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IPSA blog > Posts > IPSA Chair Sir Ian Kennedy: MPs’ Pay
 

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December 12
IPSA Chair Sir Ian Kennedy: MPs’ Pay

This morning we set out the terms of the new remuneration package for MPs, which we have set following two full public consultations. The full package, which will apply after the next general election, is set out in our report available here.

The reforms we are introducing do not cost the taxpayer a single penny more and come on the back of our already having taken tens of millions out of the cost of politics with the changes we made to the business costs and expenses. The reforms will see us make cuts to the generous pension scheme and resettlement payments, but make a one-off increase to MPs’ pay to £74,000.
 
But how did we reach this decision? In short, after carrying out the most wide-ranging and authoritative review of MPs’ remuneration ever undertaken. We considered this issue from every angle. We looked at international comparisons (which you can see in the chart below), comparisons with other jobs, historical trends, indexes against average earnings, and of course, all of the weighty research conducted on this issue in the past including by the SSRB and Sir John Baker. In addition to that, we conducted two formal public consultations and online discussions, surveys, focus groups and received thousands of responses.
 
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As we said in our consultation document in July, setting MPs’ pay is not like setting pay in other jobs. Most of the tools used in other walks of life are not available to us:  such as data on recruitment and retention, the market “value” of the job, the training requirements or qualifications needed.
 
Some people think we should set MPs’ pay by proxy and link it to the pay for, say, a family doctor or a local authority chief executive or a chief constable. We are not persuaded by simplistic comparisons with jobs that require extensive qualification and long training and have responsibility for performance. And of course, often this or that job is suggested because the salary is roughly what the person suggesting it thinks is about right: the judgement comes first, the most convenient comparator afterwards.
 
We also have not been persuaded by the claim that the quality of prospective candidates has fallen because of the current level of pay. We have found no evidence to support this claim and, indeed, the selection policies and procedures of the political parties are probably far more important in determining the quality and character of prospective candidates.
 
How best, then, to approach the determination of MPs’ salary? We have been particularly guided by the evidence that MPs’ pay has fallen behind.
1)      In 2007, the Senior Salaries Review Body (SSRB) found that the cash element of the MPs’ reward package was worth 85% of the average cash reward available to a selected group of other public sector professions. Using 2012 figures, MPs’ cash reward has slipped to 80% of the cash reward available to those other public sector jobs used by the SSRB.
2)      The SSRB recommended and Parliament accepted that the salary from 1 April 2007 should be £61,820. If this salary had kept pace with national average earnings, it would now be £68,954. Based on projections of earnings growth from the Office for Budget Responsibility, the salary in 2015 would be £73,365.
3)      The relationship between MPs’ pay and average national earnings has changed over time. In the period from 1911 – when MPs were first paid a salary – to 1980, when the expenses/remuneration confusion began, MPs’ pay was 3.16 times average national earnings. Since 1980, the ratio has fallen to 2.7. Restore the ratio to its level before the muddling of expenses and remuneration and MPs’ pay in 2015 would be £83,430.
4)      In 2008, Sir John Baker (previously the Chair of the SSRB) argued that changes in MPs’ pay (which he judged to be 10% too low) should be determined by reference to annual movements in average public sector earnings. Updated to reflect movements in public sector average earnings since 2008, Baker's formula would yield a salary today of £74,365. Project that figure forward to May 2015 and the prospective salary rises to £79,122.
 
Having considered these four reference points, we are persuaded that MPs’ pay should rise in 2015, and that its level should be in the range £73,365 - £83,430. In recognition of the current difficult economic circumstances we have set it at the lower end of this range: £74,000, indexed to national average earnings thereafter. This equates to an additional £6,269 in 2015, an increase of 9.26%.

 

Alongside this pay increase, we have made cuts elsewhere. We have removed the generous resettlement payment system that operated at the 2010 election, replaced with much smaller payments equivalent to double statutory redundancy, and only for MPs defeated at an election. We have ended the final salary pension scheme, replaced with a cheaper, career average system, with MPs paying a higher proportion of the cost. We have cut further the expenses that MPs can claim, removing those with a personal benefit.

 

Comments

MP's Pay levels

Dear Sirs,

Equating MP's pay levels in this country with those of other countries is just a smokescreen to allow you to raise their salaries. You know as well as the rest of us do that legislators in other countries have responsibilities that may differ markedly from those in this country. So trying to equate the remuneration of our representatives with those of other countries is not, and never can be, a viable comparison.

My opinion, and that of others with whom I have spoken recently, is that as public servants, MP's pay increases should be capped at the same level as other public employees, which at the moment is 1%. So the maximum you should consider raising MP's salaries in this country by is 1%, and no more!

To ignore this is to flout public opinion on the matter, and will not bode well for the country as a whole, and the reputation of both yourselves as a pubic body, and the MP's who are the beneficiaries of your deliberations.

Yours, etc.

R J Hood BA
 
 on 12/12/2013 1:59 PM

Public approval?

I understand Sir Ian thinks he has public support for hiking MPs' pay. I'm a very poorly paid public sector worker, and I wonder if he's joking? MPs are already far overpaid for what they do.
 on 12/12/2013 2:03 PM

Public Consultations?

IPSA has carried out TWO Public Consultations? Which public has been consulted? I certainly have not been and nor has anybody I know.

My pay as a nurse has been frozen, I can be made to go to work in a different hospital within my trust, but won't even be able to claim the extra travel expenses that this might incur.

To say that 'the public' support this, is a ludicrous lie.
 on 12/12/2013 2:38 PM

Honest analysis but flawed conclusion...

To keep in touch with the concerns of the general population I think MPs need to live similar lives.

