States Members' Remuneration Review Body: recommendations for remuneration beyond the 2022 General Election

2019  R.89

2 REPORT

The  States  Members'  Remuneration  Review  Body  has  submitted  a  report  to  the Privileges and Procedures Committee (PPC) on States Members' remuneration, which PPC is required to present forthwith to the States. The report is published with this document as an Appendix.

The  Review  Body's  recommendations  on  Members'  pay  –  not  including  the introduction  of  differential  pay  –  will  be  implemented  automatically  unless  a States Member  brings  a  Proposition  within  the  next  month  to  annul  or  vary  a recommendation and that Proposition is adopted by the States.

PPC had already agreed that a pension scheme for Members is long overdue and funding for a pension scheme has been included in the States Assembly's budget for 2020 in the forthcoming Government Plan. Support for this position from SMRRB is welcome.

The  recommendation  that  the  Chief  Minister,  Ministers  and  the  President  of  the Chairmen's Committee should receive an additional allowance cannot happen without a change to the primary legislation which currently requires all States Members to be paid the same.

Although there are aspects of the Review Body's report we welcome, we continue to have questions about the methodology used by the Review Body. We also think that the time is ripe to consider whether the current arrangements for setting States Members' pay are in tune with international best practice. We therefore intend to commission a review of how States Members' pay is determined and the report before us. We will provide further details of this review in due course.

The report does represent a shift on the part of the Review Body from the prescribed course it inherited and which would have prolonged an unreasonable and damaging stagnation. For this and for their care and attention and time and effort, PPC records its grateful thanks to the members of the Review Body.

R.89/2019

STATES MEMBERS REMUNERATION REVIEW BODY

Recommendations for States Members' Remuneration beyond the 2022 General Election

Executive Summary

The States Members' Remuneration Review Body is the independent, objective and impartial body established  to  make  recommendations  on  any  matters  relating  to  the  remuneration  of  States Members, as it considers appropriate. Its recommendations are presented to the States through the Privileges and Procedures Committee.

The  SMRRB's  recommendations  on  base  remuneration  and  expenses  are  to  be  implemented automatically, unless a proposition seeking a debate is lodged au Greffe' within one month of the date of their presentation to the States. Recommendations on other matters require the specific agreement of the States.

The  SMRRB  is  presenting  this  report  recommending  changes  to  the  remuneration  of  States Members, predominantly to follow the 2022 general election.

The SMRRB's terms of reference require it to have particular regard to, but not be bound by:

1. Entry-level remuneration for those considering standing for election to the States: "...the level of remuneration available to elected members should be sufficient to ensure that no person is precluded from serving...by reason of insufficient income... "
2. Affordability including considerations of: "...the economic and fiscal position prevailing in Jersey, any budgetary restraints...and the States' inflation target..."

In formulating its recommendations, the SMRRB has taken account of relevant pay levels in Jersey, international practice for politicians' remuneration, the outcomes of opinion surveys, and the views of current and former States Members. It has struck what it considers to be an appropriate balance between solutions that it might consider ideal and solutions that it considers affordable in the prevailing financial climate.

Summary of Recommendations

Money values are per year; recommendations are to be effective from 1st June 2022 unless otherwise stated

Contents of Report

Page

Executive Summary  1 Introduction  3 The SMRRB's Approach to this report  5 The Role of a States Member  7 States Members' Current Remuneration  9 Research and Findings  10 Recent Election Trends  10 Local Comparators  11 International Comparators  13 Rationale for Recommendations  15 Affordability  20 Surveys  21 Public Opinion  21 States Members  22 Appendix 1: Terms of Reference of the SMRRB  23 Appendix 2: States Members remuneration since 1 January 2005  24 Appendix 3: International Comparator Data Analysis  25 Appendix 4: 4insight Public Opinion Survey  27 Appendix 5: States Members' Surveys 28

Introduction

The States Members' Remuneration Review Body (SMRRB)

The SMRRB is the independent, objective and impartial body established by the States of Jersey Assembly (the States) to recommend on any matters relating to the remuneration arrangements for elected members of the States (States Members).

The SMRRB was set up in 2004, establishing a process whereby States Members could no longer be seen to directly determine their own pay. Its members are selected through a process supervised by the Jersey Appointments Commission, and appointed by the Privileges and Procedures Committee (PPC) following referral to the States. SMRRB members responsible for this report are Gerald White (chair), Ian Black, Louise Read, Nicola Santos-Costa and Andrew Wicks.

