Implementing the Kelly proposals in full - 2/5

Shortly before the last General Election, the TaxPayers’ Alliance produced a manifesto. Here is the latest in our series of posts looking at how the Coalition Government has performed in relation to our recommendations.

The full TaxPayers' Alliance manifesto can be found hereClick here to see the full series of posts.

In our 2010 Manifesto we recommended that the next government should implement the Kelly proposals in full, reforming the MPs’ expenses system and creating a sense of transparency and accountability for the taxpayer.

Sir Christopher’s report, ‘MPs’ expenses and allowances: Supporting Parliament, safeguarding the taxpayer (2009), proposed a number of key reforms to the expenses regime. Those of particular note include:

  • Stopping MPs from being able to claim back from the public purse the costs of furnishing, repairs or maintenance to their property. In 2009, MPs were able to claim for the redecoration of their second home, even though in principle they couldn’t claim for anything that would improve the capital value of their property.
  • Forcing MPs to surrender any capital gain made during the sale of their second home. MPs in 2009 completely avoided having to pay capital gains tax on the sale.
  • MPs must only claim for first class travel where it can be justified and only economy class flights can be used when travelling within the UK or Europe.
  • Reforming a system which gave MPs who lost their seats or stood down at the general election a resettlement grant of up to 100% of their annual salary.

Back in 2010 we said that this should be achieved within three months, but how has the Coalition fared in dealing with the highly contentious issue of MPs expenses in the past five years?

The short answer: not very well. Since its creation following the passage of the Parliamentary Standards Act 2009, the Independent Parliamentary Standards Authority, the body responsible for handling the expense claims and salaries of MPs, has morphed into what we described in 2011 as one of the most inefficient monsters of a quango to have ever been created. While independent of the influence of MPs to encourage a fairer and more transparent system, left to its own devices IPSA has become what David Davies MP has described as a “bureaucratic obstacle course”.

This isn’t to say that IPSA has not acted on the report; it has honoured an encouraging proportion of the proposals made, namely disallowing MPs from claiming back the costs of furnishing and cleaning their second property, setting the London Area Living Payment at Kelly’s recommended rate of £3,760 per financial year (as opposed to continuing the previous rate of £7,500), reforming the travel expense system and recouping capital gains tax from the MPs that financially profit from selling on their second home. However, we’re still seeing MPs use their associated accommodation expenditure to pay for TV packages and broadband and witnessing considerable sums spent on first class travel.

IPSA has also ventured into the ludicrous in its short lifetime. In 2013 it proposed a 10% pay rise for MPs, taking their salaries from £67,060 to £74,000, despite the large-scale cuts families, government departments and local frontline services were facing. The pay rise is still set to go ahead, despite the across-the-board condemnation from the party leaders. And this is only the half of it; IPSA itself cost the taxpayer an astonishing £5.1m to run in 2013-14 and has developed a taste for the bafflingly ironic. Indeed, the irony of them spending two public-funded days away at a luxurious Surrey hotel and golf resort to discuss the pay hike proposal was lost on IPSA. Similarly, the body spent £70,000 on opinion polling to gauge the public mood for changing MPs’ pay only to entirely ignore the results. Completely unaccountable to the taxpayer, it has been told repeatedly to lower its operating costs to £2m.

The Coalition has been an outspoken critic of IPSA, with David Cameron in 2010 telling them to “get a grip on what they are doing”, but in practical terms very little has been done. The way we see it is as such: IPSA can either be scrapped, or have the legislative framework from which it operates reformed.

A deeply unsatisfactory and highly unaccountable public body, IPSA has done little to redeem MPs in the eyes of the taxpayer, and unsatisfyingly with the Coalition’s complacency to date it looks like it’s here to stay. So with that it’s a 2/5 for effort on this manifesto proposal.