Pay politicians more

No one will respect MPs unless they stand up for reasonable pay
July 18, 2013

Politicians can never get it right over their own pay and expenses. The decision—after the expenses scandal in 2009—to shift responsibility to Ipsa, the independent regulator, is in danger of backfiring because party leaders ran for cover in the face of a populist outcry from the blogosphere and the press over speculation about a big pay rise for MPs. Ipsa, it is said, is out of touch; now is not the right time for an increase.

But the party leaders are wrong. The Ipsa process and its balanced package offer the best way forward for both MPs and voters. Pay for MPs was introduced a century ago to enable working men to serve in the Commons. The real value of the pay has fluctuated. It has generally lagged behind average earnings when inflation has been rapid, while much has depended on the attitude of prime ministers, who have generally sought to demonstrate that MPs are setting a restrained example. But during the 1980s and 1990s that led to evasion as small increases in pay were offset by a proliferation of allowances, often ill-defined and subject to abuse. That resulted in the expenses scandal, where the damage was caused not just by a few outright crooks but also by the exposure of a deeply flawed system which tainted parliament.

The hurried response was to create Ipsa to handle expenses and pay. The party leaders believed that MPs had lost the trust of voters on anything to do with money. Hence, responsibility was handed to an independent body. However, some heavy-handed initial rules and regulation alienated many MPs, strengthening the position of those who argued that MPs should never have surrendered control in the first place.

It is impossible to give a job description to backbench MPs since their constituencies, interests and approaches differ so much. It is also hard to draw clear comparisons with other groups in the public and private sectors, as has been tried in the past. It does not matter whether MPs should be allowed to have some, fully disclosed, outside interests, or to be full time. Either way, their pay should be set at a level which does not deter experienced and successful people from standing.

Determining the level of pay is inevitably an arbitrary business. In my view, the current £66,400 is a bit low when judged, say, by the standards of GPs or many headteachers. So the proposed once-and-for-all rise by 9 per cent after the 2015 general election and then indexation to national average earnings is reasonable, particularly when coupled with a tightening of the pension terms and the end of the resettlement allowance for departing MPs of up to £33,000. There is also the suggestion that MPs should issue an annual report on what they have done, alongside their financial records. Provided this is not just an exercise in campaigning and is purely factual, it could extend accountability.

It is up to individual MPs whether or not to take the pay rise. But it is wrong for the party leaders to distance themselves from the package. They set up Ipsa and made it responsible for pay and pensions. Party leaders should be robust, embrace the value of an independent regulator and defend its recommendations. At present, they are reinforcing the crude anti-politician mood. No one will respect politicians unless they are willing to stand up for themselves and a reasonable, non-exorbitant, pay package.