2014-15 Interim Draft Annual Report and Accounts - Electoral ...

Annual Report & Accounts 2014–15 HC 261

Annual Report and Accounts 2014–15 HC 261

Annual Report and Accounts 2014–15 Presented to Parliament pursuant to Schedule 1, Paragraphs 20(1) and 18(2)(b) of the Political Parties, Elections and Referendums Act 2000. Ordered by the House of Commons to be printed on 20 July 2015. HC 261

© The Electoral Commission 2015

The text of this document (this excludes, where present, the Royal Arms and all departmental or agency logos) may be reproduced free of charge in any format or medium provided that it is reproduced accurately and not in a misleading context. The material must be acknowledged as The Electoral Commission copyright and the document title specified. Where third party material has been identified, permission from the respective copyright holder must be sought. Any enquiries related to this publication should be sent to us at: 3 Bunhill Row, London, EC1Y 8YZ Tel 0333 103 1928

[email protected] This publication is available at www.electoralcommission.org.uk Print ISBN 9781474121859 Web ISBN 9781474121866 Printed in the UK by the Williams Lea Group on behalf of the Controller of Her Majesty’s Stationery Office ID: SGD008970

07/15

Printed on paper containing 75% recycled fibre content minimum

Electoral Commission

Annual Report and Accounts 2014-15

Contents Introduction

2

Foreword

3

Principles and Objectives

6

Strategic Report - Management commentary

8

Strategic Report - Financial Report

21

Remuneration Report

29

Sustainability Report

37

Statement of Accounting Officer's Responsibilities

40

Governance Statement

41

Powers and Sanctions Report

54

The Certificate of the Comptroller and Auditor General to the Houses of Parliament

60

Statement of Parliamentary Supply

63

Notes to the Resource Accounts (Statement of Parliamentary Supply)

64

Statement of Comprehensive Net Expenditure

68

Statement of Financial Position

69

Statement of Cash Flows

70

Statement of Changes in Taxpayers’ Equity

71

Notes to the Resource Accounts

72

Contact details

90

1



Introduction The Electoral Commission was set up under the Political Parties, Elections and Referendums Act 2000 (PPERA). The Commission is independent of government and political parties and is directly accountable to the UK Parliament through a Committee chaired by the Speaker of the House of Commons. The Commission also reports to the Scottish Parliament in respect of its functions relating to local government elections in Scotland and reported to the Scottish Parliament in relation to the referendum on independence in Scotland. The Commission’s 2014–15 annual report and accounts are prepared in accordance with an accounts direction, set out on page 89 issued by HM Treasury under paragraph 17 (2) of Schedule 1 PPERA. The Powers and Sanctions report at page 54 is prepared in accordance with paragraph 15 Schedule 19(b) and paragraph 27 Schedule 19(c) PPERA.

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Foreword This annual report provides details of the Commission’s performance for 2014-15 and presents the Commission’s accounts for the same period. The management commentary starting on page 8 sets out the Commission’s achievements during 2014-15 across a wide range of areas: • Electoral registration • Participation in elections and referendums • Electoral fraud • Electoral framework • Ensuring voters can see how politicians and campaigners raise and spend money • Good regulation • The framework for political party funding Electoral registration The Commission’s Electoral Registration programme focuses on supporting the transition from household to individual electoral registration (IER), as well as work to maximise registration levels. A great deal of work took place in 2014-15 as the transition to IER commenced on 10 June 2014 in England and Wales and 19 September 2014 in Scotland. In addition to monitoring preparations by Electoral Registration Officers and running multimedia public awareness campaigns, the Commission published two studies of the accuracy and completeness of electoral registers and reports on the conclusion of the first stage of the transition to IER; and an analysis of the 1 December 2014 local authority registers across England and Wales. Participation in elections and referendums The Commission’s Scottish independence referendum programme supported the September 2014 referendum on Scottish independence, with the aim of helping to deliver a referendum that put voters first and produced a result they could have confidence in. During 2014-15 this included designating the lead campaigners, encouraging the UK and Scottish Governments to issue a joint statement, running the public awareness campaign, ensuring the rules on funding and expenditure were followed by referendum campaigners and publishing a report on the conduct of the referendum. In relation to the May 2014 polls, the Commission ran a public awareness campaign in advance of the European Parliamentary elections in the UK and local elections in England and Northern Ireland; reported on the administration of the May 2014 elections and published the conclusions of a review of the Tower Hamlets election count; issued a revised Code of Conduct for Campaigners and published a campaign spending report and detailed campaign expenditure returns for party and non-party campaigners for the May 2014 European elections.

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In preparation for the May 2015 polls, the Commission published the first of three pregeneral election donations reports by registered ‘non-party campaigners’ in February 2015; published guidance for candidates and agents and (Acting) Returning Officers for the UK Parliamentary election and English local government elections. We have developed partnerships with a range of organisations from the corporate, public and voluntary sectors aimed at reaching traditionally ‘hard to reach’ voters to encourage them to register to vote ahead of the May 2015 elections and supported National Voter Registration Day on 5 February on social media and through other activities. Electoral fraud The Commission published the findings of its research into the vulnerability of some South Asian communities, specifically those with roots in parts of Pakistan or Bangladesh, to electoral fraud; and a briefing paper in January 2015 detailing what was being done to prevent electoral fraud ahead of the May 2015 UK general election including work by Returning Officers, the police and Crimestoppers. The Commission also continued monitoring of 17 local authority areas identified at higher risk of allegations of electoral fraud in advance of the May 2015 elections. The Commission has developed a cost model to determine the cost of implementing an electoral identify card scheme for England, Scotland and Wales (there is already such a scheme in Northern Ireland). Electoral framework The Commission completed preparing and submitting detailed papers to the UK Law Commissions on areas of elections law and practice which require review for electoral law reform. The Commission continued its work to identify the ‘hidden costs’ of elections, which relate to the inefficiencies that flow from the current complex and outdated legal processes. The Commission published a report covering recommendations to update the rules around standing for election and make them clearer, fairer and more consistent. Ensuring voters can see how politicians and campaigners raise and spend money The Commission published details, on a quarterly cycle, of a total of £65.8 million accepted by political parties in donations during 2014. On 30 January 2014 the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill received Royal Assent. The Act introduced significant changes to the regulatory regime operated by the Commission around the activities of non-party campaigners in the run up to a UK general election and the Commission prepared and disseminated guidance and gathered feedback to ensure that guidance was appropriate and relevant.

4



Good regulation The Commission published revised guidance explaining changes to its party registration policy (mainly in relation to the use in identifiers to be used on ballot papers of acronyms, numerals, personal names and dynamic identifiers) and communicated it to all registered parties. The Commission also carried out a review of all party names and descriptions included in the Great Britain and Northern Ireland registers to ensure that existing identifiers complied with these requirements. A review of registered emblems is planned for 2015-16. The framework for political party funding In 2013-14 the Commission published a review of the current rules on donations and campaign spending, making 50 recommendations to update the law covering political parties and other campaigners. A number of those recommendations, including changes to the regulation of non-party and referendum campaigners, were adopted by the UK and Scottish Governments in 2013 and came into force for the Scottish independence referendum in 2014 and the 2015 UK general election. During the year we also responded to the introduction of the Transparency of Lobbying, NonParty Campaigning and Trade Union Administration Act. We prepared and disseminated guidance to those affected by the Act’s provisions and subsequently gathered feedback to ensure that guidance was appropriate and relevant. We also worked with Scottish Government and others to inform the development of legislation that enabled the referendum on Scottish independence on 18 September 2014. Alongside these achievements we have continued to deliver efficiencies within our budget and we have achieved reductions in core spending (£4.5 million or 30% in real terms for the five years to the end of 2014-15). We will continue to seek spending efficiencies on an ongoing basis whilst ensuring that appropriate resources are in place to ensure that we continue to fulfill our role effectively. Our Corporate Plan 2015-16 to 2019-20, which sets out the Commission’s priorities over the next five years, was laid in Parliament on 17 June 2015. We would like to thank our staff, and everyone who works more widely across the electoral system, for responding positively to the challenges to date. We would not have achieved the successes of the past year, without the support of our staff and of the other organisations we work with and we look forward to facing the challenges and opportunities to come.

Peter Wardle

Jenny Watson

Chief Executive

Chair

5


Annual Report and Accounts 2014-15 Strategic Report (Management Commentary)

Principles and Objectives We are committed to the United Kingdom’s strong tradition of free elections, which are an essential part of a healthy democracy. We: • Work to serve the people of the United Kingdom • Are committed to protecting and promoting democracy • Put voters first We will seek change where the evidence shows that it is needed to serve the people of the United Kingdom, and their democracy, better.

Our principles for free elections that support a healthy democracy •

Trust: people should be able to trust the way our elections and our political finance system work

•

Participation: it should be straightforward for people to participate in our elections and our political finance system, whether voting or campaigning; and people should be confident that their vote counts

•

No undue influence: there should be no undue influence in the way our elections and our political finance system work

Our objectives for free elections that support a healthy democracy Well-run elections, referendums and electoral registration We want people throughout the United Kingdom to be confident that: •

Registering to vote and taking part in elections is straightforward, accessible and secure

•

They will receive a consistently high quality of service, wherever they live and whichever elections or referendums are being held

6



Transparency in party and election finance, with high levels of compliance We want people throughout the United Kingdom to be confident that: • There is transparency about party and election finance, so that people know where money comes from and how it is spent • People who want to stand for election, and people and organisations that want to campaign at elections, can easily find out how to get involved, what the rules are, and what they need to do to comply with those rules • The rules on party and election finance are followed, and those who do not follow them are dealt with appropriately and effectively • Political parties, candidates and campaigners can participate in elections without unnecessary barriers

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Management commentary Performance 2014-15 The Electoral Commission’s Corporate Plan for the period 2014-15 to 2018–19 1 was approved by the Speaker’s Committee in April 2014. The plan identified a number of key delivery priorities: • • • • • • •

Electoral registration Participation in elections and referendums Electoral fraud Electoral framework Ensuring voters can see how politicians and campaigners raise and spend money Good regulation The framework for political party funding

The Management Commentary reports what the Commission has achieved during the year in each of these areas. 1.1 Electoral registration The Commission’s Electoral Registration programme focuses on supporting the transition from household to individual electoral registration (IER), as well as work to maximise registration levels. The transition to IER commenced on 10 June 2014 in England and Wales and on 19 September 2014 in Scotland. In 2014-15 the Commission: •

Published our final assessment of the performance of Electoral Registration Officers (EROs) in 2013. This assessment found that 22 EROs did not meet the performance standard relating to house-to-house enquiries, down from 30 in 2012. The preparations for the transition to IER of the 22 EROs who did not meet the performance standard were monitored closely by the Commission.

•

Ran multimedia public awareness campaigns in England and Wales (summer 2014) and in Scotland (autumn 2014) designed to support EROs’ write-out to electors: an exercise during which EROs across Great Britain sent a letter to everyone registered to vote, informing them how they were affected by the change to voter registration.

•

Published two studies of the accuracy and completeness of electoral registers: -

1

‘The quality of the 2014 electoral registers in Great Britain’; the 2014 registers were the last ones produced under the household registration system;

The Commission’s Corporate Plan for 2014-15 to 2018-19 (HC 1207) was approved by the Speaker’s Committee and is available at http://www.electoralcommission.org.uk/__data/assets/pdf_file/0006/167091/EC-Corporate-Plan-2014-15-to-2018-19.pdf.

8


-


‘Electoral registration in 2011’, a study conducted in collaboration with the Office for National Statistics and National Records of Scotland and assessing the quality of the December 2010 and April 2011 electoral registers in Great Britain, using data from the 2011 census.

•

Published reports on the conclusion of the first stage of the transition to IER - the confirmation live run exercise - that took place in England and Wales over the summer and in Scotland in the autumn of 2014. This was an exercise by which EROs matched existing electoral register entries against Department for Work and Pensions’ data and locally held data to identify which entries could be automatically transferred on to the new IER registers. Overall, 87% of electors in Great Britain were moved automatically onto the new registers without having to do anything. The 13% not automatically transferred to the new registers were informed by their Electoral Registration Officer that they need to re-register. By May 2015, the 13% had reduced to 4%.

•

As part of our reporting on the progress of the transition to IER, published an analysis of the 1 December 2014 local authority electoral registers across England and Wales. (We subsequently published a separate assessment for Scotland – where the transition began later, after the independence referendum - in April 2015). Our report set out what further work needed to happen before the May 2015 UK general election in order to ensure that the registers would be as accurate and complete as possible. We also identified problems with the electoral management software systems used by electoral administrators to share information about their electoral registers with the Commission; and said that, unless these issues were resolved, it was highly unlikely that in June 2015 the Commission would be in a position to recommend that the end of the transition to Individual Electoral Registration should be brought forward from December 2016.

•

Updated our IER guidance for EROs, to reflect amendments to legislation; and published guidance on assisted applications in England & Wales and Scotland.

Stakeholder view: Every year in an annual winter public opinion survey we measure voters’ knowledge of how to register and satisfaction with the process. In 2014 89% of the UK public knew how to go about registering to vote, and 78% were satisfied with the system of registering to vote. Both measures are similar to previous years. 1.2 Participation in elections and referendums Referendum on Scottish independence The Commission’s Scottish independence referendum programme supported the September 2014 referendum on Scottish independence, with the aim of helping to deliver a referendum that put voters first and produced a result they could have confidence in. Funding for this work (in both 2013–14 and 2014–15) was provided by the Scottish Parliament.

9



In 2014–15 the Commission: •

Designated ‘Yes Scotland’ and ‘Better Together’ as the lead campaigners for each outcome at the referendum. This gave the two campaigners access to specific benefits, including a spending limit of £1.5 million during the regulated ‘referendum period’ which began on 30 May 2014.

•

Encouraged the UK and Scottish Governments to issue a joint statement providing information about what would happen after the referendum in the event of either a ‘yes’ or ‘no’ result . The joint statement was published on 29 April 2014.

•

Published four pre-poll reports of donations and loans to registered campaigners (that were not political parties) at the referendum, covering the period 18 December 2013 to 5 September 2014.

•

Ensured that the rules on funding and expenditure were followed by referendum campaigners. Monitoring referendum campaigning to ensure the rules on campaign spending and donations were followed, and taking regulatory compliance action when necessary.

•

Ran a public awareness campaign to give voters information on how to register to vote and the different ways of casting a vote at the referendum. As part of the campaign, the Commission sent a voting guide to the 2.5 million households in Scotland, also containing information from the two lead campaigners, and the joint statement from the Scottish and UK Governments. TV, radio, billboard and online advertising were used to raise awareness of the booklet and remind people that they needed to be registered to vote by the 2 September deadline. The campaign led to 152,730 registration form downloads from the Commission’s AboutMyVote website and contributed to the 137,898 additions to the register in the period 9 August – 2 September.

