Our evidence: Inquiry into the financial implications of the Senedd and Elections (Wales) Bill
Our Accountability to the National Assembly for Wales
We are currently accountable to the UK Parliament, specifically the Speaker’s Committee, who we receive our funding from. As well as devolving competence over devolved elections (National Assembly for Wales and Welsh local government) and referendums, the Wales Act 2017 gives the Assembly competence to legislate in relation to to our work, including:
- financing us
- the preparation, laying and publication of reports about the performance of our functions
- provision by us of copies of regulations we make or notice of the alteration or revocation of such regulation
The Senedd and Elections (Wales) Bill places a duty on the Senedd to consider the financial and oversight arrangements for us in relation to devolved elections and devolved referendums with a view to making recommendations for reform. If the Assembly recommends support for such a move, amendments would be introduced at Stage 2 to give effect to this change.
Any initial costs we expects as a result of changing the financial and oversight for Welsh devolved elections (i.e. staff costs)
We do not expect any incremental costs from the implementation of the new accountability arrangements. Work with colleagues in Wales (and Scotland) in establishing the arrangements is being accommodated within existing resources.
We also expect that the on-going additional work in identifying and accounting for the costs of activity in Wales will be accommodated within our planned resources.
The cost to us of regulating Welsh devolved elections and referendums
The principle we are applying is that the legislature which is responsible for the activity we undertake should fund that activity. Thus the National Assembly for Wales would contribute to the share of total costs that related to devolved elections.
But UK Parliamentary general election costs and Police and Crime Commissioner election costs should be met by Westminster.
In order to understand how this will work in practice it is necessary to understand how our operations and budgets are currently structured.
We have offices in Wales, Scotland, and Northern Ireland, and this will continue. However these teams both depend upon and contribute to the UK-wide work mainly undertaken from our offices in London. Staff in London also work on specifically Welsh issues, such as providing guidance on Welsh elections or regulating Welsh parties.
To identify the costs of our work on Welsh issues we have evaluated the share of time staff based across the UK spend on Welsh issues, and a fair share of the corporate overheads.
We structure our budget into ‘core’ and ‘event’ parts. Event budgets cover all the costs of delivering and overseeing specific electoral events. These budgets vary with electoral cycles. Core budgets are more stable and include business-as-usual delivery, such as political finance regulation and providing guidance. The corporate overheads and capital expenditure necessary to support business delivery are included in core budgets.
Event costs, including staff time on events, are typically readily identifiable to particular events. Core costs, however, are not generally identifiable to specific territories directly. We identify these, where possible, by staff allocating time they spend on specifically Welsh matters.
For corporate overheads, where time spent in specific areas is not relevant, we estimate the shares based on shares of identifiable costs. This way of estimating the funding shares offers a good balance of accuracy and simplicity (and thus low cost of operating the process).
Exhibit A illustrates this process.
Financial modelling undertaken
We have built a financial model to estimate likely funding contributions. We wrote to colleagues in the Assembly Commission in March 2018 with illustrative funding figures.
These were based on activity during 2017/18 and on the indicative budgets in our Corporate Plan for 2018/19 – 2022/23. They excluded certain items, such as capital funding and for depreciation and other non-cash items, as the correct budgeting treatment was not clear at that time.
On that basis, our initial estimate of the Welsh share was between £0.6million (3.5%) and £1.5million (10.7%), depending on the scheduled elections in Wales.
We have now refined the estimates from the existing Corporate Plan, based on technical advice from HM Treasury on how to deal with the technically difficult items. The effect of this is to include funding for in-year capital spend but exclude deprecation and other non-cash items. If indicative capital budgets in the corporate plan are included with the figures above, we would expect the total contribution to rise by up to £0.1m.
We are also in the process of refining the estimate of activity relating to each part of the UK. That will be an on-going process each year.
Our views on funding of such costs by the Assembly and associated budget procedures and audit arrangements
We are proposing the principle that each legislature should bear the share of the Commission’s total costs in line with the share of activity that relates to that legislatures area of competence.
