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These are relatively minor matters, and I appreciate that we now have to move forward with the recommendations before us. I therefore hope the Committee will be able to agree on most of the issues tonight. We have discussed the new clause in the name of my right hon. Friend the Member for North-West Hampshire
and my hon. Friend the Member for North-West Cambridgeshire (Mr. Vara). I hope that the Secretary of State will give some consideration to the concerns in this regard. We should have a pre-clearance system, in order to avoid the terrible, and nonsensical, situation whereby open and transparent claims are entirely reversed some years further down the line. If we are going to have the IPSA machinery and a compliance officer in place, it is not beyond the wit of man to ensure that we have such a system in place for the protection not only of Members of this House, but of the taxpayer.
Angus Robertson: I do not plan to delay the Committee for long, but I think it is worth going through the genesis of the changes we are discussing this evening. When the expenses abuse revelations were at their height, the then Speaker convened a meeting of the leaders of all the parties that take up seats at Westminster: the three UK party leaders, joined by colleagues from the Northern Irish, Welsh and Scottish parties, myself included. We agreed that radical action was required. We decided that, first, there should be immediate restrictions on expenses pending a review, and a Scottish National party proposal that the transparency standards operating in the Scottish Parliament should also apply to Westminster was agreed. I think that was the most important agreement at that meeting, because from now on it will be impossible to go back to the kind of secrecy that was highlighted by the hon. Member for Cities of London and Westminster (Mr. Field). We cannot go back to the days of secrecy; transparency is the key to the future. We also agreed that an independent inquiry should proceed, and that conclusions should be agreed in full. The party leaders thought that it was important that all our parties should work together, and I am seeking to reflect that in my comments.
Following this meeting, there were regular follow-up meetings, chaired by the Justice Secretary and the Leader of the House. I cannot remember how many meetings there have now been since that inaugural meeting, but the figure is about six or seven. Given the justified levels of public opprobrium about the expenses abuses, it was absolutely right for the political parties to work together to expedite these changes as speedily as possible. Everybody has in the back of their mind a concern that rushed legislation might be bad legislation, and it has to be said that a variety of hoops have had to be jumped through at a variety of stages to get us to where we are now, but, by working together, we are finally getting close to finding a fix for the problems facing us.
These meetings were the driving force behind the creation of the parliamentary standards authority. I am pleased that it was an SNP proposal that the agency should be designated as "independent". That argument was persuasive; clearly, even Westminster parties are open to persuasion on independence, at least sometimes. We therefore now have a body called the Independent Parliamentary Standards Authority-because independent it must, of course, be.
Initially, IPSA was empowered to deal only with expenses. Pay and pensions were not included in the initial legislation, for reasons we completely understand. That was to be put right at the earliest opportunity, however. We have heard from the right hon. Member for North-West Hampshire (Sir George Young) of the confusion about how quickly that might proceed, but we are here today and that is very much to be welcomed
because, together with other improvements, including those relating to compliance, we are now moving ahead on the pay and pensions issues. That is key, because parliamentarians should not be responsible in any way for their own pay and pensions, or for setting their own expenses levels.
The Justice Secretary is well aware of my disappointment that the gold standard operating in the Scottish Parliament for compliance was not emulated in legislation dealing with MPs transgressing in this House. There is an irony in this. The Westminster Chamber legislated for the creation of the Scottish Parliament and set the rules under which it would operate, including criminal sanctions when Members of the Scottish Parliament transgressed the rules. However, Members of this House-Members of the Conservative and Labour parties-did not agree that that same high, gold standard of criminal sanction should apply to Members of Parliament in this Chamber in the future. That is totally beyond me. The SNP believed, and continues to believe, that criminal sanctions that can apply to MSPs should also apply to Members of this House. Notwithstanding that shortcoming, I believe that creating an IPSA with real teeth is vital, and that is what is being completed by these provisions. MPs have forfeited any credible right, as have the UK Government, to determine pay, expenses and pensions-that was forfeited some time ago.
The right hon. Member for North-West Hampshire and the hon. Member for Somerton and Frome (Mr. Heath) raised some important and commendable points about compliance officers and some other queries, but I have no reason to doubt that the Justice Secretary will continue his collegiate approach before Report so that things can be smoothed and ironed out. For that reason, I shall be supporting the progress of these provisions today.
