Allowances

Wednesday 27th March 2024 Lords Chamber

Motion

11:51

Moved by

[Lord True]

That:

(1) Members of this House, except any Member who receives a salary under the Ministerial and other Salaries Act 1975 and the Chairman and Principal Deputy Chairman of Committees, should be entitled to an overnight allowance in respect of each day of attendance on or after 15 April 2024 as provided for below.

(2) Members are eligible to claim the overnight allowance—

(a) if the Member’s registered residential address is outside Greater London,

(b) the Member has a recorded attendance,

(c) for reimbursement towards the expense of hotel or similar accommodation costs in Greater London incurred in staying overnight away from their registered residential address where it is necessary to do so for the purpose of attendance.

(3) “Attendance” means attendance—

(a) at a sitting of this House,

(b) at a meeting of a Committee of this House, or

(c) on such other Parliamentary business as may be determined by the House of Lords Commission.

(4) The maximum daily amount payable to a Member should be £100.

(5) The maximum daily amount can be claimed for each day of recorded attendance or each night which falls immediately before a day of recorded attendance. Members cannot claim for more nights than days attended.

(6) The provisions of this Resolution apply in accordance with guidance issued under the authority of the House of Lords Commission.

(7) In relation to the year beginning with 1 April 2025, and each subsequent year beginning with 1 April—

(a) any formula or mechanism included in the IPSA determination for the year as a result of section 4A(4) of the Parliamentary Standards Act 2009 (adjustment of MPs’ salaries) should be treated as applying for the purposes of adjusting for that year the amount of the allowance payable to a Member of this House, and

(b) accordingly, the amount of the allowance payable to a Member in respect of a day of attendance in that year should be—

(i) the amount obtained by applying the formula or mechanism to the amount payable by way of allowance (under paragraph 4 or this paragraph) in the previous year, or

(ii) where no formula or mechanism is included in the determination, the same amount payable by way of allowance (under paragraph 4 or this paragraph) in the previous year.

(8) In paragraph 7(a) “IPSA determination” means a determination under section 4(4) of the Parliamentary Standards Act 2009.

(9) Any fraction of a pound in an amount obtained under paragraph 7(b)(i) should be rounded up to the nearest pound if the fraction is 50p or more, but otherwise should be disregarded.

[The Lord Privy Seal (Lord True) (Con)]

My Lords, on 13 March, the House of Lords Commission agreed to restore an overnight allowance scheme to provide specific accommodation support for Members who live outside Greater London. The resolution that I move as Leader today will put into effect the proposals agreed in the commission report published on 21 March.

The original impetus for this came from the chairs of the Back-Bench party groups in your Lordships’ House. Having reached a cross-party consensus as to the principle and extent of any additional financial support, as I suggested would be necessary, they approached me to present their case to the commission. I agreed to do so. The commission agreed the proposals and I am putting them to the House today. The resolution that noble Lords see before them reflects the recommended proposals of the party chairs and the usual channels. I know that they do not meet everyone’s aspirations, but I submit that they represent a compromise and a balance.

For the avoidance of doubt, as an officeholder and a resident of the Greater London area, I have no personal interest whatever in this change. Indeed, I supported my noble friend Lord Strathclyde in the design of the current approach to allowances. It was intended to be, in my noble friend’s words,

“direct, transparent and accountable, a scheme that is simple and not open to abuse”.—[Official Report, 20/7/10; col. 916.]

In the same way, I submit that the current measure before your Lordships passes those tests as simple, transparent and accountable, and is appropriate to meet the changing burdens currently faced by many Peers.

To summarise, if this Motion is agreed to, Members whose registered address is outside the Greater London area may claim towards the expense of overnight accommodation in Greater London in a hotel, club or similar accommodation while away from their registered residential address for the specific purpose of attending sittings of the House. The maximum that can be claimed for each eligible overnight stay is £100, and it will be reimbursed only on production of a receipt. If the room costs less than £100, only the receipted cost of the room will be paid. The number of overnight claims cannot exceed the number of recorded attendances a Member has in a given week. A review will take place of this new scheme after 12 months.

As many Peers travel daily from far beyond the M25, and Members who seek accommodation inside London pay an increasing price for undertaking their parliamentary duties, I pass over the fact that it is far more sustainable to have Peers staying over rather than commuting daily. But I submit that this House must be accessible to all, regardless of financial status and location. We have, and I mean no offence, become far too much a House of the south-east of England. It is not right that some noble Lords may be deterred from coming to this House because attendance would impose a significant financial burden on them. In responding to this, the commission seeks to ensure that geographic and economic disparities do not dictate the conduct of Parliament.

