House of Lords: Allowances

Debate between Lord Soley and Lord Marlesford

Tuesday 20th July 2010 Lords Chamber

[Lord Marlesford]

My Lords, I support the proposals made by the House Committee and introduced by my noble friend the Leader of the House. I should like to offer some brief comments which, to some extent, relate to what the noble Lord, Lord Tomlinson, said—although they do not answer his questions and probably will not satisfy him.

First, I underline, and certainly welcome, the simplicity and lack of ambiguity in the new scheme. It will reduce to an absolute minimum the administrative cost and the bureaucratic burden on both the House and Members. I should point out that IPSA, which is tormenting MPs with its arrogance, insensitivity and pettiness, is costing £10,000 per MP per year to administer. It must be one of the most expensive payroll systems in the world. Newly-elected MPs are already expressing their resentment and irritation with it. It may well deter those who might otherwise consider becoming MPs in the future unless they are either independently wealthy or have a very low earning capacity in the outside world. I hope we never allow IPSA anywhere near the House of Lords.

Secondly, the new system may be rough and ready. It is not able and not intended to deal with individual circumstances: that would be the way which leads both to scandal and to IPSA. Some of us who live outside London will lose out, but so be it. On balance it is sensible, economical, transparent and fair.

Thirdly, to those who suggested the allowance should be taxable, I point out, because this is how the tax system has always worked, that that would enable the wealthiest with plenty of outside resources to benefit by arranging with their accountants, and through dialogues with inspectors of taxes, for their expenditure to offset the allowance under the appropriate tax codes.

Fourthly, to those who still believe that the allowance should be subject to receipts, I point out, as I did in my evidence to Cockburn, that a system based on actuals, as used in the business world, depends on three steps: first, checking the expenditure was made; secondly, ensuring that it was necessarily and exclusively related to the business function performed; and, thirdly, that the level of expenditure was appropriate to the status of the employee. These steps are the function in business of a line manager. We do not have line managers. To ask officials of the House of Lords to act as our line managers would be unreasonable, inappropriate and impractical.

Fifthly, the sums proposed—a maximum of £300 a day to cover all the cost of participating—are far from extreme. I believe that the public are much too sensible to compare this, for example, with the minimum wage. The maximum amount that one could receive would be £45,000 a year, but, on the basis of the average number of days on which we sat during the previous five years, the average would be £43,500. Let us compare that with three other reasonably comparable fields—I am sure that colleagues will have lots of other examples that they could give. An MEP currently receives a salary of £78,000 a year, a daily allowance amounting to £39,000 for a 160-day year, a general expenditure allowance of £42,000 and allowance for parliamentary assistants of £193,000. That makes a total of £352,000 per MEP, of which only the salary element is taxable. In addition, MEPs receive pensions and medical costs.

Three hundred pounds a day would pay the standard fee charged by a medical consultant, an accountant or a solicitor for about one hour. The international rate for a keynote speech of the sort which many Members in the House are experienced in making has for many years been approximately $10,000, which is £6,500 or the equivalent of five weeks’ worth of the proposed attendance allowance in the House of Lords or two-and-a-half weeks’ worth at a 50 per cent tax rate.

Let us end this prolonged discussion of our financial support so that we can focus our time and efforts on the parliamentary role for which we are privileged to be here.

[Lord Soley]

I shall speak not just on the matters before us today but also the way in which we address them. We are doing a bit of what we have done in past—it happened in the House of Commons, too; that is, amending on the Floor of the House. It is that which gets us into so many difficulties. This problem started in the House of Commons some 40 or 50 years ago. It blew apart with the passage of the Freedom of Information Act. That Act affected us here far less, but it is very important.

We need to emphasise, first, that this House is cheap to run, as my noble friend on the Front Bench said, not just by British but also by international scales of comparison. We need to emphasise, secondly, that we are unsalaried and, thirdly, that we do a very important job. We are part of the democratic system of which we should all be proud. That is why I have been so acutely concerned during the past few years by the disgrace brought on politicians by the collapse of a system which none of us could justify. Is today’s solution an absolutely good one? Of course it is not. Is it absolutely fair? Of course it is not. However, we need to look at it as part of a process, which is what I said when I last spoke on this matter. My concern is that if we go on doing what we have been doing, either in the House of Commons or here, and try to amend our income system on the Floor of the House after one report here and another there, we will continue to make mistakes.

For the past four or five years, I have argued against defining “first home” or “second home”, mainly because, in the British system of doing it, you invariably run into traps and dangers which you had not envisaged. I do not attempt to justify what David Laws said, but I ask what on earth we are doing in creating a system where it is legitimate and proper for the press or anyone else in public to ask, “Who are you living with? What is your relationship with them?”. We should not go down that road.

