This blog will be updated regularly by IPSA team members who will raise particular issues, provide interesting information and report back on developments.
From time to time there is media coverage – often billed as an investigation, but actually built on information which we make available for all to see – which criticises MPs or pokes fun at them because of the cost of running their Parliamentary office or travelling in their constituency. At times, I feel some of this goes beyond holding to account and becomes an unfair attack on individuals or MPs as a group. Such articles invariably include the line ‘MPs don’t get it’ before raising eyebrows about the business costs MPs incur in going about their duties of serving constituents or legislating.
Before reaching for such hackneyed lines, it is worth remembering that there has been major reform. The system is unrecognisable from the one in 2009 – and rightly so. We now have clear rules properly enforced. Genuine transparency meaning all claims are online for anyone to see. At times that has meant some try to trivialise the smaller amounts. These claims provide support to help MPs do their Parliamentary work and are published in such detail because the stationery bills are itemised and we ask MPs to account for individual journeys in the constituency. This approach has to be the right one, doesn’t it?
And, in addition to this new approach of openness, the changes we have introduced have saved the taxpayer around £35m since 2010.
The crisis is over. The system is working. And the taxpayer and public are benefitting. And MPs are getting the support they need to do their job
Yesterday, I sent the following letter to the Daily Mail for publication:
In response to the article published on Saturday, claiming ‘Proof expenses loving MPs still don’t get it’, it is worth making three points.
First, in response to the suggestion that MPs are squeezing every last penny out of the taxpayer – that simply isn’t right. IPSA has checks in place to stop that happening. We have actually saved the taxpayer around £35m since 2010.
Second, the list of office costs you cite as evidence of abuse are no such thing. MPs should not have to fund the costs of running an office from their own pockets – doing so would make Parliament the preserve of the rich.
Third, the idea ‘they don’t get it’ ignores the major reform to MPs’ costs and expenses we’ve introduced. There is now real transparency which is why your paper and any member of the public can go online and see in precise detail what their MP has claimed for. Add to that the savings for the taxpayer of £35m and it is clear that things really have changed for the better.
Sir Ian Kennedy
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.
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.
Ever since we were given the responsibility to set MPs’ pay and pensions, IPSA has said that we will make our decision based on the evidence and the quality of the arguments put to us – and that we would do so following consultation with the public.
Over the last two years, we have held two full rounds of formal public consultation; received hundreds of responses from the public; taken part in dozens of radio phone-in programmes around the country; held focus groups in different regions; reviewed research and conducted some of our own; and discussed the questions on social media.
And, on Thursday, we will publish our findings. The package we will announce will be exactly that: a package. It will be about more than pay.
One of the strands of research we pursued was a survey of public opinion about the package we put out for consultation in the summer. As a reminder, that package included a one-off pay rise, thereafter linking MPs’ pay to average earnings; reforming MPs’ pensions; scrapping the outdated resettlement payments worth tens of thousands; further tightening up the expenses rules; and calling on MPs to complete an annual account of their work to help their constituents understand what it is MPs actually do.
In some ways, the research results were unsurprising: in general, when viewing each element of the package in isolation, people supported the recommendations which take money away from MPs, and didn’t support the recommendation to increase MPs’ pay.
When asked to weigh the recommendations as a whole - as a complete package - the public view is more sophisticated than many commentators have given them credit for in the past few days.
Taking the package together, our research suggests that, if the reformed package costs more overall, 58% thought it too generous and 30% thought it about right or not generous enough.
But, when presented with a similar package which does not cost the taxpayer any extra, public opinion is almost split down the middle: 45% say it would be too generous, and 43% say it is about right or not generous enough.
This shows us something important: this is an issue where the public has a more nuanced, and split, opinion than the reactive howls of ‘outrage’ from some commentators and politicians..
We have taken the time to ask people about their opinions in detail, and we have received them in kind.
We also know that when you engage the public in a detailed consideration of the issues, as we have, they will take the time to give the kind of thoughtful and considered response this issue deserves.
The package we will announce on Thursday will, taken as a whole, not cost the taxpayer a penny more. That message has not been heard in the hubbub of the last few days. Once it is, I am hopeful that our reforms will receive the same thoughtful response that we found in our polling. And that some commentators will pause before making sweeping assumptions about what the public think without asking them.