The SMRRB's terms of reference (Appendix 1) are those of a wide-ranging and free-thinking body. They empower the SMRRB to recommend on any matters relating to the remuneration arrangements for States Members as it considers appropriate. They require it to have particular regard to, but not be bound by:

1. Entry-level remuneration for those considering standing for election to the States: "...the level of remuneration available to elected members should be sufficient to ensure that no person is precluded from serving...by reason of insufficient income... "
2. Affordability including considerations of: "...the economic and fiscal position prevailing in Jersey, any budgetary restraints...and the States' inflation target..."

The SMRRB's recommendations are submitted to the States through the PPC. Recommendations on base remuneration and expenses are to be implemented automatically, unless a proposition seeking a debate is lodged au Greffe' within one month of the date of their presentation to the States. Recommendations on other matters require the specific agreement of the States.

Implementation of the recommendations in this report for allowance payments to Members appointed as Chief Minister, Ministers, and the President of the Scrutiny Chairs Committee, require the rescindment of Article 44 of the States of Jersey Law 2005, which states that all States Members must receive the same amount of remuneration.

Previous SMRRB Recommendations

Recent recommendations of the SMRRB and their outcomes include:

• In 2017, the SMRRB recommended that States Members' pay should remain unchanged at £46,600 per annum during the 2018 – 2022 States' electoral term. No proposition seeking a debate on this recommendation was lodged au Greffe' and therefore, in accordance with the SMRRB's terms of reference, the recommendation was implemented automatically.
• Also in 2017, the SMRRB recommended that the role of Chief Minister should receive a supplementary payment of £7,500 per annum, in recognition of its additional scope and responsibilities. This recommendation required the rescindment of Article 44 of the States of Jersey Law 2005, which states that all States Members must receive the same amount of remuneration. Following a tied vote in the States Assembly this recommendation could not be implemented.
• In 2015, the SMRRB recommended that States Members should receive a matched contribution to a pension scheme, at a cost of up to 10% of their remuneration. PPC applied for funding of this proposal through the States budgeting process. The funding application was debated in the States Assembly but denied by a vote of 39 to 1. Therefore the recommendation could not be implemented.

The values of States Members' remuneration and expenses allowances for the years 2005 to 2022 are listed at Appendix 2.

The SMRRB's Approach to this report Frequency of Reporting

The SMRRB, prior to submitting its 2017 report, decided that it should produce one comprehensive report during each 4-year States electoral term, with recommendations to take effect for the following term.

This decision was taken on the basis of the benefits that would result, notably:

• Politicians would need to be re-elected before any revisions to their remuneration arrangements were implemented.
• Anyone considering standing for election would be clear as to the level of remuneration that would apply should they be elected.
• The publicity often associated with any proposal to increase politicians' pay would be restricted to one occasion per 4-year electoral term.

In adopting this approach, the SMRRB anticipated the continuation of a low inflation environment, and of pressure on public finances, during 4-year electoral terms. It acknowledged that were these not to be the case, or in other exceptional circumstances, it would consider reviewing its recommendations during the course of an electoral term.

This  report  follows  the  approach  adopted  in  2017,  in  recommending  changes  to  remuneration arrangements for States Members predominantly to follow the 2022 general election.

Guiding Principles

Following its failure to secure States Assembly agreement to some of its recent recommendations, the SMRRB has approached this report afresh, from an objective and impartial perspective, unconstrained by previous SMRRB recommendations or States decisions.

The SMRRB has adopted three guiding principles in its approach to this report:

• Wide-ranging
• Data-driven
• Opinion-tested (not opinion-driven)

Organisation of Work

The SMRRB has organised its work on this report into distinct work-streams: Local Comparators

• Pay movement by sector, median, mean, living and minimum wage, and Jersey RPI, since States Members' pay was last increased in 2014
• Placement of States Members' current pay of £46,600 as a percentile within Statistics Jersey's individual employment earnings database
• Comparison against percentiles within the available local data

International Comparators

• Comparator selection based on population and economic activity of each jurisdiction
• Comparison of the relative value that each jurisdiction places on politicians' work
• Comparison of components and features of remuneration and expense packages

Opinion Surveys (by local firm 4insight)

• Focus Groups - to inform Public Opinion Survey design
• Public Opinion Survey

States Member Engagement

• States Greffe 2017 survey
• States Greffe 2018 survey of retirees from the States
• States Greffe 2019 survey of new Members to the States
• Opinion Survey of States Members by 4insight.

Recommendations

In formulating its recommendations, the SMRRB has taken account of relevant pay levels in Jersey, international practice for politicians' remuneration, the outcomes of opinion surveys, and the views of current and former States Members.

The SMRRB has struck what it considers to be an appropriate balance between solutions that it might consider ideal and solutions that it considers affordable in the prevailing financial climate.

Thanks

The SMRRB would like to take this opportunity to thank all those who have contributed to its work, either directly or through responding to the opinion surveys.

