House of Lords: Allowances

Lord Strathclyde Excerpts

Tuesday 20th July 2010 Lords Chamber

Moved By

[Lord Strathclyde]

House of Lords Allowance

That—

1.– (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 allowance in respect of each day of attendance on or after 1 October 2010.

(2) “Attendance” means attendance—

(a) at a sitting of this House or a Committee of this House, or

(b) on such other Parliamentary business as may be determined by the House Committee.

(3) The amount of the allowance payable to a Member in respect of a day of attendance should be—

(a) £300, or

(b) if paragraph (4) applies, £150.

(4) This paragraph applies if—

(a) the attendance in question is away from Westminster, or

(b) the attendance is at Westminster but the Member elects that this paragraph should apply.

2.– (1) Accordingly, the following provisions should not apply in relation to expenses incurred on or after 1 October 2010—

(a) paragraph (1)(d) of the Resolution of 22nd July 1980 (office costs allowance),

(b) paragraph (1) of the Resolution of 25th July 1991 (day and night subsistence), and

(c) paragraph 4 of the Resolution of 10th November 2004 (overnight subsistence on visits away from the House).

(2) The limit on the expenses incurred from 1 August 2010 to 30 September 2010 which a Member of this House may recover under paragraph (1)(d) of the Resolution of 22nd July 1980 (office costs allowance) should be the amount obtained by multiplying—

(a) the number of days in that period specified by the Member, subject to a maximum of 40 days, and

(b) the appropriate amount for expenses incurred in that period (calculated in accordance with paragraph (3)(b) of the Resolution of 20th July 1994).

[The Chancellor of the Duchy of Lancaster (Lord Strathclyde)]

My Lords, on 28 June, I made a Statement in this House on the merits of a new proposal for the remuneration of Peers. Today, I introduce two resolutions that will put the essence of that Statement into effect.

These resolutions will have an impact on all Peers and, while I welcome any interventions that Peers may wish to make during the course of my speech, I hope that noble Lords will intervene only if any clarification is required because my opening remarks will, I hope, lay out the ground and I will pick up queries when I wind up at the end of this afternoon's debate. I echo my noble friend the Chief Whip: there will be an opportunity for all Peers who wish to take part to do so.

We have before us today a final set of proposals for a new system of financial support for Members which, if approved, will come into effect on 1 October this year. This is not a new subject. The discredited parliamentary expenses regime is one that has caused this House much difficulty in the past, but today we have the opportunity to put that behind us and approve a new scheme that is direct, transparent and accountable, a scheme that is simple and not open to abuse, a scheme that will lay to rest the risk of the scandal of claims for so-called second homes that so damaged the House, a scheme that is fair in treating all Members alike.

When I made a Statement to the House, putting forward the outline of a radical new scheme for one single allowance to be paid on the basis of attendance on each sitting day, a number of comments were made on it. That proposal has now been considered by the House Committee, which brought its wisdom to bear and, as noble Lords would expect, has refined the proposal. The result is a sensible and workable scheme, which I have no hesitation in supporting today.

The scheme is set before your Lordships’ House today in the form of two resolutions in my name, and the Motion to approve the House Committee report in the name of the noble Lord, Lord Brabazon of Tara, Chairman of Committees. It may be helpful if I set out some of the detail of the proposals contained in the Motions on the Order Paper. I will do so partly on behalf of the noble Lord, Lord Brabazon of Tara, who will speak towards the end of the debate and, in doing so, will be able to respond to any questions Members raise about the details of the House Committee proposals.

The central element of my original proposal remains a single daily allowance paid on the basis of attendance on any sitting day. The allowance will be set at £300. This can be claimed if a Member has attended the House or a Committee of the House. Next, the reduced rate of £150 also remains a central part of the proposal. Paragraphs 3 and 4 of the resolution set out the circumstances in which a Member may claim the reduced rate. First, for attendances at Westminster, at a sitting of the House or a Committee of the House, any Member may elect, on a monthly basis, to claim the reduced rate,

“where they consider it appropriate”.

I am aware that the question of when a Member might claim this reduced rate was an issue of concern to some. As the House Committee report states at paragraph 6:

“It is difficult to arrive at specific criteria for measurement of a Member’s contribution to the work of the House”.

It will therefore be a matter for Members to judge their own circumstances in deciding whether it is appropriate to claim the full or reduced rate. Secondly, the reduced rate applies if the attendance on any day is on authorised business away from Westminster. Members attending such business will already be in receipt of reimbursement for the costs of accommodation, food and transport. These two categories of authorised business for which the reduced rate applies are the same as those for which Members may claim financial support under the current system. They are travel on official Select Committee business or on parliamentary delegations to certain interparliamentary assemblies; and travel in connection with certain authorised business such as CPA and IPU.

