Parliamentary Standards Act 2009

Nick Raynsford Excerpts

Thursday 15th December 2011 Commons Chamber

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

As almost all of us are recipients of expenses, I assume that it is appropriate to make a declaration of interest at the outset.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

You make a profit, do you?

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[Mr Raynsford]

I assure my hon. Friend that I do not make a profit.

I thank the hon. Member for Windsor (Adam Afriyie) not only for his introductory remarks, which have given a good and fair outline of the Committee’s report, but for all his work, not just as Chair of the Committee but prior to its establishment, in ensuring that this important issue is looked at in a clear and dispassionate way. I believe that, under his chairmanship, the Committee achieved that objective. It looked carefully, rigorously and dispassionately at the evidence and has come forward with recommendations that I believe are sound and sensible and should be taken up.

However, a few key messages need emphasising. The first is that, contrary to what has been suggested by some commentators, who have rushed into print to condemn the report, the Committee was adamant—no pun intended—in its support for the retention of independent regulation of MPs’ expenses. As the surveys conducted by the National Audit Office earlier this year and the Committee itself more recently have demonstrated, there is a very wide degree of support among MPs generally for the principle of independent regulation. Some 77% of MPs who responded to the latest survey agreed that independent regulation was important for restoring public confidence.

Having said that, the way in which the independent regulator has operated the system since May 2010 has been fraught with problems. Those problems provided a huge amount of evidence to the Committee in the course of its considerations. They are all documented in the report and its annexe. The process for making claims, considering them and paying expenses has proved slow and cumbersome. Many MPs have been left substantially out of pocket because of the time lag between expenditure and reimbursement. The system is far from cost-effective. As the hon. Member for Colchester (Bob Russell) highlighted, the NAO concluded last summer that 38% of claims at that time involved processing costs higher than the amount being claimed.

The system also imposes heavy burdens on MPs’ staff, thus diverting them away from their primary responsibility of looking after the interests of constituents. It also, of course, imposes burdens on MPs themselves. There is a great deal of evidence that MPs are not able to perform other functions because of the time that they have to spend on cumbersome bureaucratic processes. There is also evidence that MPs are deterred from making claims because of time-consuming and tortuous processes and the lack of clear advice from IPSA on what claims may be appropriate. There is also the fear of being subject to media and public criticism, either for claiming too much, or—paradoxically—for claiming too little; we all know of examples of minor items that Members feel would be held up to ridicule if a claim were seen to have been made for them.

Both the NAO report last summer and the Committee’s report, published now, demonstrate a very high level of dissatisfaction on the part of MPs about the working of the system as currently operated—not, I stress, about the concept of independent regulation, but about the system as it is currently operating.

[Sir Peter Bottomley]

On dissatisfaction, I should say that the public interest is illustrated in paragraph 80, page 27, which points out that the cost of IPSA is £6.4 million. If we allowed £400,000 for processing payroll, that would leave costs of £6 million for other expenses of £19.5 million. I cannot believe that the House would allow that to happen in any other part of the public sector.

[Mr Raynsford]

I was going to come to this point later, but I entirely concur with the hon. Gentleman's view that the system is cumbersome and slow, and is not cost-effective. It is costing the country a great deal more than is necessary for a safe, rigorous and transparent system for overseeing MPs’ expenses claims.

[Michael Connarty]

On whether the system, which is costing that amount of money, is effective, IPSA cannot process a direct debit. It cannot process a BACS payment. The Scottish Parliament, when I shared an office with an MSP, used to process direct debits and send me a bill for half because we did not have the capacity to do that either in the Fees Office or in IPSA. It seems that for £6 million we get a system that does not work.

[Mr Raynsford]

My hon. Friend makes a telling point and countless examples have been brought to those of us who served on the Committee of ways in which the current system imposes unreasonable costs and burdens and is inefficient. Our objective as a Committee was to come forward with proposals that would be practical and sensible and could be implemented to achieve a better system of independently regulated expenses. That is the nub of what the Committee is proposing. As the report emphasises, the improvement of the process should deliver savings in expenditure because the current system costs more than is required to run an independently regulated, transparent and cost-effective system. Indeed, as the Chair of the Committee made clear, it is hard to find examples anywhere else in the world of a system where the regulator is also the payment agency—where the two roles, administration and regulation, are combined. There are unfortunately inherent inefficiencies in the way in which that is being done, which need to be addressed to create a fair but also more cost-effective system.

