DWP HOSPITALITY FRAMEWORK 1. What’s New 2. Introduction 3. Official Hospitality 4 Internal Business Functions (Refreshments etc) 5. Management Conferences, Seminars etc 6. Working Lunches 7. Teas, Coffees, Biscuits at Meetings 8 Personal Events etc 9 Provision of Alcoholic Drinks at Public Expense 9.1 Authorising Officers Responsibilities Provision of Alcohol at Public Expense - Authorising Officers 10 Payment / Reimbursement 11 Impact on Subsistence Claims 12. Tax Liability Welcome to the DWP Hospitality Framework. This framework reflects the civil service-wide policy on the provision of official hospitality, which is owned by the Cabinet Office. Expenditure on official hospitality is a sensitive issue, which calls for sound judgement on the part of those authorising expenditure. The framework is part of wider DWP Regularity and Propriety guidance contained in the Regularity and Propriety Framework. The key principle for hospitality is that you must not accept hospitality or receive other benefits from anyone which might reasonably be seen to compromise your personal judgement or integrity (Civil Service Code). The framework also sets out the Department’s guidelines in respect of management conferences, working lunches and teas and coffees at official meetings, all of which are specific to DWP. It also includes details of the provision of alcohol at public expense. The framework ensures that the Department reflects appropriately and proportionately the following requirement in the Civil Service Management Code: “Departments and agencies must inform staff of the circumstances in which they need to report offers of gifts, hospitality, awards, decorations and other benefits and of the circumstances in which they need to seek permission before accepting them. In drawing up such rules departments and agencies must draw the attention of staff to the provisions of the Prevention of Corruption Acts 1906 and 1916”. This framework underpins and complements the Standing Financial Instructions, which provide high-level guidance on the roles and accountabilities of managers, and should therefore be read in conjunction with this and other guidance on specific finance matters. If you cannot find what you are looking for please contact us and let us know. We very much welcome feedback from users of these pages. 1. What’s New This framework was last updated in January 2010. It now includes: Revisions to the list of authorising officers for the provision of alcohol at public expense; Information and amendments included as a result of the ET paper on hospitality which was produced to take account of the Cabinet Office’s decision to publish an annual list of hospitality received by members of Departmental boards. Amendments reflecting operational changes within DWP; and Other minor drafting changes. 2. Introduction 2.1 The provision of Hospitality and expenditure on associated business functions (such as management conferences, working lunches etc) is a sensitive issue which requires judgement when considering the occasions on which such expenditure should be incurred. A written record, demonstrating that the proposed expenditure is justified by sound business reasons and delivers value for money, should be produced to support this. 2.2 The amount that the Department spends on items of this nature is regularly the subject of Parliamentary Questions, Freedom of Information requests and press interest and therefore requires detailed monitoring. 2.3 This document provides a framework within which all DWP businesses must operate. As such, it does not, and could not, provide a definitive list of “events” or attendees for which the provision of either hospitality, or other associated business-related expense, is appropriate. This is a decision for the officer responsible for organising the “event” and their line management, using the principles set out in this document. 2.4 Managers should be consulted if a third party offers hospitality or benefits. If there are any doubts about the propriety of accepting such offers of hospitality they must be refused. 2.5 Offers of conventional hospitality are acceptable providing they are reasonable and appropriate to the circumstances i.e. coffee and biscuits at meetings and working lunches of a modest nature to further outstanding business. Hospitality of this nature does not need to be recorded. 2.6 Invitations of a purely social nature from private sector companies with whom the DWP has business, for example, to sporting events or theatre or concert performances should normally be declined. Invitations should only be accepted when attendance is clearly in the interests of the Department. In such cases written line management approval should be obtained. 3. Official Hospitality 3.1 Hospitality (sometimes also referred to as “entertainment”) means “entertaining” guests from the private or public sector (normally, non-civil service) usually over a meal and off official premises. The provision of official hospitality in these circumstances must directly relate to Departmental business, even though the guest or visitor may be from an external organisation or a foreign country. 3.2 Expenditure on the provision of hospitality is a matter of particular sensitivity and should be authorised only where it is expressly in the Department’s interests. There must be no appearance of extravagance, which might give rise to criticism that Departmental staff are benefiting at taxpayers’ expense. 3.3 This is why there is a clear distinction drawn between Official Hospitality provided to non-civil servants and working lunches provided to civil servants. As a general rule, it is difficult to envisage circumstances in which it is appropriate or acceptable to “entertain” a fellow civil servant to a meal at taxpayers’ expense (other than justifiable working lunches). Official Hospitality is therefore normally only extended by Ministers, Chief Executives or Executive Members of the Departmental Board (DB). 