I believe that the proposal strikes a balance. We must all be mindful that money we spend in this place is not our own. Any scheme that seeks to support parliamentarians must be proportionate to both the purpose it seeks to address and the implications for the public purse. In this case, the commission considers that a flat rate that sits below the average cost of London hotel accommodation is a proportionate figure. This proposed ceiling is well below—indeed, less than half—that which is offered to our good colleagues in the other place.

I return to my first point: the scheme is simple, easy to check, and aimed to avoid abuse. This House will rightly come down hard—very hard—on any who may seek to abuse it. We have placed a review of the scheme after 12 months to ensure that the allowance is working as it should, and the House will expect that every Peer will stand on their honour in this regard.

If this resolution is passed, the scheme will come into effect after the Easter Recess. I will of course continue to welcome Members’ views on this matter, though I know that very many have fed into the cross-party consultations in the various groups, and I thank them for that. I hope that this scheme may support participation in this House, and I thank the noble Lords who worked on the proposals, the usual channels and the convenor for their support for this resolution. I commend it to the House and I beg to move.

[Lord Balfe (Con)]

I welcome this proposal, and the points I wish to make are made in a friendly manner, not a critical one. I am concerned about the interpretation of the words “similar accommodation”. I wonder whether the noble Lord the Leader of the House would consider whether a requirement that the accommodation is registered for VAT should be part of the scheme. I understand that this is fairly common within the Civil Service. I also wonder why we are reinventing a wheel and why we do not just adopt the same system as applies to Treasury officials who come to London for meetings and are part of the Home Civil Service. This seems a very easy thing to incorporate into our rules. I am concerned that the absence of any mention of VAT and the loose wording “similar accommodation” could lead to loopholes. As a person who was responsible for closing many loopholes in the European Parliament scheme, I am well aware of where loopholes can be found.

[Lord McConnell of Glenscorrodale (Lab)]

My Lords, it would be wrong of me not to comment on this, having been the Member who first raised this about a decade ago when we first raised the annual allowance. I welcome the report and the Motion in the name of the Leader of the House. I thank him personally. He may have been involved in the original scheme and the mistakes that were made then, but I welcome very much his efforts as Leader, with, I am sure, the support of the Lord Speaker and others, to make sure that this change came before the House today. It is long overdue and very welcome.

I also want to thank my noble friend Lord Foulkes. When I gave up the campaign on this issue through sheer exhaustion, he took up the cause. He deserves some credit on behalf of all of us who live outside London for making sure that this change comes forward.

The initial scheme, which was introduced in the month in which I came into this House, was wrong. In order to stop people who live in London abusing the old scheme, it has resulted in all of them receiving significant financial benefit during the last 14 years, while every Member who lives outside London and who uses overnight accommodation in London had their allowance cut in July 2010 and has suffered financially ever since.

12:00

Over time, we will review and adapt the scheme. I very much welcome the conditions concerning receipts; they should have been required under the old system, and certainly must be part of the new arrangement. I slightly question the inclusion of clubs but not Airbnb and similar booking sites; they seem to be a 20th-century, rather than a 21st-century, answer. Perhaps this could be looked at in due course, not least for the sake of the image of your Lordships’ House. Using clubs rather than commercial letting sites seems a little strange.

I welcome the change in principle. I particularly welcome the following statement in the report:

“We consider it important that voices from across the country should be heard in the House of Lords and that the scheme for financial support for Members should enable this.”

Those who live outside London deserve respect too, and they are finally getting it.

[Baroness Fraser of Craigmaddie (Con)]

My Lords, I too declare an interest as I come to this House every week from Scotland. It astounded me from the moment I was introduced that there was no such scheme to compensate for overnight accommodation, so I too welcome the report.

I have one question. I do not understand why Members of this House who travel from the various parts of the UK should be subject to different rules from those for Members of the other place. The overnight rating, while welcome, is considerably less than Members of the other place receive. The kind of accommodation to which it applies is not as extensive as IPSA sets out for MPs. I do not really understand why those of us who come to this House from other areas should be treated differently from MPs.

I remind your Lordships that this is an allowance that can be claimed, and there are many colleagues who choose not to claim it. I would hope that it would be claimed only by those of us for whom it really makes a difference to our attendance here, rather than by those who seek to claim it just because they can. I thank my noble friend for the report, but I do not understand why we have not followed the IPSA guidance.

