“Office Cost Allowance is being used to create a property asset for a political party”

In the Belfast Telegraph David Gordon returns to the topic of the NI Assembly Committee on Standards and Privileges’ consideration of a report on Ian Paisley Jnr’s relationship with Seymour Sweeney and the Paisleys rental claims for their Ballymena office. The Committee rejected a recommendation that Ian Paisley Jnr should declare his connections with developer Seymour Sweeney in the Assembly Register of Interests – although, in his report, the Interim Commissioner, Tom Frawley, noted that in making that recommendation he had “discussed the matter at considerable length with [his] legal adviser.” He also found that Ian Paisley Jnr had “not broken any rule within the current Handbook relating to the Office Cost Allowance in respect of the level of rent paid for the premises at 9/11 Church Street Ballymena although the total amount of rent claimed by Mr Paisley Jnr and Dr Paisley for the accommodation is significantly in excess of what might be regarded as a normal market rent.” And, as mentioned here previously, the Interim Commissioner noted

“Effectively the Office Cost Allowance is being used to create a property asset for a political party. Whether this would be perceived by the public as constituting an appropriate use of public funds is a matter which the Assembly, as a whole, may wish to consider.”

The Committee’s report is online here. [Added new link]

There is also a lot of detail in the report on the rental value of the property and “understandable” commercial returns for Sarcon 250. From the Committee’s report.

12.14 The current rules governing the use of the Office Cost Allowance for the provision of constituency offices places no limit on the level of rent which will be reimbursed within the overall maximum figure of £72,000 pa nor does it make any requirement for a professional valuation to be obtained by the Member. In the case of Mr O’Loan’s complaint a number of valuations in relation to the level of annual rent which might have applied can be identified.

These are as follows:

• £42,000 pa – referred to in the June 2007 professional valuation report on the property;
• £62,500 pa – as stated in the copy lease dated July 2007 held in the Assembly’s Finance Division records;
• £57,200 pa – being the annualised figure derived from the quarterly claim made by Sarcon 250 Ltd’s solicitors in August 2007, held in the Assembly’s Finance Division records;
• £ 52,750 pa – being the September 2008 professional valuation advice provided to Mr Paisley Jnr;
• £ £56,000 pa – being derived from the approximate amount which Mr Paisley Jnr told me was likely to be claimed in 2008/09;
• the upper end of the range £26,000 to £30,000 being the valuation of market rent advised by the Commissioner for Valuation.

I note that Mr Paisley Jnr explained during the course of my investigation that a further variable that could apply was that the amount to be claimed could reduce from the lease figure as a consequence of reductions in the bank interest rate that might apply to any particular period in time.

12.16 In light of the advice provided by the Commissioner for Valuation I would conclude that the amount of rent claimed for the premises at 9/11 Church Street Ballymena, exceeds what would be regarded as the normal market rent for such a property. However, I have also noted the Commissioner’s comment that the arrangements which obtain are understandable in commercial terms.

Except that, as Ian Paisley Jnr has said “it goes directly to the bank to furnish the mortgage”, and as he stated to the Interim Commissioner

Sarcon 250 is a company whose sole purpose is to provide in perpetuity an advice centre/community facility in Ballymena to advance the political cause as represented by its tenants – Dr Paisley and myself and for the general benefit and promotion of the DUP in North Antrim. 9-11 Church Street is owned by Sarcon 250. No financial benefit is derived to the company’s directors(s). No profit is made in relation to any aspect of the provision of the advice centre by the company director(s) as a result of his/her directorship. This is and always has been the basis of the role of the director of Sarcon 250. As you note there have been so far three directors, Mr Sweeney, Mr Currie and Mr Hanna. That is the legal basis of their role as director of Sarcon 250. [added emphasis]

And the Interim Commissioner’s conclusions

Conclusion – Summary of Findings

13.1 Mr Paisley Jnr should have recorded his relationship with Mr Sweeney as an interest under Category 11.( see paras 12.1- 6 )

13.2 Mr Paisley Jnr was not required to register his shareholding in the Ballyallaght Management Company. ( see paras 12.7 – 9 )

13.3 Mr Paisley Jnr was not required to register the fact that his father in law was the Director of Sarcon 250 Ltd but he should have registered as an interest under Category 11 the fact that his father in law was the sole shareholder in the company. (see paras 12.10 – 13)

13.4 Mr Paisley Jnr has not broken any rule within the current Handbook relating to the Office Cost Allowance in respect of the level of rent paid for the premises at 9/11 Church Street Ballymena although the total amount of rent claimed by Mr Paisley Jnr and Dr Paisley for the accommodation is significantly in excess of what might be regarded as a normal market rent. (see paras 12.14 – 16)

The Committe rejected the first recommendation, by 6 votes to 5, but accepted the rest.

And the Committee has written to the Assembly Commission

30. In particular the Interim Commissioner recommended that the level of rent claimed for any constituency accommodation should be underpinned either by an independent professional valuation of the premises or should be determined by the Commissioner for Valuation, as generally occurs with all other accommodation leased by public bodies.
31. The Interim Commissioner went on to consider the ambiguity concerning the rules prohibiting the use of the Office Cost Allowance to purchase property. The Interim Commissioner has pointed out that the rules do not prohibit a Member renting accommodation from a relative, who effectively uses the rental income provided through the Office Cost Allowance to purchase the property; nor do they prohibit the Office Cost Allowance being used to create a property asset for a political party.
32. A further point was that there needed to be clearer rules on the apportionment of costs; firstly, in circumstances where Members share constituency accommodation; and secondly, in circumstances where a Member is also an elected representative of another institution where office accommodation costs can also be claimed.
33. The Committee agrees that these issues warrant urgent review in the interests of public accountability and securing public confidence. It is not within the Committee’s remit to rewrite the rules on Office Cost Allowance. However, the Committee does have a role in identifying shortcomings in existing guidance, especially where those shortcomings mean that Members’ conduct could be called into question. The Committee therefore believes that it is essential for the integrity of the Assembly that the rules governing the use of Office Cost Allowance are reviewed urgently to take account of the issues raised by the Interim Commissioner. [added emphasis]