IPSA Response

Response from the TaxPayers’ Alliance to the IPSA

Consultation of November 2011 into its Annual

Review of the MPs’ Scheme of Expenses and Costs

Submitted on behalf of the TaxPayers’ Alliance by

Jonathan Isaby

Political Director

The TaxPayers’ Alliance

55 Tufton Street

Westminster

London

SW1P 3QL

0845 330 9554

[email protected]

55 Tufton Street, London, SW1P 3QL www.taxpayersalliance.com 0845 330 9554 (office hours) 07795 084 113 (24 hours) 1

Foreword by Matthew Elliott, Chief Executive of the TaxPayers’ Alliance

The TaxPayers’ Alliance welcomes this opportunity to respond to IPSA’s latest Consultation on MPs’ Expenses and Costs.

We believe that Members of Parliament fulfil a vital role in representing their constituencies, acting as legislators and holding the executive to account. We do regret, however, the increasing calls on them in recent years to act as “über social workers”, and have included some thoughts in this response as to how this problem can be tackled, taking into account the various other elected representatives to whom the public should perhaps be turning.

It is entirely right that MPs should be afforded appropriate financial and staff support in performing their important duties: we need a strong Parliament of strong MPs to scrutinise both the Government and whatever legislation is under consideration. Weaker MPs would effectively mean a stronger executive, which would be bad for democracy and the scrutiny of government spending. But we must, of course, pay heed to the need for restraint in public spending whilst embracing the principles of transparency, accountability and taxpayer value for money in the administration of MPs’ costs and expenses.

The revelations surrounding the abuse of expenses by some MPs in the last Parliament made for an unhappy few years for all politicians as the public came to view the entire House of Commons with suspicion. Criminal proceedings followed for a few, but it was nevertheless clear that broken systems urgently had to be reformed and made far more transparent if there were to be any hope of restoring public confidence.

The 2010 general election introduced a new generation of MPs, untainted by the misdemeanours of the past, and we at the TPA welcomed many of the expenses reforms which were introduced; on reflection, however, we have concluded that IPSA has been too prescriptive in dictating how MPs run their offices, and that is reflected in our responses to this Consultation. Moreover, IPSA has shown itself to be one of the most inefficient monsters of a quango ever to have been created and it ought urgently to be reviewing its processes (although we do recognise that to some degree it is bound by a legislative framework that may need to be amended by MPs themselves). As we set out in this response, the introduction of procurement cards for MPs akin to those used in government departments would go a long way towards massively decreasing the bloated IPSA bureaucracy.

We accept that being an MP is a unique role like no other job, but our elected representatives do also owe it to those who put them there not only to account for the taxpayers’ money they spend, but also to emulate the kind of practices that would be found in any private sector company when it comes to the expenses regime.

I hope that our responses to the questions posed by this Consultation will be taken on board as a constructive contribution to the debate. It goes without saying that we will be more than happy to discuss our position further with any relevant parties.

Matthew Elliott, Chief Executive

20 January 2011


Responses to the questions raised in the Consultation

Below are the TaxPayers’ Alliance’s responses to the individual questions raised in the IPSA

consultation published in November 2011.

Question1:What likely or actual impact do you believe the Scheme and specific matters raised in this consultation may have on equality and diversity in relation to MPs and their staff? Whilst we would expect MPs to abide by anti‐discrimination legislation such as the provisions of the Equal Pay Act, it strikes us as an example of the unnecessary additional burdens and regulations introduced by the Equality Act 2010 that IPSA is having to spend time and (taxpayers’) money conducting another Equalities Impact Assessment. Although we recognise that changing the law in this area is something to which MPs themselves need to turn their attention, we hope that IPSA will only spend the legally‐required minimum amount of time dealing with these issues. Question2:Should staff members be allowed to carry out any party political activities during their working (taxpayer‐funded) hours? If so, should there be any limitations on these activities and what should these be? Limitations may include the following: Restricting the length of time staff members spend on party political activities; Prohibiting certain types of party political activity while allowing others (please explain which activities should be prohibited). Members of Parliament are, almost without exception, party political beasts, and it is therefore unrealistic to suppose that the work of their staff – in writing notes for speeches to be made in debates, in replying to correspondence about contentious issues etc – could always remain above party politics. As such, it needs to be acknowledged that there will be a grey area where an MP’s parliamentary and political activities coincide. That said, it would be outrageous if the money used to pay for MPs’ staff was to end up systematically funding political party machines by the back door. In respect of the examples given in Paragraph 31 of the Consultation Document, we are not uncomfortable with the idea of MPs’ staff writing speeches that promote a party line or criticise the position of a political opponent. We can also see circumstances in which an MP could reasonably ask a member of staff to attend a party conference in the course of their duties. Where we would want to see a red line drawn, however, is in restricting any form of campaigning by MPs’ staff in elections or referendums at any level: such activity – be it door‐to‐door, telephone or email canvassing, or attending election rallies or other events promoting candidates – is clearly unrelated to the work of an MP and must be prohibited during (taxpayer‐funded) working hours. Transparency forms an important part of monitoring whether staff are systematically carrying out party political functions unrelated to their MP’s work so, to that end, their names and job titles should be in the public domain. Question3:Should IPSA retain its framework of standard – although adaptable – job descriptions, pay scales and reward and recognition payments (option a) or should MPs be able to decide what roles to recruit for and what staff salaries should be (option b)? Question4:Should IPSA investigate offering central recruitment and performance management systems where these can achieve enhanced cost‐effectiveness (option c)? Are there any other areas of staffing arrangements where IPSA should look to achieve greater cost‐effectiveness through a centralised system?