Considering how our funds are currently allocated and how this would be transferred from Westminster to the Assembly
Normal HM Treasury practice is that, when functions transfer between public bodies, budget and funding moves with it. This is usually done by transferring spending review settlements from one body to the other.
Transfer of funding from HM Treasury to devolved funding blocks is a matter for the Treasury and devolved administrations to agree. We expect that this will be a consideration for the forthcoming spending review.
At present, we are funded directly by Parliament rather than through the Treasury. As a result there is no spending review settlement for Treasury to transfer funding ‘from’. This makes it more difficult to resolve how any transfer would work in practice.
We have already begun discussing this issue with officials from the Welsh Government and the Treasury. We will continue to support the process.
How the Assembly would how us to account for our spending decisions in relation to devolved Welsh elections
Since our establishment we have reported to the National Assembly for Wales in relation to policy scrutiny matters and have a long history of giving evidence to those legislatures and advice.
We expect to continue with this arrangement of reporting to a Committee of the National Assembly for Wales on policy work.
To protect our fundamental principle of independence, we must be funded by the relevant legislature rather than government. We actively welcome scrutiny and accountability for how we spend public funds to the legislature which provided them.
Accordingly, the body to which we account at the National Assembly for Wales should have the following characteristics and functions:
- be independent of any Welsh Government department
- report directly to the Assembly
- be chaired by a non-party representative (a Presiding Officer or Deputy Presiding Officer)
Functions to include:
- general oversight of how we exercise our functions derived from that legislature
- review of our annual estimate of resources required for delivery of functions carried out under its legislative responsibility
- require us to provide an annual report to facilitate scrutiny of our activities
- receive reports from the Wales Audit Office
Previous discussions have indicated that there are some current arrangements in place that might be utilised for us to report to the National Assembly for Wales in the future. These include:
- The current panel of Assembly Commissioners establishing a separate Llywydd’s Committee’ – a model similar to the Speaker’s Committee on the Electoral Commission in the UK Parliament
How scrutiny arrangements would work alongside scrutiny by the UK Parliament
At present, policy scrutiny of our work by the UK Parliament is mainly undertaken by the Public Administration and Constitutional Affairs Committee.
Other Select Committees have also sought our input where relevant. The UK Political Parties Elections and Referendums Act 2000 (“PPERA”, as amended) established the Speakers Committee on the Electoral Commission, which has general oversight of our work and is responsible for setting our corporate and business plans and budgets.
Our existing business planning and accountability cycle is set out in PPERA. We are required to submit a new corporate plan after each UK Parliamentary General Election for the following five years. This includes indicative budgets for all five years. We then submit an annual business plan with each year’s budget. PPERA also establishes that the UK Comptroller & Auditor General is responsible for audit our accounts and value for money.
The UK, English, Welsh and Scottish electoral cycles are all different. Also, much of our activity is delivered most efficiently across the Commission as a whole. It would therefore be difficult to produce geographically-specific corporate plans at different times. These could overlap and duplicate much material or appear to contradict each other as circumstances changed.
We therefore propose to continue with our existing business planning cycles. We already include some material on geographically-specific activity. However we recognise that we will have to be much clearer in future about what activity is planned and what the benefits to the voters are in each part of the UK.
Currently, PPERA appoints the (UK) Comptroller & Auditor-General as our auditor. The current proposal is that the (C&AG) should continue as our auditor, reporting additionally to the devolved legislatures. We are discussing with HM Treasury the best way to achieve this, specifically if a new accounts direction required.
We acknowledge that legislatures will also want to take a reserve power to send in auditors in response to concerns and feel that this could be achieved through a power to require us to co-operate with any such audit. We would expect to consult, as necessary, with officials in the devolved legislatures and government, as well as in Westminster, when preparing our plans.
We also expect to meet the required timetables to fit in with scrutiny in each part of the UK. This will, of course, make business planning a more complex process. But we welcome the opportunity to ensure priorities are better aligned across all parts of the UK and expect to accommodate the process within planned resources.
We do not anticipate any major difficulties in practice, but we can see that there is a case for officials in the various parts of the UK building relationships between the legislatures to ensure scrutiny is as joined-up as possible.