Therefore, it is sad, but not entirely unpredictable, that much of the media reaction to the publication of the report and today’s debate is to interpret them as an attempt to turn the clock back to the bad old days. May I say openly, as an MP who has not been subject to personal criticism for his expense claims over the years, that I have no wish whatever to revert to the old system, which was open to abuse and has rightly been replaced by one of independent regulation? All MPs suffered reputational damage as a result of the exposure of the abuses that some perpetrated under the old system. The restoration of public confidence is vital and that is what should be at the forefront of our minds. That is why we must stick with a system of independent regulation, but it is also why we should not stay silent now about the failings of the administration of the existing system.

The worry is that, because MPs are naturally worried about reputational damage in a climate where some of the media have used this as an opportunity in the last day or two to raise lurid headlines of “Back to the bad old days”, and “Greedy MPs want more money”, genuine concerns about the inefficiencies and unsatisfactory features of the current system will not be addressed. MPs find it easier and safer not to put their heads above the parapet and risk being attacked by the media for supporting sensible recommendations that will improve the system.

[Alison Seabeck]

I also declare an interest. Does my right hon. Friend agree that the taxpayer will not thank us in the long term if we kick the issue into the long grass and allow the additional costs that IPSA is racking up in processing our claims to continue ad infinitum? Something does really need to be done.

[Mr Raynsford]

I agree wholeheartedly. We have a responsibility to speak out openly and properly about the failings of the existing system, while at the same time making clear our commitment to a framework of independently regulated expenses that guarantee transparency, probity and all the objectives that were rightly emphasised in the preparation of the 2009 legislation.

The report proposes exactly that. First, any fair-minded commentator reading the report will see that it clearly is not arguing for a return to the old discredited system of self-regulation; that is not anywhere in the report. It is utter nonsense for some media commentators to imply that that is the objective. Secondly, it is not a case of “greedy” MPs arguing for more money. As any fair-minded observer of the report will see, it focuses on ways in which savings can be made and argues that we should be operating a system that gives better value for money to the taxpayer. Indeed, as the report highlights, the criticisms have been overwhelmingly about the processes operated by IPSA, rather than the amounts of money involved. Thirdly, the report does not argue for flat-rate allowances, although it has been misrepresented as doing so. I will come back to that issue in a moment because it is controversial, but it is important to put on the record that it is not the Committee’s recommendation that there should be flat-rate allowances, other than those that already exist. There are flat-rate allowances in the existing system that apply to London MPs and those living in the area around outer London.

[Bob Russell]

I am sure the media have not deliberately gone out of their way to misrepresent the report and thus mislead readers. Does the right hon. Gentleman think that the TaxPayers Alliance had not read the report when it made its comments? Clearly, as has been pointed out, the report would not impose an additional cost on the public purse; in fact it talks about greater efficiency and saving money for the public purse. Perhaps those at the TaxPayers Alliance are the people who are at fault and not the national media.

[Mr Raynsford]

I note, but I cannot say I am persuaded by, the hon. Gentleman’s touching faith in the integrity and probity of journalists, not all of whose expense claims would survive the slightest degree of the scrutiny that they advocate in the case of MPs. However, I agree that there are some forces outside this place that are only too keen to rush to judgment. They do not make a proper considered appraisal of the evidence in the report, or weigh up the merits and arguments and debate those rationally, but rush into caricature and vitriolic attacks on MPs because they have an agenda, which I do not wish to elaborate on further today.

The report proposes, first, separation of the regulation of the expenses system, which should remain in independent hands, from the administration, which as we have heard repeatedly and saw in the evidence submitted to the Committee, could be handled in a far more cost-effective way. The report does not propose a return to the Fees Office but it does suggest having a cost-effective administrative body appointed to run the process of handling claims and making payments, subject to the independent regulator's overall remit. That kind of structure applies almost universally in comparable organisations. It does not require a return to administration in this House. It could be done entirely independently. The case for separating the regulatory function from the administrative function was made forcefully by a large number of extremely experienced people who gave evidence to our Committee, many of whom said that the present arrangement was indefensible and not cost-effective.

