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Month of ideas

Please see below for IPSA's month of ideas contributions prior to the consultation, from a range of high profile figures to offer thoughts on the issue of MP remuneration.

July 05
Trevor Phillips, Chair of the Equalities and Human Rights Commission - What should MPs receive by way of salary and pension?

When asked what attracted him to politics, one former cabinet minister apparently replied that it was the only career that offered money, power and fame. 

Some Members of Parliament may object to the money claim. Privately, of course, because £65,000 a year puts them safely in the higher tax bracket, but it is still much less than lobbyists paid to influence them can expect to earn. Travelling back and forth between constituency and Parliament (for non-London based MPs) also means their hourly rate is significantly lower than most on a similar salary. 
 
A new MP slogging it out on the backbenches may also object to the power claim. Many probably feel the special advisers – some not long out of university – exert a lot more power than they ever will.
 
As for fame – given the MPs’ expenses scandal, infamy may be a better tag. If it’s fame you’re after, The Only Way is Essex is likely to offer more recognition and less public humiliation.
 
If you asked most MPs what attracted them to politics, most would say public service. I think that’s true for most of them.  The MPs I know best are motivated by the most selfless of reasons. They want to change the world around them.
 
As Sir Ian Kennedy embarks on his review of MPs’ pay and pensions, I wonder if this is an opportunity to also reflect on who we are seeking to attract to public office.  
 
Research shows it will take another 200 years (or 40 elections) to achieve 50/50 male/female representation in the House of Commons and until 2080 for the number of ethnic minority MPs to reflect Britain’s current population.
 
The last Parliament established a Speakers’ Conference on representation – it considered among other things the lack of women, ethnic minorities and disabled people in both Houses. It did not tackle the vexed issue of social class.
 
Parliament can be a harsh environment for anyone but someone who is “different” – a women, disabled, ethnic minority, gay – may need a thicker skin than most. Many of the pioneers who have broken into this white, non-disabled, straight boys club have previously succeeded in another career – perhaps as a lawyer, trade unionists or running their own business.  A decent salary doesn’t mitigate against hostility, or make being the odd one out any easier – but when we are asking people to put themselves forward for this potentially hostile environment, asking them to take a significant pay cut too isn’t sweetening the pill.
 
Finally, perhaps, there is a crucial issue that the debate about salary levels and expenses doesn’t address, but what is probably more important to some non-traditional candidates than any other:  security.  Being an MP is one of the least secure jobs you could think of; and keeping it doesn’t, these days, rest on your past performance in most cases.  For the children and grandchildren of immigrants brought  up with the constant drumbeat of fear that your precarious hold on a new home could be broken by some accident of fate and politics, the glory of the mother of Parliaments can pale into insignificance set against the safe continuity of a doctor or teacher’s pension scheme.  On the face of it, there is little that can be done; no one can guarantee MPs a seat for ever; but a little more attention to the exit door and where it leads could pay some dividends.
 
Let’s put aside any sneering about what MPs do. Let’s assume we want hard working and honest people motivated by public service. MPs are not in it for the money – there are much easier ways to earn £65,000 a year which does not involve the risk of putting your family through public inquisition. 
 
Like everyone else MPs have bills to pay and mouths to feed so the position should not be unpaid. Of course the position should be an honour to hold but an unpaid position will only attract the super wealthy and the role would be treated like voluntary work alongside well remunerated board positions. The earnings of MPs should be linked to that of comparable professions – headteachers, GPs, leaders of local authorities.
 
We want Parliament to attract the brightest and best. But we also need to attract people from more diverse backgrounds than is currently the case. 

 

July 02
Simon Jenkins, commentator

I have always believed MPs should be as independent of the government/state as conceivably possible. They should be, what they used to be until the 1960s, self-employed schedule D taxpayers, also now paying VAT. They should get no expenses other than travel plus one Commons secretary.

By way of compensation the salary should be in excess of £100,000, increased by inflation only each year.

June 25
Matthew Parris, commentator and MP for West Derbyshire 1979-1986

I think an MP’s salary should be approximately twice today’s figure: perhaps £120,000 a year and pension not out of line with the average pension that would attach in the public sector to a salary of that order. This huge salary increase would be matched by sweeping cuts to MPs’ expenses.


I would abolish secretarial and research expenses, leaving MPs to fund what they need from their own pockets and employ whomever they choose on whatever terms they choose.


Reimbursable travel expenses limited to cheapest available, public or private transport, between the constituency and Westminster.
 

I would abolish all housing or accommodation allowances.

My aim would be to fund the increase in salary by the decreases in expenses plus the planned decrease in the number of Members of Parliament.

