Finally the Government wakes up on MPs' expenses

April 21, 2009 2:56 PM

At last the Government has woken up to the severity of public anger over abuse of MPs' expenses. For a while they seemed to think it was just a nightmare that would vanish when they turn the bedside lamp on, but finally the true reality has sunk in. Harriet Harman has just made a statement in the Commons proposing a new system of allowances and expenses that will be put to the vote next week.


Politically, the timing is clear - they have clearly been particularly stung by the Jacqui Smith scandal, and what's more this is something to butter the public up before Budget Day. Whatever their motivations, though, if they do the right thing then it will be good for taxpayers.


The Government's plans aren't half bad, and they show that they are aware of the fact that the status quo is unacceptable, but they will need some tweaking and tightening up to make them watertight. In order to assist them in that task, here are the TPA's comments.


It should be noted that one benefit of the current situation is that these are interim proposals, which will be superceded by the long term report out at the end of the year. If they prove to be half-hearted or flawed then they can still be got rid of in nine months time.


Key: Harman's Statement (in italics), TPA comments (in red).


A. Flat-rate Allowance. We propose that, for MPs representing constituencies outside London, the Personal Additional Accommodation Expenditure (commonly known as the 'second home' allowance) should be abolished and be replaced by a flat-rate daily allowance, based on actual attendance at Westminster on parliamentary and government business or the business of the Opposition frontbenches. This will be limited to the Parliamentary session or a maximum number of days.


There will now be no second home allowance or claims for food, furniture and fittings, fuel, mortgage interest, rent or council tax.


We will ask the Senior Salaries Review Body to set the appropriate level of allowance independently, comparable to those set by wider public and private institutions. The Committee on Standards in Public Life will want to consider these issues going forward, including the issue of taxation. Provision will be made for the long-term ill and maternity leave. The claims by each Member should be published annually.


A daily allowance system can work, but only if it is properly established and tightly policed. They have such allowances in the European Parliament, where MEPs have become notorious for simply signing in for their money at 7.30am then going home without doing any work. To avoid similar abuse in Westminster, MPs must be made to sign in in the morning and then sign out at the end of the day to prove they were actually there.


MPs must also still publish their accommodation bill, and be free to claim less than the full amount. That way public pressure will keep the bills down - if MPs are seen to be able to afford the Ritz with the allowance, then the allowance will be reduced by public pressure.


B. London. For anyone representing constituencies within reasonable distance of Westminster, the Personal Additional Accommodation Expenditure will be replaced by the London supplement, which already applies to inner London MPs. The Committee on Standards in Public Life will of course want to look at the current Green Book rules on this and the SSRB should report on the level of the allowance.


Good. But how far will a "reasonable distance" be? It should be at least an hour's commute - most MPs within that distance will find that many of their constituents commute to London daily with no need for a second home.


C. Grace and Favour homes. Ministers who for security or other reasons live in so-called 'grace and favour' homes will continue to pay council tax and tax on the benefit of living in this accommodation but will not receive this new allowance. The Committee on Standards in Public Life should be asked to report on these arrangements.


Good, again. There is no way that the great and the good should be allowed to cash in for second homes whilst living in a free third home at taxpayers' expense.


D. MPs' Staff. In future all staff appointed by MPs without exception should become direct employees of the House of Commons, which would become centrally responsible for their employment terms and conditions, their contracts, and the payment of their salaries within the limit allowed - and will have the right to make an independent assessment of such contracts. The Committee on Standards in Public Life is examining the rules governing employment of spouses or other relatives.


It's sad that some MPs like Derek Conway have cast the whole system into doubt, but that, sadly, is what has happened so this reform is necessary. After seeing that abuse, the public are naturally suspicious of who MPs choose to employ and how they do it, so employing staff through the Commons will be a good, clean break.


E. Full receipts. There will be a requirement for receipts for claims for all remaining transactions (for office costs, travel, and communications), including those under £25. MPs' claims will be subject to independent audit by the National Audit Office.