•

Published a report on the conduct of the referendum which found that the referendum was well run, with high levels of voter satisfaction in the voting process. The report also identified important lessons from Scotland about how to run future referendums successfully in the UK, including the need for all the relevant legislation to be in place at least 6 months before the polls and for future referendums on high-profile issues not to be held on the same day as other polls.

•

Published details of spending by campaigners that spent £250,000 or less during the regulated campaign period. Twenty-one of the forty-two organisations and individuals that registered with the Commission as campaigners at the referendum reported spending between £10,000 and £250,000 and, altogether, these campaigners spent over £1.4 million on campaigning. Eleven registered campaigners confirmed that they did not spend over £10,000 on campaigning in the regulated period. Regulatory action is under consideration for the five registered campaigners that failed to submit spending returns by the deadline. Five registered campaigners spent more than £250,000 campaigning and had until 18 March to submit an independently audited return; we subsequently published these returns in May 2015.

10



May 2014 and May 2015 elections The elections and local referendums programme oversees Commission activity to ensure well-run electoral events. In 2014–15 the Commission: •

Ran a public awareness campaign designed to raise awareness of the need to register to vote in advance of the May 2014 elections (European Parliamentary elections in the UK and local elections in England and Northern Ireland). During this period more than 203,000 registration forms were downloaded online (against a target of 140,000) and over 4,500 forms were sent out by our call centre.

•

Reported on the administration of the May 2014 elections. The report included assessments of how well Regional Returning Officers (RROs) and a sample of Returning Officers (ROs) met the new performance standards published in November 2013. The standards focus on the key outcomes from the perspective of voters and those who want to stand for election and cover the range of activities carried out by ROs in preparing for and delivering well-run elections. The report found that only two ROs failed to meet one of the elements of the first performance standard in relation to election stationery.

•

Published the conclusions of a review of the Tower Hamlets election count that took place at the May 2014 elections. The purpose of the review was to understand the reasons for the lengthy count process after the elections and to put forward recommendations for the management of future election counts in the borough.

•

Issued a revised Code of Conduct for Campaigners following a formal consultation with political parties, campaigners, voters and electoral administrators.

•

Published a campaign spending report and detailed campaign expenditure returns for party and non-party campaigners for the May 2014 European elections.

•

In February 2015, published the first of three pre-general election donations reports by registered ‘non-party campaigners’ for the period September to December 2014. This was the first time this information had been made available ahead of a general election. We subsequently published the second and third prepoll reports at the end of April and beginning of May 2015.

•

Published guidance for candidates and agents and (Acting) Returning Officers for the UK Parliamentary election and English local government elections that took place on 7 May 2015.

•

Monitored campaigning by political parties, non-party campaigners and candidates to ensure the rules on campaign spending and donations were followed.

•

Developed partnerships with a range of organisations from the corporate, public and voluntary sectors aimed at reaching traditionally ‘hard to reach’ voters to encourage them to register to vote ahead of the May 2015 elections. We supported National Voter Registration Day on 5 February on social media and through other activities, and launched our online registration campaign in February and our main public information campaign in March. For the May 2014 European elections and 2015 UK general election the Commission ran campaigns targeting overseas electors, and focused interest at the start of each campaign on an 11



Overseas Voter Registration Day. The target for the general election was 100,000 additions to the Electoral Register. •

Published the findings of further research with the public to inform assessment by the UK Parliament of the question proposed in the EU (Referendum) Bill (introduced as a Private Members Bill by James Wharton MP in June 2013), reflecting views on the response options ‘Remain’ and ‘Leave’.

•

Published a report on cases of alleged electoral fraud in 2014, including allegations recorded by the police during the May 2014 polls and the Scottish independence referendum; and information on the three electoral petitions that followed the May 2014 local government elections in England.

•

Answered more than 14,100 calls, emails and letters from the general public on the subject of elections and electoral registration and over 5,600 enquiries relating to the Scottish independence referendum. Ninety-nine per cent of these enquiries were responded to within the target of one week.

•

Answered 145 letters from senior stakeholders (e.g. Parliamentarians, Assembly members) on a wide range of topics including individual electoral registration, campaign spending and postal voting. Eighty-five per cent of the letters were answered within 5 working days.

Stakeholder view: The Commission carries out research with the public after electoral events to measure confidence and satisfaction with the election process. In 2014, we carried out research after the May 2014 polls and the September 2014 Scottish independence referendum. At the May 2014 polls: •

•

•

Almost three in four people (73%) reported that they were either very or fairly confident the elections were well run. This level of confidence was consistent with those reported following the May 2013 local elections in England and Anglesey (74%) and the May 2012 elections and referendums across Great Britain (74%). It significantly exceeded the levels achieved following the November 2012 Police and Crime Commissioners (PCC) elections (33%). People who turned out to vote were more confident that the May 2014 polls were well run: 88% of voters were confident compared with 59% of non-voters. The most commonly given reasons for not feeling confident that the elections were well run related to a lack of information/publicity/not knowing much (cited by 50% of those who said they were not confident); and the view that information was confusing/some people did not understand what the vote was for (14%). Levels of satisfaction were very high among those who voted: 97% of those who voted in person at a polling station reported that they were very or fairly satisfied with the process of voting, and 94% said it was a convenient way for them to vote; 96% of people who voted by post reported that they were satisfied with voting in this way, and 94% said that it was a convenient way for them to vote.

12



At the September 2014 Scottish independence referendum: •

•

•

Nearly three quarters (73%) of respondents were confident that the referendum was well run. This was in line with results from previous surveys undertaken after recent referendums and elections, and higher than the level reported by respondents in Scotland after the May 2014 polls (68%). People who turned out to vote were more confident that the Scottish independence referendum was well run: 77% of voters were confident compared with 54% of non-voters. The most commonly given reasons for not feeling confident that the referendum was well run related to related to concerns around fraud or security (cited by 40% of those who said they were not confident); the view that the poll was badly run/organized (20%); that the counting process was not well verified (18%); a lack of information (14%); and a lack of information about what would happen in the event of a Yes or No vote (10%). Levels of satisfaction were very high among those who voted: 95% of those who voted in person at a polling station reported that they were very or fairly satisfied with the process of voting, and 97% said it was a convenient way for them to vote; 99% of people who voted by post reported that they were satisfied with voting in this way, and 97% said that it was a convenient way for them to vote.

1.3 Electoral fraud The Commission’s electoral fraud review project encompasses activities aimed at understanding levels of public concern; whether the extent of electoral fraud is in fact different from that reflected in the data reported by police forces; and what changes to legislation or processes might be needed to improve security and confidence in the integrity of elections. In 2014–15 the Commission: •

Published the findings of its research into the vulnerability of some South Asian communities, specifically those with roots in parts of Pakistan or Bangladesh, to electoral fraud. We found that, while strong community networks in the areas covered by the research provide valuable support to people and a positive campaigning mechanism to support candidates, in some areas the reciprocal and hierarchical nature of kinship networks may mean pressure can be put on people to vote for particular candidates or parties. We also found that there are some specific factors that may make these communities more vulnerable to electoral fraud, including low levels of public awareness about what is acceptable campaigning activity and about how to report electoral fraud; and low levels of literacy and a lack of English language skills, which may exacerbate these vulnerabilities. Many of the issues raised in the research were being addressed in existing work by Returning Officers, police forces and the Commission. However, the research identified a number of specific follow up activities including providing materials and messages that Returning Officers and police forces can use to raise awareness of what is acceptable behaviour at election time and what might involve electoral fraud.

13



•

Published a briefing paper in January 2015 alongside our research on electoral fraud vulnerabilities in some British Pakistani and British Bangladeshi communities, to set out clearly for elected representatives, campaigners and the media what was being done to prevent electoral fraud ahead of the May 2015 elections, including work by Returning Officers, the police and Crimestoppers. This predominantly resulted in balanced coverage focusing on the issues raised by the research, and on the plans in place ahead of the May 2015 polls.

•

Continued monitoring of 17 local authority areas identified at higher risk of allegations of electoral fraud in advance of the May 2014 elections, and commenced monitoring of those areas in advance of the May 2015 elections.

•

Commissioned the development of a cost model to determine the cost of implementing an electoral identity card scheme across Great Britain under a number of different scenarios. The cost model will be used to inform the Commission’s further recommendations about a scheme for verifying voters’ identity in polling stations.

Stakeholder view: The Commission’s research with the public after elections and referendums held during 2014 shows that there remains a consistent underlying level of concern among voters about electoral fraud in the UK:

• Just under one-third (30%) of people who responded to our public opinion research carried out after the May 2104 polls said that they thought electoral fraud had taken place, with 25% saying it happened ‘a little’ and 5% saying ‘a lot’. •

As in previous years, the most commonly given reasons why people thought that fraud had taken place related to a general impression that fraud was a problem (21%) and because they had seen stories in the media about electoral fraud (18%).

•

The proportion of people reporting that they thought electoral fraud had taken place at recent elections has fluctuated between about one fifth and one third: in England, for example, 35% of respondents following the May 2012 local government elections said that they thought that electoral fraud had taken place, compared with 22% of respondents following the May 2013 local government elections.

1.4 Electoral framework Law Commissions’ review of electoral law This work includes: •

Providing guidance and assistance to the Law Commissions in their legal reform work on electoral law.

•

Engaging with people and organisations with an interest in and influence on electoral law.

14



The review will result in the development and recommendation of consolidated, modernised and simplified draft electoral legislation governing the delivery and conduct of elections, and how to participate in them. It will then be for government and legislatures to determine whether to enact such legislation. In 2014–15 the Commission: •

Completed its programme of preparing and submitting detailed papers to the UK Law Commissions on areas of elections law and practice, which require review for electoral law reform. This work commenced in 2012 and ranges from electoral registration through to conduct of the poll, forms and notices, and challenging elections. During this period the Electoral Commission worked closely with the Law Commissions and engaged with political parties, Returning Officers and electoral administrators, electoral lawyers and academics to encourage support for and contribution to the project.

•

Continued its work to identify the ‘hidden costs’ of elections, which relate to the inefficiencies that flow from the current complex and outdated legal processes.

•

Responded to the Law Commissions’ consultation on ways to reform the law governing elections and referendums across the UK. The consultation was published in early December 2014 and included proposals for rationalising and modernising electoral law by consolidating the many Acts, Regulations and Orders (over two hundred at present) and at the same time bringing the law up to date. The consultation paper largely reflected the range of issues that the Electoral Commission raised with the Law Commissions during the initial scoping and informal consultation phases of their review.

Standing for election in the UK This work examined the case for modernising and simplifying the rules on standing for election to the benefit of candidates, parties, Returning Officers and voters. In 2014-15 the Commission: •

Published a report containing a number of recommendations to update the rules around standing for election and make them clearer, fairer and more consistent where appropriate. This report followed a public consultation which received almost 100 responses. The recommendations included: removing the financial barrier of paying a deposit but retaining subscriber requirements to help ensure candidates are genuinely contesting the election; giving candidates easier access to the register for electoral purposes; clarifying the distinction between offices or employment which would prevent someone from standing for election, and those which would prevent someone from holding office if elected; and modernising the process around submitting nomination papers and related documents.

•

Following the report’s publication, the Commission shared it with the UK Law Commissions for them to consider as part of their important consultation seeking views on potential reforms that will modernise and rationalise electoral law.

•

Advised Cabinet Office on the draft provisions and briefed Parliament during the passage of the Recall of MPs Bill. The Bill received Royal Assent on 26 March 2015.

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1.5 Ensuring voters can see how politicians and campaigners raise and spend money Party and Election Finance audit and returns This strand of work covers the Commission’s ongoing work to deliver transparency, including timely and accurate publication of all statutory returns, and ensuring appropriate controls over the distribution and use of Policy Development Grants. In 2014–15: •

The Commission published details, on a quarterly cycle, of a total of £65.8 million accepted by political parties in donations during 2014 (2013: £35.9 million). Political parties also received a total of £8.8 million from public funds (2013: £9.2 million).

•

98.4% of quarterly reports from large political parties were submitted on time (target: 100%); 86.1% of small parties submitted on time (target: 90%).

•

100% of statement of accounts from the large parties were submitted to the Commission on time (target: 100%); 93% were submitted on time by small parties (target: 90%).

•

The Commission published 100% of donations and loans returns within the target of 10 working days (Q1 to Q3) and 15 working days (Q4). 96% of statement of accounts were published on time (target for both is 100%).

•

93% of campaign expenditure returns from the small parties that contested the European Parliamentary election were received on time (target: 90%). 100% of larger parties submitted theirs on time. All were published within the target of 20 working days.

•

98% of donations to political party headquarters were reported in the correct quarter (target: 100%).

•

97% of donations to parties’ accounting units were reported in the correct quarter (target: 95%).

•

61% of parties (target: 50%) submitted one or more of their statutory returns electronically.

•

The Commission carried out 73% of checks on donations reported to them by political parties to ensure that they were from permissible donors within 20 days (target: 95%).

•

The Commission missed the target for the adoption of a new standardised format for statements of accounts by political parties and their accounting units (large political parties: 35.6% adoption, against a target of 50%; political party accounting units: 35.6% adoption against a target of 40%). These figures do however show a slight improvement over performance during 2013-14 (34% adoption by large political parties and 32% adoption by political party accounting units).

Seven political parties were eligible to receive policy development grants in respect of the 2014–15 financial year: • • •

Conservative and Unionist Party Democratic Unionist Party – D.U.P. Labour Party 16


• • • •


Liberal Democrats Plaid Cymru – The Party of Wales Scottish National Party (SNP) SDLP (Social Democratic and Labour Party)

Details of eligibility, allocations and grants paid can be found in the link below. http://www.electoralcommission.org.uk/find-information-by-subject/political-partiescampaigning-and-donations/public-funding-for-parties All parties submitted expenditure returns; five of the seven claimed for their full allocation. The Conservative Party and the SDLP both claimed for less than their full allocation. A separate project oversaw the Commission’s work to achieve transparency in the reporting of donations and loans to political parties in Northern Ireland. The Northern Ireland (Miscellaneous Provisions) Act 2014, which received Royal Assent in March 2014, included provision for the publication of information about donations and loans to political parties in Northern Ireland. In the first instance this will mean the publication of anonymised data (unless the donor has given consent to publication) until the Secretary of State believes that the security situation is such to allow full publication. The first publication will include historical data from 2007 to 2014, and thereafter there will be quarterly publication. In 201415 the Commission continued to work with the Northern Ireland Office on the details of the Order setting out the process for publication of donations and loans data and, if the Order is laid quickly in the new Parliament, the publication of the first set of data could take place in the autumn 2015.

Legislation on non-party campaigning On 30 January 2014 the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill received Royal Assent. The Act introduces significant changes to the regulatory regime operated by the Commission around the activities of non-party campaigners in the run up to a UK general election. The changes came into force on 19 September 2014 during the regulated period for the May 2015 general election. In 2014-15 the Commission: •

Following a stakeholder survey to gather feedback from the organisations affected by the changes, published its guidance on the new rules for non-party campaigners in July 2014. The guidance explains the new rules and what campaigners need to do to comply with them.

