In view of recent comments I thought you might like to read the evidence I submitted to Sir John Baker’s review.
Dear Sir John,
Review of MPs’ pay and pensions
I am writing as the former Chairman of the Parliamentary Labour Party (1997-2001). In that capacity I gave evidence to the SSRB on a previous review.
I wish to focus my comments on the key issue of what type of body can and should review MPs’ pay, expenses and pensions and what type of process we need to get the desired outcome.
The ‘desired outcome’ should be a structure that removes pay, pensions and expenses from the Parliamentary process. As you rightly point out in your own comments, Parliament is sovereign and could therefore take control again if it so wished. I do not believe a majority of MPs are likely to want to do that if we are successful in establishing independent machinery.
Part of the problem surrounding this issue is that MPs’ expenses have historically been seen as a way of subsidising necessary but unusual costs of a job which does not compare easily with other forms of employment.
I know your terms of reference do not cover expenses but they inevitably intrude on salary. The main example of this is the way we pay the second homes allowance. There is an important difference between MPs’ need to be away from their primary home and that of most other employees. Other employees go home and are not expected to work. The MP goes home to be active in their constituency – there is no expectation of going home for a break!
In an ideal world I would recommend a very significant increase in pay and the abolition of the second homes allowance. MPs are seriously underpaid for the level of responsibility they take, from coping with individual problems of constituents to issues of war and peace. They are also working seriously long hours. The public however would not take kindly to such a proposal at the present time.
This is why we need a structure to determine MPs’ income in a way that can rebuild the system over time and is seen to be totally independent of MPs. What should that structure be?
We have, as you point out, tried making comparisons with other professional groups and we have tried references to the SSRB. The latter in my view is more successful than the former.
Any organisation that reviews MPs’ income needs to have a good understanding of the complex but constitutionally very important relationship between: the needs of an MP as an individual elected by their constituents; the MP and Parliament; and the MP and Party. MPs are more independently minded than the media give them credit for, but the pressure they put on their own party leadership including government is often within the party machinery. Inevitably that is largely behind closed doors so it is little understood outside Parliament where the view tends to be that the pressure is entirely the other way round. In fact it is in both directions.
The SSRB is very good at listening to the case for pay increases and for coming up with comparisons but it is less successful at understanding (and is not designed to) the subtleties of the political relationship between MP, party and Parliament.
The Electoral Commission is rather better at that and is making very good progress at understanding it further. So perhaps the model should be that the Electoral Commission be given responsibility as the independent body we all seek. They should be able to call in either the SSRB or some other independent consultant to do the more detailed work on what the pay level should be given the job responsibility. The role of the Electoral Commission would be to define the terms and parameters of the work to be carried out by the consultants. There are many organisations and companies that can assess pay and responsibility but that needs to be mediated by an organisation with the understanding of the constitutional role referred to above.
In summary, the Electoral Commission should be given the responsibility to determine pay, pensions and expenses but to have the resources to bring in any additional advice or guidance they might need. Parliament having given the Electoral Commission the power to decide and apply its decisions would have no further part in the process.
I should add that I have discussed this with Sam Younger, Chairman of the Electoral Commission. He understands and is not unsympathetic to what I am trying to achieve, but in all fairness his immediate reaction was that “I need this like a hole in the head!” I think any other organisation would respond in exactly the same way! At the end of the day somebody has to take it on board. In my view, the only alternative to the Electoral Commission doing it is a specially constituted body but that would have to involve people with the knowledge of the constitutional complexity of an MP’s role.
I also believe that any new body would be well advised to bring reforms in over a period of time.
I would be very happy to discuss this further with you if that would be helpful. I an convinced that there would be considerable support for the structure I am describing although there may need to be further discussion on whether the independent body should be the Electoral Commission or a free standing and specially constituted organisation.
I hope this is helpful.
Yours sincerely,
Lord Soley of Hammersmith.
You have to look at remuneration from a historical perspective and in this context the role was always subsidised from an MP’s own pocket. Indeed, there are still MPs who do this.