Peter Bottomley: I often agree with the hon. Member for Moray (Angus Robertson), but I do not agree with him on a number of points today. For example, why should MPs not be responsible on these matters? For most of my time in Parliament, it has been perfectly reasonable for Members of Parliament to say what their pay arrangements should be. The fact that they have not always adopted what I thought was sensible is probably more my fault than that of my colleagues. It is clear to me that MPs' pay arrangements should be set before a new Parliament, should come into effect at the beginning of it and should not change during the Parliament, irrespective of whether it lasts for six months or for five years. That would be a far more elegant and sensible arrangement than the current one of wondering whether there should be increases each year or other kinds of conventional things. Even if the arrangement is not conventional, if we know what the terms are when we get elected, that should do us until we again come up for election or deselection.
The second thing that the hon. Gentleman said that I would not mind taking him up on was his comment about the gold standard of criminal sanctions. Criminal sanctions ought to be for criminal offences, and the standards that we ought to be meeting are lower than that; we ought to be meeting the reasonable expectations of Members of Parliament, not just expectations relating to "beyond all reasonable doubt". I hope that Martin Bell, with whom I served on the Standards and Privileges Committee, will not mind my saying that that is one of
the areas where he and I failed on a number of occasions. If I were to allocate some of the "blame"-that is probably the right word-I would say that the House authorities or past occupants of the Speaker's Chair did not do what they might have done when Elizabeth Filkin was the Parliamentary Commissioner for Standards. I doubt whether compliance officers, whatever their responsibilities, can carry the same weight as a good Parliamentary Commissioner for Standards. Therefore, I put it to the Secretary of State that if he were able during the passage of this Bill to find a better expression than "compliance officer" to balance the "Parliamentary Commissioner for Standards", that would be a good thing. We know what is understood by "compliance officer" and what the responsibilities will be, but it is not an elegant title.
Plainly we cannot go on having final salary pensions where-this will not apply to me as I have reached 65- any increases in the salary of someone who has been in this House for 25 years and is between 60 and 65 are still multiplied by their years of service. Any sudden increase of 30 per cent. in the pay of such a person in recognition of various parts of an MP's job would multiply through all their previous years of service, even though their actual pay would have been much lower. Members of Parliament ought to have a way of expressing in public, whether just to IPSA or in this Chamber too, that we think that we ought to move on to an average salary system at best. By all means, let us keep what we have got in the past-I declare that I have the full limit-but we ought to be able to say clearly that we need a reasonable compromise between not putting people off coming into Parliament and not maintaining this kind of gilt-edged, gold-plated standard pension. It may have been good at a time when our pay was very low but if IPSA is to do its job, the pay will not remain very low for very long. I do not see where in the IPSA proposals we can reach the stage where it is possible for IPSA to recommend that part of any significant change in MPs' pay should be non-taxable and non-pensionable.
Peter Bottomley: Non-taxable and non-pensionable. The idea of bringing in a receipt for every small bit of spending is one of the mistakes into which the House and those who have been invigilating its affairs have fallen. I examined my spending for two weeks, keeping the receipts for two weeks. If I buy 80 items in Lidl in Worthing for £120, two of which are relevant to my office expenses, I am supposed to put in the list of all 80 things-the details of everything other than those two things either will or will not be redacted-so that I can get back some money that I have spent on batteries, CDs and so on. Such an arrangement is bizarre. I shall not go into the detail of all the other allowances, but one element that I hope IPSA will consider is having part of the pay being non-taxable and non-pensionable.
The Secretary of State has been very kind to the Committee, although I do not think that he understands all this all the time-I am sure that he understands much of it much of the time. I hope that the Leader of the House does not mind my saying that this is an incredibly complicated result of a suggestion that we did not need primary legislation. We may not have
needed it, but this is quite a lot to have to digest quite late in an afternoon when many of the other experts are not present.
I want to reach the stage where Members of Parliament can do their job without needing the skills of a good accountant. We ought to have reasonable accounts. We certainly ought to reach the stage-I think we had this with the parliamentary commissioner system-where if a Member of Parliament gets clearance for an arrangement from the Fees Office, irrespective of whether it is judged afterwards to be wrong, the MP is not penalised for it. There is an argument as to what constitutes approval and what is accepted, but we need to have some way of ensuring that MPs cannot be chased back too far, too often on too many things. MPs ought to be able to take advice from the authorities, rely on that advice, make their arrangements as simple as possible and maintain them. That would address most of the fears that people have had and most of the excitement involving the media.