Secondly, the report recommends the extension of direct payments to cut down on bureaucracy and costs without any risk of MPs gaining a financial advantage. That must be common sense. The report also proposes more extensive central procurement of equipment and supplies to save public money—again, a recommendation that should command widespread support. It proposes the annual publication of claims, backed up by receipts that have been redacted to remove personal details. That of course goes far further than the current system, which does not involve the publication of receipts, so the suggestion that we are trying to get away from transparency in making that recommendation is curious.

The framework proposed in the report would be more transparent than the current arrangements. At the same time, it would reduce the scope for potentially misleading indications of MPs’ expenses, which is the product of bi-monthly publication. That can result in some MPs who have particular surges, peaks or troughs in expenditure looking as though, in any one set of published figures, they are spending much more than their neighbours. Therefore, a simple, more accurate and fully transparent annualised publication system, together with a move towards real-time publication, as is proposed, must make sense.

The report recommends strongly the clear separation of expenses, which are items such as travel, subsistence and accommodation costs, from office expenditure. The hon. Member for Colchester (Bob Russell) and many others have made the point that such expenditure, bizarrely and uniquely to Members of Parliament, is treated as an expense. Where else would the costs necessary to carry out one’s job, such as for one’s desk, staff, office supplies, printers and so forth, be treated as an expense? Those are not, in normal parlance, an expense, but necessary costs of carrying out our functions. They should be identified separately so that we no longer see the highly misleading figures that are produced by some journalists to imply that MPs benefit from expenses of £120,000 a year, when that is a reflection of the costs of running their office and of their staffing. Those costs should not be subsumed by, or confused with, expenses.

[Mr Winnick]

Like the hon. Member for Colchester (Bob Russell), I intervened when the Chair of the Select Committee was speaking. What is IPSA’s response to that point? Does it accept that it is farcical to describe staff salaries and office accommodation as expenses?

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[Mr Raynsford]

If my hon. Friend reads the transcripts of the evidence, he will see that the Committee took evidence from Sir Ian Kennedy in two sessions. He will have to draw his own conclusions from the views set forward by Sir Ian Kennedy. I have to say that we did not feel that there was a meeting of minds that would suggest the likelihood of a smooth and easy transition from the current arrangements to ones that would work properly and effectively, and in a way that guaranteed the public confidence in Parliament that we all want to see.

The report recommends the establishment of a liaison group between IPSA and representatives of MPs’ staff. I found it extraordinary that no such group exists, but that probably explains why IPSA, in some of its evidence to us and in some of its responses to MPs, appears to be surprisingly ignorant of the practical implications for the staff in this place of operating the systems that it has set up. The establishment of a liaison framework between IPSA and MPs’ staff, who do the bulk of the work in making claims and processing applications, is surely commonsensical and ought to be done.

I cannot see how the many pragmatic and sensible reform proposals in the report merit the intemperate language that has been heaped on them by some media commentators. However, let me in conclusion focus on two recommendations that might appear to be more controversial. The first is the proposal to amend the legislation to make it clear that the independent regulator should, in line with the recommendation of the Committee on Standards in Public Life,

“support MPs efficiently, cost-effectively and transparently in carrying out their parliamentary functions”.

The way in which that recommendation was transposed into legislation allowed a loss of clarity.

[Adam Afriyie]

It struck us in the evidence sessions that even the chairman of IPSA acknowledged that he did not quite have the mandate to justify supporting MPs in the way that he wanted, because the legislation says that he must “have regard to” the principle of supporting MPs cost-effectively and efficiently, rather than it being a primary duty. It is clear from all the observations and evidence that there can be no other primary duty for such a body than to support MPs cost-effectively and efficiently in doing the duties that their constituents expect.

[Mr Raynsford]

I agree very much with the hon. Gentleman. It is clear from the evidence that there is a lack of clarity in the legislation, and that needs to be resolved. It cannot be satisfactory for the chairman of IPSA to talk in fairly broad terms about balancing a number of different considerations, some of which are in legislation and some of which are not. That gives no clarity about what the role and responsibility of the independent regulator should be.

There is a persuasive case for making this change. This is not MPs arguing for support, which some journalists have interpreted it to be. It is not us saying that we need customer care, as has been suggested. This is about clarity in the role of IPSA and in the balance that needs to be struck in its work between ensuring that MPs have the support necessary to carry out their functions properly, in a cost-effective and transparent way, and ensuring that all the other objectives that we want are satisfied. The lack of clarity needs to go. The arguments are set out very persuasively in paragraphs 8 to 13 of the report, and I commend them to right hon. and hon. Members.