With the rise of the professional MP and individuals who have no experience outside of Parliament and no other means of income then remuneration has become no different from any other employment except that in this case the employee holds the purse strings.
What would MPs do if an external tribunal recommended a pay cut? MPs would exercise their sovereignty and ignore the recommendation in a similar way to what has happened with the police.
MPs are also in a sense self-employed in that expense allowances are granted free of tax. The difference here is that dispensations agreed with HMRC are not concurrent with everyday practice.
Another difference is that an accountant is not performing an audit on profit and loss items at year end. I have yet to meet a business owner that has not been creative with their accounting at some time or another.
MPs are not subject to the tyranny of taxation that engulfs the land; even the Monarchy feels obliged to pay taxes. Anybody who fails to pay taxes can be severely fined or imprisoned. This is a constitution abuse by an unaccountable Treasury.
If it were down to me I would insist that constituency party members paid their MP’s salary. This would exert a downward pressure on that salary and an upward pressure on the the MP to take up other forms of income support. I would rather see a beggar draped in rags representing the people than a well heeled politician complete with bling.
When I talk to the younger end they all say that MPs are out to line their own pockets, are keen on becoming brands in their own right and are removed from the everyday experiences of ordinary people.
I sympathise with them! Like lots of other professions especially in health care, the public are indifferent to what goes on. They just expect it to happen and for the greater good of society.
The real truth is that MPs or Peers have no solutions to anything. They are the facilitators of change and it is the people themselves who achieve their own prosperity not Parliament.
Hello Senex, meet your first honest (honest) business owner! Both my accountant and I wanted an initial ‘interview’ with each other when I bought my business because we both valued integrity above price/custom.
Honesty is not that uncommon in small businesses since they have more to lose, but it is darned difficult when the Creative Accountant-in-Chief keeps messing around with the Budgets, designed to keep the multi-nationals happy whist ignoring the rest of us.
Lord Soley, I have long been an advocate of increasing the salaries of MPs and would be quite happy to see their pay go up to that of a typical company director in charge of 60,000 people, but all allowances must be stopped. This might encourage more people, independent of party influence, to stand in the first place. It is simply ridiculous that the basic salary of most council CEOs is several times greater than that of an MP.
Please don’t go on about the long hours they work. I don’t buy into that argument since most seem to be able to hold second, third or more paying jobs, and find the time to make after dinner speeches and write books/newspaper columns etc.
A pint of honesty, all round, please!
Tiz
Tiz, I never mentioned dishonest, the word used was creative. This is the grey area between what is taxable and what is not yet regarded as taxable by the authorities. It’s a civil liberty of commerce.
I’m glad you have met with your accountants; they are people who are professional and with very few exceptions, extremely honest. If they have done their job properly they will have advised you that you need to be greedy in order to succeed. I hope you will avail yourself of what commercial civil liberties you have left.
Everybody it seems has been branded as potentially dishonest by tax law; it used to be only the very rich, masters but not servants. Employees have absolutely no choice but to pay tax. So why are they branded as prospective criminals for something they can never do, that is avoid paying tax? Constitutional abuse is the reason.
If supermarkets were to indicate on shelf labelling what products had tax content then the supermarket would be guilty of promoting tax evasion and its directors fined or imprisoned. Our poorest should have a choice but tax law won’t allow it!
Then there is National Insurance…
http://www.icaew.com/index.cfm?route=157682
What diabolical schemes are afoot?
Should MPs comply with the EC working time directive?
It is far less common for MP’s to hold second jobs now. The work load is heavy but that is not so much a complaint as recognition of the facts. It is also a result of MP’s own decisions. I would like a reform that increased the size of constituencies so that MP’s could not go on being “big” councillors and “big” social workers. That would also put more pressure on councillors to take council cases rather than referring them to the MP as often happens. A reform of this type would also reduce the size of the House of Commons to about 450 MP’s. There is a growing interest in this but I have to say I did not win instant popularity with my colleagues when I first suggested it some 15 years ago!
Well said! Local Councillors do an excellent job.
Somehow i missed the point. Probably lost in translation 🙂 Anyway … nice blog to visit.
cheers, Cogitator.