I believe median income in the UK is in the mid £20ks, whereas a salary of above £70k would put MPs within the top 5% of UK earners. That's before all the better than average pension perks and expenses are taken into account.

I also think that being an MP should be thought of as a calling as much as a career, there are many, many superb nurses, teachers etc for whom career satisfaction is as important as salary and despite having the wherewithal to no doubt make more money elsewhere stick with their chosen professions. If we accept this about teachers and nurses without believing there's a good chance they'll end up corrupt why are we unable to assume the same about MPs?

I think comparing MPs pay across countries and with 'equivalent' positions in other professions is to miss the point, MPs need to be in touch with the needs and concerns of ordinary folk, now more than ever, and they should be encouraged to think of their jobs as a calling and a public service rather than a highly remunerated career choice. Of course this may result in some deciding they'd rather do something else instead; fair enough, this is the precise chaff we want to winnow out.
 on 12/12/2013 2:42 PM

Mr Shepherdson

I cant believe there has been 2 public consultations either.  Maybe you should pole the public for a fair opinion!  As a public sector worker my pay has been frozen too and the measly 1% nurses were getting has been stopped.  IPSA your a disgrace and a let down to the public.
 on 12/12/2013 2:42 PM

IPSA Chair Sir Ian Kennedy: MPs’ Pay : PETITION AGAINST A PAY RISE

Dear Mr Kennedy,
R.J.Hood says it all so well.  There is also a petition by Tanya B via Change.org signed by over 200,000 persons.  Why are you ignoring the masses? Are you benefitting from the increase? I have always worked, not lived off the state and, on reaching 60 I cannot get my state pension for another 5 years!!!! So, it is a good thing since I cannot get work now that I made small preparations for my senior years - the pittance I get each month is so heavily taxed that I wonder why I bothered??!!
 on 12/12/2013 2:43 PM

MP`S FEATHER THEIR OWN NEST AT THE COST OF THE POOR

Dear Sir,

It is with disgust that the country now finds that the MP`s are getting this massive pay rise while the poor suffer with very small rises and are having a job to make ends meet.

It was the same with expenses again just looking at how much they can get out of the purse for their own ends again.

Needs to get their act together to have the public`s trust.

Guess like many other matters this will fall on deaf ears  again.
 on 12/12/2013 2:46 PM

Out of touch and unrepresentative of the nation - an irrelevant quango

I should like to complain about your insistence on implementing an outrageous pay settlement to MP's and your refusal to make any form of real compromise available in times of economic hardship of the majority of the hard-working people of this country.
I find it difficult to believe your claim that only 45% of people thought the offer too generous and would question which sections of the population were consulted, and especially in what numbers, to substantiate such a claim.

I can only assume that your 'organisation' is not as independent as it is made out to be and, along with many other sectors of management within the public services, this is all part of an assessment of pay that is geared towards maintaining the salaries of the higher earners with over-generous pensions to follow.

As a retired Associate Professor who worked hard consistently for 56 hours a week with unpaid 'overtime' and continues to live on a £19000 pension, yet forced to work 30 hours a week to earn another £15000 just to pay my bills (while also having to help maintain my two daughters with degrees who are working only part-time), I fail to see how any argument that MPs work so hard they deserve to earn three times the average wage in a time of such economic hardship can hold any water. Where on earth do you get your comparators from to justify your assessments? It is almost on a par with the bogus arguments used by our still untouchable and corrupt bankers (HSBC and RBS aiding drug traffickers and breaking sanctions) to hold on to their inflated bonuses.

No, the truth is you are completely out of touch with the people of this country whom parliament is here to represent and serve. Your assessment can only serve to confirm the view of so many that, having cooked their expenses, MPs are now so unwilling to be "all in this together" that they have to cook the books yet again in order to maintain their so-called status - a status of unpunished and unaccountable felons in much of the public's eyes.

Your measures do not solve the problems of so-called inadequacies in MPs' pay, they simply serve to: (a) increase distrust of parliament and democracy in this country; and (b) convince people that, in a global world, national politics is irrelevant and as corrupt as the tax-dodging multinationals that govern world economics and national economic policy (read the clauses of the new TPP agreement between corporates and governments representing 60% of world GDP that override national law and you might see what I mean). No wonder the young of this country do not even bother to vote. Your measures can only compound that feeling of politicians only being in it to enrich themselves and not us.

The fact that you have now reduced the award from 11% to 9.56% smacks of the old "double it first and then make it look reasonable when you lower it to 80% above the number you first thought of" routine used ad nauseam by institutional managements.

So, take the number of people you surveyed to reach 45%, add 15 of the people I know and consulted who are as dismayed as I am, recalculate using the relevant multiplier of the total population and tell me you still get just 45%.
Then think of how, like any other Quango, you can even justify your own role and salary in all of this!
 on 12/12/2013 3:26 PM

M.P's Pay Rise is an Absolute Disgrace

I find this rise totally and utterly unacceptable , considering the economic climate in this country, and the fact that most working peoples rises are below the rate of inflation .

Furthermore - I simply do not believe you have carried out two public consultations on this matter.

Unlike M.P's , the majority of people in this country have contracts of employment .Which means for example - they have to be at work 9-5 Mon to Fri , and are at work for more than six months of the year.


  
 on 12/12/2013 5:10 PM

Keith Jervis

IPSA you are a complete joke.   11 % ??  Public sector pay frozen for 3 years.
I've been in Fire service 29 years and still not on 30K which we went on strike for over 10 years ago. That was recommendation of a similar body. That what they said we were worth.  Did we get it??
I've had it with this brain dead country and the idiots that run it and those who support them. Pigs in the trough... Again!
Shame on you!
 on 12/12/2013 5:25 PM
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