Whilst we would not object to IPSA providing templates of job descriptions and pay scales to assist MPs as they go about employing staff, we have come to the view that it should be entirely a matter for individual MPs to decide how to structure their offices and use their staff budget. Being an MP is a unique role and given that no two MPs have the same set of circumstances, responsibilities, interests and priorities, it seems ludicrous to expect them to have to run their offices in line with pretty rigid structures as dictated by IPSA. So we believe that, within the available limit, MPs should be free to allocate their staffing budget as they see fit to suit their needs. The only proviso we would make in the interests of transparency is that the salary of any staff who are “connected parties” should be in the public domain, within a reasonable pay band. Question 5: Should IPSA provide an additional budget increase to MPs currently paying staff below the IPSA pay scale minimum for their role, to bring those staff members’ salaries up to that minimum? Those MPs would then need to absorb the cost of these salary rises in future years. In a word, no. In line with our response to Questions 3 and 4 above, we believe MPs should judge for themselves how to manage the staffing budget available. Clearly they can employ a number of people on lower salaries or fewer people on higher salaries – it is up to them to manage that budget. But there is no justification for increasing that budget merely to impose an increase in the salaries of the lowest paid – especially given the evidence cited in Section 44 of the Consultation that the vast majority of MPs are not spending all of the available staffing budget. Question6:Which of the following options do you think IPSA should use to determine the Staffing Expenditure budget? No change to the existing budget and continue to base the budget on all MPs employing 3.5 FTE members of staff (option a); Provide an increased budget for MPs with the most socially deprived constituencies (option b); Calculate the budget based on pay‐band maximum (option c); Another method (please explain). We are very much of the view that there should be no change to the existing staffing budget and that it should continue to be based on all MPs employing 3.5 FTE members of staff (option a). First and foremost, when families, businesses, councils and government departments alike are all having to make savings, we cannot see a justification for an increase in expenditure here. It is vital that MPs have regard to the pressures on public funds, and that is why we reject options b) and c), both of which would increase the burden on taxpayers. In particular we reject option b) – giving additional funds to MPs whose seats are deemed to be most deprived – since it would set a dangerous precedent for treating MPs representing constituencies with particular circumstances in a different way. The Consultation makes no reference, for example, to the fact that those living in Scotland, Wales and Northern Ireland already have another set of representatives in their devolved Parliaments/Assemblies who are responsible for policy and action in a number of areas. The same logic that calls for MPs in more deprived areas to have bigger staffing budgets would go on to suggest that MPs sitting in a legislature not responsible for certain issues, eg health care or education, ought to have a reduced budget since the offices of MSPs/AMs/MLAs are there to deal with issues a constituent may want to raise which arise from those policy areas. Our view, quite simply, is that as far as possible all MPs should be treated equally. We are, of course, aware that at the May 2015 General Election, the membership of the House of Commons will be reduced from 650 MP to 600 MPs, most of whom will then be representing more