The Role of a States Member

The role of a States Member is different from most other roles. States Members are elected as individuals. Once elected, they do not have a "boss", nor are they set formal achievement objectives. The role has no agreed job description and no stated threshold requirements for qualifications, skills or experience.

The role of a States Member includes work in the States Assembly, work in States committees and advisory bodies, policy work, constituency work and other commitments. While States Members have fixed demands in their diaries, they have discretion as to the amount of the remainder of their time that they dedicate to States business.

In order convey the SMRRB's understanding of the role of a States Member, we have identified key components of the role which seem important to us. To help in this task, we have taken into account a proposition lodged by PPC on 29th March 2018, discussion with States Members, views of SMRRB members, and matters discussed at focus groups conducted in March 2019.  We have attempted to identify at high level the most important components and accountabilities of a States Member's role. Our objective has been to capture its essence, and to provide a basis for focus and prioritisation across the multiplicity of inputs faced by States Members and by anyone seeking to more fully appreciate the nature of the role.

We have sought to identify components applicable to an elected Member of the States Assembly. We have not addressed responsibilities conferred by appointments to government, scrutiny, or other States' functions, nor the parish responsibilities of States Members who are parish Connetables.

Member of the States Assembly: Key Components of the Role

1. Identify and engage available channels of influence in government, to further the development of policy in favour of the personal or party manifesto promises against which the Member sought election to the States.
2. Represent, defend and promote the interests of the people of Jersey, with particular focus on the interests of residents of the constituency which the Member represents in the States.
3. Play an active and constructive role in the governance of the Island, strategically, tactically and operationally, at all times acting in good faith, whether appointed to a Government role or to a Scrutiny panel or other committee, or as a back-bencher.
4. Work to ensure that the States Assembly functions effectively and efficiently as the Island's legislature and gives voice to the diverse interests of people in Jersey.
5. Initiate, seek to amend and review legislation to help maintain a continually relevant and appropriate body of Jersey law.
6. Hold the Government of Jersey to account for policy and spending decisions, within the formal processes of Scrutiny or otherwise, by surfacing and highlighting areas of concern, with particular focus on achieving good value, efficiency, relevance and appropriateness in the deployment of financial and other resources.
7. Provide direct assistance to individual constituents, to progress and help resolve their issues and problems, using knowledge of Jersey's governmental and other institutions to connect individuals with relevant service providers and sources of professional help and guidance.
8. Identify apparently adverse impacts on individuals of, or inadequacies in, government policy or service provision, and engage with the relevant policy development or service review processes to secure improvement.
9. Continuously develop own knowledge, skills and network of contacts in the Island, and proper knowledge of its characteristics, to identify and understand issues currently or potentially affecting Jersey, and to contribute effectively to Assembly debates and other proceedings on those issues.
10. Further the best interests of the Island generally, defending its justified reputation and acting as an ambassador for Jersey, its people, and the States Assembly, when presented with the opportunity to do so.
11. Undertake the duties of a States Member with particular regard to the most vulnerable members of the community, including the Island's children and other people for whom the States of Jersey has a duty of care.

States Members' Current Remuneration

Basic Remuneration

States Members' current basic remuneration is £46,600 p.a., an amount unchanged since 2014.

All States Members receive this same amount, irrespective of their role, an arrangement mandated in Law (Article 44 of the States of Jersey Law 2005).

Pension

No pension provision is made for States Members.

Social Security

States Members are neither employees nor self-employed in law; by concession they pay "employee" Social Security contributions as if they were employees and the States pays each Member's "employer" contribution on their behalf.

Expenses

States Members' expenses incurred on States business are reimbursed in the same manner as those of States employees.

States Members may claim income tax relief for office and similar personal expenses incurred in discharging their role as a Member; by convention the Comptroller of Taxes automatically accepts such claims up to £3,650 p.a.

Until 2014, States Members received an amount of basic remuneration supplemented by a fixed personal expenses allowance. This no longer applies, because from 2014 the two amounts were merged into a single sum of "remuneration" – Appendix 2.

Other Benefits

States Members may apply for a free permit, enabling them to park in any States public car park, for their sole use in conjunction with their official duties.

On ceasing to hold office States Members are entitled to receive a payment of one month's remuneration as compensation for loss of office.

Research and Findings

Recent Election Trends – Voter Turnout and Unopposed Elections

Island-wide voter turnout remains below 50%, a matter of concern highlighted in the ComRes report commissioned by the States and published in November 2018.

Islandwide Percentage Voter Turnout

47 46 45 44 43 42 41 40 39

Islandwide Percentage Voter Turnout

38

1995 2000 2005 2010 2015 2020

Year Source: States Greffe

The number of States Members elected unopposed has increased.