•

Continued publishing regular campaigner updates on sections of the guidance requiring clarification or specific topics raised by campaigners. This service currently has over 1,000 subscribers.

•

Ran four webinars during the summer on how to decide whether an organisation needs to register with the Commission. Around 100 organisations and individuals attended these webinars and feedback was largely positive.

•

Responded to 674 requests for advice between April 2014 and March 2015. All but two enquiries were responded within the target timescales of 5, 10 or 20 working days depending on the level of complexity. 17



1.6 Good regulation In 2014–15 the Commission: •

Published revised guidance explaining changes to its party registration policy (mainly in relation to the use in identifiers to be used on ballot papers of acronyms, numerals, personal names and dynamic identifiers ( e.g. a link to a website or a Quick Response code) and communicated it to all registered parties.

•

The Commission also carried out a review of all party names and descriptions included in the Great Britain and Northern Ireland registers to ensure that existing identifiers complied with the requirements of PPERA. A review of registered emblems is planned for 2015-16. Following this review, the Commission contacted the parties where changes to their registrations were desirable to bring them in line with the new policy.

•

Registered 98 new political parties, 76 of them (77.6%) within the 30-working day target (target: 95%).

•

Answered nearly 5,000 requests for routine, medium complexity and novel or complex advice, answering 98.1% of queries within their respective five, ten and twenty working days targets. Most of the queries received were about spending and donations, or party registration from candidates and agents. In addition, the Commission answered more than 1,700 email queries from the 42 registered campaigners at the independence referendum in Scotland.

•

Completed 44 initial assessments and 24 case review investigations relating to allegations of rule breaking. 100% were resolved within the five and ninety day deadlines respectively.

•

Issued eleven initial notices and five final notices, all of those due for payment by end of year were paid on time. We met or exceeded our targets for the time taken to impose these sanctions.

Stakeholder view: The annual winter public opinion survey found that 41% of people said that they were confident that appropriate action would be taken if rules on political donations or spending on election campaigns were broken, down from 44% in 2013. Research following the Scottish independence referendum found that 65% of the Scottish electorate was confident that the authorities would take appropriate action if a campaigner was caught breaking the rules on campaign funding.

18



1.7 The framework for political party funding In 2013–14 the Commission published a review of the current rules on donations and campaign spending, making 50 recommendations to update the law covering political parties and other campaigners; improve the information available to voters; increase the effectiveness of the rules; and make obligations more proportionate for those that the Commission regulates. A number of those recommendations, including changes to the regulation of non-party and referendum campaigners, were adopted by the UK and Scottish Governments in 2013 and came into force for the Scottish independence referendum in 2014 and the 2015 UK general election. We will be evaluating the effectiveness of those changes in our postpoll reports to inform preparations for future electoral events. During 2014-15 we have also taken the opportunity to feed our recommendations into the Law Commissions’ review of electoral law and the Scottish Government’s consultation on council elections in Scotland. We will continue to work with relevant governments to progress the other recommended changes over the coming year.

Corporate Support and Internal Services To ensure that the Commission is in the best position to fulfil the objectives set out in the Corporate Plan, a range of improvement projects are undertaken each year to enhance the efficiency and effectiveness of internal systems and processes. In 2014–15 the Commission: •

Completed a redesign of the Commission’s AboutMyVote website. The new site was launched in October 2014 and features improved user-friendly navigation and better accessibility on mobile or tablet devices. On launch the site received widespread positive feedback from stakeholders. The Commission will be monitoring the success of the site by carrying out user testing, and will ensure that the site continues to evolve to meet users’ needs.

•

Continued to enhance its Information Communication Technology capacity and improve the resilience of operational systems, whilst at the same time aiming to provide these services in a more cost effective manner.

•

Improved the levels of knowledge retention within the organisation by ensuring that Commission’s knowledge and expertise is mapped, retained and shared, thus preventing the loss of specific information due to staff transition or absence.

•

Maintained high levels of awareness of data security issues and encouraged staff to report any information security issues they identified. All staff undertook training in information security during the year.

•

Continued to use its programme and project management framework to manage its wide range of programme and projects, with clear roles and responsibilities, strong project controls and consistent terminology and templates.

•

Strengthened the mechanisms through which the Commission responds to external enquiries to ensure high and consistent levels of customer service for all

19



stakeholders. As part of this, the Commission implemented a new phone system to enable the effective and timely routing of calls from stakeholders. •

Implemented a new data visualisation system aimed at improving the presentation and accessibility of key Commission data, including the provision of visualisation tools that allow readers to more easily reuse data.

•

Carried out an upgrade of PEF Online, the Commission’s e-filing system and registers database, in order to update the public search pages and make them easier to navigate and more accessible from mobile devices. Searches for donations, loans, and party registrations can be carried out much faster with many options to sort and filter the data. The design of the web pages also now matches the look and feel of the corporate website.

20


Annual Report and Accounts 2014-15 Strategic Report (Financial Report)

Financial Report Going concern note The Statement of Financial Position as at 31 March 2015 (on page 69) shows negative taxpayers’ equity of £2,184K. This reflects the fact that on 31 March 2015 the Commission had not yet paid all outstanding invoices relating to public awareness expenditure in preparation for the UK Parliamentary general election in May 2015. Settlement of these invoices occurred in the new financial year. The future financing of the Commission’s liabilities (so far as it cannot be met out of income received by the Commission) is to be met by grants of supply approved annually by the UK Parliament or, where statutory provision dictates, by payments direct from the Consolidated Fund. The Commission is likely to continue to receive funding from the Scottish Parliament for agreed activities. Approval for the resources required for 2015-16 has been received and there is no reason to believe that future approvals will not be forthcoming. Therefore it is considered appropriate to adopt a going concern basis for the preparation of these financial statements. Investment, Funding and Income As an independent public body, the Commission is accountable to the UK Parliament for its expenditure. UK Parliament approval for its spending plans was sought through a Main Supply Estimate for 2014–15 (HC 1208), presented to the House of Commons, specifying the estimated expenditure and requesting the necessary funds to be voted. Further UK Parliament approval was sought to amend the Main Supply Estimate through a Supplementary Estimate (HC 977) to move £250K of revenue funding into capital and provisions. Both the Main and Supplementary Estimates included a formal description or ambit of the services to be financed. In these accounts, the Statement of Parliamentary Supply shows outturn figures against the Supplementary Estimate. The Commission drew down voted funds during the year from the Consolidated Fund as required. The Commission received income from the Scottish Parliament during the year 2014-15 which was the recovery of incremental costs incurred associated with the Scottish independence referendum. The Cash Flow Statement analyses the net cash flow from operating activities; identifies cash spent by the Commission on capital expenditure and investment; records income from fines or penalties paid by political parties and individuals that the Commission is required to surrender to the Consolidated Fund; and shows the funding that the Commission drew down from the Consolidated Fund in order to finance its activities during the year.

21



Use of Resources Following approval of Commission plans by the Speaker’s Committee, the UK Parliament voted funding of £22,581K to the Commission for 2014-15. This figure comprised a net resource expenditure limit of £22,181K and a capital expenditure limit of £400K. In addition the Estimate recorded anticipated ‘non-voted’ spend of £265K (for Commissioner fee payments). The Statement of Parliamentary Supply on page 63 reports expenditure against the combined (voted and non-voted) funding limit of £22,846K. The Commission set individual expenditure budgets totaling £24,238K and £400K for resource and capital respectively to reflect, the voted allocation and £2,057K of budgeted income (of which £2,010K was related to the expected reimbursement by the Scottish Parliament of the costs of the Scottish independence referendum).The chart below shows the break-down of these figures between: • continuing core expenditure which is not influenced by the election cycle • expenditure required to support specific electoral events (elections, referendums and the transition to individual electoral registration) The actual incremental costs incurred on the Scottish independent referendum were £1,685k which represents a reduction of £325k on the original estimate of £2,010k. This reduction reflects efficiencies achieved in public awareness spending.

22



In delivering its objectives the Commission spent a total of £21,940K (voted £21,710K, nonvoted £230k), £906K less than the total funding limit of £22,846K (voted £22,581K, nonvoted £265K). This comprises: •

• •

An under-spend of £854K against voted resource, the major items being: £468K of unused contingency funding not required in year, £95k relating to efficiencies in public awareness, and £70K in staff (core and event). With regard to the budget diagram above, the under spend of £854K is made up of £523K on core resource, £204K on event-related costs and £127K on Policy Development Grants. An underspend of £17K against the voted capital allocation of £400K An underspend of £35K against non-voted resource of £265K

The Commission also collected £29,400 in fines from political parties and individuals for failure to comply with the rules on party and election finance. These fines have been surrendered to the Consolidated Fund as required by law. The Commission required cash amounting to £19,920K in 2014-15 to finance its activities, which was £2,456K less than the sum of £22,376K approved by Parliament in the Supply Estimate. Note SOPS4 on page 66 to the accounts provides a reconciliation of the net resource outturn to the net cash requirement.

Going Forward The Commission’s Supply Estimate for 2015–16 (HC 176) provides for a net resource requirement of £21,156K, which is £1,425K less than the equivalent 2014-15 figure. This decrease reflects a reduction in event related costs associated with the major elections in May 2015 and May 2016, and core operating costs reductions. The key areas in which the Commission plans to use its resources during 2015–16 are: • To support preparations for the UK Parliamentary general election in May 2015 and elections in May 2016 • To maintain and publish information about political parties and their finances • To ensure that parties, candidates and others understand and follow the rules on party and election finance • To continue to support the introduction of Individual Electoral Registration in England, Scotland and Wales • To set standards for running elections and electoral registration and report on the performance of Returning Officers and Electoral Registration Officers in meeting those standards • To provide support, advice and training for those involved in delivering elections and electoral registration • To carry out work designed to make sure people understand it is important to register to vote, and how to vote • To report on electoral events during the period • To contribute to the on-going discussion on the administration of elections and the framework for party and election finance in the UK • To comment on proposals for new legislation as appropriate 23


• •


To conduct a programme of research to support and inform the Commission’s work To make grants to eligible political parties for policy development

Key areas of activity planned for the period beyond 2015–16 are set out in the five-year Corporate Plan which is published on the Commission website. The plan focuses on continuing to make an impact in the field of elections and political finance, facilitated by efficient programme and project management.

The Speaker’s Committee The Speaker’s Committee is established under Section 2(1) of Political Parties, Elections and Referendums Act 2000 (PPERA) to perform the functions conferred on it by PPERA. These functions include: •

Examining the Commission’s annual resource estimates and laying them before the House of Commons, with or without modification

•

Examining the Commission’s five-year plans and laying them before the House of Commons, with or without modification

•

Receiving the Commission’s accounts

•

Receiving an annual report from the Comptroller and Auditor General on the economy, efficiency and effectiveness with which the Commission has used its resources

•

Designating the Commission’s Accounting Officer

•

Reporting to the House of Commons, at least once a year, on how it has carried out its functions

Details of Committee membership and further activity during 2014–15 are outlined in the Governance Statement at page 41. The Speaker’s Committee met in March 2015 to consider the Commission’s Supply Estimate for the 2015–16 financial year and the Commission’s five-year Corporate Plan for 2015–16 to 2019–20. The Corporate Plan was laid before the House of Commons in pursuance of paragraph 15(4) of Schedule 1 of PPERA and published on 17 June 2015.

Pensions Employees of the Commission are eligible for membership of the Civil Service Pension Scheme. The Scheme includes a choice between a defined benefit scheme and stakeholder pension. Liability rests with the Scheme, and not with the Commission. Benefits are paid from the Civil Superannuation scheme to which the Commission makes contributions to cover accruing pension entitlement for staff employed. Statements of Account for the Scheme are provided in the Cabinet Office Civil Superannuation Resource Accounts. Further details are provided in note 3 to the Accounts and in the Remuneration Report. Pension arrangements for the Electoral Commissioners are outlined in the Remuneration Report. 24



Audit Committee The Board has established an Audit Committee to support the Accounting Officer in discharging his formal accountability responsibilities and provide assurance to the Electoral Commissioners on the discharge of these responsibilities. Details of Audit Committee responsibilities, membership and activity during the year are provided in the Governance Statement. The remunerations for the Chair of the audit committee during the year were as follows: •

Elizabeth Butler (to 11 October 2014) - £2,371 (2013-14; £4,500)

•

Dean Parker (from 12 October 2014) - £2,105

Early departure costs The Commission meets the additional pension costs of any employees who retire before they reach normal pensionable age. The total pension liability up to the normal retiring age in respect of each employee is charged as expenditure in the year in which the employee takes early retirement and a provision is created for the liability until they reach their 60th birthday. There were no early departures in 2014–15. Further details are provided in note 15.2 to the Accounts.

Accounting Officer In accordance with Schedule 1(19) of PPERA, the Speaker’s Committee has appointed the Chief Executive as Accounting Officer of the Electoral Commission. His responsibilities as the Accounting Officer are set out at page 40.

Auditors The Comptroller and Auditor General is appointed as the Electoral Commission’s external auditor under Schedule 1 of PPERA. As disclosed in note 4 to the accounts, a notional cost of £35,000 (2013-14: £37,500) was incurred on audit services provided by the Comptroller and Auditor General. Internal audit services during 2014–15 were provided by PricewaterhouseCoopers LLP (PwC) who were appointed as the Commission’s Internal Auditors for a three-year period from 1 April 2012 which following due process was subsequently extended by a further year. Internal Audit services for 2014–15 cost £61,009 (2013–14; £52,513). The 2014-15 fees include the cost of the party registration review.