3.4 However, as with any guidelines, there are always exceptions to the rules. There may be occasions when managers below this level are required to entertain non-civil servants. For example, the Department has major contracts with the Post Office (PO). There may be occasions when one or two senior PO staff are involved in a business meeting with relevant DWP staff where it is genuinely considered that a working lunch is not appropriate and the PO representatives are taken out to lunch. In circumstances such as these, however, the following criteria apply: occasions of this nature should be the exception; there must be sound, clearly defined business reasons; the justification should not be solely to reciprocate hospitality given on some previous occasion; the number of Departmental officials or “hosts” must be kept to the absolute minimum and they must be active participants in the discussion or activity concerned; the number of Departmental officials must not, other than in very exceptional circumstances, exceed the number of guests; hospitality should not normally be extended to the same guests regularly – e.g. more than once or twice in a year; hospitality should only be extended to spouses in exceptional circumstances. Where this occurs the attendance of a spouse should be recorded in the hospitality register; the expenditure must be approved by an officer who has personal responsibility for a running cost budget and is at least of SEO (or equivalent) grade or, in cases involving the Permanent Secretary’s Office, by an authorised member of that office; refreshments should normally be restricted to the provision of a modest lunch; and drinks provided should be non-alcoholic except in exceptional circumstances and with the express prior permission of the appropriate authorising officer (See Section on Alcohol). In support of cross-government sustainability objectives, bottled mineral water should not be ordered. 3.5 Hospitality Registers. Each DWP Finance Director is accountable for the collation and maintenance of a Business-wide register which records all hospitality, received by staff from external sources for each Business Unit. Hospitality registers should record the following details of hospitality offered to staff, as a minimum: date of offer; description of hospitality offered; name of organisation making the offer; to whom the offer was made; reason for the offer; and name, grade and job title of authorising officer. It should be noted that it is not necessary to record hospitality that has been declined. 3.6 Gifts. With the exception of protocol gifts made by Ministers to representatives of Overseas Governments, for which separate guidance exists, hospitality must not be extended to cover the provision of gifts. (See Gifts Giving and Receiving Departmental Guide for further information). 4 Internal Business Functions (Refreshments etc) Although public funds should not be used for the “entertainment” of civil servants, there are occasions when, in the interests of good management, some expenditure on refreshments and / or meeting accommodation may be appropriate. These types of event are collectively referred to as “internal business functions”, and fall into 3 individual categories: management conferences; working lunches; and teas/coffees/biscuits at meetings. Information about each of these categories is detailed below. 5. Management Conferences, Seminars etc 5.1 Management Conferences are defined as: “Meetings or events, the majority of which should be composed of an "educational" element. These may be organised by senior management to, for example, enable senior officers to meet and bring up to date staff who are remote from their management; to bring together officers as part of staff development or awareness initiatives; or to bring together senior staff from other departments or agencies to exchange views on current issues or developments”. 5.2 The circumstances outlined above are not exhaustive but the key to classification of an event as a management conference is that they are deemed to have “educational” or training elements as a major part. It is also expected that such events should have a supporting agenda detailing the activities that will be taking place. In this case, and provided DWP complies with the agreed rules (see Section on Tax Liability), Her Majesty’s Revenue and Customs (HMRC) has confirmed there will be no tax liability for attendees or the Department. 5.3 Wherever possible, management conferences and seminars should take place on official premises. There may be cases where the hire of rooms or the use of hotel facilities is necessary, but no such expenditure should be authorised unless supported by a written justification approved by a senior officer. The case for the hire of rooms or use of hotel facilities should be judged against the availability of reasonable alternatives, the location of the facilities in relation to the home location of the majority of attendees, and the associated travel costs. In accordance with Departmental policy, use of external venues for Management Conferences must be arranged via NYS Corporate, as set out in the Departmental Business Travel Regulations (BTRegs) and accessed via the Intranet under “conference bookings”. 5.4 The provision of modest refreshments, such as a buffet lunch, may be arranged where the event necessarily takes up the greater part of the working day and where a number of officers have travelled from off-site. If the event is held on official premises, staff restaurant facilities should normally be used, where available and cost effective. Where modest refreshments are provided, officers should, where appropriate, be reminded of the requirement to reduce subsistence claims in recognition of the provision of refreshments (see Section on Subsistence). 5.5 Alcoholic beverages must not be provided at public expense except in exceptional circumstances and with prior permission of the appropriate authorising officer (See Section on Alcohol). 