Number of States Members elected unopposed

18 16 14 12 10 8 6 4 2 0

Number of States Members elected unopposed

1995 2000 2005 2010 2015 2020

Year Source: States Greffe

The SMRRB is concerned that these trends risk the development of a "democratic deficit" in Jersey, whereby:

• Insufficient candidates with the necessary skills may put themselves forward for election.

• Unopposed elections may lead to the presence in the States of Members lacking democratic legitimacy.
• The population may become apathetic towards and disengaged from politics.

Findings

It is an open question as to whether an increase in the remuneration available to States Members, or a more stepped approach to Members' remuneration, could help address these issues through encouraging more people with the necessary skills to stand for election (or re-election).

Local Comparators

Comparison  against  pay  movements  within  sectors  of  Jersey's  economy,  and  of  published benchmark levels, is possible, as is the positioning of States Members' pay within the local individual earnings database compiled by Statistics Jersey. It is not feasible to attempt any form of like-for-like local benchmarking analysis given the unique nature of the role of a States Member in Jersey.

Pay and Index Movements

Movements in local indices since States Members last received a pay increase in 2014 indicate the extent to which States Members pay has fallen relatively in that period:

Weekly Wage Level by Year

1200

1000 Finance Sector Mean Public Sector Mean

800

States Members 600 Jersey Mean

Jersey Median

400

Jersey Living

200

Jersey Minimum

0

2014 2015 2016 2017 2018 2019

Year

Jersey RPI at end-March increased from 157.9 to 177.3 between 2014 and 2019 (12.3%).

Positioning within the Jersey individual earnings database

Analysis of information on individual employment earnings in Jersey, extracted from the Jersey Income Distribution Survey database compiled by Statistics Jersey (last surveyed in 2014/15 but statistically updated since), shows the following percentile levels for individual annual employment earnings in Jersey as at June 2018:

Current States Members Pay:

Explanation A "percentile" is a way of describing the rank of a number within a set of numbers:

• The 50th percentile (also "median") is the middle value: 50% of the values in the set of numbers are higher than the 50th percentile, 50% are lower;
• The 75th percentile (also "upper quartile") is the three-quarter value: 75% of values in the set of numbers are lower than the 75th percentile, 25% are higher;
• The 25th percentile (also "lower quartile") is the one-quarter value: 25% of values in the set of numbers are lower than the 25th percentile, 75% are higher.

Percentiles (in particular the median and quartiles) are used as a standard basis for comparison against remuneration databases in commercial remuneration surveys. The arithmetic mean is rarely used – it is considered an inappropriate measure for a distribution that is naturally skewed, and it is subject to excessive influence from "outlier" data – unusually high or low data points.

Statistics Jersey advises, in relation to its Jersey Income Distribution Survey data:

"The distribution of income is unequal (skewed) due to a few households having very high incomes, so the median is a particularly meaningful average measure as it is not influenced by extreme values."

Findings

Using the percentile basis, States Members' pay was at the 72nd percentile of individual employment earnings  in  Jersey  in  2018.   That  means  that  in  2018  it  was  higher  than  72%  of  individual employment earnings in Jersey.

International Comparators

The primary purpose for comparing Jersey States Members' remuneration arrangements against international comparators is not to compare absolute values, but to understand the relative value that each jurisdiction places on its politicians, in relation to its community as a whole. The validity of this approach rests on an assumption that the role of a politician across jurisdictions is broadly similar.

The SMRRB has identified a comparator group of jurisdictions that it considers appropriately similar to Jersey, most having a substantial financial services sector:

• Bermuda
• Gibraltar
• Guernsey
• Ireland
• Isle of Man
• Luxembourg
• Scotland
• Singapore
• UK
• Wales

The key points of comparison for the purposes of this report are:

• Member pay vs. local Minimum Wage
• Member pay vs. local Median Wage
• Minister (or equivalent) pay vs. Member pay
• Chief Minister (or equivalent) pay vs. Member pay

Findings

The findings from these comparisons have been analysed in both rank order terms and quartile terms. They are summarised below, with more detail provided in the tables at Appendix 3.

Base Remuneration

• Jersey States Members' basic remuneration in relation to Jersey Minimum Wage is in the lower half of the international comparator group, close to lower quartile* in value.

*an explanation of quartiles, median and percentiles is provided on the previous page.

• Jersey States Members' basic remuneration in relation to Jersey Median Wage is  in the lower half of the international comparator group, below lower quartile in value.