25



Payment of suppliers Although the Commission is independent of government, it aims to comply with the Prompt Payment Code that operates across the public sector. The Government target is to pay undisputed invoices within 30 days. In 2014–15, 99% (2013-14: 99%) of invoices were paid within this 30-day target. The Commission further aims to pay undisputed invoices within 10 days from the date of receipt in recognition of government’s commitment to paying suppliers promptly. For the year 2014–15, the Commission paid 83% (2013-14: 92%) of undisputed invoices within 10 days. Staff relations The Commission is committed to communicating directly with all staff and taking into account their views on matters affecting their employment. To help the Commission and its staff to achieve this objective, a recognition agreement is in place between the Commission and the Public and Commercial Services Union (PCS). This agreement encourages clear working arrangements which promote the mutual interests of the Commission and its employees to maintain good relations by fostering a spirit of understanding, cooperation and trust between the Commission, its employees and the Union. Staff involvement is also actively encouraged as part of the day to day process of line management and information on current and prospective developments is widely disseminated. In addition to this, we are currently developing a Staff Engagement and Internal Communications working group as a further mechanism for enhancing and maintaining good employee relations Occupational health and safety The Commission’s health and safety policy is published and available to all staff. In addition, procedures, guidance and risk assessments are in place covering the Commission’s core activities. A health and safety group oversees the Commission’s arrangements, although the primary responsibility for health and safety rests with line management. The group meets quarterly and reports to the Commission’s senior leadership team. The Commission uses an independent health and safety organisation to provide advice and guidance and to monitor the Commission’s management of its health and safety responsibilities and arrangements and, during the course of the year, no significant nonconformances were found with respect to the Commission’s safety management systems and working environment. Equal opportunities and diversity The Commission is committed to the principle of equality of opportunity and values diversity. The Commission’s single equality scheme sets out its duties and commitments across the whole of the UK and includes an action plan which is updated annually. The scheme reflects the public sector equality duty which prohibits discrimination on the grounds of age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation. 26



The Commission scheme is designed: •

To ensure that everyone who is eligible is able to participate in the democratic process, by identifying barriers, making recommendations and working with others to remove them

•

To ensure that the Commission embeds equality and diversity all its work, treats all customers fairly and with respect, and is transparent in the decisions it makes

•

To ensure equality of opportunity for everyone at the Commission and ensure that all staff are treated fairly and with respect

The Commission undertook equality impact assessments on relevant policies and procedures throughout 2014–15. The equality impact assessments support a commitment to evidence-based policy making. In addition to arrangements for consultation and monitoring, the assessment process helps to develop effective policies that meet the needs of all users. The Commission is committed to ensuring that disability is not a bar to recruitment or to advancement and has successfully retained the ‘Two Ticks’ Disability symbol. The symbol is awarded to employers who have agreed to meet five commitments regarding the recruitment, employment, retention and career development of disabled people. This award enhances the Commission’s existing working practices so that no job applicant or employee is discriminated against due to a disability. Sickness absence In 2014–15 the average number of days sickness absence was 8.02 per employee (2013– 14: 8.08). The Electoral Commission is committed to the health and wellbeing of all staff and promotes a balanced life style, including a corporate membership with Benenden Healthcare. There is a comprehensive sickness absence policy and guidance for managers on dealing with staff absence. Personal data related incidents There have been 12 information governance related incidents reported during 2014-15. Of these, three were around the availability of systems and resulted in no information loss, two related to the mismanagement of information being sent via email, four related to poorly redacted information or information published in error, and there were three incidents of internal breaches of information processing and security processes. These incidents were reported to and reviewed by the Commission’s Audit Committee as part of the annual assessment of information risk management. The report noted that remedial actions and future mitigations have been implemented Information risk management responsibilities, together with an assessment of performance, are set out in the Governance Statement at page 48.

27



Interests, gifts and hospitality Commissioners and staff abide by a code of conduct, part of which requires them to declare any interests, and any significant gifts or hospitality that they have received or offered. The registers are updated periodically and are available on the Commission website. Freedom of Information (FOI), Parliamentary Questions and complaints In 2014–15 the spokesman for the Speaker’s Committee, Gary Streeter MP, responded to 194 Parliamentary questions on a range of topics, including on the transition to IER and electoral registration in general, electoral fraud, performance standards for EROs and the Commission’s public awareness activity. The Commission is committed to the principles of openness and transparency in public life and acknowledges a duty to provide information to the public. In 2014-15 we received 174 FOI requests. 167 requests were due for response in the same period and we responded to 161 (96.4%) within the 20 working days statutory timeframe. All responses are available on the website. The Commission also dealt with five complaints of which two requested a review. The Commission’s past consideration of a closed regulatory matter was referred by a complainant to the Parliamentary Ombudsman. The Parliamentary Ombudsman issued a report on this matter in July 2014. This matter is now resolved. Disclosure of audit information to the auditors As far as the Accounting Officer is aware, there is no relevant audit information of which the Commission’s auditors are unaware. The Accounting Officer has taken all the steps that he ought to have taken to make himself aware of any relevant audit information and to establish that the Commission’s auditors are aware of that information.

Peter Wardle Chief Executive and Accounting Officer 02 July 2015

28


Annual Report and Accounts 2014-15 Remuneration Report

Remuneration Report The Commissioners and their remuneration Commissioners are appointed by Royal Warrant to exercise the functions of the Commission as described in the Political Parties, Elections and Referendums Act 2000 (PPERA). The Chair of the Commission is appointed on a part time, three day a week basis; the other Commissioners spent an average of between 1.2 and 5.8 days per month on Commission duties. The following Commissioners served during the year: • • • • • • • • • •

Jenny Watson (Chair) Max Caller CBE (stepped down 31 December 2014) Anna Carragher Gareth Halliwell Tony Hobman Lord Horam of Grimsargh David Howarth John McCormick Bridget Prentice (appointed 12 May 2014) Alasdair Morgan (appointed 12 May 2014)

Max Caller was appointed in December 2014 by the Secretary of State for Communities and Local Government as one of three commissioners tasked with intervening in the London Borough of Tower Hamlets. An aspect of the role was specifically in relation to the delivery of electoral services, which potentially could have conflicted with his role as an Electoral Commissioner. He stepped down from his role as an Electoral Commissioner with effect from 31 December 2014. A recruitment process, overseen by the Speaker’s Committee and independently chaired, is taking place to fill the vacancy created by his stepping down. The appointment of Alasdair Morgan and Bridget Prentice as Commissioners commenced on 12 May 2014 following a recruitment process overseen by the Speaker’s Committee and independently chaired. These appointments followed the departures of the Rt Hon Sir George Reid and Lord Kennedy during 2013. Lord Horam and David Howarth were subject to a re-appointment process during the year which resulted in their re-appointments for a further four-year term in each case. A reappointment process for Anna Carragher is currently ongoing.

29



The durations of the current Commissioner appointments are as follows: Name

From

To

Jenny Watson

1 January 2013

31 December 2016

Anna Carragher

1 January 2012

31 December 2015

Gareth Halliwell

13 March 2013

12 March 2017

Tony Hobman

1 January 2014

31 December 2017

Lord Horam of Grimsargh

1 October 2014

30 September 2018

David Howarth

1 October 2014

30 September 2018

John McCormick

1 October 2012

31 December 2016

Bridget Prentice

12 May 2014

30 September 2018

Alasdair Morgan

12 May 2014

30 September 2016

The House of Commons has resolved that fees for the Commissioners shall increase on 1 April each year, by the percentage increase paid for High Court Judges. In accordance with this arrangement, fees were increased by 1% from April 2014. The fees for Commissioners and the Chair are paid out of the Consolidated Fund, as may be specified in a resolution of the House of Commons. Commissioners were paid a fee of £366 (2013–14; £362) for each day worked in the period 1 April 2014 to 31 March 2015. The Chair received remuneration of £102,771 (2013–14; £95,037 which included a short period of unpaid leave following surgery). The pension arrangements for Commissioners may be provided for by the House of Commons in a resolution. The only provision made under this section is for the Chair of the Commission and these costs are met out of the Consolidated Fund. The salary and fee payments to Commissioners during 2014–15 were as follows: 2014-15

2013–14

Salary or Fees

Salary or Fees

£

£

102,771

95,037

Max Caller CBE (to 31 December 2014)

13,345

9,044

Anna Carragher

14,622

13,385

Gareth Halliwell

19,742

22,431

Tony Hobman

9,876

8,684

Lord Horam of Grimsargh

7,578

7,235

David Howarth

9,309

7,595

John McCormick

23,211

20,972

Bridget Prentice

4,026

-

Name

Jenny Watson (Chair) *

Alasdair Morgan 6,588 * The Chair received remuneration of £95,037 for 2013-14 which included a short period of unpaid leave following surgery. 30



Executive Team Peter Wardle was appointed as Chief Executive by the Commissioners on 1 December 2004. The Speaker’s Committee also designated him the Commission’s Accounting Officer. The Chief Executive’s contract of employment is for an indefinite period. The termination of his employment is a matter for the Commissioners. The Executive Team is the Chief Executive’s forum for strategic decisions and is responsible for advising Commissioners on aims and objectives and for ensuring they are met. Appointment to the Executive Team is on merit and follows open competition. The Executive Team members during 2014–15 were as follows: • Chief Executive: Peter Wardle (Peter Wardle will leave the Commission on 31 July 2015) • Deputy Chief Executive and Director of Finance & Corporate Services: Carolyn Hughes • Director of Party and Election Finance: Peter Horne – (until 1 May 2014) • Director of Party and Election Finance and Legal Counsel: Bob Posner – (from 23 September 2014) • Director of Communication: Alex Robertson • Director of Electoral Administration: Andrew Scallan The organisational structure as at 31 March 2015 is set out below:

31



The remuneration of the Commission’s Chief Executive and Directors is funded through the Commission’s Supply Estimate and accounted for in the Commission’s resource accounts. The people covered by this report hold appointments which are open-ended although staff have the option to retire and draw pension from the age of 60 or 65 dependent on their particular pension scheme rules. Early termination with qualifying service, other than for misconduct, would normally result in the individual receiving compensation as set out in the Civil Service Compensation Scheme, which may be accessed at www.civilservicepensionscheme.org.uk.

The Remuneration and Human Resources Committee is responsible for advising the Commission Board on the remuneration of the Chief Executive and agreeing the annual negotiating remit for staff pay awards (including the Executive Team). Details of the committee’s responsibilities and membership are provided in the Governance Report. The Commission is not part of the Civil Service and therefore not bound by the Civil Service Pay Guidance. However, Schedule 1 of PPERA requires that the Commission shall have regard to the desirability of keeping staff terms and conditions of employment broadly in line with those of the Civil Service. The Remuneration and Human Resources Committee also takes account of wider economic considerations and the affordability of their recommendations.

Executive Team emoluments The salary and pension entitlements of the Executive Team of the Commission were: Gross Salary £000

Pension Benefits

Total

2014-15

2013-14

2014-15

2013-14

2014-15

2013-14

125

124

30

30

155

154

101

100

24

24

125

124

95

95

23

23

118

118

95

94

23

23

118

117

40

94

2

23

42

117

48

-

12

-

60

-

Peter Wardle Chief Executive Appointed 1 December 2004

Carolyn Hughes Deputy Chief Executive and Director Finance &Corporate Services and Appointed 21 May 2007

Alex Robertson Director of Communication Appointed 1 October 2010

Andrew Scallan Director of Electoral Administration Appointed 24 October 2006

Peter Horne** Director Party and Election Finance Resigned 1 May 2014

Bob Posner** Director Party and Election Finance Appointed 23 September 2014

The information in the above table is audited. 32



* Executive Team members’ benefits in kind include Benenden Healthcare membership, an online purchasing discount scheme and an employee assistance programme, for each of which the Commission also makes a payment to HMRC. The value of these benefits for each Executive Team member for 2014–15 was £313 (2013–14; £300). These benefits are provided for all Commission staff. ** The 2014-15 annualised salary of Peter Horne was £94,277 and Bob Posner is £95,220

Compensation for loss of Office Peter Wardle will leave the Commission under the voluntary exit terms of the Civil Service Compensation Scheme on 31 July 2015. He elected to take early retirement. The Commission will make a payment, the cost of which is included in the 2014-15 accounts, of £320,389 directly to the Civil Service Superannuation Scheme comprised of two elements: a compensation payment of £219,608 calculated on the basis of his salary and length of service; and a payment of £100,781 to buy out the actuarial reduction on his pension. The payments were agreed by the Cabinet Office and the Speaker’s Committee were kept informed of the use of the voluntary exit scheme and cost. The amount of the payment to the Civil Service Superannuation Scheme will be adjusted to reflect any change in pay effective in the period 1 April 2015 to 31 July 2015.

Median pay disclosure

Highest paid Director Median remuneration Ratio

2014-15 £ 125,490 36,783

2013–14 £ 124,248 36,554

3.4

3.4

Reporting bodies are required to disclose the relationship between the remuneration of the highest paid director in their organisation and the median remuneration of the organisation’s workforce. This is as recommended by the Hutton Fair Pay review of senior salaries. The objective of the disclosure is to make senior executive pay more transparent and hold public sector organisations to account for this pay by tracking it against that of all employees of the organisation. The remuneration of the highest paid director in the Commission in the financial year 201415 was £125,490 (2013–14, £124,248). This was 3.4 times (2013–14, 3.4) the median remuneration of the workforce, which was £36,783 (2013–14, £36,554). In 2014–15 no employee received remuneration in excess of that of the highest-paid director. Remuneration rates for staff other than the highest paid director (adjusted where necessary to reflect part-time working arrangements) ranged from £21,611 to £100,914 (2013–14; £21,397 to £99,823).

33



Total remuneration includes salary, non-consolidated performance-related pay and benefitsin-kind. It does not include severance pay, employer pension contributions and the cash equivalent transfer value of pensions. The remuneration of the highest paid Director increased by 1% with effect from 1 April 2014 which was consistent with all Commission salaries.

Name

Peter Wardle Chief Executive

Accrued pension at age 60 as at 31 March 2015 and related lump sum

Real increase in pension and related lump sum at age 60

£000

CETV at 31.3.15

CETV at 31.3.14

Real increase in CETV

£000

£000

£000

£000

50 150

2 5

915

850

21

14

2

244

199

22

6

2

92

57

25

14

2

113

93

9

12

1

210

185

19

10

-

104

102

1

Carolyn Hughes Deputy Chief Executive and Director of Finance & Corporate Services /

Andrew Scallan Director of Electoral Administration

Alex Robertson Director of Communications

Bob Posner Director Party and Election Finance Appointed 23 September 2014

Peter Horne Director Party and Election Finance Resigned 1 May 2014

The information in the above table is audited. CETV is the Cash Equivalent Transfer Value.

The accrued pension quoted in the table above is the pension the member is entitled to receive when he or she reaches 60 for ‘Classic’, ‘Classic Plus’ and ‘Premium’ pension schemes, and 65 for the ‘Nuvos’ pension scheme. Peter Wardle’s pension disclosures reflect his entitlement for the full period of employment with the Commission together with service transferred from previous employers – not just his entitlement from employment with the Commission.

34



Cash equivalent transfer values A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in his/her former scheme. The pension figures shown in the table on page 34 relate to the benefits that the individual has accrued as a consequence of his/her total membership of the pension scheme, not just the service in a senior capacity to which disclosure applies. The CETV figures include the value of any pension benefit in another scheme or arrangement that the individual has transferred to the Civil Service pension arrangements and for which the Civil Superannuation Vote has received a transfer payment commensurate to the additional pension liabilities being assumed. They also include any additional pension benefit accrued to the member as a result of their purchasing additional years of pension service in the scheme at their own cost. CETVs are calculated within the guidelines and framework prescribed by the Institute and Faculty of Actuaries and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are drawn.

Real increase in the Cash Equivalent Transfer Value (CETV) The real increase in the CETV reflects the increase in CETV effectively funded by the employer. It does not include the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.