6. Working Lunches 6.1 A working lunch is defined as: “the provision of a modest lunch during a meeting between civil servants to discuss business issues”. 6.2 It is necessary that an agenda and a list of attendees are provided to support the provision of a working lunch. There is also an assumption that some attendees will have travelled from off-site. 6.3 In determining whether a modest working lunch is appropriate, the following rules apply: the event necessarily occupies the greater part of a normal working day during which business continues over lunch; meetings should not start or end with the lunch and should be held on Departmental premises wherever possible; if non-civil servants also attend the meeting, it is appropriate that the cost should still be charged to working lunches, not hospitality; where Eurest catering facilities or a staff restaurant exist they must be used. Where this is not available, organisers can source local suppliers that will accept the Government Procurement Card (GPC); Only modest buffet menus should be used and Value for Money should always be considered ; and alcoholic drinks may not be provided at working lunches except with the express prior permission of the appropriate authorising officer (See Section on Alcohol). Individual orders for working lunches must be certified as received by the Chair of the meeting prior to payment of the invoice. 6.4 If the meeting is of sufficient length to also justify provision of teas / coffees / biscuits, either mid-morning or mid-afternoon and where the charges for working lunches and teas / coffees / biscuits appear on the same invoice, it is reasonable and administratively sensible to charge the whole expenditure to working lunches. 6.5 The EU Working Time Directive states that staff whose daily working time is more than 6 hours must take a break of at least 20 minutes. In support of this directive, the Department’s employee policy states that the minimum break should be 30 minutes. It follows, therefore, that managers will need to consider the implications on their scheduled meetings and include a formal break of at least 30 minutes where appropriate. This should be reflected in the agenda and consideration given as to whether a working lunch is appropriate. 7. Teas, Coffees, Biscuits at Meetings 7.1 Teas, coffees (and biscuits) may be provided at public expense for meetings at the discretion of the Chair, after consultation with the cost centre manager as appropriate, providing the event necessarily takes up a substantial part of the morning or afternoon. 7.2 It is generally expected that some of the attendees will have travelled from off-site, but cost centre managers may exercise some discretion, subject to value for money considerations. For example, it may be less time consuming and disruptive, where large numbers of staff are involved, to provide refreshments rather than using the normal facilities provided – e.g. drinks machines. 7.3 When provided in addition to a working lunch, and billed on the same invoice, it is administratively more sensible to charge the whole bill to working lunches. 7.4 HMRC has confirmed that there are no personal taxation issues associated with the provision of teas / coffees / biscuits at meetings. There is, however, a value for money issue from a departmental perspective and some judgement is therefore required. 7.5 If non-civil servants attend a routine, business-related, official meeting, the cost of providing them with teas and coffees should still be charged as expenditure on Teas and Coffees (or Working Lunches, where appropriate to do so), not Hospitality. 8 Personal Events etc 8.1 It is not appropriate to provide official hospitality or refreshments at personal events such as retirement or long service award presentations. Treasury rules make it clear that such personal events must not be funded at public expense. 9 Provision of Alcoholic Drinks at Public Expense 9.1 Authorising Officers Responsibilities 9.1.1 The provision of alcoholic drinks at public expense is a very sensitive issue and alcohol may only be provided with the express prior written permission of the appropriate authorising officer. Authorising officers have a particular responsibility for ensuring that: alcoholic drinks are served only in exceptional and narrowly defined circumstances; a written submission is always produced clearly setting out the business reasons for, and estimated cost of, the provision of alcohol; and approval, based upon the written evidence, is provided in writing. 9.1.2 Only modest amounts of alcohol may be purchased at public expense – a reasonable guide would be no more than two glasses of moderately priced wine with a meal for each attendee. There must be no suggestion of extravagance. 9.1.3 Extra care should be taken to consider the appropriateness of the provision of alcoholic drinks at events where staff may be travelling after the event. The Department must act with responsibility towards its employees; in particular due recognition must be given to the inherent dangers associated with the consumption of alcohol and driving. 9.1.4 Authorising officers may not further delegate within their business area their authority to approve the provision of alcohol. 