The second recommendation that might be seen as controversial is in respect of flat-rate allowances. The first thing that I should say is that it is sometimes ignored that there are existing flat-rate allowances. As a London Member, I obviously receive one such allowance. Members from outer London and the immediate surrounding areas are also eligible for an additional allowance. Those elements exist at the moment.

It was put to the Committee that there might be a case for extending that principle of allowances to cut out much of the considerable cost involved in checking and processing individual claims for travel and accommodation costs. I can see an argument for that, but I am not wholly persuaded that it should be done. I do believe, and I think that the Committee believes, that it is right for the idea to be evaluated independently. That is why the recommendation in the report states clearly that there should be an independent evaluation of it.

[Cathy Jamieson]

Like my right hon. Friend and as a member of the Committee, I was not persuaded that we should move to that system. However, does he agree that if it is not evaluated and analysed independently, we will continue to have these arguments and the debate will continue in the media? We therefore need to consider it in more detail.

[Mr Raynsford]

My hon. Friend makes a very persuasive point. I hope that all Members, including those who are nervous about possible media criticism of any steps that we take in this matter, accept that there is a world of difference between a recommendation to introduce such a fairly fundamental change to the way in which expenses are paid and a recommendation that the likely costs, benefits and adverse consequences of it should be evaluated independently. That is the nub of the Committee’s recommendation.

I accept entirely the point made by the hon. Member for Windsor that there might be ambivalence about the recommendation that the House should have an opportunity to debate this matter. The point has been made forcefully that whatever the House decides, it will be for IPSA, ultimately, to determine whether any such recommendations should be supported. That, to my mind, means that the motion is acceptable. I would prefer it to the amendment, which has the whiff of the long grass about it. I am only sorry that a member of the Committee who signed up to the report as written and as presented to the House has moved an amendment that goes in a slightly different direction. I believe that the report stands. I accept entirely the ambiguity in the role of the decision by the House. I support very much the hon. Member for Windsor in his view that the House should consider the recommendation, but that ultimately it will be for IPSA to determine whether it should be applied as the basis for an expenses scheme.

In conclusion, I believe that this is a sensible, pragmatic and important report that deserves serious consideration. It should not either proceed to the long grass or continue to be the subject of vilification from certain quarters where it is seen as simply a rerun of the debates of two or three years ago, when completely unacceptable malpractice under the old system was exposed. That has passed, and we are in a different era. The principle of independent regulation is accepted and the new system is in place. It is not working as well as it should, for reasons that have been outlined, and it is right that we should be serious about finding ways of improving it. We need to ensure that we have a system for MPs to be able to carry out their functions, responsibilities and duties in a proper way and to be reimbursed for expenditure that they have of necessity to incur to perform those duties.

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[Mr Harper]

No, IPSA has not considered the report. IPSA has said that it will consider the Committee’s recommendations, as it considers the annual review of the scheme. As I have said, the Government have had to consider the report because the House is being invited today to decide whether to approve it. I simply said at the beginning of my remarks that the Government would have welcomed having had more than three days in which to do so, and that would have done justice to the report. Many Members said that they wanted a careful and thoughtful review, so I am gently suggesting that giving the Government three days was perhaps not entirely helpful in achieving that objective.

The Government’s interest in IPSA concerns equipping it with its statutory framework. IPSA is accountable to the House and the Speaker’s Committee, which was set up under the Parliamentary Standards Act 2009. The Government are primarily concerned about recommendations 2 and 3, which are for the Government. I will say something about recommendation 17, which deals with the decision that the House would be invited to take.

Recommendation 2—the right hon. Member for Greenwich and Woolwich addressed this point—states:

“The Act should be amended in accordance with the Committee on Standards in Public Life’s recommendation to provide that IPSA’s primary duty is ‘to support MPs efficiently, cost-effectively and transparently in carrying out their parliamentary functions.’ It would continue to be IPSA’s role to determine what assistance for MPs was necessary.”

It seems that there are two schools of thought about what that recommendation means. It is either a modest change that is meant to correct the emphasis of the legislation—

[Mr Raynsford]

indicated assent.

