11 Jul 2013

MPs awarded bumper 10 per cent pay boost

Backlash over MPs pay is expected as the independent authority that sets parliamentary salaries announces a bumper MP wage boost of more than £8,000.

The Independent Parliamentary Standards Authority (Ipsa) proposed a rise to £74,000 on Thursday, an increase of around 10 per cent – despite the fact that pay rises for all other public sector workers have been capped at 1 per cent.

Backlash is expected to the consultation document, and David Cameron, Ed Miliband and Nick Clegg have all urged restraint – and are likely to decline the pay increase.

However, there is nothing the three party leaders can do to stop the pay increases for other MPs. Doing so would involve changing the law – something that MPs who will benefit from the pay increase are unlikely to support.

The Independent Parliamentary Standards Authority (Ipsa) is expected to propose a rise to around £75,000 on Thursday, an increase of around 11 per cent – despte the fact that pay rises for all other public sector workers have been capped at 1 per cent.

Backlash is expected to the consultation document, and David Cameron, Ed Miliband and Nick Clegg have all urged restraint – and are likely to decline the pay increase.

However, there is nothing the three party leaders can do to stop the pay increases for other MPs. Doing so would involve changing the law – something that MPs who will benefit from the pay increase are unlikely to support.

The announcement comes as Ed Miliband and David Cameron do battle over how their parties are funded, and how MPs earn money. Mr Cameron ahs attacked Mr Miliband over union influence on the party, whilst Mr Miliband has said the Conservatives are controlled by a “few millionaires”. Mr Miliband has also called for a ban on MPs having second jobs – something that would hit Conservative MPs the hardest.

Tighter expenses

In total, the increase would add approximately £5.6m to the wage bill for MPs.

Ipsa is expected to try and offset the bumper pay boost, which will take place from 2015, with tighter rules governing expenses.

The £15 expenses available for dinner when the House of Commons sits later than 7:30pm will be scrapped, which would save hundreds of thousands of pounds a year. There could also be tighter rules on using taxis, and restrictions on claiming running costs for second homes such as contents insurance.

Our view is clear that any decision about MPs’ pay must reflect wider economic circumstances and what is happening in the rest of the public sector. Labour source

The “golden goodbye” resettlement grants of up to £65,000 that used to be handed to departing MPs will not be brought back. Instead, those defeated at an election could be entitled to redundancy similar to other public sector organisations.

Ipsa chairman Sir Ian Kennedy has admitted that the context of the 1 per cent public sector wage cap makes the job of reviewing MPs salaries more difficult, but warned if the issue was not dealt with it could lead to a repeat of the scandal over MPs expenses.

‘Wider economic circumstances’

A senior Labour source said: “Our view is clear that any decision about MPs’ pay must reflect wider economic circumstances and what is happening in the rest of the public sector.

“It must be consistent with what is happening to nurses, teachers and others in the public sector as well as conditions in the private sector.”

Tory backbencher Conor Burns said it was the “most imperfect” time for a pay rise. In a blog for the Spectator website he said: “All MPs who are doing their job to any percentage of excellence know that our constituents are feeling very concerned for the future.

“Any spare money they have is going into repairing domestic debt and yet with rising petrol prices, food costs and utility bills not that many have much spare money at all.

“So this week with the backdrop of Conservative tearing lumps out of Labour on cash and influence and Labour responding by attacking the Conservatives on funding from business we may see the independent body responsible for setting MPs pay recommend a £10,000 pay increase.

“Leaving aside for a moment whether it is warranted what exactly would this be saying to the public? Can we seriously on the one hand say that we need public sector pay restraint (the private sector is largely self-frozen), that we must all make sacrifices to repair the economy and reduce the deficit if at the same time we accept a large increase to our basic pay?”

The announcement comes as Ed Miliband and David Cameron do battle over how their parties are funded, and how MPs earn money. Mr Cameron has attacked Mr Miliband over union influence on the party, whilst Mr Miliband has said the Conservatives are controlled by a “few millionaires”. Mr Miliband has also called for a ban on MPs having second jobs – something that would hit Conservative MPs the hardest.

Tighter expenses

Sir Ian Kennedy, chairman of Ispa, said “The history of MPs’ pay and pensions is a catalogue of fixes, fudges and failures to act. The package we put forward today represents the end of the era of MPs’ remuneration being settled by MPs themselves.

This organisation Ipsa, it is a bit of a silly organisation anyway. And as far as I am concerned, pay rise – they can stick it. Michael Gove

“For the first time, an independent body will decide what MPs should receive. We will do so in full view, and after consultation with the public.” In total, the wage bill for MPs will go up approximately £5.5m.

The bullet points of the proposals are:

• a salary of £74,000 in 2015, indexed to average earnings in the whole economy thereafter.

• a new pension on a par with those in other parts of the public service.

• scrapping “resettlement payments” worth tens of thousands of pound per MP and introducing more modest, modern redundancy packages, available only to those who contest their seat and lose

• a tighter regime of business costs and expenses – ending the provision for things such £15 for evening meals.

The proposals will now be debated in a consultation that runs to October.

Our view is clear that any decision about MPs’ pay must reflect wider economic circumstances and what is happening in the rest of the public sector. Labour source

Ipsa chairman Sir Ian Kennedy has admitted that the context of the 1 per cent public sector wage cap makes the job of reviewing MPs salaries more difficult, but warned if the issue was not dealt with it could lead to a repeat of the scandal over MPs expenses.

‘Wider economic circumstances’

A senior Labour source said: “Our view is clear that any decision about MPs’ pay must reflect wider economic circumstances and what is happening in the rest of the public sector.

“It must be consistent with what is happening to nurses, teachers and others in the public sector as well as conditions in the private sector.”

Tory backbencher Conor Burns said it was the “most imperfect” time for a pay rise. In a blog for the Spectator website he said: “All MPs who are doing their job to any percentage of excellence know that our constituents are feeling very concerned for the future.