June 21
Dr Ros Altmann, Director-General of the Saga Group - What should MPs receive by way of salary and pension?

Salary: Setting appropriate levels of senior executive compensation is currently a high profile, emotive issue and salary benchmarking for a role without proper parallels is not easy. However, in my view, MPs salaries are much too low.

I do not consider 'multiples' of average salary a relevant benchmark to use, but finding comparators for suitable pay and benefit levels for MPs involves subjectivity and judgment. It is important that MPs pay reflects their responsibility and compared with senior public sector roles, or high-level corporate executives, MPs £64,500 salary seems inordinately low.  Senior local government roles, corporate managers and senior officials, earn around £80,000 a year, head teachers and senior Directors earn over £150,000 - MPs duties are surely more responsible than these roles.  On call at all hours, running surgeries for constituents, representing tens of thousands of people and making our legislation. 

MPs salaries must be sufficient to ensure we can attract high quality people to stand for office.  I do not believe it is reasonable to suggest that MPs should be unconcerned about earning appropriate salaries because their job is a 'privilege'.  They should be properly rewarded for their work, which is so important to all of us.  Of course, we would not want people standing as MPs just to earn high salaries, we would like to think they are motivated by public duty, but that surely applies equally to other senior public officials in local and quasi-Government roles who are paid significantly more than our Members of Parliament.  The current low salary level probably contributed to the expenses scandals which undermined public confidence in Parliament.  This must not happen again. 
 
I suggest a figure of at least £100,000 for basic pay would be far more appropriate to MPs levels of responsibility, plus a further £5,000-£10,000 a year for those who Chair a Select Committee.  This figure should incorporate and, therefore, replace the current additional benefits such as 'redundancy' payments for MPs leaving Parliament for any reason.  Currently, these pay 50-100% of salary, depending on length of service, with the first £30,000 tax-free, but should be incorporated into a significant salary increase instead.

 
Pensions: MPs' pension benefits are virtually the most generous in the country.  They accrue 1/40th of salary each year (if they pay 10% contributions) and can get a pension of half their final salary after only around 20 years as an MP.  Taxpayer contributions to these pensions will be worth approximately an extra 40% of salary, amounting to over £25,000 a year.

I suggest an alternative approach for MPs pensions.  A pension contribution - of £25,000 a year - should be added to MPs base salary, and paid into a new defined contribution replacing the current defined benefit scheme.  This would help MPs better understand the issues facing the majority of the population who will only have DC pensions.  So far, MPs have been cushioned from the pension changes affecting most private workers.

Dr. Ros Altmann

June 18
Rt Hon Peter Riddell, Director of the Institute for Government, and chair of the Hansard Society.

Any method of fixing the pay of MPs is bound to be arbitrary and the outcome is certain to be widely criticised. It is not just that MPs as a class are popularly seen as self-serving and in it for themselves—though individual members are often more highly regarded by their own constituents.
 
The real difficulty is that, regardless of public criticism, there is no objective way for fixing MPs’ pay. There is no market rate. And attempts by pay review bodies to fix a rate by comparison with other occupations are unconvincing. Their reports often read like well-intentioned, but fundamentally, flawed rationalisations of a figure that seems reasonable. Choosing a comparator is in itself very tricky—a doctor, a head teacher a director level civil servants. A case can be made for each, but the factors affecting their pay have nothing to do the life of an MP.  There are no professional qualifications, nor any career progression given that a tenure can be abruptly ended at a general election for national political reasons unrelated to an individual’s, highly subjective, performance.
 
Writing a job specification for an MP has been similarly elusive. As MPs always, fairly, argue, the job varies enormously depending on the type of the constituency, and on the personality of the MP. During an MP’s service even in the same constituency, their view of the job will change, and the demands on them will alter, depending, for example, if a big local employer collapses and on the levels of unemployment and poverty. The balance between activities in the constituency and at Westminster ( largely unknown to, and ignored by, constituents) will vary. Someone chairing a select committee will have a very different diary and workload to a newly arrived backbencher. Moreover, the life of a minister, or member of the Shadow Cabinet, will be different again from that of a backbencher.
 
There are already some pay distinctions—for ministers and whips because of their service in government and, more recently, an extra payment for the chairs of select committees. But beyond that all MPs are, and should be, treated equally and attempting to introduce any performance measure, let alone a bonus for a super-assiduous MP, would be unworkable and unacceptable.
 