constituents than an average MP does at present. At that juncture, we would support redistributing the staffing budget from those 50 MPs’ offices no longer in existence to those of the remaining 600. This question also raises the wider issue of the amount and kinds of casework which MPs are doing. Over the last couple of decades, MPs of all parties have reported an increase in the amount of casework that they are taking on, with some lamenting that their role has become akin to that of an “über‐social worker”. Over that same period of time the allowances for local councillors have significantly increased, and it is our view that many of the cases being taken on by MPs would sit far more comfortably with the responsibilities of those (now better remunerated) local councillors. Furthermore, with many of the laws and regulations affecting Britain now being drawn up by the institutions of the European Union, there will be issues raised by constituents with their MPs which would probably be more appropriately brought to the attention of an MEP. It is a great pity that the direct link between people and a specific, named constituency MEP was abolished in 1999, since when vast regions have been represented by a number of MEPs, making them more remote from the people they represent and therefore less likely to be approached by constituents. MPs should probably be encouraged to use their websites to make clearer the issues for which they are responsible as compared with councillors, MEPs and members of the devolved legislatures, so as to discourage the culture which has evolved whereby some members of the public automatically turn to their MP rather than another of their representatives. This delineation of responsibilities could perhaps also be more clearly set out on the Parliament website. Websites already exist which can identify someone’s representatives at all levels simply on the basis of them entering their postcode1: such a facility ought to be available on the official Parliament website and MPs should be encouraged to provide it on their own websites too. Question7:Should London Area MPs receive a different staffing budget from non‐London Area MPs? If so, how should this be calculated? Whilst we appreciate that an argument can be made for this, we return to the point made in our answer to Question 6 above that all MPs should as far as possible be treated equally. We also reiterate that since we cannot countenance an increase in the overall staffing budget in these tough economic times, if the budget for London area MPs were to be increased, we believe there would need to be a slight reduction for non‐London MPs in order for this measure to be cost neutral. Question 8: Do you agree that MPs who lose their seat should be allowed to claim for the associated expenditure on the property formerly required for their parliamentary functions for up to two months after leaving Parliament? Now that the Fixed Term Parliaments Act has come into law, MPs are clearly able to plan their living and working arrangements into the future with infinitely more confidence. As such, we would suggest that MPs who lose their seat should be allowed to claim the accommodation expenses and the associated expenditure on the property formerly required for their parliamentary functions – but only for one month, not two months. Question9: Should MPs be allowed to claim for the costs of websites which contain material relating to referendum campaigns? Question10: Should MPs be allowed to claim for the costs of websites which display political party logos?

1 http://www.writetothem.com is probably the best known example


Question11:Should IPSA allow MPs to claim for the cost of websites that contain any other types of political content? These questions return to the point made in our answer to Question 2: namely, that MPs are, almost without exception, party political beasts, and that their parliamentary and political activities are inevitably going to coincide. As such, the rules about the content on an MP’s parliamentary website need to be treated with a degree of common sense and reasonableness. With respect to referendums, MPs are entitled to take a view during such campaigns and their constituents ought to be able to know the position their representative is taking. So using the website to publish the transcript of a speech the MP has made on that subject or a photograph of them campaigning on the issue is not unreasonable – although it would be an abuse to create a micro‐site dedicated to campaigning on the issue up for debate in the referendum. With respect to political party logos, whilst we expect MPs to make it clear that they are there to represent all constituents, regardless of how they voted, we do not believe it unreasonable for an MP to state on their home page the party under whose banner they were elected, accompanied by a small logo, if they wish. Similarly, there may be occasions where a photo of the MP in question is taken in a situation where a party logo is visible in the background, which would also seem fair to allow to be published. However, it would clearly be an abuse to systematically emblazon a website with political logos, or to use images of the MP campaigning in an election or wearing his party’s rosette. With respect to “political content” on websites, we see no reason why MPs should not be able to reproduce speeches they have made in Parliament, set out how and why they have voted a certain way in parliamentary divisions or explain their points of view about other current issues of concern: all of these things are, by definition, political, but people should be able to know the positions their MP is taking as their representative. However, it would be an abuse for an MP to use such a website to reproduce centrally‐sourced party political material or to promote candidates for elections at any level. In putting together content for their website, we would certainly expect MPs to reflect on the expectation upon them to be a representative of all their electorate and not to abuse the additional latitude we have indicated that they should be afforded. Question 12:Do you agree that staff members who live over 20 miles from the constituency boundary of the MP who employs them and who regularly work from home should be entitled to claim office and travel expenses, like other staff members who live closer to the constituency boundary? We think not, again on the basis that as far as possible all MPs and their staff should be subject to the same conditions, with as few exceptions to rules as possible. We believe it is reasonable to expect an MP’s constituency‐based staff to either live in the constituency or within a 20‐mile radius of it. Question13:Should the budget limit for taxis be increased from £80 to allow MPs, if they wish, to return to their London Area residence rather than claiming £150 for a hotel? If so, should the limit be £100, £120, or another figure? On the basis of the evidence provided, we are persuaded that increasing the limit for spending on late night taxis to £120 would reduce the total claims for overnight hotel accommodation – whilst