ComRes September Report
On 12 November I had the privilege of sitting on a panel to judge this year's Student Short Video Competition, run by the Political Studies Association. It's the third year of the competition, and this year's theme was "How much is an MP worth?”. Ties in nicely with our consultation on MPs' pay and pensions, which closed on 20 October.
Three schools were short listed: Cheadle Hume School, North Halifax Grammar School and Kings High Warwick. The videos were up to four minutes in duration. The panel watched all three and then talked to the students in turn for about 10-12 minutes. The videos were excellent: quite different in their approaches, but all creative and thought-provoking. The discussions with the students were brilliant. All three groups were really engaged, enthusiastic and insightful. 10-12 minutes just wasn't enough. Anyone who claims that young people aren't interested in politics should just talk to young people...
The panel took much longer than planned to come to a decision because the combination of the videos and the discussions afterwards were so good. By a whisker we went for Kings High Warwick, but it could have been any of the three. And while they were all different, I think there were some common themes, which are very relevant to our deliberations on MPs' remuneration. I'll just highlight three here - there were plenty more.
• Diversity. There was a strong feeling that Parliament needed to be representative of society - not just an elite - and a feeling that pay, and other state funding for politics, had to be pitched at the right level to help that. At the same time, pay should not be a big motivation in itself for standing for Parliament.
• The MP's role as a representative of his or her constituents was seen as the most important aspect of the job. Both as someone who can deal with people's problems in the constituency and as someone who can articulate the views of the constituency at Westminster. Of course it was recognised that those views can be diverse. But the MP was the voice of the constituency at Westminster.
• The more you know.... all three teams spoke of how their own views changed as they worked on their videos, took in more information, developed their thinking. On the whole, they ended up more aware of the range of roles MPs have and - and this is not to be sniffed at - the hours they put in.
So, this wasn't about putting a precise number on the right level of pay. But I sensed that all the teams became more amenable to the idea of higher pay as they looked deeper into the subject. And compared the salaries of MPs with head teachers, doctors, and others. They didn’t conclude that it definitely should be higher, because of the importance they attached to the views of the public at large. But they were open-minded about it.
This mirrors our findings when we conducted our "citizens juries" in 2012.
And highlights the importance of having a full understanding of what MPs do as we debate the right level of pay. Which is why we continue to explore the idea of some form of annual reporting, to help that understanding.
And shows how important it is that we listen to the views of all generations – future, as well as current, voters.
Originally published in The Sunday Times, 10 November 2013
Over the last week, media discussion about MPs’ costs and expenses – in particular over their claiming bills for a second property – highlights the nature of the transparency IPSA has introduced: it is the disinfectant that hurts as it heals.
One of the first commitments I made in this job was to bring real transparency to an issue which had previously lived in the shadows. I said we would publish all claims made by all MPs. And we have.
That is what enabled campaigners to write, unfairly, about the ‘shame’ of MPs claiming for such costs. On the point of the costs themselves – it is worth being clear: MPs pay the cost of running and heating their own home, just as you or I do. Reports to the contrary are just plain wrong.
It is right that we should support MPs in the cost of travelling between the constituency and Westminster and, where they represent places beyond commuting distance, support them with somewhere to stay. Not a mansion; not helping them to build a property portfolio. But enabling them to rent a place and help with some of the unavoidable costs that come with that.
I know some see any money going to MPs as too much. That race to the bottom isn’t healthy for our democracy. We need to ensure the support isn’t too generous, but that it enables MPs to get on with the job of scrutinising legislation and supporting constituents. That’s the balance I think we have found.
Details of the rules aside, we gave all of this information to the public and, while sometimes it might be painful to MPs when it provokes hyperbole, openness is the only solution to the deep rooted cynicism about our Parliament which was exacerbated by the abuse and secrecy of the past.
Over time, the best chance we have of overcoming cynicism about politics is by making information available. That idea has been central in IPSA’s work and something we’ll continue next week when we will publish details setting out from whom MPs rent office space. Many MPs hire offices for their staff to work in and in which to meet constituents. It is right that we support them to do so. But we also think it is in the public interest to know where that money goes. So on Thursday, we’ll tell you.
Again, this will produce a mix of commentary and reaction – some considered and thoughtful; some not. But making information available drives informed discussion. That is a great prize to secure.
Facts are crucial to proper public debate. That’s why we are releasing these details. They are the first step in a public review of the support available for MPs to rent offices and work away from home, and the rules and checks we need to protect public money.