The new scheme, if approved, will come into effect on 1 October. Up to that point, the current scheme continues to have effect. In respect of the additional office costs allowance, the resolution makes it clear that Members may continue to recover office costs up to a maximum 40 days per year while the House is not sitting. This will apply for the period from 1 August to 30 September. The House Committee decided that this provided a degree of certainty to those Members who employ staff and who may otherwise be affected by the scheme agreed today. I have accepted that advice.

When I made my Statement to the House in June, several noble Lords raised the question of whether the new allowance would or should be taxable. Tax is not paid on the current expenses system on the basis that membership of the House is neither an employment nor an office. Any change to this position would require primary legislation and reconsideration of the level—£300—at which the attendance allowance is set. The Government currently have no plans to legislate to change the tax status of the scheme that is on the table today. If and when there is full reform of the House, the whole basis of financial support would need to be reviewed.

The issue of travel expenses is properly House Committee territory, but it may be helpful if I set out, on behalf of the noble Lord, Lord Brabazon of Tara, the recommendations on travel made by the committee. In line with the SSRB and the Wakeham group reports, the committee recommended that car parking and road tolls should be treated as “permissible travelling expenses” but that Members should not be able to claim for the London congestion charge. Provision for this is made in the text of my second resolution. Also in line with the SSRB and the Wakeham group reports, the committee recommended that, where Members do not make use of the House of Lords travel credit card, travel expenses should be reimbursed only on the basis of receipts or tickets. Equally in line with those reports, the committee recommended that claims for vehicle mileage must be accompanied by details of the individual journey and that only one claim per journey per vehicle can be made. The committee recommended that only those Members who live outside Greater London may claim reimbursement for travel expenses to and from Westminster.

The committee made a number of recommendations on the class of travel for Members and for Members’ spouses, civil partners and dependants. Members may be reimbursed for train travel up to the cost of a standard open ticket, whatever class they ultimately choose to travel. The committee recommended that the same rules should apply in respect of travel by Members’ spouses, civil partners and dependants.

[Lord Faulkner of Worcester]

This is a quick question. Does the description,

“ceiling cost of a standard … open ticket”,

apply after the application of a senior citizen discount or any other discount card that Members may hold or does it apply only to the standard open ticket?

[Lord Strathclyde]

My Lords, the standard open ticket is the price ceiling on which all claims will be judged.

That neatly brings me towards the end of my words. The committee recommended that the new arrangements be put in place for the duration of the present Parliament. I fully support that approach.

This has been a long and at times difficult journey to reform the discredited expenses regime, but it is a journey that is coming to an end. I hope that today the House will approve the Motions before it so that the reforms can be made and, when the House returns in October, we can start afresh under a simpler, more transparent allowance scheme that can command public confidence. I commend the scheme and I beg to move.

[Lord Stoddart of Swindon]

Before the noble Lord sits down, will he say what the position is with regard to travel by standard class? If Members are travelling with officials who are entitled to first-class travel, will the officials be able to travel first class while Members of this House and Members of the House of Commons have to sit at the back?

[Lord Strathclyde]

My Lords, the situation that the noble Lord, Lord Stoddart of Swindon, suggests will never arise.

[Baroness Royall of Blaisdon]

My Lords, I strongly support the Government’s resolutions and the House Committee’s report. The House Committee report puts forward changes to the system of financial support for Members of your Lordships’ House, based on proposals from the Leader of the House. The report rightly describes them as important changes. I agree with these proposed changes. I also agree that the changes proposed by the ad hoc group set up by your Lordships’ House and chaired by the noble Lord, Lord Wakeham, form a marked move away from the current system of financial support for Members of this House.

The report of the ad hoc group sets out in some detail how we have got to this point. The background to the issues is also summarised in the report from the House Committee, so there is no need for me to repeat that history. This has been a long and complicated matter, and I add my thanks to all those involved who have worked so hard to get to the point where what is on the Order Paper today is, I believe, the right way forward.

First and foremost, I thank the noble Lord, Lord Wakeham, and all the other Members of the House who served on the ad hoc group that was appointed by the House to examine these issues in the wake of the report from the Senior Salaries Review Body.

I also pay tribute to the Leader of the House for the decisive action that he has taken in bringing forward the alternative proposal, set out in the Wakeham report, that forms the resolution and the report before the House today. I know from my time as Leader of the House, and in Government, that these are very difficult issues to address, and I believe that the noble Lord has performed a considerable service for this House and its Members in bringing forward the proposals that are before us today.