allowing a few more MPs to be able to return to their home. This is a move which would save taxpayers’ money and we welcome it. Indeed, it is a shame that this is the only proposal costed in this entire IPSA Consultation (at Annex C) to propose a saving for taxpayers. Question14: Should IPSA introduce an interim resettlement grant system for MPs leaving the House of Commons involuntarily? If so, how should the payment be calculated? IPSA will shortly begin its consultation on MPs’ pay, which will take into account the issue of whether to retain a resettlement grant of some kind or not, and its conclusions – whatever they are – will take effect from April 2013. So this question is asking whether to introduce a resettlement grant for sitting MPs seeking re‐election who are defeated at the ballot box at a putative general election taking place between now and April 2013. We believe the Consultation to be rather overestimating the chances of this happening when it states its likelihood as “low”. With the Fixed Term Parliaments Act now on the statute book and both Coalition parties aware of the need for stable government in these tough economic times, the chances of an early general election really are minuscule. However, in the highly unlikely event of an early general election, we would suggest any MP who leaves involuntarily (ie is unsuccessful in their bid to seek re‐election) should be entitled to one month’s salary. Question15:Should IPSA’s rules allow MPs to claim for the cost of returning to Parliament in the event of a recall of the House of Commons? Are there any restrictions on the type or value of claims which you think should be payable? Recalls of the House of Commons during a recess are always going to be for a very good reason, be it a national crisis or an international emergency. As such, it is entirely proper that MPs should seek to return to Westminster in order to represent their constituents and hold the executive to account. So of course MPs should be able to claim the cost of returning to Parliament from wherever they happen to be, whether that requires a rail journey from one end of the country to the other or a flight back to London from a far‐flung foreign destination. The only proviso we would make is that any journey should be taken using an economy/second class ticket and that if no economy class ticket is available which would enable the MP to return in time for the emergency sitting, then he should have to produce documentation proving that this was the case if he then goes on to claim for a business/first class ticket in order to make it back in time. Question 16: Should IPSA introduce rules to restrict claims for expenditure during an election period? Notwithstanding our belief that MPs who lose their seat should be allowed to claim the accommodation and associated expenditure on the property formerly required for their parliamentary functions for just one month (as per Question 8), the recommendation to restrict claims for expenditure during an election period as described sounds fair and we endorse it. Question 17: Should IPSA provide legal expenses insurance for MPs centrally, or should MPs continue to have discretion to claim for this cost themselves? In line with our stated view above that individual MPs should decide how to allocate their budgets, we believe that MPs should continue to have discretion to claim for the cost of legal expenses insurance themselves. Question18:Do you support an allowance‐based system for MPs, that is the payment of a lump sum to MPs for them to spend at their discretion, without a detailed account of the expenditure?


One of the legacies of the expenses scandal of the last Parliament is that the public expects maximum transparency and accountability from MPs about how they spend the money afforded them to assist in carrying out their duties as a parliamentarian. As such, we would be strongly opposed to the payment of a lump sum in place of MPs having to provide an itemised account of their expenditure. Those principles of transparency and accountability should be sacrosanct. The payment of lump sums in place of work‐related expenses is not a widespread practice in the private sector, and we could not support its introduction in this case. Some of those who support the introduction of a lump sum justify their position on the basis of saving taxpayers’ money, pointing to the current costs of processing individual claims. The National Audit Office found in its July 2011 report into the payment of MPs’ expenses2 that IPSA’s cost per claim was “around £16” as of May 2011, whilst Adam Afriyie MP – the chairman of the Committee on Members’ Expenses – asserted in The House Magazine earlier this month that it costs “about £9m to regulate and administer just £19.5m of expenses”3. Those figures are indeed exorbitant, but are not cause enough for the principles of transparency and accountability to be sacrificed. Rather, IPSA needs to radically reform the way it functions and become more efficient, in order to deliver better value for money for the taxpayer in how it administers MPs’ expenses. And whilst we recognise that the costs of running IPSA have been somewhat reduced since its inception due to start‐up costs no longer being taken account of, there is still a long way for it to go. The Public Accounts Committee stated in its September 2011 report4 that not only is there “significant scope to improve its cost effectiveness”, but also that “IPSA's validation processes are disproportionate, in particular on low‐value and low‐risk claims”. Furthermore, the PAC criticised IPSA for the inefficiency of its systems in terms of the time taken up by MPS and their staff in making claims. These are all valid criticisms on which, four months later, we trust IPSA is acting. One way in which the system can be simplified and costs reduced would be to adopt the following proposal: we believe MPs should be issued with a credit or debit card to which they can directly charge – at no direct cost to themselves – the costs of their accommodation expenditure; associated expenditure on utility bills, council tax etc; and travel and subsistence expenditure – all of which are personal expenses incurred by the individual MP during the course of his duties. A separate card could be issued to the MP to cover expenditure on office costs. The details for the spending on each card (cash withdrawals from ATMs would be prohibited) could be published online on a real‐time basis5 with MPs then required to submit each month a batch of receipts and a line of explanation (also to be made available online) to support each transaction on the latest monthly credit/debit card statement. Clearly during the course of a year there would need to be a limit to the potential maximum spend on the cards equal to the total budgets available (a monthly limit could be too draconian since some bills are paid quarterly or annually). The army of ‘armchair auditors’ comprising members of the general public, journalists and other interested parties would then be able to scrutinise the information online to ensure that nothing improper had been claimed – in place of IPSA bureaucrats having to approve each and every claim,