We know that MPs renting offices from their local party is a contentious issue.
To my mind, there are two aspects which need consideration. The first is value for money. We have a safety check designed to meet that concern, which is the need for an independent valuation confirming rent is being paid at the market rate. And there is the quite separate issue of whether taxpayers’ money is being used to fund political activities.
It is timely and appropriate to test both of these. They are important and complex issues and that is why we are acting now to engage and inform people as we set out on this work.
So, while this openness will cause discomfort in some quarters, we remain focused on the longer term goal of promoting understanding and confidence. In reaching that goal, transparency is our greatest asset. And like many disinfectants; you know it is working when it stings a little.
Last month, IPSA published all the details of every claim made by every MP for the full 2012-13 calendar year. Publishing this information is one of the most important things IPSA does – it means everyone can see exactly where public money is being spent.
It also means everyone can see exactly how much was claimed overall, and how this total changes over time.
If you read the news reports, you’d be forgiven for thinking that in 2012-13 MPs’ claimed more in business costs and expenses than ever before. In fact, several newspapers said exactly that.
The problem is, they were entirely wrong.
I should point out that IPSA doesn’t think that expense claims rising or falling is necessarily a good thing – MPs’ need to run effective offices, and need resources to do their jobs. Each MP decides how to run their office differently, depending on the needs of their constituency, and costs will naturally change over time.
At the same time, it’s important that debates about how we allocate limited public resources are conducted with accurate facts.
So, fact one: the total value of claims published by IPSA for 2012-13 was £98.1m. You can find them all here.
Fact two: In 2008-09, the last year before the expenses scandal, the House of Commons Fees Office paid a total of £102.3m in expenses. You can find that on page 34 of this report (you need to subtract the cost of paying for Opposition parties for it to be a fair comparison - it’s not something IPSA pays).
Some simple calculator work will show you that the IPSA total for 2012-13 is £4.2m lower than the House was in 2008-09 - clearly not the record, then.
However, this gap doesn’t allow for the increase in prices between the 2008 and 2013. Once price and wage inflation is added in, the 2008-09 total rises to £108.4m – more than £10m higher than IPSA in 2012-13.
In fact, when you compare what IPSA has paid in business costs and expenses to the system we replaced, it’s pretty obvious we’ve saved the taxpayer quite a bit of money:
Expenses paid, £m (inflation-adjusted)
*IPSA started paying MPs’ expenses following the May 2010 election. This means the IPSA figure only covers 10 months. The Fees Office figure of £105.6m has been reduced to also reflect 10 months.
**2008-09 total in £ of the day
That’s £38.5 million saved, in less than three years. And still £10m a year cheaper than the system we replaced.
That’s worth remembering next time someone tells you that nothing has changed since 2009.
As the consultation on our recommendations for MPs’ remuneration continues over the summer, IPSA members will discuss elements of the package here on the IPSA blog.
Something that came through very clearly from all the public research we undertook as part of our pay and pensions review is that members of the public have very little information about what it is their MPs’ actually do – particularly at Westminster.
We also found that the more people knew about the work their MP did, the more they thought they did a good job (and, incidentally, the more they should be paid!).
Importantly, this wasn’t simply a case of the politically interested being fans of their MPs. The citizens’ juries showed a causal relationship: when participants were given more information about the role of MPs, their attitudes changed.
We believe this signal something important: that there is an information gap between the public and MPs about what MPs do day to day.
We have recommended that one way to begin bridging this gap is for MPs to produce an annual report on what they have achieved with the salary they received and the expenses they claimed.
This form of reporting is not only important for bridging the information gap with the public – it also brings MPs into line with many other professions, where reporting and accountability are an important and everyday part of doing the job.
Since launching our consultation, we have asked the public how interested they are in finding out more about what their MP does, and if an annual report would help.
The answer to both has been a resounding ‘YES!’
As well as confirming our earlier research on the knowledge gap, polling by YouGov found that 65 per cent of respondents wanted more information about what their MP does, and 74 per cent would be interested in receiving an annual report.
Clearly, the public is willing to do their bit to cross the information gap, and we believe annual reporting would be a good step from the MP side.
Do you want to know more about what your MP does? Would you be interested in an annual report? What sort of thing would you like to know?
