Myth Busting: Are UK MPs Underpaid? Are They Hell…

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The Independent Parliamentary Standards Authority (IPSA) has today called for the salary of Westminster MPs by £8,000, bringing the annual wage for a backbench MP to £74,000.  Much of the justification for this rise is based on a popular theory that MPs are not paid enough, but does this statement stand up to closer inspection?

What are MPs Paid?

The salary package for a member of parliament in the UK House of Commons consists not solely of the basic salary, but a wide range of allowances and expenses, pension and a particularly generous ‘exit package’. The figures below are taken from the House of Commons Library’s Members Pay and Expenses – Current Rates from April 2013 report. (click to enlarge)

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On top of this MPs are able to claim:

Subsistence (Overnight sitting): £25
Taxi Late Night Sitting: £80
Winding Up Expenditure: Winding up their offices (does not include redundancy payments) £56,450
Travel: Per mile Car (45p), Motorcycle (24p), Bicycle (20p)
Hotel Accommodation: £150 a night
     
Staffing Expenditure: £144,000
Constituency Office: £12,761
General Admin: £10,394
Office Costs (includes PERSONAL accountancy & tax advice, and alcoholic drinks): £25,350

These expenses have been notably exploited to maximum effect by our members of parliament.  It was discovered that after the 2010 election, 218 defeated MPs were able to claim £10.4m in Resettlement Payments from the public purse.  MPs can claim for their mortgages to be paid off, for their gardening, for redecorating their homes, for the insurances on their homes, and even for their TV installation and licenses.

The Expenses scandal revealed widespread abuse of the expenses and allowances scheme – one would expect a certain reigning in after this.  Quite the opposite, last year MP expense claims skyrocketed by 25% totalling £90m.

Our MPs are remunerated to the tune of at least £112,251 a year during their service, and entitled to enormous sums on leaving office.  The resettlement payments are made whether an MP is defeated at the ballot box or chooses to leave mid-term.  MPs claim this represents a redundancy payment.  However, an MP signs up to a five year term from the start, they are therefore not made redundant at all – rather they are simply at the end of a fixed term contract or resigning.  Why on earth should they be eligible to up to a year’s salary?

What Are Other MPs Paid?

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The basic pay of UK MPs is already higher than Spain (£44,618), France (£52,028) and Sweden (£53,376).  In fact, within Europe, only Germany (£72,294) and Italy pay their MPs higher salaries.

 What about the Second Job?

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MPs are also allowed to continue in other employment while serving as MPs, and many do just that to further increase their earnings.  MPs are highly sought after as consultants for firms seeking to maximise their influence in policy development.

Last year, MPs made more than £7m from second jobs. According to a report from The Guardian, compiled from MPs own filings:

“20 MPs made more money from their outside jobs than they did from their Parliamentary salary, with some spending more than 1,000 hours engaging in outside employment. Of those, 17 declared more than £100,000 in income…

In total, Conservative MPs declared more than £4.3m in earnings from outside directorships or jobs, versus £2.4m (including Gordon Brown’s £1.36m) for Labour. More than 50 MPs had directorships of at least one company, while 295 declared at least some kind of minimal earnings from outside work.”

This money has certainly had an influence on MP behaviour in the House of Commons. Here’s one example:

Mark Simmonds, MP for Boston and Skegness spoke in glowing terms of the recent NHS Competition Regulations which opened up NHS services to private healthcare providers.  He referred in particular to Circle Healthcare, a private healthcare company which was awarded the first NHS franchise.  The company were granted a £1b – 10 year contract to run Hinchinbroooke Hospital in Cambridgeshire. He said:

“In this hospital you can change the way the NHS works, in my view for the better, you are at the frontier of the way healthcare is going to be provided in the future. I hope patients and the local community recognise the positive changes that have been made and provide sufficient support and recommend it to their family and friends.”

He later apologised to parliament for failing to declare that he received £50,000 a year as a Strategic Adviser to Circle Healthcare.

But if we paid them More, We’d keep the Corporates Out…

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This is the final claim made by those in favour of increasing the pay for MPs once you have pointed out that a) MPs earn rather a lot and b) they earn a lot more than their counterparts in Europe.  There are a couple of simple objections to this argument too.

Firstly, there is an ethical objection.  The public should not be held to ransom by members of parliament threatening only to serve their interests relative to the amount of money showered upon them.  They sign up as democratic representatives for their constituencies, not their second job paymasters or corporations offering them lucrative post parliament directorships.  Instead we should be actively weeding out MPs that operate in this abhorrent fashion, not tossing them yet more money to stuff in their mattresses.