• Jersey is the only jurisdiction in the international comparator group that does not pay its Ministers (or equivalent) more than its Members, placing Jersey last in the group on the value of remuneration received by a Minister on top of his/her pay as a Member.
• Jersey is the only jurisdiction in the international comparator group that does not pay its Chief Minister (or equivalent) more than its Members, placing Jersey last in the group on the value of remuneration received by a Chief Minister on top of his/her pay as a Member.
• If the cost of pension and fixed allowances are added to basic remuneration,  Jersey's position falls relative to the comparator group on all of the above measures.

Pensions

• Jersey and Guernsey are the only jurisdictions in the international comparator group that make no pension provision for elected politicians, placing them last in the group on this feature of remuneration (employment pensions are not normal in Singapore or Luxembourg due to generous mandatory state arrangements).

Expenses

• The international comparator data revealed widely differing practices relating to the availability and rules for fixed expense allowance (which was merged with "remuneration" in Jersey from 2014 – Appendix 2), reimbursable expense categories, and provision of "tools of the trade" for elected politicians. Some are applicable only to large jurisdictions, where a parliament is located beyond commuting distance from a politician's home. The data is insufficient to support a change to Jersey's current arrangements in principle; in practice the SMRRB would expect that the basis for the acceptability of categories of reimbursable expenses claims by States Members will be kept under regular review by PPC and the States Greffe, along with the provision of support services for States Members.

The SMRRB has found these international comparators helpful to informing its recommendations, but has adopted a cautionary approach to their interpretation. Each jurisdiction's history, laws, practices, culture, and expectations for political service, have developed separately one from the other, and the SMRRB has tailored its recommendations accordingly.

Rationale for Recommendations

Member Basic Remuneration: Increase from £46,600 p.a. to £50,000 p.a. from 1st June 2022 (with an interim increase to £48,000 p.a. from 1st June 2020)

The terms of reference of the SMRRB (Appendix 1) require it to consider in particular the entry-level remuneration for those considering standing for election  "...to ensure that the level of remuneration available to elected Members should be sufficient to ensure that no person is precluded from serving as a Member of the States by reason of insufficient income and that all elected Members should be able to enjoy a reasonable standard of living".

In relation to local comparators, it is clear that States Members' basic pay has fallen, relative to other groups and local indices, since 2014 when States Members' pay was last increased - although that in itself would not be sufficient justification for an increase from 2022.

The SMRRB has determined that the most appropriate approach by which to address its terms of reference is to identify a broadly fair level for the role of a States Member within the distribution of individual employment earnings in Jersey.

This approach has the benefit of linking States Members' pay to something over which they have a degree of control: their success or otherwise in protecting and developing the Island's economy. If the economy prospers, the States will collect more in taxes to support spending on public services, incomes generally will rise, and States Members' pay should be increased to maintain its position within the employment earnings distribution; if the economy declines, the reverse will be the case.

The SMRRB's view is that States Members' pay should sit no lower than that of 70% of individual employment earnings in Jersey, and no higher than 75%. We believe that this positioning, being a rate of pay higher than 70% to 75% of individual employment earnings, meets the requirement of our terms of reference for those entering elected service that "no person is precluded from serving as a Member of the States by reason of insufficient income and that all elected Members should be able to enjoy a reasonable standard of living".

In 2018 the 70th and 75th percentiles of the individual employment earnings distribution stood at £44,900 and £49,800 respectively. We judge that the 75th percentile will have increased to above £50,000 by June 2022 (the start of the next States electoral term). We recommend an increase in States Member's basic remuneration to £50,000 from 1st June 2022.

The SMRRB would expect that during a four-year States electoral term, a pay level set near the 75th percentile at the beginning of the term will often not have fallen below the 70th percentile by the end of the term; if it drifts too close to that level, a mid-term review of States Members' pay may be appropriate.

States Members' pay is currently £46,600, which places it at the 72nd percentile of the 2018 individual employment earnings distribution. We judge that it is likely to fall below the 70th percentile before the end of the current electoral term in 2022.  We recommend an interim increase in States Member's basic remuneration to £48,000 from 1st June 2020, being the half-way point of the current term.

In relation to international comparators, there is a need, when drawing conclusions, to respect local cultural fit, especially Jersey's historic tradition of honorary service, and to acknowledge the relative scale of Jersey relative to some of the international comparator group. Having taken these factors into account, the SMRRB has concluded that the relative value placed by Jersey on its States Members' remuneration has nevertheless fallen too far behind international comparator practice for comfort.

Our recommendations, while based primarily on local comparators, will correct this shortfall against international comparators to an extent. Jersey will still fall below the middle of the ranked sequence of the international comparator group, and States Members' pay in relative terms will remain below median practice in all cases, and in some cases below lower quartile (Appendix 3).

