposals would not remove bureaucracy from the procedure, but would just replace one unwieldy system with another. Carolyn Downs, chief executive of the LGA, said committee members “may not have the technical skills or expertise to handle these complex cases and will require high quality advice throughout the process, to enable them to confidently and effectively discharge such a responsibility. Such support and advice may well have to be bought externally.”

Efficiency effects: Hynes claimed that Pickles’ linking of the need for reform to pay-offs for senior staff was a straw man. He said: “The changes only deal with the process where a dismissal is sought, that is, where there are grounds in employment law to dismiss. The changes will have no effect on those cases where compromise agreements are made to remove an officer where there are otherwise no legal grounds for dismissal.” He said the fact that the independence of the process was being weakened could actually lead to more compromise agreements being sought, “if there is any doubt on the part of a council that its independent role is unable to properly contribute to the lawfulness of its decision making.”

What is the alternative?
Some respondents said that the whole process needed to be fundamentally rethought, with Whiteman saying: “CIPFA would argue that any change should be on the basis of ensuring that the role can be executed properly rather than taking a risk to undermine the execution of these duties for an unclear reason that has not been raised by professional bodies or commentators.” Others said they were happy with the principle of reform, but that the role of the independent reporter needed to be strengthened. The LGA suggested an alternative system, where it held a list of independent persons drawn from council standards committees. Councils would draw from the list in order to carry out an investigation. It says the system would “avoid some of the excessive fees currently charged for this work and to enable the local authority to budget precisely for the costs of an investigation.”

What’s next?
The DCLG ended its consultation on 14 January. The department has yet to announce when amending regulations will be laid before Parliament. However, one commentator pointed out that the regulations also include provisions relating to council votes on annual budgets, so if these were to be effective this year, they will need to be introduced imminently. Watch this space.