[Lord Newby (LD)]

My Lords, we on these Benches very much welcome this scheme. I would say to the noble Baroness, Lady Fraser, that we do not want to go down the IPSA route on anything. Everything is different, and once we start trying to draw comparisons, we get into real difficulty.

It is very important that this House is as diverse as possible. It is heavily skewed towards London and the south-east. Money is not the only reason, but we should be doing whatever we can to ensure that everybody, wherever they live and whatever their circumstances, can participate.

I fully accept that the scheme is not perfect, but it is better. Nobody I have spoken to has come up with a scheme that everybody would agree is perfect. This scheme will relieve real problems for a significant number of Members who, in some cases, have been out of pocket by coming to your Lordships’ House. This is clearly not acceptable, and the scheme goes a long way towards dealing with that. From these Benches we heartily welcome it.

[Baroness Smith of Basildon (Lab)]

My Lords, I thank the Leader of the House for bringing this forward today. He has heard the mood of the House, and it is warmly welcomed. I also put on record our thanks to the chairs of the groups and the convenor. They have consulted around the House about the difficulties caused for those who travel some distance to get here and stay overnight. I am grateful to them for their efforts in putting forward a scheme.

This scheme recognises three things. First, when the rules on the initial daily payment were changed, it was not kept in line with inflation for around 10 years, meaning that it fell behind what was reasonably expected when it was set up. At the same time, the cost of hotels and other accommodation increased significantly above inflation during that period, meaning that those paying for accommodation are paying a significantly greater proportion of the daily allowance than they were when the scheme was set up.

To answer the noble Baroness, Lady Fraser, the difference between us and the Members of the House of Commons is that they are salaried employees, and we are not. We receive a daily allowance for days on which we attend and are here working. So, there is a difference in the arrangements for the two Houses.

The scheme also recognises that this is a contribution towards the costs, which fluctuate enormously; in that sense, it is fair to all colleagues. It also recognises the work of your Lordships’ House. Too often we talk about allowances in the abstract, but allowances enable Members of this House to fulfil their responsibilities. Members who have to dash off early to catch the train home because they cannot find a hotel within their price range are disadvantaged and cannot play a proper role. The bottom line is that we need to ensure that the House can do its work properly. I am grateful to the Leader of the House and to the chairs of the groups, who, as I said, have done a lot of work in producing something which is fair and reasonable for all. It has the support of these Benches.

[Lord True (Con)]

My Lords, I am grateful to the noble Baroness. In my opening remarks, I expressed gratitude to the chairs of the various groups. I should have explicitly included the convenor, but I was including the Cross-Bench group as well. Mature, sensible discussions have contributed to this.

I thank the noble Lord, Lord McConnell, for what he said. I must not go back over old times, but the reality is that the current scheme came out of what was an emergency brake on a system that was being abused. We were trekking down a road which led the other place into considerable disrepute at that time, and there was widespread agreement in the House that we should move to a simple, transparent and accountable system. With the test of time and having spoken to the noble Lord and to others, I think it was right to undertake these conversations and this review. As the noble Baroness and the noble Lord, Lord Newby, said—I am grateful to them—we have arrived at a scheme which, although not perfect, is direct, transparent and clear.

My noble friend Lord Balfe spoke of loopholes. Being an expert, he will no doubt advise the finance department if he detects any. I have written to him privately about his VAT question but, since he raised it in the Chamber, I will give him the same reply. What he suggests would not necessarily achieve the desired result because there may be commercial premises that are below the VAT threshold and therefore not registered. There are far more likely to be Airbnb operations which cross the £85,000 threshold and charge VAT. This is a complexity that may not create a clear line between different types of property. There is broader guidance about this system; it is not too complex.

With respect, I do not fully agree with my noble friend that this is how Civil Service rules work. From an initial search, this does not appear to be the case in every department. In the Cabinet Office, for example, civil servants need to go through an approved agent to secure hotels.

I return to the fundamental point: this is proportionate and clear, and it is also testable. We will have a review and if it is misused, that will be seen and the House will wish to address it.

My noble friend Lady Fraser asked why we are treated differently from the House of Commons. The noble Lord, Lord Newby, gave the answer. Being a Member of your Lordships’ House is entirely different from being a Member of the other place; their range of duties, responsibilities and offices is completely different.

My feeling, the feeling of the commission and the feeling of the Back-Bench groups was that while this may not please everybody, as I said in my opening remarks, we need to reflect on the context that we are in. There is a point at which we need to enhance participation in the House, to get more Peers being better able to come from outside London to take part. I repeat that this is a proportionate, reasonable, clear and transparent system, which will be reviewed and tested.

Motion agreed.