9.1.5 Authorising officers should retain a record containing details of the reason for each event – i.e. hospitality, management conference or working lunch - the number of attendees at each event at which alcohol is provided at public expense and the cost of the alcohol provided. This information is required to enable the Department to respond to potential Parliamentary Questions and to provide the Permanent Secretary with assurance that the agreed policy is operating as intended. Provision of Alcohol at Public Expense - Authorising Officers Leigh Lewis, Permanent Secretary Adam Sharples, Work Welfare and Equality Group Director General Chris Last, Group Human Resources Director General Terry Moran, Chief Executive, The Pension, Disability and Carers Service Richard Heaton, Director General, Strategy, Information and Pensions Stephen Geraghty, Commissioner for Child Maintenance and Enforcement Commission Joe Harley, DWP Corporate IT Director General and Chief Information Officer Richard Paul, Group Finance Director General Darra Singh, Chief Executive for Jobcentre Plus Isabel Letwin, Director General of Legal Group Sue Garrard, Director of Communications Sue Owen, Director General for Welfare and Wellbeing Group John Oliver, Principal Private Secretary 10 Payment / Reimbursement 10.1 Where payment is to be made by the organiser on receipt of invoices from the supplier, invoices should be authorised and submitted for payment in accordance with existing instructions. 10.2 If overnight accommodation is an integral part of an event – e.g. a management conference - and is paid for by the organiser, the costs should be charged to the appropriate account code (management conferences etc). If attendees are required to claim subsistence expenses themselves, the appropriate RM fields should be completed in the usual way and expenditure accounted for under the appropriate subsistence codes. 10.3 It is important that the correct account codes are always used. This is necessary to avoid incorrect reporting both internally and when responding to external requests for information such as Parliamentary Questions or Freedom of Information Requests. In particular, hospitality should only be used where there is an element of entertaining guests usually over a meal and off official premises. Where working lunches and or teas and coffees are provided to non- civil servants as part of business meetings, these should be charged to the appropriate account codes and not to hospitality. 10.4 The correct account codes to be used are: Management Conferences - 32705 Hospitality / entertainment - 32706 Working Lunches - 32707 Teas and coffees - 32708 11 Impact on Subsistence Claims 11.1 In ensuring that the provision of hospitality or internal business functions provides value for money for the taxpayer and to comply with Departmental travel and subsistence rules, it is the responsibility of officers who have travelled from off-site to reduce their subsistence claims in recognition of the provision of a working lunch at either a management conference or official meeting. Line managers should satisfy themselves that the necessary reduction has been made before authorising the subsistence claim. 11.2 Any officer who does not reduce their subsistence claim appropriately will have the claim returned to them for amendment and, dependent upon the individual circumstances, may be required to personally meet the tax liability applying to the particular working lunch they received. (See Section on Tax Liability). 12. Tax Liability 12.1 HMRC, the authority on tax law, considers the provision of lunches, dinners and refreshments as a staff benefit and therefore taxable. Strictly speaking, the tax liability falls on the individual member of staff in receipt of the “benefit”. 12.2 However, DWP has negotiated a set of rules with HMRC which, provided that these are strictly adhered to and can be demonstrated to HMRC’s satisfaction, mean that the tax liability has been mitigated, as follows: 12.3 Management Conferences (seminars etc). A tax liability arises due to the receipt of lunch, dinner or refreshments by individual attendees at the taxpayers’ expense. However, a dispensation has been agreed with HMRC, whereby the tax liability will not be imposed provided that: the majority of the conference has a clear “educational” (or “training”) element; a copy of the formal agenda is retained demonstrating the “educational” element and including a list of attendees; the formal agenda demonstrates that the conference did not start or end with lunch or dinner; and all delegates are reminded of the requirement to reduce any relevant subsistence claim in recognition of a lunch or dinner at the taxpayers’ expense. 12.4 Working Lunches. Because of the complexities of monitoring and controlling the provision of working lunches to HMRC’s satisfaction, no dispensation has been given to DWP by HMRC. However, DWP has negotiated an exemption whereby tax is paid on 50% of working lunches. Strictly speaking, this liability falls to the individual in receipt of the working lunch. However, DWP has decided that the tax liability will be met from Departmental funding – i.e. the cost centre of the manager responsible for organising the event. Nevertheless, managers still have a responsibility to ensure that: working lunches are provided only in accordance with Departmental policy; and staff who travel to the event are made aware of the requirement to reduce any relevant subsistence claims in recognition of the provision of a working lunch. The Tax Advice and Assurance Group carries out checks on working lunches and conferences. They require: Agenda; and List of attendees The Tax Advice and Assurance Group checks the agenda to ensure the relevant rules are adhered to e.g: the meeting did not start or end with a working lunch; the meeting covered the majority of the day etc; and if a conference took place that there was a majority element of training. If the agenda is missing or does not meet these rules the whole amount becomes eligible for tax. The list of attendees is checked to ensure that Daily Meal Allowance, (DMA), is not claimed unless hours of attendance permit the purchase of another meal. If DMA is claimed incorrectly a refund will be requested and where a refund is not paid the individual will be taxed. 12.5 Teas, Coffees and Biscuits at meetings. Because such items are categorised as “trivial” by HMRC, by nature of their low intrinsic value, no tax liability arises. Nevertheless, managers are required to ensure that expenditure on such items cannot be considered to be excessive, either on an individual, or collective, meeting basis.