The Scottish Government recently consulted on amendment of the Councillors' Code of Conduct ("the Code") so that councillors who represent their councils on the board of an external organisation _ which includes charities, ALEOs and voluntary organisations _ would not be prevented, solely because of their membership of that body, from participating in council discussions on certain matters in which that body has an interest.

The Code

The Code applies to all 1,223 councillors across Scotland's 32 local authority areas, and sets out the standards which councillors must adhere to in the course of their council duties. The genesis of the Code was the Ethical Standards in Public Life etc (Scotland) Act 2000 (the "2000 Act"), one of the early post-devolution acts of the Scottish Parliament. Compliance with the Code is overseen _ and, where necessary, enforced _ ultimately by the Standards Commission for Scotland.

Paragraph 3.17 of the Code states that if a councillor is appointed or nominated by their council as a member of another body, the councillor will be bound by the rules of conduct of that body and will be accountable to them for any actions taken in their capacity as member of that body. The Code makes clear that councillors "must also continue to observe the rules of this Code in carrying out the duties of that body".

The conflicts

Section 5 of the Code, as currently drafted, requires a councillor to declare an interest in a matter and withdraw from discussion or voting by their council on that matter, where a member of the public who knew about that interest "would reasonably regard the interest as so significant that it is likely to prejudice the councillor's discussion or decision-making". This "objective test" must be applied by councillors both in relation to financial and non-financial interests. The latter can include membership or holding office in public bodies and must, in accordance with Section 4 of the Code, be registered and described as a non- financial interest where members of the public might reasonably think the interest could influence the councillor's actions, speeches or votes in the council.

However, there is no requirement for the councillor to withdraw from council discussions about the matter if a general or specific exclusion applies, or if the interest is sufficiently remote or insignificant. There may still be a need to declare the relevant interest, however. There is no doubt that a councillor must declare an interest if they are a member of a body, society or organisation (including an ALEO) which receives funding from the council. "The public interest", states Section 5.8 of the Code, "points towards transparency and, in particular a possible divergence of interest between the Council and another body".

The exclusions

At present, specific exclusions include any interests which a councillor may have as a member or director of an external body to which they have been appointed or nominated (or where such an appointment is approved) by their local authority. This exclusion applies where such an interest has been duly registered and includes membership or directorship of statutory public bodies or of companies established wholly or mainly for the purpose of providing services to the councillor's local authority, provided that there is a contractual arrangement between the two parties for the supply of goods and/or services to that local authority.

However, this exclusion cannot be applied in respect of any matters which concern the external body and are "quasi-judicial or regulatory" in nature, such as where the organisation is applying to the local authority for a licence, approval or consent, is objecting to such a licence, approval or consent, or has a material interest concerning such matters.

Factors to bear in mind when considering conflicts of interest might include:

  • What is the current status of the other organisation? Is it a charity? Is it a body listed in Schedule 3 of the 2000 Act? Has the status changed?
  • What is the composition of the organisation? How is it funded?
  • Was the organisation established wholly or mainly for the purpose of providing services to the council?
  • If appointed to an ALEO, would you still be able to undertake the scrutiny role?

The problem

The consultation referred to issues raised by Nestrans, a Regional Transport Partnership (RTP) set up under the Transport (Scotland) Act 2005 to co-ordinate transport planning and delivery across the Aberdeen City and Aberdeenshire areas. Dispensation was sought from the Standards Commission to allow members of Nestrans who are councillors to also participate in their council's discussions and decision-making on, for example, major planning matters which could affect transport in the area and in which Nestrans might necessarily have a significant role to play. Consideration of such matters by a council would, however, fall into the "quasi-judicial or regulatory" sphere in terms of the Code and thus would not be excluded from the conflict of interest provisions. Accordingly, the Standards Commission did not grant dispensation, deciding that a councillor's membership of Nestrans would amount to a declarable conflict of interest _ prohibiting their participation in the council's consideration of "quasi-judicial or regulatory" matters involving Nestrans _ which could not be overcome, even by the councillor withdrawing from any discussions of such matters by Nestrans.

RTPs might then wonder whether this could adversely impact on their ability as an organisation to influence council decisions on, for instance, major planning applications which affect transport. Questioning the desirability of appointing councillor members (or having them appointed automatically) could also raise issues regarding performance of statutory functions by RTPs and similar entities; it is a legal requirement for certain bodies to have both councillor and non-councillor members on their boards.

A potential solution outlined in the consultation was to amend the Code by extending the specific exclusion to encompass quasi-judicial or regulatory matters in which an RTP has an interest, and allowing such councillors to take part in their council's discussions and votes on these matters. The Scottish Government also sought views on whether the exclusion should extend to councillor membership of bodies other than RTPs, such as ALEOs, where the councillor had not had any prior involvement in meetings or decisions of the public body regarding the relevant matters.

In any event, there would of course still be a need for councillors in such situations to declare their interest as a member of the relevant body. On this point the Code itself emphasises that public confidence in a local authority "is damaged by perception that a council's decisions are substantially influenced by factors other than the public interest." Ultimately, as Alexander the Great is alleged to have said, we would do well to remember that "upon the conduct of each depends the fate of all."

The Scottish Government's consultation on possible amendment of the Councillors' Code of Conduct closed on 20 March 2017, but can be accessed here.