2 http://www.nao.org.uk//idoc.ashx?docId=bdd1c26d‐e98e‐44de‐940d‐dd9e2961cdf6&version=‐1 3http://www.politicshome.com/uk/article/43573/adam_afriyie_we_must_stop_the_slide_towards_a_two_tier_parliamen

t.html 4 http://www.publications.parliament.uk/pa/cm201012/cmselect/cmpubacc/1426/142602.htm 5 The December 2011 report by the Committee on Members’ Expenses, The Operation of the Parliamentary Standards Act 2009, recommended “developing and implementing a cost‐effective system of real‐time publication of claims”.


one by one, at such a great cost. There would then need to be a procedure by which those “armchair auditors” could raise the alarm if they believed something improper to have been claimed. This system would not only be simpler and cheaper, but is very much in line with the existing direction of travel on transparency, as demonstrated by the way in which Government Procurement Cards (GPCs) function. Question 19:Do you support MPs continuing to claim mortgage interest subsidy, beyond the August 2012 transitional arrangements? As the Consultation notes, a previous online survey indicated that more than two thirds of people are opposed to permitting MPs to continue claiming mortgage interest subsidy. We do not believe public opinion has shifted on this issue and therefore reaffirm that mortgage interest payments must be entirely discontinued when the transitional arrangements come to an end in August 2012. Whilst we recognise that the monthly cost of mortgage interest could be cheaper than rent, no‐one has come up with a satisfactory scheme that would compensate taxpayers for the fact that MPs have been able to use that subsidy to assist them in the purchase of a property during their tenure as an MP which they retain thereafter. Owning a property is currently an aspiration for millions of Britons, but prices are so high that they are unable to afford it. As such, it is unthinkable that those same people’s money should be used to help MPs buy their own (second) home. Question20:Are there any additional comments which you would like to submit on the Scheme? The Committee on Members’ Expenses considered a number of issues relating to the Scheme and its administration in its December 2011 report, The Operation of the Parliamentary Standards Act 20096, and several of the issues it raised are worthy of comment here.

We agree with the Committee in its support for the position of the Committee on Standards in Public Life (from its November 2009 report, MPs’ expenses and allowances: Supporting Parliament, safeguarding the taxpayer7), that IPSA should be deemed to have a statutory duty “to support MPs efficiently, cost‐effectively and transparently in carrying out their parliamentary functions”.

As outlined in our response to Question 18, we support the real‐time publication of claims online to assist in the scrutiny of how individual MPs have spent taxpayers’ money and that this should replace the bi‐monthly publication of data, which does indeed encourage “bogus comparisons”. We would demand, however, the publication of meaningful comparative aggregated data on an annual basis for each category of expenditure for each MP.

We agree with the Committee that a distinction should be made between the personal costs incurred by MPs on accommodation, travel, subsistence etc as compared with office and staff costs. In the private sector, the cost of an executive’s secretary and computer equipment, for example, would never be considered part of his remuneration package, and that distinction needs to be clear for MPs as well.

On the wider issue of the setting of MPs’ pay and costs, our view is that this should indeed be set for a whole Parliament at a time. However, in order to maximise accountability, we

6 http://www.publications.parliament.uk/pa/cm201012/cmselect/cmmemex/1484/1484.pdf 7 http://www.public‐standards.gov.uk/Library/MP_expenses_main_report.pdf


believe that MPs should vote on this themselves at the very end of each five year Parliament (for the next Parliament), in the same way that the current set‐up was approved via the Parliamentary Standards Act 2009 before the last General Election.

IPSA Response

Documents

Transcript of IPSA Response