This article was originally published in The Independent on Friday 12 July 2013
There have been a lot of screaming headlines over the last 24 hours – all focused on a recommended pay rise for MPs.
Well, it is true that we are recommending a pay rise, but that is not the whole truth.
Take a step back and look at the facts. IPSA was tasked with cleaning up expenses and with reviewing and revising how we pay MPs.
We’ve done the first part over the last three years and now we have turned our mind to the second. Once you begin to look at MPs’ remuneration, you can’t help but be struck at the peculiar benefits which have grown up over time.
Successive governments failed to address MPs’ pay in a transparent way. Resettlement payments emerged – worth up a year’s salary. And MPs’ pensions evolved into something quite unsustainable.
And of course, up until 2009, there was also the whispered encouragement that MPs could top up their salary through allowances. We’ve already brought this final one to a juddering halt. But we also need to strip back these other peculiarities. And at the same time we need to tackle the question of MPs’ pay head on, no longer relying on supplements of one sort or another to make up for the fact that their pay has fallen behind in recent years. That is not just our view, but the view of successive reviews in recent years.
And so we are recommending a package of reforms. Getting rid of the golden parachutes, bringing pensions into line with the rest of the public sector, further tightening of the expenses regime and, yes, a pay rise of about £6,300.
Not now, I hear you say. But the time is never good to tackle this question. Look at the experience of the last 30 years, which teaches us that this issue will never be politically convenient – or popular. And so we are addressing the question now, but doing so in a way which is mindful of the economic context and mindful of the pressures on taxpayers.
Taken together, the changes we’ve introduced to MPs’ costs and expenses and to their pay and pensions will save the taxpayer some £7m a year.
We’ve cleaned up the system, introduced unprecedented transparency, and now we’re recommending reforming and opening up MPs’ pay and benefits – removing their peculiar perks. And we’re doing all this with a healthy saving for the taxpayer .
And beyond that, we are proposing to MPs that they introduce an annual report – in a standard format, to help explain their activity to their constituents. Because it is clear from our research that many voters do not understand what MPs do in their constituencies and especially what they do at Westminster.
That has to be good news for the taxpayer. For MPs. And for our democracy.
Andrew Mc Donald
IPSA Chief Executive
We published our first report on the Review of MPs' Pay and Pensions on 10 January.
There has been a lot of interest in the report, focusing principally on the survey of MPs' views, conducted by YouGov on our behalf.
Why did we commission this anonymised survey? Well, we believe that it is very important that the views of MPs themselves help to inform the debate on pay and pensions. A number of MPs did respond to our consultation, as did representative groups like the 1922 Committee and the Parliamentary Labour Party. (The consultation responses will be on the website shortly). But it is difficult for individual MPs to venture an opinion on the amount they should be paid, because the minute they do, the chorus of outrage begins. So, most prefer to keep their heads down, at least in public.
Is this good for our democracy? I don't think so - it is silencing an important voice in the debate. So, we tried another tack. The survey of 100 MPs by YouGov, a highly respected polling organisation. The results are really interesting, and maybe not that surprising - the majority of people probably think they are underpaid for what they do, often with justification.
The results are also really helpful, because they provide an authentic voice on behalf of MPs. Finally we have a view out in the open. The initial reaction is inevitably hostile, but maybe in time people will pause and ask, why do many MPs feel they are underpaid? And why do I agree or disagree with that?
And another point: MPs haven't DEMANDED a pay rise as a lot of the headlines say. They have been asked a question and answered it. Honestly. Isn't that better than brushing everything under the carpet?
So, as we move into the second phase of our consultation, to be launched in the spring, we will continue to seek an open, objective debate on the key issues surrounding MPs' pay and pensions. We will continue to encourage and listen to all views. We will be mindful of the economic circumstances and the challenges so many people face today. But we will continue to ask: what do we want from our MPs, and what is that worth?
JOHN SILLS - Director of Policy and Communications at IPSA
Our consultation on MPs' pay and pensions closes on Friday 7 December. 590 people have responded to our on-line survey and we have received 62 written responses. This is addition to to the 130 comments that have been made on "Share your views" or in response to our earlier blogs.
The results of the on-line survey and the written responses will be published in our report on the consultation in January 2013. The exception is where someone has either asked for their response either to be published anonymously or not to be published at all.
So if you would still like to contribute and haven't yet managed, three days left!
John Sills, Director of Policy and Communications