In considering these proposals, we need to bear in mind two fundamental points: the nature of this House, and its cost. On the first point, I can do no better than to quote from the introduction to the report of the ad hoc group:

“Membership of this House is not an office nor is it an employment. From their appointment to the House, Members are unsalaried volunteers and they offer their experience, time and commitment freely because of a strong sense of duty and public service. The fact that the House of Lords is an unsalaried House is fundamental to its nature and character; to how and what it does as a House, and to the issue of financial support to enable Members to carry out their Parliamentary duties and to discharge their Parliamentary responsibilities”.

That is exactly right.

The second point concerns the cost of this House. The ad hoc group says that the cost of your Lordships’ House is “relatively low”. Again, that is exactly right. The report points out that not only are the total costs of this House currently less than one-third of the costs of the House of Commons but the cost of the current expenses scheme for Members of this House is, at around £19 million, just 15 per cent of the running costs of this House and a fraction of the comparable cost of £150 million in the Commons. An unsalaried House, a low-cost House—that is where we are.

We all accept that we are in a time of considerable economic difficulty. We may well—indeed, we do—have serious political disagreements with the coalition Government about how best to resolve these matters, but all sides accept that we are in straitened economic times. I welcome, therefore, the efforts made by the SSRB, the Wakeham group and the Leader of the House to reform the old system of expenses in your Lordships’ House, which, as the ad hoc group says,

“grew up in piecemeal fashion over time”,

while keeping costs under control.

Both the full debate in the Chamber on 14 December last year and the responses of Members detailed in the ad hoc group’s report made it clear that many Members of your Lordships’ House had real reservations about the SSRB’s proposals. Many believed that what the SSRB proposed was unnecessarily complicated, cumbersome and bureaucratic. The Wakeham group sought to deal with those issues, but at the same time recognised that the context for them had changed—first, because of the proposals made in March this year by the Independent Parliamentary Standards Authority for changes to the system of allowances in the House of Commons, and secondly because of the changed political context following the outcome of the general election, particularly the proposals from the coalition Government for further reform of your Lordships’ House.

Accordingly, the ad hoc group recognised that the emergence of an alternative proposal would be worth consideration, reducing the level of support currently set aside for overnight accommodation and combining it with the daily allowance as a single allowance claimable by all Members. That is the essence of the proposal before us today in the report from the House Committee and in the Motion from the Leader of the House. As the ad hoc group itself says:

“If this change were to be made, it would be simple, easy to implement, easy to administer and easy to explain to the public”.

I agree.

I am of course aware that not everyone in the House agrees, including on my own Benches. I know that there are real concerns about equity, about the impact on Members travelling to attend the House from far distances and about other points. I understand those concerns; I respect those who feel them, and who either have voiced them to me privately or within our political group or may voice them in the Chamber today. But no system of financial support is perfect. All systems of financial support have to strike a balance between comprehensiveness and simplicity. I believe that the package in front of the House gets that balance right.

--- Later in debate ---

I close by saying that, as indicated in the report, the committee agreed with the Leader of the House that the scheme should be put in place for the lifetime of the present Parliament and not be subject to a review in one year or three years’ time. However, as has been said, that does not mean that every detail set out in the report is set in stone for all time. If any of the new elements of the scheme cause problems for individual Members—the sort of problems that the noble Lord, Lord Sewel, raised—the House Committee will of course consider them in the future. I hope that, when it comes to it, noble Lords will support the Motion standing in my name.

[Lord Strathclyde]

My Lords, this has been an interesting and lively debate in which many noble Lords have participated, and in which a considerable number of other Members have listened carefully to what has been said. The noble Lord, Lord Brabazon of Tara, has already responded with his customary dexterity to those issues that fall within the remit of the House Committee, and I would not seek to add anything other than my full support to his response.

It falls to me to respond to noble Lords who raised issues about the proposed scheme and the provisions in the two resolutions on the Order Paper. I begin by thanking the noble Baroness, Lady Royall of Blaisdon, for her handsome tribute to me. The House needs to understand that none of this would have been possible without a certain amount of co-operation, understanding and agreement among the usual channels, the Convenor of the Cross Benches and my noble friend Lord Wakeham and his group. Nothing has been simple about this. It required a great deal of thought and hard work. Many reports were commissioned and it took a great deal of time to bring us to this moment. I am painfully aware that this scheme does not and will not suit everybody but in our combined judgment, it was the best we could possibly do to suit as many Peers as possible.