This would simply mean that MPs would live by the same rules as the rest of us in the real world.


F. Transparency of MPs' Second Incomes. The Prime Minister has already asked the Committee on Standards in Public Life to look into the issue of MPs and second jobs, in order to avoid conflicts of interest and to reflect the fact that MPs receive a parliamentary salary for a full time job. Meanwhile, there should be greater transparency.


This government has been the first to publish a list of Ministers' interests.


Where Members of Parliament have a second source of income from second jobs, irrespective of whether it is in their capacity as an MP, every payment shall be declared with a full description of who paid and what for. There shall also be a full declaration of the hours worked for the payment received.


I suspect Brown sees this as a way to get at the Tories, who are traditionally more likely to hold outside interests, but it wouldn't do any harm. There is an argument for having MPs with outside experiences, but clearly taxpayers and voters have an interest if their MP is spending hundreds of hours working for another employer. That must apply to MPs who also hold positions in Stormont, Cardiff and Holyrood, and particularly those with Ministerial positions in those Houses.


G . Pensions. We have taken steps through the SSRB to reform MPs' pension arrangements. In the meantime, in order to contain the cost to the public purse, a proposal will be put before Parliament to increase the contribution required from MPs by around £60 per month for the current year and to extend the scheme's pension limit of two thirds of final salary to all scheme members for future service.


This does not go anywhere near far enough. Like so many other public sector pension schemes, the Parliamentary pension is extremely generous, impossible to even dream of for most MPs' constituents, unaffordable and already saddled with a large deficit. The scheme should be closed not only to new entrants but to future years' service of current MPs.


H. We will ask the Committee on Standards in Public Life to look at the circumstances applying in Northern Ireland before final application of the flat rate allowance for MPs representing Northern Ireland.


Presumably by "circumstances" they mean the recent Sinn Fein controversy, and the rule should be that if you don't take the oath and sit in Parliament, then you shouldn't get a penny. No-one else applies for a job, refuses to come to the office and do it, then still gets to claim expenses!

At last the Government has woken up to the severity of public anger over abuse of MPs' expenses. For a while they seemed to think it was just a nightmare that would vanish when they turn the bedside lamp on, but finally the true reality has sunk in. Harriet Harman has just made a statement in the Commons proposing a new system of allowances and expenses that will be put to the vote next week.


Politically, the timing is clear - they have clearly been particularly stung by the Jacqui Smith scandal, and what's more this is something to butter the public up before Budget Day. Whatever their motivations, though, if they do the right thing then it will be good for taxpayers.


The Government's plans aren't half bad, and they show that they are aware of the fact that the status quo is unacceptable, but they will need some tweaking and tightening up to make them watertight. In order to assist them in that task, here are the TPA's comments.


It should be noted that one benefit of the current situation is that these are interim proposals, which will be superceded by the long term report out at the end of the year. If they prove to be half-hearted or flawed then they can still be got rid of in nine months time.


Key: Harman's Statement (in italics), TPA comments (in red).


A. Flat-rate Allowance. We propose that, for MPs representing constituencies outside London, the Personal Additional Accommodation Expenditure (commonly known as the 'second home' allowance) should be abolished and be replaced by a flat-rate daily allowance, based on actual attendance at Westminster on parliamentary and government business or the business of the Opposition frontbenches. This will be limited to the Parliamentary session or a maximum number of days.


There will now be no second home allowance or claims for food, furniture and fittings, fuel, mortgage interest, rent or council tax.


We will ask the Senior Salaries Review Body to set the appropriate level of allowance independently, comparable to those set by wider public and private institutions. The Committee on Standards in Public Life will want to consider these issues going forward, including the issue of taxation. Provision will be made for the long-term ill and maternity leave. The claims by each Member should be published annually.


A daily allowance system can work, but only if it is properly established and tightly policed. They have such allowances in the European Parliament, where MEPs have become notorious for simply signing in for their money at 7.30am then going home without doing any work. To avoid similar abuse in Westminster, MPs must be made to sign in in the morning and then sign out at the end of the day to prove they were actually there.