Pensions Pension benefits for Commission staff are provided through the Civil Service pension arrangements. From 30 July 2007, civil servants may be in one of four defined benefit schemes; either a final salary scheme (classic, premium or classic plus); or a whole career scheme (Nuvos). These statutory arrangements are unfunded with the cost of benefits met by monies voted by Parliament each year. Pensions payable under classic, premium, classic plus and Nuvos are increased annually in line with Pensions Increase legislation. Members joining from October 2002 may opt for either the appropriate defined benefit arrangement or a ‘money purchase’ stakeholder pension with an employer contribution (partnership pension account). Employee contributions are salary-related and range between 1.5% and 6.85% of pensionable earnings for classic and 3.5% and 8.85% for premium, classic plus and nuvos. Benefits in classic accrue at the rate of 1/80th of final pensionable earnings for each year of service. In addition, a lump sum equivalent to three years initial pension is payable on retirement. For premium, benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service. Unlike classic, there is no automatic lump sum. Classic plus is essentially a hybrid with benefits for service before 1 October 2002 calculated broadly as per classic and benefits for service from October 2002 worked out as in premium. In nuvos a 35



member builds up a pension based on his pensionable earnings during their period of scheme membership. At the end of the scheme year (31 March) the member’s earned pension account is credited with 2.3% of their pensionable earnings in that scheme year and the accrued pension is uprated in line with Pensions Increase legislation. In all cases members may opt to give up (commute) pension for a lump sum up to the limits set by the Finance Act 2004. The partnership pension account is a stakeholder pension arrangement. The employer makes a basic contribution of between 3% and 12.5% (depending on the age of the member) into a stakeholder pension product chosen by the employee from a panel of providers. The employee does not have to contribute, but where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution). Employers also contribute a further 0.8% of pensionable salary to cover the cost of centrally-provided risk benefit cover (death in service and ill health retirement). Further details about the Civil Service pension arrangements can be found at the website www.civilservicepensionscheme.org.uk


36


Annual Report and Accounts 2014-15 Sustainability Report

Sustainability Report The Commission recognises that delivering its activities and achieving its objectives has an impact on the environment and continues to work towards minimising this impact. In line with public sector reporting requirements, the following information has been prepared to summarise the Commission’s use of energy and water, and the production and disposal of waste material. The Commission aims to comply with published reporting guidance where possible but is a relatively small organisation which leases properties from a combination of public and private sector landlords. Accordingly it does not have direct control, and only limited influence, over choices of utility supplier or waste disposal management at its premises. Furthermore for a number of offices energy and water consumption and the disposal of waste is managed by the landlord on a consolidated basis on behalf of a number of tenants which includes the Commission. The costs associated with these services form part of a consolidated service charge. For this reason, and to ensure consistency of presentation, this sustainability report includes only consumption and waste disposal data from the London office, which is the Commission’s largest property, and the base for the majority of staff. As part of an on-going accommodation strategy, the Commission relocated its London office from Westminster to Moorgate in December 2010. This move to smaller premises enabled the Commission to reduce the office footprint and to make significant savings on accommodation running costs in later years. Offices in Edinburgh, Cardiff and Belfast have also subsequently relocated to smaller, more environmentally efficient premises. Regional offices in England were closed in 2012, with staff moving to full-time homeworking. Other initiatives continue in place to help minimise the environmental impact. Since 2011–12 the Commission has: •

Reduced printed resources provided to electoral administrators and other groups, focusing on electronic provision wherever possible.

•

Encouraged the use of video and teleconferencing to avoid unnecessary travel the consequential CO2 emissions. During an eight-month period in 2013-14, it was calculated that using these facilities removed the need for an estimated 413 individual journeys, which would have required 304,500 km (189,232 miles) of travel. This travel would have produced emissions equivalent to almost 38,500kg of CO2

•

Operated recycling facilities in all its offices.

•

Maintained a sustainable procurement policy that considers the full life environmental impact of purchases we make.

•

Regularly communicated the importance of efficiency initiatives and measures to staff.

37



Summary (London office) 2014–15 Performance Actual Target 2

Area Greenhouse gas emissions (CO2e in tonnes) 3

Estate Water

2012-13

354

454

437

471

Consumption (kWh)

767,244

956,238

981,446

931,011

Expenditure

Not available

Not available

Not available

Amount (tonnes)

12.33

12.32

Expenditure

£1,123

Consumption Expenditure

Estate Energy

Estate Waste

2013-14

Not available

12.17

12.47

£1,333

£1,123

£1,543

799 m3

1,459 m3

829 m3

2,089 m3

Not available

Not available

Not available

2014-15 354

2013–14 437

2012–13 471

2011–12 385

282

373

406

325

64

65

60

538,285

737,481

560,511

562,739

228,959

243,585

370,500

159,809

Not available

Not available

Not available

Not available

153,821

141,108

159,791

118,451

Not available

Emissions report (London office) Greenhouse Gas emissions Non-financial Total gross emissions indicators Gross emissions – (CO2e in Fossil fuel tonnes) consumption Gross emissions – Travel Related Electricity energy Consumption Gas (kWh) Financial Expenditure on indicators (£) Energy 4 Expenditure on travel

72

Performance commentary on emissions Reported fossil fuel consumption has decreased in the year, following the landlord’s introduction of measures during the previous year to reduce levels of electricity consumption, including lower ‘out of hours’ operation of plant and machinery and the introduction of

2 3

4

The target figure was set as the lower of the mean average of the previous two years’ figures. CO2e is Carbon Dioxide Equivalent. Data from fuel use, mileage, electricity and gas consumption, etc. is converted into carbon dioxide equivalents using conversion and emission factors. Expenditure on energy forms part of the service charge and is not available separately. 38



energy-efficient lighting. Consumption in the Commission’s dedicated space has reduced during the year (by over 15,000 kWh).

Waste report (London office) Waste Nonfinancial indicators (tonnes)

Total waste NonConfidential hazardous General waste waste reused or

2013–14

2012–13

2011–12

12.33

12.17

12.47

13.46

1.98

1.94

2.48

2.00

10.34

10.23

9.99

11.46

Not available

Not available

Not available

Not available

1,123

1,123

1,543

1,483

Not available

Not available

Not available

recycled

Total disposal cost 5 Financial indicators (£)

2014-15

Confidential General waste reused or recycled

Not available

Performance commentary on waste management General waste and recycling figures are based on a proportion of total building waste and are not directly controllable by the Commission. Confidential waste disposal for the Commission is handled separately from that for other building occupants. The confidential waste generated by the Commission is shredded onsite before being recycled into low grade paper. Overall waste production has increased slightly compared with 2013–14. There has been a small increase in the amount of confidential waste that the Commission produced, and the level of general waste and recycled waste has also increased. In the latter case, as this figure is based on a proportion of total building waste, this increase may be attributed to another tenant disposing of redundant items prior to vacating the building at the expiry of its lease during the last quarter. All general waste produced in the building, including that generated by the Commission, is sent to a nearby ‘Energy from Waste’ plant instead of to landfill sites.

5

Costs relating to the disposal of general/reused/recycled waste are part of the Commission’s annual service charge and cannot be specified. 39


Annual Report and Accounts 2014-15 Statement of Accounting Officer’s Responsibilities

Statement of Accounting Officer's Responsibilities Under the Political Parties, Elections and Referendums Act 2000 (PPERA), the Commission is required to prepare accounts for each financial year, detailing the resources acquired, held, or disposed of during the year and the use of resources by the Commission during the year. The accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of the Commission and of its net resource outturn, changes in taxpayers’ equity and cash flows for the financial year. In preparing the accounts the Accounting Officer is required to comply with the requirements of the Government Financial Reporting Manual (FReM) prepared by HM Treasury, and in particular to: •

Observe the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis.

•

Make judgements and estimates on a reasonable basis.

•

State whether applicable accounting standards, as set out in the FReM, have been followed, and disclose and explain any material departures in the accounts.

•

Prepare the accounts on a going concern basis.

In accordance with paragraph 19(1) of Schedule 1 to PPERA, the Speaker’s Committee has designated the Chief Executive as Accounting Officer of the Electoral Commission, with responsibility for preparing the Commission’s accounts and for transmitting them to the Comptroller and Auditor General. The responsibilities of an Accounting Officer, including responsibility for the propriety and regularity of the public finances for which an Accounting Officer is answerable, for keeping proper records and safeguarding the Commission's assets, are set out in Managing Public Money published by HM Treasury.

40


Annual Report and Accounts 2014–15 Governance Statement

Governance Statement The Electoral Commission was set up under the Political Parties, Elections and Referendums Act 2000 (PPERA). In accordance with Schedule 1(19) of PPERA, the Speaker’s Committee has appointed me as Accounting Officer of the Electoral Commission. My responsibilities in this role are set out separately on the previous page. This governance statement is produced in accordance with HM Treasury guidance as a summary of the procedures, processes and support structures I maintain to effectively manage and control the resources made available to me by Parliament. The statement is structured into four sections as follows: •

The governance framework

•

The control environment

•

Risk management

•

Outcomes for 2014–15 including board and committee performance

The Governance Framework The Commission is accountable to the UK Parliament, and specifically to the Speaker’s Committee of the House of Commons which is appointed in accordance with the provisions of PPERA. The Commission also reports to the Scottish Parliament on its functions in relation to Scottish local government elections and the independence referendum and to other legislatures as requested. Accountability to the UK Parliament and the internal governance framework can be illustrated as follows:

Accounting Officer & Chief Executive

UK Parliament

Speaker's Committee on the Electoral Commission

Electoral Commission Board

Audit Committee

Remuneration & Human Resources Committee

41

Commission staff via an Executive Scheme of Delegation



The Speaker’s Committee on the Electoral Commission The Speaker’s Committee is established under Section 2(1) of PPERA. Its key functions are outlined in the Strategic Report at page 24. Members of the Committee during the year were: •

Rt Hon John Bercow MP, Speaker of the House of Commons (Chair)

•

Mr Graham Allen MP, Chair of the Political and Constitutional Reform Committee

•

Rt Hon Nick Clegg MP, Lord President of the Council

•

Rt Hon Brandon Lewis MP, Parliamentary Under-Secretary of State at the Department for Communities and Local Government

•

Tracey Crouch MP

•

Rt Hon Sir Gerald Kaufman MP

•

Naomi Long MP

•

Bridget Phillipson MP

•

Mr Gary Streeter MP

The Speaker is ex officio Chairman of the Speaker’s Committee, and the Chair of the House of Commons Political and Constitutional Reform Committee and the Lord President of the Council (the Deputy Prime Minister) are ex officio members. The appointments of the Minister of State for Housing, made by the Prime Minister under Section 2 (c) of PPERA, and of the other five members, made by the Speaker under Section 2 (d), are (subject to the provisions of paragraph 2 Schedule 2 of PPERA) for the duration of the Parliament. The Secretary of the Speaker’s Committee is Eve Samson. During the year the Committee published 3 reports which are available from its website: http://www.parliament.uk/business/committees/committees-a-z/other-committees/speakers-committee-onthe-electoral-commission/publications/

42



Commission Board The Commission Board meets on a regular basis to consider the strategic direction of the Commission, to review and revise its objectives and to review its performance against its objectives. The Commission Board comprises the Electoral Commissioners, and its formal meetings are attended by all members of the Commission’s Executive Team, the Commission’s Legal Counsel and other Commission staff as required. The Chair and Commissioners are appointed by Her Majesty the Queen on the recommendation of the House of Commons. Commissioners are appointed for a period not exceeding ten years with the possibility of re-appointment for a further period. A Commissioner may cease to serve or be removed in accordance with the grounds set out in Schedule 1, paragraphs 3–5 of the Act. Appointments will terminate at the end of the period specified for each Commissioner, unless the Commissioner is reappointed before the period expires. Appointments may also be terminated at the request of the Commissioner. Details of the Commissioners who served during the year are provided in the remuneration report. During the year 2014-15 the Commission Board has delegated specific activities to the following sub-committees: • Audit Committee • Remuneration & HR Committee • Recruitment Panel

Audit Committee The Audit Committee supports the Accounting Officer to discharge his responsibilities for ensuring the adequacy of risk management, internal controls, efficient and effective use of public funds and financial governance arrangements within the Commission. The Audit Committee also acts on behalf of the Electoral Commissioners to provide them with assurance on these issues. The Audit Committee’s role includes, in particular, scrutiny and review of the Commission’s accounting policies; the Commission’s annual report and accounts, including the process for review of the accounts prior to submission for audit and management’s letter of representation to the National Audit Office (NAO); matters relating to the NAO; the adequacy of management response to issues identified by audit activity; assurances relating to the corporate governance requirements for the Electoral Commission; and proposals for tendering for audit services, or for the purchase of non-audit services from contractors which provide audit services. The Audit Committee comprises four appointees and is required to meet at least three times a year. Three Commissioners are appointed by the Board to the Audit Committee. The Chair of the Commission may not be appointed as a member of the Audit Committee. The Board has also approved the appointment of an independent adviser to the Audit Committee, who 43



is a suitably qualified independent person who has no connection with the Commission. It is agreed by the Board that the independent adviser will chair the Audit Committee and have the right to attend any meeting of the Electoral Commissioners. The Audit Committee makes an annual report to the Commission Board and approved minutes of each Audit Committee meeting are provided to the next available Commission Board meeting. Members of the Audit Committee will normally serve for three years, unless a member ceases to be a Commissioner or asks to stand down. They may be re-appointed for a further period normally not exceeding three years. The Chairs of the Audit Committee during the 2014–15 financial year were: •

Elizabeth Butler FCA, independent adviser (to 11 October 2014)

•

Dean Parker CIPFA, independent adviser (from 12 October 2014)

The members of the Committee during the same period were: •

Gareth Halliwell, Electoral Commissioner

•

Tony Hobman, Electoral Commissioner

•

Max Caller CBE, Electoral Commissioner (to 16th September 2014)

•

Alasdair Morgan, Electoral Commissioner (from 1st October 2014)

Four Committee meetings were held during 2014–15. The internal and external auditors routinely attend all meetings along within Commission staff including the Chief Executive, the Director of Finance and Corporate Services and the Head of Finance. The Committee members may also hold an annual private discussion with the auditors. The Committee approved a programme of audit and reviews for 2014–15 and has monitored the achievement of this programme through the year.

Remuneration and Human Resources Committee The Commission’s Remuneration and Human Resources Committee comprises three Commissioners and meets at least twice a year. The Committee has been established to support the Board and the Accounting Officer in their responsibilities for significant changes to staff terms and conditions, reviewing the remuneration policy of the Chief Executive and agreeing staff pay award remit, setting the fee for the independent Chair of the Audit Committee respectively.

44



The Committee also acts as an advisory group on the extent to which organisational development and HR matters support the Board’s strategic direction for the Commission. Members of the Remuneration and Human Resources Committee serve for three years, unless a member ceases to be an Electoral Commissioner or asks to stand down. They may be re-appointed for a further period not exceeding three years. The members of the Committee during the 2014–15 financial year were: •

Tony Hobman (Chair), Electoral Commissioner

•

Gareth Halliwell, Electoral Commissioner

•

Anna Carragher, Electoral Commissioner

The minutes of each meeting of the Remuneration and Human Resources Committee are circulated to all members of the Commission Board at the next available meeting. The committee met 4 times during 2014–15 and the key topics of discussion were the 2014– 15 pay award, the Commission’s ‘Vision 2020’ and associated HR initiatives; succession planning & talent management, performance management, changes in the Commission’s party & election finance directorate, knowledge retention and job evaluation.

