The price of a clean MPs' expenses system

February 11, 2010 10:16 AM

There is much being made by the BBC this morning of the news that the Independent Parliamentary Standards Authority (IPSA) will apparently have an annual budget of £6.5m. That's certainly a large sum of money, but is it an increase on what we spend now, and is it worth it?


The odd thing about the Beeb's online story and their broadcast bulletins about this news is the comparison they make:



The Parliamentary body set up to police expenses will cost about six times the amount MPs have been ordered to repay 


Now, you'd normally draw such a comparison in order to put the figure into context, but this one does anything but.


Contrasting the cost of running the new system of expenses - which will hopefully involve full transparency and a proper regular audit - with the amount repaid by MPs following the retrospective audit by Sir Thomas Legg is simply invalid. The two figures have nothing whatsoever to do with each other.


It was valid to compare, as people did last week, the amount Legg spent doing his audit with the amount he ended up extracting in repayments, but the valid comparison for the cost of IPSA would be the cost of the system it is replacing: the Fees Office.


To be fair to the BBC, the cost of the Fees Office has never been published. If you read the Parliamentary accounts, all you get is the total cost of MPs' expenses and allowances and then a general set of figures for administration of the whole Parliamentary structure.


The absence of the precise figure on the cost of the Fees Office, though, doesn't justify drawing this unfair comparison with the Legg repayments.


The question that we should be posing is: is IPSA's £6.5m going to be worth it?


The two essential and fundamental elements of any new system do cost some money: transparency and auditing. The Fees Office may have saved money by not auditing MPs' expenses or publishing them for the public to see, but it is now clear that this was a pretty flawed strategy.


These costs will undoubtedly bring their own returns. We have yet to see the expenses that MPs have claimed since the scandal broke, but previous experience from the Scottish Parliament suggests that a transparent system open to public scrutiny tends to reduce the amount that politicians dare to claim. Would anyone have claimed for moats, tennis courts, duck houses, flat screen TVs or Mars Bars if they had known that their voters would be told about it?


There are some areas where IPSA is already being a bit too profligate for our liking, though. The pay and perks being given to Sir Ian Kennedy, its Chairman, and his board, do seem excessive - and perhaps they should be reduced after the busy period of designing a new expenses system is over.


Eventually, of course, whether this is money well spent will depend on the system of expenses that they decide upon. If they simply take up Sir Christopher Kelly's proposals, and stand firm in enforcing them, then this would be a worthwhile bill for the resulting clean Parliament. If they water down Kelly's ideas, though, and indulge what is reported to be Kennedy's sympathy towards MPs by hiking salaries and allowing the employment of family members, then it would be money down the drain.


One final observation: this is the second time that there has been an attempt to attack IPSA over its cost. Could there be some MPs out there trying to sabotage the Authority, and scare it off being too radical? There are certainly penty of Hon. Members who would love to see IPSA decide to save money by scrapping their audit plans and demanding only minimal proof that the expenses are legitimate, thus ensuring business as usual.


Interestingly, the last time there was an attack on IPSA it also drew a false comparison very similar to today's news. The previous attack compared IPSA's total draft budget - including both admin and the money paid out in expenses - with a figure that only represented the cost of the expenses paid out by the Fees' Office, and didn't take into account the cost of Fees Office admin at all. Cast in that light, today's news is actually a rehash of the previous story, which failed to get off the ground in the media. Might this simply be another attempt by the same people, using a very similar methodology, to wreck the drive towards expenses reform?

There is much being made by the BBC this morning of the news that the Independent Parliamentary Standards Authority (IPSA) will apparently have an annual budget of £6.5m. That's certainly a large sum of money, but is it an increase on what we spend now, and is it worth it?


The odd thing about the Beeb's online story and their broadcast bulletins about this news is the comparison they make:



The Parliamentary body set up to police expenses will cost about six times the amount MPs have been ordered to repay 


Now, you'd normally draw such a comparison in order to put the figure into context, but this one does anything but.


Contrasting the cost of running the new system of expenses - which will hopefully involve full transparency and a proper regular audit - with the amount repaid by MPs following the retrospective audit by Sir Thomas Legg is simply invalid. The two figures have nothing whatsoever to do with each other.


It was valid to compare, as people did last week, the amount Legg spent doing his audit with the amount he ended up extracting in repayments, but the valid comparison for the cost of IPSA would be the cost of the system it is replacing: the Fees Office.


To be fair to the BBC, the cost of the Fees Office has never been published. If you read the Parliamentary accounts, all you get is the total cost of MPs' expenses and allowances and then a general set of figures for administration of the whole Parliamentary structure.


The absence of the precise figure on the cost of the Fees Office, though, doesn't justify drawing this unfair comparison with the Legg repayments.


The question that we should be posing is: is IPSA's £6.5m going to be worth it?


The two essential and fundamental elements of any new system do cost some money: transparency and auditing. The Fees Office may have saved money by not auditing MPs' expenses or publishing them for the public to see, but it is now clear that this was a pretty flawed strategy.


These costs will undoubtedly bring their own returns. We have yet to see the expenses that MPs have claimed since the scandal broke, but previous experience from the Scottish Parliament suggests that a transparent system open to public scrutiny tends to reduce the amount that politicians dare to claim. Would anyone have claimed for moats, tennis courts, duck houses, flat screen TVs or Mars Bars if they had known that their voters would be told about it?


There are some areas where IPSA is already being a bit too profligate for our liking, though. The pay and perks being given to Sir Ian Kennedy, its Chairman, and his board, do seem excessive - and perhaps they should be reduced after the busy period of designing a new expenses system is over.


Eventually, of course, whether this is money well spent will depend on the system of expenses that they decide upon. If they simply take up Sir Christopher Kelly's proposals, and stand firm in enforcing them, then this would be a worthwhile bill for the resulting clean Parliament. If they water down Kelly's ideas, though, and indulge what is reported to be Kennedy's sympathy towards MPs by hiking salaries and allowing the employment of family members, then it would be money down the drain.


One final observation: this is the second time that there has been an attempt to attack IPSA over its cost. Could there be some MPs out there trying to sabotage the Authority, and scare it off being too radical? There are certainly penty of Hon. Members who would love to see IPSA decide to save money by scrapping their audit plans and demanding only minimal proof that the expenses are legitimate, thus ensuring business as usual.


Interestingly, the last time there was an attack on IPSA it also drew a false comparison very similar to today's news. The previous attack compared IPSA's total draft budget - including both admin and the money paid out in expenses - with a figure that only represented the cost of the expenses paid out by the Fees' Office, and didn't take into account the cost of Fees Office admin at all. Cast in that light, today's news is actually a rehash of the previous story, which failed to get off the ground in the media. Might this simply be another attempt by the same people, using a very similar methodology, to wreck the drive towards expenses reform?

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