MPs must also still publish their accommodation bill, and be free to claim less than the full amount. That way public pressure will keep the bills down - if MPs are seen to be able to afford the Ritz with the allowance, then the allowance will be reduced by public pressure.


B. London. For anyone representing constituencies within reasonable distance of Westminster, the Personal Additional Accommodation Expenditure will be replaced by the London supplement, which already applies to inner London MPs. The Committee on Standards in Public Life will of course want to look at the current Green Book rules on this and the SSRB should report on the level of the allowance.


Good. But how far will a "reasonable distance" be? It should be at least an hour's commute - most MPs within that distance will find that many of their constituents commute to London daily with no need for a second home.


C. Grace and Favour homes. Ministers who for security or other reasons live in so-called 'grace and favour' homes will continue to pay council tax and tax on the benefit of living in this accommodation but will not receive this new allowance. The Committee on Standards in Public Life should be asked to report on these arrangements.


Good, again. There is no way that the great and the good should be allowed to cash in for second homes whilst living in a free third home at taxpayers' expense.


D. MPs' Staff. In future all staff appointed by MPs without exception should become direct employees of the House of Commons, which would become centrally responsible for their employment terms and conditions, their contracts, and the payment of their salaries within the limit allowed - and will have the right to make an independent assessment of such contracts. The Committee on Standards in Public Life is examining the rules governing employment of spouses or other relatives.


It's sad that some MPs like Derek Conway have cast the whole system into doubt, but that, sadly, is what has happened so this reform is necessary. After seeing that abuse, the public are naturally suspicious of who MPs choose to employ and how they do it, so employing staff through the Commons will be a good, clean break.


E. Full receipts. There will be a requirement for receipts for claims for all remaining transactions (for office costs, travel, and communications), including those under £25. MPs' claims will be subject to independent audit by the National Audit Office.


This would simply mean that MPs would live by the same rules as the rest of us in the real world.


F. Transparency of MPs' Second Incomes. The Prime Minister has already asked the Committee on Standards in Public Life to look into the issue of MPs and second jobs, in order to avoid conflicts of interest and to reflect the fact that MPs receive a parliamentary salary for a full time job. Meanwhile, there should be greater transparency.


This government has been the first to publish a list of Ministers' interests.


Where Members of Parliament have a second source of income from second jobs, irrespective of whether it is in their capacity as an MP, every payment shall be declared with a full description of who paid and what for. There shall also be a full declaration of the hours worked for the payment received.


I suspect Brown sees this as a way to get at the Tories, who are traditionally more likely to hold outside interests, but it wouldn't do any harm. There is an argument for having MPs with outside experiences, but clearly taxpayers and voters have an interest if their MP is spending hundreds of hours working for another employer. That must apply to MPs who also hold positions in Stormont, Cardiff and Holyrood, and particularly those with Ministerial positions in those Houses.


G . Pensions. We have taken steps through the SSRB to reform MPs' pension arrangements. In the meantime, in order to contain the cost to the public purse, a proposal will be put before Parliament to increase the contribution required from MPs by around £60 per month for the current year and to extend the scheme's pension limit of two thirds of final salary to all scheme members for future service.


This does not go anywhere near far enough. Like so many other public sector pension schemes, the Parliamentary pension is extremely generous, impossible to even dream of for most MPs' constituents, unaffordable and already saddled with a large deficit. The scheme should be closed not only to new entrants but to future years' service of current MPs.


H. We will ask the Committee on Standards in Public Life to look at the circumstances applying in Northern Ireland before final application of the flat rate allowance for MPs representing Northern Ireland.


Presumably by "circumstances" they mean the recent Sinn Fein controversy, and the rule should be that if you don't take the oath and sit in Parliament, then you shouldn't get a penny. No-one else applies for a job, refuses to come to the office and do it, then still gets to claim expenses!

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