Recruitment Panel The Commission’s Recruitment Panel comprises 5 Commissioners and meets as necessary to deal with the appointment of a new Chief Executive.

Chief Executive The Board has delegated authority for the day-to-day management of the Commission to the Chief Executive. These delegations are formally set, recorded and reviewed on an annual basis. He therefore has responsibility for the overall organisation, management and staffing and for procedures relating to financial and other matters including conduct and discipline.

Executive Team The Commission’s Executive Team, which comprises the Chief Executive and the Directors, meets usually weekly to manage the delivery of the Commission’s objectives in line with the strategic direction set by the Commission Board, addressing ongoing issues and risks in the process. The Executive Team receives monthly reports on performance, finance and risk management across the Commission and on progress with key projects and initiatives. As well as frequent informal discussions, the Chief Executive meets each member of the Executive Team at least once a month to review operational and financial performance. Members of the Executive Team during 2014–15 are listed in the Remuneration Report. 45



Impact of Deregulation Act 2015 The Speaker’s Committee agreed in late 2013 to some changes to the Commission’s governance arrangements as set out in PPERA. The Deregulation Act enables these changes, subject to a commencement order being made by the Secretary of State. If that happens: •

There will no longer be a requirement to provide an annual update to the Electoral Commission’s Corporate Plan. Instead, the Electoral Commission will publish a fiveyear plan in the first financial year of a Parliament. The Speaker’s Committee retains the right to request updates of the Corporate Plan outside of this cycle.

•

There will no longer be a requirement for the National Audit Office to provide an annual value for money study. Instead, this will be linked to the production of the fiveyear Corporate Plan.

The Control Environment In addition to the support of the Board and Committees outlined above, the effectiveness of the Commission control framework is further maintained and reviewed through the following arrangements:

Corporate governance The Commission Board reviews the corporate governance framework on an annual basis ensuring that current best practice is adopted. The Secretary to the Commission Board is responsible for the operation of the scheme of corporate governance to ensure that the aims and principles of the framework are given full effect. External Audit The National Audit Office provides formal reports to management as part of the statutory audit process that also inform the continuous review of Commission control systems. Internal Audit The Commission’s internal auditors during 2014–15 were PricewaterhouseCoopers (PwC). Audits were performed in accordance with PwC's Internal Audit methodology which is aligned to the Public Sector Internal Audit Standards. Their various reports offer an independent opinion on the adequacy and effectiveness of the Commission’s control systems. The agreed, risk-based, programme of audit, which had been approved by the Audit Committee, was delivered within the year.

46



The Audit Committee reviews both external and internal audit reports, and monitors which recommendations from these reports are accepted, and the implementation of accepted recommendations. The Audit Committee also satisfies itself that recommendations that are rejected are done so for valid reasons. Information governance The Commission’s management of information risk is an ongoing process. The Commission informs and measures its approach against the Lord Chancellor’s Code of Practice on the management of records, the Cabinet Office’s Security Policy Framework (SPF) and the ISO27001 Standard for Information Security. The Audit Committee oversees the Commission’s approach to managing information risk. Executive responsibility lies with the Director of Finance and Corporate Services in her role as Senior Information Risk Owner (SIRO). Other internal control systems The Commission delivers outputs of a material or cross cutting nature through a systemised Programme and Project management structure. The major Programmes in place during 2014-15 are detailed in the Management Commentary. Formal reporting arrangements for programmes and projects to the Executive Team and Commission Board have been developed, to enable them to monitor plans and achievements against key milestones and budgets. A monthly programme of directorate performance and financial monitoring meetings is in place across the Commission. The meetings are attended by each Director and their budget managers and are supported by a central management reporting team. The Infrastructure and Corporate Projects Board (ICPB), chaired by the Director of Finance and Corporate Services met most month during 2014–15. Its remit included ensuring that: •

Investment projects are properly evaluated against clear success criteria

•

Delivery plans are in place for approved projects

•

Project risks are adequately identified and managed in accordance with the Commission’s risk management framework

•

Lessons learned are reflected in future decision making.

During the year the ICPB approved and monitored £400K of capital expenditure. The Commission operates a comprehensive Personal Performance Management Framework, designed to ensure that each member of staff has clear objectives and that their success in achieving these objectives is assessed in a structured way. The framework is

47



also designed to ensure that all staff have access to the training and development they need in order to carry out their responsibilities as required. Policy Development Grants, as outlined at note 5 to the accounts, these are made by the Commission to qualifying political parties. Control over payment of the grants is maintained through a comprehensive claim and review process, reviewed for accuracy and regularity as part of the annual financial audit.

Risk management and key activity Under the Commission’s risk management arrangements, responsibility for identifying, assessing and managing the key risks which could affect the achievement of the Commission’s policies, aims and objectives lies with the members of the Executive Team. They are supported in this role by the senior managers who report directly to Executive Team members, and by staff in the Commission Corporate Services Directorate who regularly review the risk management process. The Commission’s risk management processes are designed to: •

Maintain a clear framework across the organisation within which risks are identified, assessed, managed and regularly reviewed

•

Assign specific responsibility for managing risks to the achievement of objectives in their area of responsibility to individual Executive Team members (including managing risks to significant projects in their capacity as Programme Directors)

•

Ensure that the significance and impact of risks are assessed on a consistent basis

•

Ensure that existing risks are regularly reviewed, and that new risks are identified and managed

•

Provide the Commission’s Chief Executive, the Audit Committee and the Commission Board with assurance that the risks are being managed appropriately

The Commission’s risk management policy is reviewed annually by the Audit Committee, and changes arising from each review are implemented across the organisation promptly. Training on the framework is provided to relevant staff, and also forms part of the Commission development training for staff wishing to move into management roles. The Commission aims to ensure that all its managers are properly trained in risk management.

48



The risk management policy, which is available to all staff on the Commission’s intranet: •

Provides a definition of risk

•

Outlines the principles and benefits of the risk management process

•

Details the risk reporting procedures

The policy was fully reviewed in 2013-14 to ensure it provided a focus on the Commission’s approach to risk management, with clearer categorisation of risk and an emphasis on risk management within programmes and projects – the main delivery mechanisms for the Commission. The Commission’s organisational risks continue to be mitigated through the Commission’s main programmes and key operational activities. During 2014-15, • • •

the risk management policy was updated to reflect a change in responsibilities following staff changes a crisis management framework was created to provide a template for managing issues where there is a risk of serious reputational damage various activities to manage risk in the run up to the May 2015 elections took place including a risk assessment of terrorist threats, business continuity rehearsals and the creation of an operational risk register for managing business as usual risk

Risks are identified and evaluated in the following ways: •

All key decisions are taken following consideration of risks and associated mitigations which are separately identified in decision papers for the Commission Board and those taking delegated decisions.

•

As part of their quarterly review of risk, the Commission Board and Executive Team consider whether new risks should be added to the risk registers.

•

The Executive Team undertake a full and comprehensive review of risk at the start of each year to ensure that the Commission’s organisational risk register captures risk to the delivery of objectives in the Commission’s Corporate Plan.

•

Managers and staff are responsible for the identification of risk in their own projects or areas of work. Risks are also identified through the planning process; through audit and review of operations and through training activities.

•

Each identified risk is assigned to a risk owner, who is required formally to review the likelihood of crystallisation, the resultant impact and the mitigations in place on a minimum quarterly basis – in practice risks are reviewed once a month as part of the Commission’s programme and performance management arrangements.

49



For 2014–15 the strategic risks that were monitored and managed by the Commission were: •

The Commission is held responsible for problems at electoral events

•

Perceived failure to carry out our regulatory function in the area of Party and Election Finance

•

The Commission fails to deliver its activities in relation to the implementation of individual electoral registration

•

The Commission fails to have an impact or influence

•

The Commission does not achieve its objectives in delivering the corporate plan

Outcomes for 2014–15 Issues considered by the Audit Committee in year During 2014–15 the Audit Committee advised the Accounting Officer on the following key items: •

Developments in risk management, information management and reporting during the year

•

Consideration of the NAO Management Letter for 2013–14 and Audit Planning Report for 2014–15

•

Review of the Internal Auditor’s annual report

•

Agreement of the scope of the annual NAO value for money audit, and consideration of the findings

•

Receipt of the Annual Report and Accounts for 2013–14

Review of Board and Committee performance during 2014–15 Regular self-assessment of Board and Committee effectiveness is an integral part of the Commission’s governance arrangements. In December 2013 the Board considered its vision for 2020 and the strategic direction for the organisation, identifying priorities and approach for the period ahead. The Board’s forward programme of meetings is aimed at engaging the Board at a strategic rather than operational level, inviting effective input and challenge. The Board also held sessions with external stakeholders to help contribute to thinking and understanding and to strengthen the Board’s strategic overview. The Board will undertake a more formal assessment of its progress against these actions in 2015–16. 50



The Audit Committee and the Remuneration & HR Committee reviewed their effectiveness in March 2015. Responses were broadly positive, and the Committees will act on the conclusions during 2015-16. Board and Committee attendance during 2014–15 is set out in the following table. Maximum possible attendance is given in brackets:

Name Jenny Watson (Chair) Max Caller CBE Anna Carragher Gareth Halliwell Tony Hobman Lord Horam of Grimsargh David Howarth John McCormick Alasdair Morgan Bridget Prentice

Commission Board

Audit Committee

13 (13) 10 (10) 13 (13) 13 (13) 13 (13) 13 (13) 12 (13) 13 (13) 9 (10) 7 (10)

1 (1) 4 (4) 4 (4) 3(3)

HR and Remuneration Committee 4 (4) 4 (4) 4 (4) -

Information governance In accordance with Cabinet Office guidelines the Audit Committee and Chief Executive receive an annual assessment of Information Risk management from the Senior Information Risk Owner (SIRO). For 2014-15 the report, which looked at the areas of risk management, transparency, confidentiality of information, availability of information, integrity of information, incident management and procedures to ensure continuing awareness of responsibilities and risks, concluded that the management of information risk in the Electoral Commission was effective. The Audit Committee and Chief Executive considered and were satisfied with the SIRO assessment of the effectiveness of overall information risk management including assessment against relevant guidance and frameworks.

National Audit Office assurance During 2014–15 in addition to the statutory audit of the Commission’s Report and Accounts, the NAO also undertook its annual value for money study into the Electoral Commission’s role in the Individual Electoral Registration (IER) project. The key findings from this review were that:

51



•

The Electoral Commission undertook 2 potentially conflicting roles; delivering outcomes and scrutiny of the project which creates a tension.

•

The Electoral Commission has effectively managed the risks arising from working with multiple bodies to delivery IER and has benefited from recent changes to its project management approach although it has recognised that improvements are required to the key performance measures used to monitor its projects.

Since the report was published the Commission has reviewed the report’s recommendations with the Audit Committee and will, as part of the review of its approach to Programme management in the summer of 2015 have regard to the recommendations especially in relation to responsibility for risk management with partners; development of performance measures and reporting to the board.

Internal Audit assurance Three internal audit reports (pension administration; information technology disaster recovery & business continuity; supplier payment controls) were completed during the year For each audit the internal auditors provided reports which included their key findings; an indication of the level of assurance that could be based on their findings; and recommendations for action to strengthen any control weaknesses. None of the reports were classified ‘high risk’ and none of the recommendations were classified ‘critical/high’. All of the recommendations for action were accepted by management and have been implemented. No internal control issues were identified that affected my conclusions in this Governance Statement. Party registration procedures As noted in last year’s report, there was a full independent investigation undertaken during 2014-15 in relation to the registration of an offensive party description. The Commission’s internal auditors also conducted a separate review of party registration procedures, which led to further recommendations. All of these recommendations have been accepted by management and their implementation is being monitored by the Audit Committee.

Review of effectiveness As Accounting Officer, I have responsibility for reviewing the effectiveness of the control environment. This review is informed by the work of the managers within the Commission who have responsibility for the development and maintenance of the control framework, by the work of the internal auditors and by comments made by the external auditors in their reports to those charged with governance of the organisation and other reports. I am advised on the effectiveness of my control systems by the Audit Committee.

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I am satisfied that no control weaknesses identified during the year were sufficient to introduce significant risks to the Commission’s policies, aims and objectives, or material errors in the Commission’s financial statements. I am also satisfied that those weaknesses that were identified have been, or are being, addressed through appropriate action. I am satisfied that the annual assessment of information risk, as received by the Audit Committee, highlighted no areas of undue concern. The Audit Committee confirmed the assessment of the effectiveness of overall information risk management including assessment against relevant guidance and frameworks.


53


Annual Report and Accounts 2014-15 Powers and Sanctions Report

Powers and Sanctions Report Our powers and sanctions In keeping with good regulatory practice and our published enforcement policy, 6 we seek to encourage compliance with the rules by providing effective support and guidance. Our goal, whenever possible, is to provide support and guidance to those we regulate to help them comply with the rules. We also use advice and guidance to resolve many cases of minor non-compliance (for example minor inaccuracies in statutory reports), where we do not consider that it is in the public interest or a sensible use of public funds to pursue investigations or sanctions. All non-compliance is however recorded and monitored, and taken into account where future non-compliance occurs. Where necessary, we take proportionate action when the rules are not followed. The Political Parties, Elections and Referendums Act 2000 (PPERA) provides the Commission with powers including the ability to: •

Require information (through a disclosure notice) from anyone where we suspect there has been a breach of the law

•

Require witnesses to attend for interview

•

Take action if we do not receive cooperation with these requirements

•

In certain circumstances, enter premises (through an inspection warrant which must be obtained from a Justice of the Peace)

The Commission also has a range of sanctions, including •

Fines ranging from £200 to £20,000 (up to 12 March 2015)7

•

Compliance and restoration notices, by which we can require particular actions to be taken to achieve compliance or rectify non-compliance

•

Stop notices, by which we can require that a particular action or intended action be stopped

These sanctions apply to most, but not all, of PPERA criminal offences. There are still some offences – namely those involving an element of intentionality – for which we cannot issue fines, but can refer cases for criminal prosecution.

6

www.electoralcommission.org.uk/__data/assets/pdf_file/0003/106743/Enforcement-Policy-30March11.pdf.

7

The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 came into force on 12th March 2015, bringing into force section 85 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012. These provisions remove the maximum fine that a Magistrates Court can impose in England and Wales and have the consequential effect of removing the £20,000 maximum on fines the Commission can impose. 54



We are also able to consider ‘enforcement undertakings’ from those we regulate, where for example a party may report an offence voluntarily and propose actions it will take to put things right, avoiding the need for the party and the Commission to go through potentially time-consuming investigations. The Commission must include, in its Annual Report, information about the use of these powers and sanctions. This information is provided below. Use of investigatory powers The Commission is required to report on its use of investigatory powers, specifically: •

Cases in which a disclosure notice was issued

•

Cases in which premises were entered using an inspection warrant issued by a Justice of the Peace

•

Cases in which the Commission applied to a court for an order for disclosure

We have used our power to issue a disclosure notice on two occasions. A disclosure notice was issued to the British National Party on 11 September 2014, requiring disclosure of information relating to a bequest to the party. A disclosure notice was issued to Britain First on 8 January 2015, requiring disclosure of information about the party’s 2013 financial records and compliance procedures, including in relation to donations received by the party. We have not needed to use our powers to enter premises or to make any applications for an order for disclosure to date. In the two cases where a disclosure notice was issued, the notices were complied with, and in all other cases we have been able to obtain voluntary cooperation where we needed information to reach a conclusion. We will continue to rely on voluntary cooperation wherever possible but to use our powers where voluntary cooperation is not provided in a timely manner or at all. Our legal power to require information is however valuable in providing an incentive to ensure voluntary cooperation.