My noble friend Lord Tomlinson explained in a very good speech the problem of geography. I am with him on the principle, but make the point that an awful lot of people make the mistake of believing that we should say “London”—I notice how often “London” comes up. The reality is that you can get to most of the cities around London—Oxford, Reading, Chelmsford and so on—more cheaply and very often more quickly than you can get to the outer reaches of London. So that is not fair either. If you want to go to Oxford you can slip down the road to Victoria and catch a bus every 20 minutes, any time of the day or night, for £8.

IPSA in another place has suggested—I know that IPSA is not popular and I will come back to that in a second—that there needs to be another geographical way of measuring this. I am not convinced that geography is the best way of determining the question of how, as a couple of my noble friends have pointed out, we ensure that those people who come the furthest distance are given sufficient support to continue doing that.

That brings me back to the problem of how we define this. I know that IPSA is not popular. I know that from talking to colleagues on all sides of the House of Commons and from common sense. I have spent some time talking to Sir Ian Kennedy. He also knows that it is not popular. We need a system that enables us to address these problems over a period of time, getting it all right without having to have an occasional report, which we then present to the House and amend on the Floor, and then wonder why it goes wrong. I understand the feeling about IPSA and my guess is that, in the long run, it will get there but it is painful while it is learning not to make mistakes any more. If we are not to have IPSA I suggest that we need a committee of the House to look at all the anomalies and unfairnesses and address them as we go along—not in one grand slam every now and then. We need to do that on an annual or biannual basis.

Many other Parliaments have these problems. It will be a great comfort to my noble friend Lord Tomlinson to know that, when the Germans tried to pass their system over to an independent body for adjudication, the German constitutional court overruled them and said, “You can’t do that because the position of representatives, elected or otherwise, is too critical to the constitution to have another body decide it”. That is a great addition to the armoury of my noble friend sitting next to me. However, if we are not going to go down that route we need to find a better way than to amend reports on the Floor of the House because that is where it goes wrong. I have watched this happen in the House of Commons on a number of occasions.

We all had legitimate gripes about that system. It was a bad system in many ways. It often did not compensate Members in the way that they needed to be compensated for the work that they do, and exactly the same applies here. People talk about distance being unfair. I have raised the issue before that if you have a business such as a lawyer’s office or you are in academia or whatever, that gives you the administrative backup that you need so you may not need to employ a full-time person as others of us do. That is not fair either. These are complex issues that do not get sorted out on the Floor of the House in a big-bang solution every now and then.

What we are being offered today is a way of dealing with our immediate problems in a way that does not tie us up in this incredibly difficult business of defining a first or second home. We should remember that a number of noble Lords have already said that they would end up spending more time away from their primary home—which nobody questions is their primary home—because they are doing other things as well or have family commitments. Therefore, according to the rules that we have practised just recently, they would not be eligible to claim. In at least one case I know that a noble Lord has stopped claiming. There is no nice simple option. What we have today as the leaders of the Conservatives, Labour and the Cross Benches have said, is a straightforward system that is pretty robust and which we can use, but I ask the House to consider how we do this in future.

There has been a lot of talk about the media. It has to be said that the media did what they should do in exposing some of the abuses in the House of Commons and here. But—and it is an important but—the majority of MPs and certainly the majority of noble Lords in this House behaved perfectly well. There was a danger last year in my judgment that the media would inflict acute damage to the concept of democracy and to our democratic institutions. If you create a situation in which politicians are regarded with contempt—and they are never going to be wildly popular or the most popular people around—you create dangers. Curiously enough, it is that House down there and this House here that actually defend the freedoms that the media put into effect, and it would be quite good if every now and then the media remembered that. In the past 12 months, I wrote three articles on why we needed to change the existing system—one for the Sunday Times, one for the Daily Telegraph and one for the Times. None of them published them, and one of them actually said that it did not want to publish my article because it did not agree with it! Yet it is very largely what we are doing today. I noticed in the Times today a very supportive editorial for what the Government are doing today.

We should all start getting proud again of the constitution of which we are all part. We should all stand up and defend it and recognise that what happened was largely our fault because we did not change the system, but also recognise that we need some form of procedure that enables us to deal with these matters, not in some occasional debate of this type or by constantly trying to change it on the Floor of the House, but in a rather more sophisticated way. If it is not to be IPSA—and that jury is still out, as we wait to see how it deals with its current problem—we have to devise our own, because otherwise we will continue to get into problems and have to make amendments as we are doing on the Floor of the House today. If we had a trade union and a business negotiating on how you paid people and compensated people, everyone in the trade union and business would think that you had gone stark, staring mad—but we are doing it.