Secondly, there is a practical point.  There is no way that the tax payer could possibly outbid the private sector unless we were willing to throw millions at each MP.  The US an Italy pay their politicians double what the UK does.  This has most definitely not resulted in corporate money being taken out of politics in either of those countries.  Quite the opposite.

And Now Comes the Pay Rise?

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Nevertheless our MPs are about to see their basic salaries increase to £74,000 a year. You might have noticed a whole range of MPs, Ministers and Party Leaders condemning the pay rise.  This might have more to do with the small print of the IPSA recommendations than the pay rise.

IPSA have recommended those over generous Resettlement Payments be restricted to a maximum of 17% of salary.  This doesn’t go far enough as it still maintains the pretence that MPs are being made redundant, but could save the tax payer £12.5m by 2020.

MPs will also no longer be able to claim for the cost of evening meals, TV installation and licensing in their homes, home contents insurance, or hospitality (tea and biscuits in the office).

The MPs will also see their pensions reduced along with the hit to other public sector pensions.  They will lose their final salary pension, moving to career average instead.

MPs will also need to put together Annual Accounts of their expenditures and expenses.

No wonder the MPs are lining up to reject the IPSA recommendations.

Enough is Enough

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Conservative MP Michael Howard claimed £17,000 a year for the gardening of his second home – this is about equal to the entire annual wage of a regular soldier.  IPSA have also revealed that 148 MPs are claiming expenses for their children’s property and travel – some claiming more than £10k since 2010.  All the while the rest of the working people in the country were allowed no such luxuries.

Even before the Financial Crisis, the average working person in the UK was seeing their wages fall in real terms, as pay increases failed to keep track with the rising cost of living.

In the ten years between 1999 and 2009, the annual salary rose 13.6%.  During the same period, house prices went up 130%, a loaf of bread went up 147%, and a litre of petrol went up 42%.  This goes some way to accounting for the fact that personal debt rose during this period by 158%.

In the last five years, wages have increased by just 10%The UK Essentials Index which focuses on the kinds of everyday items which the UK’s working and non-working poor buy, showed an inflation rate of 33% during the same period. This means that for the poorest working people, their wages are worth 20% less than they were back in 2008.

It’s getting worse.  In the UK today, the cost of living is rising at four times the rate of wages.  In fact UK wages are falling faster than any other ‘developed’ country.  The bus drivers, the nurses, the teachers, the train drivers, the postal workers, the social workers, the carers, the sanitation workers, the hairdressers, the office workers, the sales assistants, the shopkeepers – the people who constitute the majority of the UK workforce – they can only dream of such riches.  Any attempt to make a stand for increasing the wages of these people across the country is met by derisive howls from neoliberals across all parties, as somehow detrimental to the economy.  They still show up for work.

If an MP is unwilling to represent their constituents and fulfil their duties for the offered salary, then they should find another profession. Some of the IPSA recommendations will make savings, others will not.  But frankly, given the total buyout of our parliament by corporate interests – it will make little difference either way.  The House is still condemned.

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5 thoughts on “Myth Busting: Are UK MPs Underpaid? Are They Hell…

  1. “Conservative MP Michael Howard claimed £17,000 a year for the gardening of his second home – this is about equal to the entire annual wage of a regular soldier.”

    Why hasn’t HE been prosecuted like some of the Labour MPs were, and sent to prison..? And what about “decorative moat upkeep” and “duck house renovations” applied to MP expenses all a part of history now..! Methinks that double standards are at play when the Tories hold onto the reins of power, and their lapdog LibDems giggle nervously at the thought that it might be THEM next time round…

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  4. Until they get their fingers out and do right by the country and the common people they don’t deserve a pay rise. In fact I would go as far as to say they should have a pay cut like so many people have had in the past few years.

    I would also recommend running the house of commons like a proper business (seeing as they like the corporate world so much) and put in place a proper fixed term employment contract (so no redundancy, no final salary pension only contributions whilst an MP etc). A contract which prevents them from working for any other organisation while a member of parliament. A contract with a structured expenses system in line with any other business (how many companies will pay someones mortgage to attend meetings in another city?).

    I would also like to see the constituency offices sorted out too. No more hiring the missus, wink wink, to run the office. No more wasting tax payers money on tea and biscuits either.

    We, the common people, are their employers so surely we should have a say in these things. Being a member of parliament is not a privilege its a responsibility but they seem to think its a cash cow. I for one will be headed to the IPSA website to give them my opinion on this announcement.

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