55



Use of civil sanctions We encourage compliance by providing effective support to those we regulate, and guidance continues to be a crucial part of our work. The introduction of the sanctions regime led to a significant improvement in compliance rates, but this has not been maintained. We will be taking action to address this, including further increasing our robust enforcement of the rules. Compliance Rate – Statement of Accounts

Compliance Rate – Quarterly Returns

We continue to work with parties and others we regulate to improve compliance in other areas.

56



As noted above, we consider whether it is in the public interest and sensible use of public money to pursue each case of non-compliance. As a result we have been able to achieve the improvements in compliance illustrated above without the use of a significant volume of sanctions. However, we have taken an increasingly robust approach to non-compliance over the course of the year, with an increase in sanctions imposed, and an increase in the proportion of non-compliance identified being sanctioned. We will continue to do so because it is now some time since the civil sanctions regime was introduced, and many of those we regulate have received specific guidance in response to minor or inadvertent noncompliance. We believe it is reasonable to expect full and consistent compliance with the rules to be the norm. There are a number of cases at initial notice stage at year end, and it is likely that 2015-16 will see a further increase in sanction activity.

57



From 1 April 2014 – 31 March 2015 we issued the following sanctions: Type of case Number of Comments Cases Cases in which a £200 fixed monetary penalty or discretionary requirement was imposed or a stop notice served (other than cases in which the penalty, requirement or notice was overturned on appeal)

6

The Conservative Christian Fellowship: £500 fine for failure to report a donation on time Nigel Farage MEP: £200 for failure to report donations on time The Communication Workers Union: £500 fine for failure to register as a permitted participant in a referendum on time The National Conservative Draws Society: £1,400 fine for failing to provide annual notifications that it had made donations to a political party Fermanagh Against Fracking: £750 fine for failure to deliver loans reports on time Southwark Labour Group: £600 fine for failing to provide annual notifications that it had made donations to a political party

Cases in which liability for a fixed monetary penalty was discharged (by payment of £200 being made before issue of a final notice)

1

NI21 (a registered party in Northern Ireland), made payment of £200 before issue of a final notice. The penalty related to failure to deliver annual accounts on time

Cases in which an Enforcement undertaking was accepted

0

No enforcement undertakings were offered.

58



No appeals were made against penalties imposed and all penalties due for payment by 31 March 2015 were paid promptly. A number of other breaches occurred during the year but did not require sanctions to resolve the situation. We publish brief summaries of all enforcement cases on our website 8 During 2014-15 we also agreed the forfeiture of a £28,000 donation from the Conservative Party, the full value of a donation that the party accepted from a company in 3 July 2013 and that the Commission was satisfied was impermissible.

The Scottish independence referendum We continue to work closely with police and prosecutory bodies in the UK under established protocols, as well as with EEC law enforcement central agencies. This enables possible and alleged criminal offences relating to party and election finance to be taken forward as appropriate. In particular, this year the Commission and the Crown Office and Procurator Fiscal Service jointly undertook the delivery of enforcing the party and election finance rules for the referendum held on Scottish independence. Working closely together, the Commission and the Crown Office were able to prevent any significant non-compliance and deal quickly and effectively with the few instances of minor non-compliance that did arise.

8

www.electoralcommission.org.uk/our-work/roles-and-responsibilities/our-role-as-regulator-of-political-party-finances/making-an-allegation.

59


Annual Report and Accounts 2014-15 Certificate of the Comptroller and Auditor General

The Certificate of the Comptroller and Auditor General to the Houses of Parliament

I certify that I have audited the financial statements of the Electoral Commission for the year ended 31 March 2015 under the Political Parties, Elections and Referendums Act 2000. The financial statements comprise: the Statements of Comprehensive Net Expenditure, Financial Position, Cash Flows, Changes in Taxpayers’ Equity; and the related notes. I have also audited the Statement of Parliamentary Supply and the related notes. These financial statements have been prepared under the accounting policies set out within them. I have also audited the information in the Remuneration Report that is described in that report as having been audited.

Respective responsibilities of the Accounting Officer and auditor As explained more fully in the Statement of Accounting Officer’s Responsibilities, the Accounting Officer is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. My responsibility is to examine and certify the financial statements in accordance with the Political Parties, Elections and Referendums Act 2000. I conducted my audit in accordance with International Standards on Auditing (UK and Ireland). Those standards require me and my staff to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Electoral Commission’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Accounting Officer; and the overall presentation of the financial statements. In addition I read all the financial and nonfinancial information in the Annual Report to identify material inconsistencies with the audited financial statements. If I become aware of any apparent material misstatements or inconsistencies I consider the implications for my certificate.

60



I am required to obtain evidence sufficient to give reasonable assurance that the Statement of Parliamentary Supply properly presents the outturn against voted Parliamentary control totals and that those totals have not been exceeded. The voted Parliamentary control totals are Departmental Expenditure Limits (Resource and Capital), Annually Managed Expenditure (Resource and Capital), Non-Budget (Resource) and Net Cash Requirement. I am also required to obtain evidence sufficient to give reasonable assurance that the expenditure and income recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

Opinion on regularity In my opinion, in all material respects: •

the Statement of Parliamentary Supply properly presents the outturn against voted Parliamentary control totals for the year ended 31 March 2015 and shows that those totals have not been exceeded; and

•

the expenditure and income recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

Opinion on financial statements In my opinion: •

the financial statements give a true and fair view of the state of the Electoral Commission’s affairs as at 31 March 2015 and of its net operating cost for the year then ended; and

•

the financial statements have been properly prepared in accordance with the Political Parties, Elections and Referendums Act 2000 and HM Treasury directions made thereunder.

Opinion on other matters In my opinion: •

the part of the Remuneration Report to be audited has been properly prepared in accordance with HM Treasury directions made under the Political Parties, Elections and Referendums Act 2000; and

61


•


the information given in the Strategic Report (incorporating the Management Commentary) for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which I report by exception I have nothing to report in respect of the following matters which I report to you if, in my opinion: •

adequate accounting records have not been kept or returns adequate for my audit have not been received from branches not visited by my staff; or

•

the financial statements and the part of the Remuneration Report to be audited are not in agreement with the accounting records and returns; or

•

I have not received all of the information and explanations I require for my audit; or

•

the Governance Statement does not reflect compliance with HM Treasury’s guidance.

Sir Amyas C E Morse Comptroller and Auditor General

Date: 7 July 2015

National Audit Office 157-197 Buckingham Palace Road Victoria London SW1W 9SP

62



Statement of Parliamentary Supply For the year ended 31 March 2015 Summary of Resource and Capital Outturn 2014-15 2014-15

£000 Estimate

Note

Voted

Non-Voted

Outturn

Total

Voted

Non-Voted

Total

Voted outturn compared with Estimate: saving/ (excess)

2013-14 Outturn

Total

Departmental Expenditure Limit (DEL) - Resource

SoPS 2.1

22,281

22,546

21,502

21,732

779

15,623

- Capital

SoPS 2.2

400

-

400

383

-

383

17

270

SoPS 2.1

(100)

-

(100)

(175)

-

(175)

75

(36)

265

230

Annually Managed Expenditure (AME) - Resource - Capital 22,581

265

22,846

21,710

230

21,940

871

15,857

Total

22,581

265

22,846

21,710

230

21,940

871

15,857

Total Resource

22,181

21,327

854

15,587

400 22,846

383 21,710

230 -

21,557

400 22,581

265 -

22,446

Total Capital

383 21,940

17 871

270 15,857

Total Budget Non-Budget - Resource

Total

265

230

Net cash requirement 2014-15 2014-15 £000

Net Cash Requirement

Note

SoPS 4

2014-15

2013-14

Estimate

Outturn

Outturn compared with Estimate: saving/ (excess)

Outturn

22,376

19,920

2,456

15,399

Figures in the areas outlined in bold are voted totals subject to Parliamentary control. For Estimate purposes, all Commission spend is classified as Programme. The Statement of Parliamentary Supply does not therefore report outturn against Administration cost limit. Variances between Estimate and outturn are given in SoPS Note 2 and explained in the Management Commentary (Use of Resources) section of the Annual Report and Accounts on page 22

63



Notes to the Resource Accounts (Statement of Parliamentary Supply) SOPS1.Statement of accounting policies The Statement of Parliamentary Supply and supporting notes have been prepared in accordance with the 2014-15 Government Financial Reporting Manual (FReM) issued by HM Treasury. The Statement of Parliamentary Supply accounting policies contained in the FReM are consistent with the requirements set out in the 2014-15 Consolidated Budgeting Guidance and Supply Estimates Guidance Manual. SOPS1.1 Accounting convention The Statement of Parliamentary Supply and related notes are presented consistently with Treasury budget control and Supply Estimates. The aggregates across government are measured using National Accounts, prepared in accordance with the internationally agreed framework 'European System of Accounts' (ESA95). ESA95 is in turn consistent with the System of National Accounts (SNA93), which is prepared under the auspices of the United Nations. The budgeting system, and the consequential presentation of Supply Estimates and the Statement of Parliamentary Supply and related notes have different objectives to IFRSbased accounts. The system supports the achievement of macro-economic stability by ensuring that public expenditure is controlled, with relevant Parliamentary authority, in support of the Government's fiscal framework. The system provides incentives to departments and other supply funded bodies to manage spending well so as to provide high quality public services that offer value for money to the taxpayer. The Government’s objectives for fiscal policy are set out in the Charter for Budget Responsibility. These are to: • ensure sustainable public finances that support confidence in the economy, promote intergenerational fairness, and ensure the effectiveness of wider government policy; and • support and improve the effectiveness of monetary policy in stabilising economic fluctuations. SOPS1.2 Comparison with IFRS-based accounts Many transactions are treated in the same way in National Accounts and IFRS-based accounts, but there are a number of differences. The differences relevant to these financial statements are as follows: SOPS1.2a Provisions Provisions recognised in IFRS-based accounts are not recognised as expenditure for national accounts purposes until the actual payment of cash (or accrual liability) is recognised. To meet the requirements of both resource accounting and national accounts, additional data entries are made in the Statement of Parliamentary Supply across Annually Managed Expenditure (AME) and Departmental Expenditure Limits (DEL) control totals, which do not affect the Statement of Comprehensive Net Expenditure.

64



SOPS2. Net Outturn SOPS2.1

Analysis of net resource outturn by section

2014 - 2015

Gross

2013-2014 Outturn

Outturn

Estimate

Income

Net total outturn Net total compared to outturn Net Total Estimate, compared to adjusted for Estimate virements

Net

Total

£000 Spending in Departmental Expenditure Limit Voted: A. Core expenditure

23,287

(1,785)

21,502

22,281

779

779

15,412

35

35

211

Non-voted B. Commissioners fees

230

-

230

265

(175)

-

(175)

(100)

Annually Managed Expenditure Voted C. Provisions created or utilised in the year

Total

SOPS2.2

23,342

21,557

(1,785)

22,446

75

75 889

889

(36) 15,587

Analysis of net capital outturn by section

2014-15 Outturn

Gross

Income

2013-14

Estimate

Net

Net

Net total compared with Estimate

Net

£000 Spending in Departmental Expenditure Limit Voted Electoral Commission

383

-

383

400

17

270

TOTAL

383

-

383

400

17

270

The variances in the above tables are explained in the Management Commentary section of the Annual Report and Accounts under Use of Resources on page 22.

65


SOPS3.


Reconciliation of net resource outturn to net operating cost

2014-15 Note Total resource outturn in Statement of Parliamentary Supply

Less:

Voted

SoPS 2.1

Non Voted

SoPS 2.1

Income payable to the Consolidated Fund

Net Operating Costs in Statement of Comprehensive Net Expenditure

SOPS4.

2013-14

£000

£000

Outturn 21,327

Outturn 15,376

230

211

(29)

(18)

21,528

15,569

Reconciliation of net resource outturn to net cash requirement 2013-14

2014-15

Note

Estimate £'000

Outturn £'000

Net total outturn compared with Estimate: saving/ (excess) £'000

Resource Outturn

SoPS 2.1

22,446

21,557

889

15,587

Capital

SoPS 2.2

400

383

17

270

(443) (62) (15) -

(463) (35) (24) (2)

20 (27) 9 2

(862) (38) 8 -

(344) (1,158)

344 1,158

(95) 593

315 22,641

37 199 20,150

(37) 116 2,491

119 28 15,610

(265) 22,376

(230) 19,920

(35) 2,456

(211) 15,399

Accruals to cash adjustments: Adjustment to remove non cash items: Depreciation / Amortisation Auditors’ remuneration and expenses New provisions and adjustments to previous provisions Write off of Assets

4 4 4 4

Adjustments to reflect movements in working balances: Increase/(Decrease) in Receivables (Increase)/Decrease in payables (Increase)/Decrease in payables falling due after more than one year Use of provision Removal of non-Voted budget items Consolidated Fund standing services Net cash requirement

66

-

Outturn £'000



SOPS5.

Income payable to the Consolidated Fund

SOPS5.1

Analysis of income payable to the Consolidated Fund

The following income relates to the Electoral Commission and is payable to the Consolidated Fund (cash receipts being shown in italics).