Ministers and President of Scrutiny Chairs Committee: as per Members plus an allowance of £7,500

The SMRRB's view is that Ministers should be paid more than States Members, to reflect the impact of their decisions on the Island and on Islanders, their duties of public accountability, and the demands of the role on their time. This approach is consistent with practice in all jurisdictions in the international comparator group, and mirrors employment practice locally.

It follows that it is necessary to identify a broadly fair level for the role of Minister within the distribution of individual employment earnings in Jersey. The SMRRB's view is that Ministers' pay should sit no lower than that of 85% of individual employment earnings in Jersey, and no higher than 90%,  between the 85th and 90th  percentiles of the Jersey individual employment earnings distribution (these percentiles were £62,500 and £76,200 respectively in 2018). This degree of uplift on top of States Members' pay would place Jersey at the low end of international comparator practice. It would create headroom, between the pay levels for Members and for Ministers, sufficient to inform consultations in the future about differential pay levels for States roles that sit between the two.

The SMRRB's terms of reference (Appendix 1) require it to have particular regard to  ... "the economic and fiscal situation prevailing in Jersey, any budgetary restraints on the States of Jersey, and the States' inflation target, if any, for the period under review."

In consideration of this requirement, we have limited our recommendation for Ministers from 2022, on grounds of affordability, to between the 80th and 85th percentiles of the individual employment earnings distribution (£54,600 and £62,500 respectively in 2018).

We recommend an increase in Minister's pay to £57,500 from 1st June 2022, to be delivered in the form of a non-pensionable allowance of £7,500 p.a. in addition to their basic pay of £50,000 as a States  Member,  for  the  duration of  their  appointment.  This should  also  apply  for  the  role of President of the Scrutiny Chairs Committee.

This uplift of 15% on top of States Members' pay will be the lowest % uplift from Member to Minister in the international comparator group (Appendix 3).

Chief Minister: as per Members plus an allowance of £15,000.

The SMRRB's view is that the Chief Minister should be paid more than Ministers, to reflect the greater scope of the role.  This approach is consistent with practice in all jurisdictions in the international comparator group, and mirrors employment practice locally.

As we have for Ministers, we have limited our recommendation for Chief Minister on grounds of affordability. We recommend an increase in the Chief Minister's pay to £65,000 from 1st June 2022, to be delivered in the form of a non-pensionable allowance of £15,000 p.a. in addition to his/her basic pay of £50,000 as a States Member, for the duration of his/her appointment.

This uplift of 30% on top of States Members' pay will place the Chief Ministers' pay between the 85th and 90th percentiles of the Jersey individual employment earnings distribution (£62,500 and £76,200 respectively in 2018). It will be the  lowest % uplift from Member to Chief Minister in the international comparator group (Appendix 3).

Patronage

The SMRRB is aware of persisting reservations within the States Assembly about the concept of differential pay.

Some of these reservations stem from concern about patronage: a Minister might feel pressured, for fear of losing his/her appointment and the additional pay that goes with it, not to argue as strongly as he / she otherwise might against the views of the Chief Minister, or against the prevailing view within the Council of Ministers.

The SMRRB's view is that arguments against differential pay, based on concern about patronage, no longer carry the weight they may have done in the past, having largely been overtaken by events:

• Ministers are elected by the States Assembly, substantially limiting the potential for acts of patronage by the Chief Minister
• Ministers who have been relieved of their duties are not precluded from standing for re- election for the same ministerial post
• Adherence to collective responsibility is no longer a pre-requisite for remaining in a Ministerial role.

Pensions: provision to be made at a cost of up to 10% of a States Member's basic remuneration

The SMRRB most recently recommended the introduction of pension provision for States Members in 2015.

There followed a PPC-led consultation with States Members, after which PPC requested a growth item of £100,000 annually through the States budgetary process. The SMRRB's understanding is that this figure derived from an estimate by PPC, having taken into account the projected take-up rate among States Members for a voluntary scheme comprising Members' contributions and States' contributions each up to 10% of a Member's remuneration. The growth request was not agreed by the States - by 39 votes to 1.

Pension provision was not subject to an explicit recommendation in the SMRRB's 2017 report, following the strength of the States vote against the funding of its 2015 recommendation on pensions.

The lack of any pension provision for States Members is an anomaly when compared against:

• international practice for the remuneration of elected politicians;
• local practice in professional employment.

The SMRRB is persuaded that lack of pension provision for States Members acts as a disincentive for people with appropriate skills, who enjoy pension provision in their current employment, to stand for election to the States. Pension provision is classed as deferred remuneration, therefore this outcome undermines the intent of the SMRRB's terms of reference in relation to entry-level remuneration for those considering standing for election: "...to ensure that the level of remuneration available to elected Members should be sufficient to ensure that no person is precluded from serving as a Member of the States by reason of insufficient income".