Despite all these difficulties, the best way forward is a simple assertion that being an MP is an important public service which should be paid accordingly. IPSA and MPs themselves should be unapologetic about this. After all the elaborate research into comparabilities, into the workload of MPs ( much higher than 30 or 40 years ago in their constituencies), IPSA should pronounce that three times the national average pay is the right figure, against two and a half times now. The figure would be adjusted at the end of each parliament in line with the percentage change in national average pay. Initially, that would represent a cash rise of £12,000 plus on the current £65,700. This would, of course, be widely criticised, especially when real living standards for most voters are being squeezed. The Government will be tempted to intervene, but should not do so. It will be up to individual MPs whether they take the full increase, but a new benchmark will be established.
 
That could be presented as part of a package with the following elements:-
·          Full disclosure of any other earnings. Outside earnings should not be banned but MPs should have to justify them.
·          Maintenance of a tight, receipted and transparent expenses regime. It is in MPs’ interests for the post-2010 system to continue to demonstrate that expenses are for official purposes.
·          A personal statement by all MPs of what their constituents can expect of them ( as is already done by some)—a target time to respond to e-mails, phone calls and letters; frequency of surgeries; division of responsibilities between an MP, local councillor and other representatives.
 
None of these proposals is going to make MPs less unpopular, or convince people they are being fairly paid. It is time for IPSA to be bold. After all, its brief has never been to court popularity.

 

Writing in a personal capacity.

June 14
Jon Snow, Newscaster, Channel 4 news

I must confess that I start from the view that even with the 10% reduction planned for the next election, there are too many MPs. Their number should be reduced and the current expenditure should be redistributed with the same sum dispersed in a manner that ensures they are properly resourced with research and managerial back up. But I recognise this is beyond your remit.

A basket of other salaries should be used as a comparator. I would suggest a GP; a Chief police inspector; a deputy head teacher;  and a prison governor. The mean salary of these positions should represent the pay of an MP. Pensions should be evaluated the same way.

June 11
Matthew Taylor, Chief Executive of RSA - What should MPs receive by the way of salary and pension?

Some very off the cuff comments…..
 
Given that overall the contribution to public spending of MPs’ remuneration is negligible, the issue here is balancing public acceptance (which is partly about fairness and partly about wanting politicians to be ’in touch’) with the need to attract and retain the best people, drawn from all walks of life.
 
Notwithstanding the vexed issue of allowances (for which I would advocate a system which is capped, simple and totally transparent – thus leaving the main role of scrutiny to voters) I would advocate a salary for MPs in the region of ninety thousand pounds. Having fixed the figure I would then index it with the earnings of a broader economic group comprising employees in both the public and private sector, perhaps full time senior professionals.
 
Pensions should be in line with the arrangements for senior civil servants. Given the risks involved in being in Parliament and the fact that an MP can lose their job for reasons over which they have limited control I would, in the context of fixed term Parliaments, have a minimum redundancy payment equivalent to one month per year of office but with a minimum of one year’s salary for any MP who has served a full term.            
 
In relation to outside earnings I think, on grounds of attracting talent and encouraging MPs to get out and about, MPs should be allowed to earn money externally as long as it is declared and permissible activity. However, on grounds of public interest and perception I would have a system of claw back so that for all earnings beyond a certain level, say 50% of the MP’s salary an amount (say, 25%) is deducted from their salary.
 
Matthew Taylor is writing in a personal capacity.

June 07
Justin Urquhart Stewart, Marketing Director and co-founder of Seven Investment Management

If one were to advertise the role of the MP then it is an interesting exercise to put together the necessary remuneration package to attract the appropriate candidates. This then would provide a reasonable outline as to what might suitable to achieve the goals of attracting the right candidates to be able to operate in the correct manner.
 
My key elements when addressing the role:
 
Type - High calibre driven individuals with expertise and experience (by which I mean other than as a party intern) which could benefit the political environment.
 
Salary - It would be beneficial that MPs could be financially independent of third parties from any political support group, and also be able to afford to be an MP and not merely leave to those of independent means.
A good remuneration package commensurate with their market value as measured against a given senior civil service grade. This would be appraised annually with the suitable civil service grade and benchmarked externally on a regular basis.
 
If it deemed appropriate that MPs have a level of entertaining as part of their role then this would be a fixed addition to the salary of a given amount. This would hopefully dispose of the bureaucracy of expenses forms and reconciliations and pass down the responsibility to the MPs themselves.
 
Additional facilities - given the recent scandals over expenses it would be far easier if facilities were provided as standard to include office, support staff and facilities as well as accommodation. This could be more easily arranged through one of the larger business based hotel chains to provide a quite cost effective solution.
 
Pension - Money purchase pension scheme again related to equivalent senior civil service grade.
 