When the noble Baroness, Lady Royall, said that we searched for a balance and got it about right, that is the right approach. It may be that we got it completely wrong and that there will be a deleterious effect on the attendance of the House. Of course, we will have to come back to review it if such difficulties arise. The Convenor of the Cross Benches was particularly concerned about that.

A number of issues were raised by my noble friend Lord Dholakia and others on a range of detailed issues. In the end, two speeches cast a substantially more cautious note about the direction in which we are going. The first was by the noble Lord, Lord Tomlinson, and the second was by the noble Lord, Lord Sewel. I understand where they are coming from although I had difficulties following entirely the thought processes of the noble Lord, Lord Tomlinson, and what alternative he was suggesting. While he was speaking I read again the words in the Wakeham report. To me it is clear. Paragraph 5.57 states:

“Since the publication of the SSRB’S report, and the appointment of this group, two key developments have taken place which we believe should cause those tasked with putting forward a new scheme to consider whether an alternative approach to that set out in this report … should be put forward”.

Paragraph 5.58 states:

“The first development was the publication of IPSA’s proposals for the House of Commons on 29 March 2010”,

and the second was,

“the new government’s proposals to reform the House of Lords in time for the next General Election”.

That was the clear signpost by the Wakeham committee to examine alternative proposals. Indeed Recommendation 17 states:

“We recommend that consideration might also be given to the case for putting in place a simplified allowance”.

I know that the noble Lord does not agree with that and we could spend a great deal of time on the process, but let us deal with the substance. I am indebted to the noble Baroness, Lady Symons, for what she said. She almost took the words from my mouth but put it rather better and more elegantly than I would have done. Equity can be viewed in different ways, but the flat-rate scheme that we are proposing—that I am proposing—today treats all noble Lords in exactly the same way. We recognise that Peers have to travel from afar through the travel arrangements. Under the scheme, the noble Lord, Lord Sewel, will be able to claim, for a four-day week, £1,200 per week. I know that that is not for every week, because sometimes the House does not sit, but it is a substantial amount of money. The noble Baroness, Lady Symons, described extremely well the differences between what was proposed by the SSRB and this proposal.

I have one unhappiness with what the noble Lord, Lord Tomlinson, said. That was his accusation that I had said that, broadly, this scheme would be cost-neutral and that he did not think that it would be. It is worth me explaining what I meant. The £300 is 11 per cent less than the current £335.50 maximum. It is 12 per cent less than the £340 maximum suggested by the SSRB. As my noble friend Lord Marlesford pointed out, it saves a considerable bureaucratic and administrative cost. My calculation was that if only 20 per cent of Peers claimed the £150 reduced fee, the scheme will cost no more than it currently does.

This time next year, we may or may not be in a position to make that judgment. Of course, it is still open to Peers to charge nothing at all. Extraordinarily—we should talk about this more—last year, 13 per cent of Peers attended the House of Lords, made their contribution and decided not to charge anything. They should be recognised for having done so.

It was about 40 years ago that the expenses scheme was brought in.

[Lord Tebbit]

I am sorry to interrupt my noble friend, but are his sums on the assumption of an unchanged number of Peers, or do they take into account the enormously increased number of Peers?

[Lord Strathclyde]

It is entirely typical of my noble friend to ask such an excellent question. My figures were, of course, on a like-for-like basis. He will recognise that phrase from his time in government.

[Lord Sewel]

I am very grateful to the noble Lord for giving way. Has he any calculation of the effect of moving from £161 a day to £300 a day for those who do not claim the overnight allowance?

[Lord Strathclyde]

No, my Lords, because I do not know how many of those who claim the £160 amount would claim the £300 amount, so I cannot help the noble Lord with that. It is my view that, on a like-for-like basis, it is broadly cost-neutral. The House is increasing in size, but was in any case, so it was going to cost more. I hope that we will get a worthy and worthwhile contribution from the new Members of this House who come here to play their part.

I was just saying that it is now 40 years since the original expenses scheme was introduced. I have no idea whether it will be another 40 years before we return to the issue. I know that it is the dream of the Deputy Prime Minister—and me—that long before that, we will have a fully reformed House, in which case there will be an entirely different regime.

The resolutions and Motions before us today will allow us to return in October to start afresh with a new scheme of financial assistance for Members. They allow us to put past indiscretions very much behind us. I believe that they will give us the confidence to look forward and concentrate fully on the excellent work that this House does in holding the Government to account. I very much hope that the House will now approve the resolutions before us.

Motion agreed.