The SMRRB's view is that this anomaly should be corrected.  We repeat the SMRRB's 2015 recommendation that pension provision be introduced for States Members, up to a cost of 10% of States Members' basic remuneration. This level is common in local professional employment practice, and sits below the median cost of 12.5% for pension provision in the international comparator group.

Taxation of the "employer" contribution on States Members' remuneration as a "benefit in kind" to be compensated retroactively to 1st June 2018.

States Members are office-holders; they do not work' for the States and are not employees in law. For Social Security purposes States Members are classed as self-employed, but they receive reimbursement of the "employer" element of self-employed Social Security contributions. This, together with the "employee" element (deducted from their monthly pay) is paid to Social Security on their behalf as if they were employees.

The reimbursement of the "employer" element has recently been clarified as taxable in States Members' hands as a "benefit in kind".

The obvious intent in reimbursing the "employer" element was to put States Members in as similar a position as possible to that of employees regarding Social Security, an intent that has been frustrated by the recent tax clarification. The SMRRB's view is that this intent should be restored.

We recommend that States Members receive a supplementary monthly sum  of 20% of the "employer" element of Social Security, calculated on their earnings as States Members, applied retroactively from 1st June 2018 (to coincide with the start of the current States electoral term).

This payment should not be considered an additional cost, as it is funded within the States overall budget by income from the recently clarified "benefit in kind" taxation.

Loss of Office Compensation: calculation to be amended consistent with the principles of Jersey's statutory redundancy framework, and be limited to Members who stand for but fail to secure re- election.

On ceasing to hold office, for whatever reason, States Members are presently entitled to receive compensation of one month's pay.

The SMRRB's view is that it is not appropriate to compensate States Members who have planned not to seek re-election, as they have effectively resigned their position with notice.

The SMRRB considers that a one month payment is insufficient compensation for a long-serving Member who has sought but not achieved re-election. It amounts to inequitable treatment when compared to the statutory framework that applies for Islanders in permanent or fixed-term employment of at least two years (being one week's basic pay - currently capped at £740 - per year of service).

We recommend that the calculation of loss of office compensation for States' Members be consistent with the principles of Jersey's statutory redundancy framework and be set at one month's basic remuneration per 4 years' continuous service from 2022 (subject to a minimum of two years' service and pro-rated as necessary). Entitlement to loss of office compensation should be restricted to those Members who stand for but fail to secure re-election at a general election.

Affordability

The terms of reference of the SMRRB (Appendix 1) require it to have particular regard  "to the economic and fiscal situation prevailing in Jersey, any budgetary restraints on the States of Jersey, and the States' inflation target, if any, for the period under review".

When considering affordability, it is important to relate the cost of doing something to the merits of the arguments for doing it. If those arguments are sound, then the relevant balance is between the cost of taking the action, and the cost of the opportunity foregone by not taking the action.

If fully justified, an additional cost represents an investment in the future, not a burden. The additional annual cost of the SMRRB's recommendations from 2022 would be:

The benefits foregone by not implementing these recommendations include:

• States Members will not receive the increased remuneration which the SMRRB considers justified by both local and international benchmarks.
• Jersey will remain an isolated example among its international peers in not rewarding those Members bearing the most responsibility with higher pay.
• Jersey will remain in a small minority of jurisdictions that make no pension provision for its politicians, creating a significant barrier to entry for some potential election candidates who enjoy pension provision in their current employment.
• The  relative  unattractiveness  of  a  career  in  Jersey  politics  for  some  potential  election candidates, especially those who earn more than States Members' basic pay, will remain unchanged.

The SMRRB has derived its recommendations in accordance with its terms of reference from the available reference data, interpreted in the relevant context. It considers the recommendations to be appropriate, necessary and an affordable investment in the Island's future.

Surveys

The terms of reference of the SMRRB require it to "...take any steps it considers necessary to gauge public opinion on the matters within its purview" and to "...seek the opinion of members of the States from time to time as it considers appropriate".

Public Opinion Survey 4insight Public Opinion Survey

The SMRRB engaged 4insight, a Jersey based, professional and independent research company, to test the public's understanding and acceptance of a number of potential approaches to States Members' remuneration.

4insight conducted two focus groups in March 2019, designed to elicit a range of opinion to inform the content of a succinct but representative public opinion survey, to be delivered primarily on-line in May 2019. The focus groups each comprised 8 contributors, selected to broadly represent Island demographics, drawn from 4insight's standing panel. Each focus group met for around 90 minutes.

The executive summary from 4insight's public opinion survey is at Appendix 4. The full results are published on the States Greffe website, and the SMRRB encourages readers of this report to review the separately-published public opinion survey results alongside this report.