Travel – as with any company this is far better operated through a central channel for cost control and oversight.
 
I believe that it is important that we have well paid politicians not only to attract and retain the suitable talent, but also to ensure that there is little reason for other roles to be taken on and that concentration is kept on the primary task.

May 31
Professor David Haslam CBE

What’s so special about Members of Parliament? Why do their salaries and pensions cause so much controversy? After all, the answer should be relatively straightforward – we shouldn’t pay them so little that talented people are discouraged from standing for election, and we shouldn’t pay them so much that the public resents their income.

But the job of being an MP can be potentially hugely challenging, requiring a range of skills across a wide sector. Most MPs work long and anti-social hours, with potentially little in the way of job security. Most MPs that I have worked with have been driven by a genuine desire to make a difference. Many are remarkably bright people who could earn much more in the private sector – but had chosen not to.

And then it all gets complicated by perceptions – perceptions that being an MP, and in particular being a minister, is a shoe-in for a highly lucrative private sector role when the political work is done.

Many employees have performance related pay. On one level, MPs actually have the ultimate in performance related pay - if they don’t do what their constituents want, they lose their job. But this is simplistic – after all more MPs lose their jobs because their constituents don’t like the Prime Minister than because the constituents don’t like the MP –it is performance related, just not the recipient’s performance.

And whatever system is chosen, some people will complain. An ideal scenario would come up with a system that the public see as fair and that MPs see as fair. Much dissent arises from the fact that MPs are seen as being their own pay negotiators, voting on their own pay awards, often at a time when they are encouraging everyone else to exhibit restraint in the national interest.

So, to solve this, there would be real logic in linking MP’s pay and pensions to the pay of another public sector group. This is important public sector work and should be treated accordingly. So which group should we choose? Doctors? Doctors are still trusted, valued, and respected – but to become a consultant requires around 12 years training – much more than the training required to become an MP. Is this a fair comparison? The average basic salary of a hospital consultant is between £74,504 and £100,446 per year.

How about teachers? The average pay for a secondary school head teacher ranges between £49k and £112k though a few earn very much more. Maybe there is a simple solution. Tie the average MP’s pay and pension arrangements to a midpoint between a senior doctor and a senior teacher – all three are in the public sector.  Or choose another bundle of public sector workers as the comparator. There should be public debate about which workers this might be, but the principle would be sound, logical, and would not need constant revision.

Though I suspect that more of the public would be even more interested in ensuring that citizens standing for election had done something in their lives other than politics. But that is quite another issue.

May 28
Matthew Elliott, Chief Executive, The TaxPayers’ Alliance

 

In addressing the question of how much MPs should be paid, what we have to keep in mind right now is that we remain in the midst of a deep economic crisis and families, councils and central government alike are all having to find ways of making savings.
And with our politicians (rightly) intent on trying to keep public spending down, it is essential that they adhere to the same discipline in the running of their own affairs.
 
In that context, there can be absolutely no justification for increasing MPs’ salaries this year or, in all likelihood, for the rest of this Parliament.
And when it comes to their pensions, too, the public will not tolerate MPs enjoying gold-plated deals that are unavailable to most of the rest of us.
It’s only since 1911 that MPs have received a salary, at which point they were paid the princely sum of £400 a year – equivalent to about £37,000 at today’s prices.
 
Today they each get £65,738, which is almost precisely two and half times the national average of £26,200.
For some MPs, pursuing a political career means taking something of a pay cut, whilst for others taking their place on the green benches, it will be the highest salary they’ve ever received.
 
It will ever be thus, and to me the current pay level seems to strike a pretty happy medium. And given that more than six candidates on average contested every seat at the last general election, there’s clearly no shortage of people willing to put themselves forward for the job.
 
However, I do believe it to be something of an anomaly that IPSA now gets to set MPs’ pay. MPs get to vote on how much of our money they take in tax, how they spend it and whether or not the country goes to war and so on – and on all those issues, they are then held accountable by their voters at election time.
It therefore strikes me as odd – and it certainly goes against the historic tradition of parliamentary sovereignty – that MPs no longer decide their own pay, since it would simply be another matter on which voters would be able to call their representatives to account at the ballot box.
 
The TaxPayers’ Alliance takes the view that, in order to maximise accountability, at the very end of each five-year Parliament MPs should have to vote on the pay, pension and allowances settlement for the duration of the next Parliament.
 
That way, the public can make a fully rounded judgement as to the value of their MP at each general election.
 
The danger of having a quango like IPSA set MPs’ pay is that if there is any public disquiet over the decisions it makes, there is nobody they can hold to account or put out of a job.
 

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