[Mr Harper]

I see the right hon. Gentleman nodding to that. Or it is a substantial change that would alter significantly the way in which IPSA functions.

If it is a modest change, it is unnecessary and would have no practical implication. Hon. Members will be aware that one amendment made to the Parliamentary Standards Act 2009 by the Constitutional Reform and Governance Act 2010 was the insertion of section 3A. That section sets out the general duties of IPSA, which are twofold. One is that IPSA must, in carrying out its functions, have regard to the principle that it should act in a way that is efficient, cost-effective and transparent, when it is running its systems and setting them up. The second duty is that in carrying out its functions, IPSA must have regard to the principle that Members of the House of Commons should be supported in carrying out their parliamentary functions efficiently, cost-effectively and transparently. Although the duty to have regard to the principle that we should be supported to do our jobs comes second in order, it is none the less just as much a legal duty as the first; it is not an optional extra that IPSA can put to one side. That is why the change of emphasis would be unnecessary and would simply have no practical effect in how it operates.

[Mr Raynsford]

Does the Minister accept the point that is articulated in paragraphs 8 to 13 of the report? There is ambiguity, which was reflected in Sir Ian Kennedy’s response in trying to define the primary principles that should guide IPSA. That lack of clarity is not helpful. There is a need for a change. I am talking not about fundamental changes in the principles, but about a clarification, so that there is no longer any ambiguity.

[Mr Harper]

That was a helpful intervention. Let me pick it up as I move on to my second thought on this matter. If recommendation 2 is going to make a significant difference, and is not a modest change, it is misplaced. IPSA has a number of objectives that must be balanced. The Committee recognises that itself. Paragraph 97 of the report states:

“Restoring public confidence in MPs and Parliament was the fundamental purpose of the 2009 Act and the establishment of IPSA. It was so basic that it did not need to be explicitly referred to in the legislation.”

It is quite clear that IPSA has a number of things that it is trying to achieve. Yes, it wants to support Members of Parliament to do their jobs efficiently, cost-effectively and transparently. Indeed, it has a legal duty to do so. It is also interested in both restoring—there is some evidence that there has been progress in that direction—and maintaining public confidence in MPs—[Interruption.] A comment has been made from a sedentary position. I am not going to repeat it for the benefit of the House. I am afraid that I am simply reading out what the Committee said in its report. Let me repeat paragraph 97 for the hon. Member for Colchester (Bob Russell):

““Restoring public confidence in MPs and Parliament was the fundamental purpose of the 2009 Act and the establishment of IPSA. It was so basic that it did not need to be explicitly referred to in the legislation.”

Those are not my words—

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[Mr Harper]

The Committee has done an excellent job in putting together what I acknowledge to be some very good recommendations, and I hope that the House will send those recommendations to IPSA. IPSA has said that it will look at them, and that is absolutely fine. However, we must accept that, if IPSA is indeed independent, and if it considers those recommendations and decides not to implement them, we must live with its decision. It seems to me that if we say, as the report says in paragraph 204, that if it does not implement them by next April we will pass primary legislation to make it do so, we shall no longer have an independent regulator for our expenses system. I think that I speak not just for the Government but for most Members when I say that we cannot start telling IPSA what to do.

[Mr Raynsford]

I thank the Minister for giving way again. He is being very generous. May I return him to the question that I asked earlier about the lack of clarity? When giving evidence to the Committee, Sir Ian Kennedy was asked to define the basic principles that guided IPSA. He was reminded that some were contained in legislation, and that some nine or 10 others were listed in a document that he had submitted. He gave us the slightly odd response that all of them were fundamental, which—as I pointed out to him—implied a lack of clarity in regard to what really were the fundamental principles. Will the Minister please accept that, given that the recommendation of the Committee on Standards in Public Life was not transcribed into legislation in precisely those terms, there is genuine uncertainty about what should be IPSA’s dominant objectives?

[Mr Harper]

I hear what the right hon. Gentleman says, but I have made it clear that IPSA has a legal duty to carry out its work and to ensure that we are “efficiently, cost-effectively and transparently” supported in the carrying out of our functions. However, IPSA must balance that duty with a range of other duties, one of which is restoring and maintaining public confidence. It will not be possible for it to have a sole objective.