Findings drawn from the 1,215 responses to the public opinion survey are:

• 50% believed that States Members' basic pay should remain unchanged from 2022, and 30% that it should be increased
• 40% believed that all States Members' should be paid the same as each other, and 50% do not
• After deeper questioning, 56% believed that States Members' pay should be higher for those with more responsibility, and 37% that it should continue to be the same for all Members
• 39% believed that pension provision should be made for States Members, and 51% do not

The on-line public opinion survey, intended to provide a sense of the direction and extent of the public's views about States Members' pay, was designed to capture pre-existing opinion, not to solicit a considered view based on an understanding of all of the data and argument presented in this report.

States Members Surveys

4insight States Members Opinion Survey

4insight's May 2019 on-line public opinion survey was open to States Members, and advertised to them by the States' Greffier. Their responses were segregated and analysed separately from those of the general public.

Findings drawn from the 15 responses (out of 49 States Members) are:

• 13% believed that States Members' basic pay should remain unchanged from 2022, and 80% that it should be increased
• 33% believed that States Members' pay should be higher for those with more responsibility, and 67% that it should continue to be the same for all Members
• 64% believed that pension provision should be made for States Members, and 36% do not

Other surveys recently conducted by the States Greffe include:

Motivation to stand for election to the States

In late 2017, the States Greffe interviewed or surveyed seven sitting States Members about why they stood for election, the difficulties they encountered, and their views on why people chose not to participate in politics in Jersey.

Survey of new States Members

Thirteen people of the sixteen first elected to States Membership at the 2018 elections responded to a request from the SMRRB via the States Greffe to complete a short questionnaire about their reasons for seeking election.

Survey of retiring States Members

Seven people of the sixteen who retired as States Members at the 2018 elections responded to a request from the SMRRB via the States Greffe to complete a short questionnaire about their reasons for standing down.

The SMRRB's conclusions from these surveys are:

• remuneration was not the primary motivator for people seeking election to the States
• remuneration was a mid-rank concern in prompting retirements from States' service
• Acceptance of a particular level of remuneration by current or prior States Members does not provide insight as to its acceptability to people who might have considered standing for election but chose not to do so.

Please refer to Appendix 5 for more detail on these surveys.

Appendix 1: Terms of Reference of the SMRRB

1. The Review Body will make recommendations to the States, through the Privileges and Procedures Committee, on any matters relating to the remuneration and expenses of elected members as it considers appropriate.
2. The Review Body shall take any steps it considers necessary to gauge public opinion on the matters within its purview. Equally, the Review Body shall seek the opinions of members of the States from time to time as it considers appropriate.
3. In forming its recommendations the Review Body will take account of any matters that it considers to be relevant and will have particular regard to, but not be bound by, the following matters –

1. the principles that the level of remuneration available to elected members should be sufficient to ensure that no person is precluded from serving as a member of the States by reason of insufficient income and that all elected members should be able to enjoy a reasonable standard of living, so that the broadest spectrum of persons are able to serve as members of the Assembly;
2. the economic and fiscal situation prevailing in Jersey, any budgetary restraints on the States of Jersey and the States' inflation target, if any, for the period under review.

4. The Review Body shall consist of 5 members, none of whom shall be a member of the States.
5. The members shall be appointed for a period of 5 years and shall be eligible for re-appointment for one additional 5 year term.
6. The members shall be appointed by the Privileges and Procedures Committee following requisite consultation with the Jersey Appointments Commission. Before making any appointments the Committee shall nevertheless be required to present a report to the States setting out the names of the proposed appointees and the appointments shall not be confirmed by the Committee until at least 15 days after the presentation of this report.
7. The Review Body shall appoint one of its members as Chairman.
8. The quorum of the Review Body is 3. Recommendations
9. The Review Body shall report its recommendations to the Privileges and Procedures Committee which shall present them to the States forthwith. R.18/2015 7
10. The Review Body's recommendations on the actual level of remuneration and expenses payable to elected members shall be implemented automatically unless a proposition seeking a debate on the recommendations is lodged au Greffe' within one month of the date of presentation.
11. The Review Body may make recommendations on other matters within its terms of reference to the Privileges and Procedures Committee but any such recommendations shall not be implemented until they have been agreed by the States.

Appendix 2

States Members' Remuneration and Expenses Allowances since 2005

As implemented (or recommended in this report):

Appendix 3/1 International Comparator Data Analysis - Rank Order

(Sing & Lux excl. pension)

(Sing & Lux excl. pension)

Jersey Current = Member £46.6k; Minister £46.6k; Chief Minister £46.6k; no pension Jersey Recommendation = Member £50k; Minister £57.5k; Chief Minister £65k; 10% pension cost

Appendix 3/2: International Comparator Data Analysis – Quartile Analysis