Outturn

Total income payable to the Consolidated Fund

67

2014-15

Outturn

2013-14

£000

£000

Income

Receipts

Income Receipts

29

29

18

18



Statement of Comprehensive Net Expenditure for the Year ended 31 March 2015

2014-15

2013-14

3 4 6

7,778 7,592 (1,814) 230

7,051 5,600 (229) 211

5

7,742

2,936

Net Operating Costs for the Year ended 31 March 2015

21,528

15,569

Total expenditure Total income

23,342 (1,814)

15,798 (229)

Net Operating Costs for the Year ended 31 March 2015

21,528

15,569

£000 Note Operating costs Staff costs Other operating costs Income Commissioners' fees Other costs Voted costs

Other Comprehensive Net Expenditure Items that will not be reclassified to the net operating costs Net (gain)/loss on: - revaluation of property, plant & equipment

-

-

- revaluation of intangibles

-

-

- Actuarial Loss on pension scheme

10

15

Items that may be reclassified subsequently to net operating costs - revaluation of available for sale financial assets

-

Total comprehensive expenditure for the year ended 31 March 2015

68

21,538

-

15,584



Statement of Financial Position as at 31 March 2015 2015

2014

£000

£000

7

276

489

8

444

313

720

802

Note Non-current assets Property,plant and equipment Intangible assets Total non-current assets Current assets: Trade and other receivables

13

230

574

Cash and cash equivalents

12

11

0

Total current assets

241

574

Total assets

961

1,376

Current liabilities Trade and other payables

14

(2,537)

(1,368)

Provisions

15

(23)

(198)

Total current liabilities

(2,560)

(1,566)

Total assets less total current liabilities

(1,599)

(190)

Non-current liabilities Provisions

15

(581)

(571)

Other payables

14

(4)

(41)

Total non-current liabilities

(585)

(612)

Total Assets less liabilities

(2,184)

(802)

General fund

(2,184)

(802)

Total taxpayers' equity

(2,184)

(802)

Taxpayers' equity and other Reserves:

Peter Wardle Accounting Officer 2 July 2015

69



Statement of Cash Flows for the Year ended 31 March 2015

2014-15

2013-14

£000

£000

(21,528)

(15,569) 892

Note Cash flows from operating activities Net operating costs Adjustments for non-cash transactions

4

524

(Increase)/Decrease in trade and other receivables

13

344

95

Increase/(Decrease) in trade payables Less movements in payables relating to items not passing through the Statement of Comprehensive Net Expenditure

14

1,132

(712)

(28)

80

Use of provisions

15

(199)

(28)

(19,755)

(15,242)

Net cash outflow from operating activities

Cash flows from investing activities (61)

(128)

Purchase of intangible assets

(305)

(221)

Net cash outflow from investing activities

(366)

(349)

19,931

15,397

Purchase of property, plant and equipment

Cash flows from financing activities From the Consolidated Fund (Supply) - current year From the Consolidated Fund (non-Supply)

230 20,161

Net financing Net increase/(decrease) in cash and cash equivalents in the period before adjustment for receipts and payments to the Consolidated Fund Payments of amounts to the Consolidated Fund - CFERS

SoPS 5

Net increase/(decrease) in cash and cash equivalents in the period after adjustment for receipts and payments to the Consolidated Fund

211 15,608

40

17

(29)

(18)

11

(1)

Cash and cash equivalents at the beginning of the period

12

-

1

Cash and cash equivalents at the end of the period

12

11

-

70



Statement of Changes in Taxpayers’ Equity for the year ended 31 March 2015

Note Balance at 1 April 2013 Net Parliamentary Funding – drawn down

General Fund £000 (847) 15,397

Net Parliamentary Funding – deemed

1

Consolidated Fund Standing Services

211

Supply payable/(receivable) adjustment

-

Consolidated Funds Extra Receipts (CFERs) payable to the Consolidated Fund

SoPS 5

Comprehensive Expenditure for the Year

(18) (15,584)

Non-Cash Adjustments: Non-cash charges – auditor's remuneration

4

Balance at 31 March 2014

38 (802)

Net Parliamentary Funding – drawn down

19,931

Net Parliamentary Funding – deemed

-

Consolidated Fund Standing Services

230

Supply payable/(receivable) adjustment

(11)

Consolidated Funds Extra Receipts (CFERs) payable to the Consolidated Fund

SoPS 5

Comprehensive Expenditure for the Year

(29) (21,538)

Non-Cash Adjustments: Non-cash charges – auditor's remuneration

4

Balance at 31 March 2015

35 (2,184)

71

The Electoral Commission

Annual Report and Accounts 2014-15 Notes to the Accounts

Notes to the Resource Accounts 1.

Statement of accounting policies

1.1. Basis of preparation These financial statements have been prepared in accordance with an Accounts Direction given by HM Treasury in accordance with Paragraph 17(2) of Schedule 1 to the Political Parties, Elections and Referendum Act 2000. The statements are prepared in accordance with the 2014-15 Government Financial Reporting Manual (FReM) issued by HM Treasury. The accounting policies contained in the FReM apply International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector context. Where the FReM permits a choice of accounting policy, the accounting policy which is judged to be most appropriate to the particular circumstances of the Commission for the purpose of giving a true and fair view has been selected. The particular policies adopted by the Commission are described below. They have been applied consistently in dealing with items that are considered material to the accounts. In addition to the primary statements prepared under IFRS, the FReM also requires the Commission to prepare an additional primary statement. The Statement of Parliamentary Supply and supporting note shows outturn against Estimate in terms of the net resource requirement and the net cash requirement. 1.2. Accounting convention These accounts have been prepared on an accruals basis under the historical cost convention as modified by the revaluation of non-current assets. 1.3. Property, Plant and Equipment Property, plant and equipment are carried at fair value. Expenditure on property, plant and equipment over £1,000 is capitalised. On initial recognition assets are measured at cost including any costs such as installation directly attributable to bringing them into working condition. All property, plant and equipment are deemed to be short life or low value assets and the Commission has therefore elected to value these assets on the basis of depreciated historical cost, as an approximation for fair value. 1.4. Depreciation and Amortisation Non-current assets are depreciated at rates calculated to write them down to estimated residual value on a straight–line basis over their estimated useful lives. Asset lives are: • • • •

intangible assets IT hardware fixtures and fittings, furniture and other equipment leasehold improvements

72

3 years 3 years 5 years 5 years



1.5. Intangible Assets Purchased computer software licences and the associated costs of implementation are capitalised as intangible assets where expenditure of £1,000 or more is incurred. Intangible assets are reviewed annually for impairment and are stated at Depreciated Historical Cost (DHC). Software licences are amortised over the shorter of the term of the licence and the useful economic life. Information Technology developments include any relevant staff costs which are also capitalised.

1.6. Operating income Operating income relates directly to the operating activities of the Commission. It principally comprises income from rechargeable activity and from registration and re-registration of political parties. It also includes income received from political parties, individuals and third party campaigners in payment of fines and penalties which is payable to the Consolidated Fund but in accordance with the FReM is treated as operating income. 1.7. Operating leases Rentals payable under operating leases are charged to the Statement of Comprehensive Net Expenditure on a straight-line basis over the term of the lease. 1.8. Grants payable Grants payable are recorded as expenditure in the period that the underlying event or activity giving entitlement to the grant occurs. 1.9. Provisions for liabilities and charges The Commission provides for legal or constructive obligations which are of uncertain timing or amount at the Statement of Financial Position date on the basis of the best estimate of the expenditure required to settle the obligation. Such provisions are discounted to present values where the time value of money is material. Following the transfer of the functions of the Local Government Commission for England to the Electoral Commission on 1 April 2002 and the incorporation of its assets and liabilities as at that date, a provision has been established to meet its obligations with respect to pension payments to certain former Commissioners of that entity. 1.10.

Value Added Tax (VAT)

The work carried out by the Commission is performed under statute and outside the scope of output VAT. Input VAT is charged to the relevant expenditure category, or if appropriate capitalised with additions to non-current assets. Income and expenditure is reported inclusive of VAT.

73


1.11.


Administration and programme expenditure

The requirements of the FReM have been adapted to enable the Commission to produce these Accounts with sufficient detail to provide a true and fair view of its operations. All Commission spend is classified as Programme. The Commission distinguishes for budgeting purposes between its core operating costs and event related activities. In these accounts the core costs of running the Commission are reported as other costs (note 4). Event related activities are reported as other operating costs (note 5). The Statement of Comprehensive Net Expenditure includes both costs incurred and any associated operating income. 1.12.

Pensions

Past and present employees are covered by the provisions of the Principal Civil Service Pension Scheme which are described in note 3. The defined benefit elements of the scheme are unfunded and are non-contributory except in respect of dependents’ benefits. The Commission recognises the expected cost of those elements on a systematic and rational basis over the period during which it benefits from the employees’ services by payment to the Schemes of amounts calculated on an accruing basis. Liability for payment of future benefits is a charge on the Scheme. In respect of the defined contribution elements of the scheme, the Commission recognises the contributions payable for the year. Pensions payable by the Commission are accounted for in the period they fall due. Please refer to note 15.1 for the accounting treatment of the pension for ex-employees of the Local Government Commission for England due to the transfer of its functions to the Electoral Commission on 1 April 2002 and the incorporation of its assets and liabilities as at that date. 1.13.

Contingent liabilities

In addition to contingent liabilities disclosed in accordance with International Accounting Standard 37 (IAS 37-Provisions, Contingent Liabilities and Contingent Assets), the Commission discloses for parliamentary reporting and accountability purposes certain statutory and non–statutory contingent liabilities where the likelihood of a transfer of economic benefit is remote, but which have been reported to Parliament in accordance with requirements of Managing Public Money. Where the time value of money is material, contingent liabilities which are required to be disclosed under IAS 37 are stated at discounted amounts and the amount reported to Parliament separately noted. Contingent liabilities that are not required to be disclosed by IAS 37 are stated at the amounts reported to Parliament. 1.14. Impending application of newly issued accounting statements not yet effective There are no accounting standards that have been issued but not yet adopted that will impact on these accounts and the Commission has not adopted any standards early.

74


1.15.


Accounting estimates and judgements

The development, selection and disclosure of significant accounting estimates and judgments and the application of these judgments and estimates has been discussed and agreed with the Audit Committee. 1.16.

Research and Development

Expenditure on research is charged to the Statement of Comprehensive Net Expenditure in the year in which it is incurred. Development expenditure is also recognised in the Statement of Comprehensive Net Expenditure when incurred unless it meets the specific criteria for capitalisation.

75



2. Statement of Operating Costs by Operating Segments

2014-15 Elections and Local referendums

Scottish Independence Referendum

Electoral Registration

Commission Projects

Electoral Administration

Total

Party and Election Finance

£000 Gross Expenditure

2,630

Income Net Expenditure

-

1,685

6,210

(1,685)

-

-

2,630

6,210

316

6,972

5,529

23,342

(41)

(59)

(1,785)

6,931

5,470

21,557

316

2013-14 Elections and Local referendums Gross Expenditure Income

Net Expenditure

Scottish Independence Referendum

1,402 1,402


156

923

(156)

(35)

-

888

Commission Projects


1,130 1,130


5,172 5,172

Total

7,015

15,798

(20)

(211)

6,995

15,587

Expenditure is reported between the core Commission objectives as outlined at page 6 and 7. In addition the analysis identifies the marginal costs of the following key deliverables which are managed through formalised programme and project management arrangements. The elections and local referendums programme governs the Commission’s work ensuring well-run elections and referendums, providing guidance and assistance to Electoral Administrators, Candidates and Agents, developing and monitoring performance standards for ROs and producing reports on the administration of elections and referendums. The Independence Referendum programme governs the Commission’s role in supporting the September 2014 Referendum on Scottish independence, helping to deliver a referendum that puts voters first and produces a result they can have confidence in. Funding for this work in both 2013–14 and 2014–15 is provided by the Scottish Parliament The Electoral Registration programme focuses on supporting the transition from household to individual electoral registration, as well as Commission activity to maximise registration levels Commission project expenditure includes a major public awareness campaign designed to maximise the effectiveness of the Autumn canvass In Northern Ireland. Commission staff costs and corporate overheads are not attributed to programme or project activity, but for the purposes of this note are either directly allocated or apportioned as appropriate between Party Election Finance and Electoral Administration activity. Only the marginal costs of delivery are currently reported by programme and project to the Board and Executive Team. Information on Assets is not reported separately to the Commission Board or Executive Team.

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2.1


Reconciliation between Operating Segments and Statement of Comprehensive Net Expenditure / Statement of Financial Position 2014-15 Elections and Scottish Local Independence referendums Referendum

£000 Total net expenditure per statement of comprehensive net expenditure by operating segment

2,630

1,685


6,210


Commission Projects

316


Total

6,972

5,529

23,342

(56)

(73)

(1,814)

6,916

5,456

21,528

Reconciling items: Income Total net expenditure per Statement of Comprehensive Net Expenditure

-

-

(1,685)

2,630

-

6,210

-

316

2013-14 Elections and Scottish Local Independence referendums Referendum

Total net expenditure per statement of comprehensive net expenditure by operating segment Reconciling items: Income Total net expenditure per Statement of Comprehensive Net Expenditure

1,402

-

1,402

156


923

(156)

-

(35)

888

77

Commission Projects



Total

1,130

5,172

7,015

15,798

-

(29)

(9)

(229)

1,130

5,143

7,006

15,569



3. Staff numbers and related costs Staff costs comprise:

Permanently employed staff

Others

2014-15 £000

2013-14 £000

Total

Total

Wages and salaries

6,070

232

6,302

5,599

Social security costs

458

-

458

451

Other pension costs

1,018

-

1,018

1,001

Total net costs*

7,546

232

7,778

7,051

The Principal Civil Service Pension Scheme (PCSPS) is an unfunded multi–employer defined benefit scheme and the Commission is unable to identify its share of the underlying assets and liabilities. The scheme was last actuarially valued as at 31 March 2007 but since this date actuarial valuations of the Scheme were suspended pending the implementation of the Hutton Review recommendations. The Scheme was valued at 31 March 2012 and the valuation reflects the post 2015 scheme rules and benefits structures. For 2014-15, employer’s contributions of £1,017,998 were payable to the PCSPS (2013-14; £1,001,139) at one of four rates in the range 16.7% to 24.3% per cent (2013-14; 16.7% and 25.8%) of pensionable pay, based on salary bands. This includes employer’s contributions on salaries charged to events which are reported as Other costs in note 5. The scheme’s Actuary reviews employer contributions every four years following a full scheme valuation. The contribution rates reflect benefits as they accrue, not the costs as they are actually incurred, and reflect past experience of the scheme. Employees can opt to open a partnership pension account, a stakeholder pension with an employer contribution. Employers’ contributions of £13,359 (2013-14; £13,294) were paid to one or more of a panel of three appointed stakeholder pension providers. Employer contributions are age–related and range from 3% to 12.5% per cent of pensionable pay. Employers also match employee contributions up to 3% per cent of pensionable pay. In addition, employer contributions of £1,175 being 0.8% per cent of pensionable pay, were payable to the PCSPS to cover the cost of the future provision of lump sum benefits on death in service and ill health retirement of these employees. Contributions due to the partnership pension providers at the Statement of Financial Position date were £2,850. Contributions prepaid at that date were nil. No pension contributions were paid by the Commission in respect of Commissioners during the period. The Commission is, however, required to pay pensions to certain former Commissioners of the Local Government Commission for England (LGCE). The total provision for these costs was £211,000 at 31 March 2015 (£206,000 at 31 March 2014) – more details are available at note 15 to the accounts.

78



Average number of persons employed

During 2014-15 the average number of full-time equivalent persons (FTE) employed was 131 (2013-14: 123). This includes on average 7 FTE (2013-14: 2) temporary staff. 2014-15

2013-14

Number

Number

124 7 131

121 2 123

Activity Full time equivalent - Permanently employed staff Temporary staff Total

3.1

Reporting of Civil Service and other compensation schemes - exit packages

Exit package cost band

*Number of compulsory redundancies

2014-15 *Number of other departures agreed

Total number *Number of of exit compulsory packages by redundancies cost band (total cost)

2013-14 *Number of other departures agreed

Total number of exit packages by cost band (total cost)