Mr. Charles Walker (Broxbourne) (Con): Is my hon. Friend aware that a number of colleagues on both sides of the House have ceased to claim legitimate allowances because they are so frightened of the reputational risk of getting something wrong?
Peter Bottomley: I am. That is a reminder that this House should not just be for those who are well-off and those who are poor, both of whom can come to this place and not have too much of a worry. It also should not just be for those who are flashers and those who are church mice; we should also include those who are normally embarrassed if they are seen without their clothes on. We need to try to ensure a reasonable spectrum.
Many MPs who stay here for some time move through inexperience and poverty, and end up reasonably comfortable-they may have grown out of their family responsibilities and their housing costs will probably have reduced. All I can do is tell hon. Members what it was like for my first 22 years here. I had two dependent children when I got elected and I had a third child when I had been in Parliament for seven years. When my wife was working less than part-time, I very nearly had to leave Parliament because I did not want to go either crooked or broke. I hope that IPSA will take that kind of thing into account.
May I end by discussing something that is not contained in these provisions? In my early years, I shared a large room in Old Palace Yard. One of my colleagues married his secretary-she was a competent secretary and she was a good wife afterwards, Why should such a person have to lose her job in those circumstances? What if I had married her, so that she could go on working for him? I was not free to do so -[Laughter.] The wife of a Member of Parliament can be elected to this place and get their own pay through the taxpayer, so what is so different about the person who gives support as a spouse? I offer Pauline Ashley as probably one of the best examples. She gave devoted service to Jack Ashley's constituents and a great deal of help to Jack. I can think of many other such examples-I shall not name any involving those in the Chamber-where the same thing has applied. This was a bad suggestion and I hope that
IPSA will throw it out. Obviously, one needs to justify the work that the family member is doing, but a blanket exclusion is wrong.
Nick Harvey (North Devon) (LD): Thank you for calling me, Mr. Gale. I apologise for not having been here at the start of the debate because of a meeting of the House of Commons Commission. I wish to contribute a few remarks in my capacity as a trustee of the parliamentary contributory pension fund. I know that the Secretary of State indicated during earlier exchanges that he acknowledges the need for further thought to be given to the specific measures proposed, but I am anxious to ensure that the trustees' concerns are articulated in this debate.
We all accept that the world has changed, that the coming into being of IPSA means that there is a need for some change in our pension arrangements and that it will be necessary to make some legislative changes to give effect to such change. However, I am concerned at the speed with which these arrangements have appeared, at the lack of any consultation and-far more so-at the way in which they sit very uncomfortably, to my way of thinking, with the fact that during the latter part of last year the Government commissioned from the Senior Salaries Review Body a fundamental review of MPs' pension arrangements. To the best of my knowledge that body completed its work by the end of last year, as it was asked to do. I do not know whether it has yet submitted its report to the Government-the trustees have certainly not yet seen it. I would have thought it made a great deal more sense for that report to have been delivered and for its recommendations to have been assimilated and taken on board before we made the sort of changes that are anticipated and provided for in these new schedules and other add-ons to the Bill.
In particular, the trustees have a concern that serving Members of this House should have confidence that the pension benefits that they have already built up in the fund to date cannot be taken away without their consent. As drafted, the Bill does not provide that protection, because it is giving to IPSA huge additional powers that, in the past, this House and its Members, as members of the pension fund, have held. Although under the current fund structure the power is exercised by the Leader of the House, that takes place only through regulations. The Leader of the House has to bring to the Floor of the House, for consideration by the members of the scheme, any changes that are wished. In future, according to these arrangements, IPSA could, in the extreme, simply make a scheme that removed the entitlement to all or any of the benefits earned in the fund by any or indeed every member. Although we would all hope, obviously, that IPSA would never take such a course of action, one has to ask whether it makes sense to give it the power to do so.
The Kelly report made two recommendations on MPs' pensions. The first was on the independent determination of MPs' pensions and the second was on oversight of the administration of parliamentary pensions. The Bill goes well beyond that and gives IPSA substantially greater powers over the structure of the fund-the power to determine how it is administered goes well beyond the oversight and scrutiny recommended by Kelly and gives the authority control over the management
of the fund, the application of its assets and the constitution and proceedings of the funds' trustees, as well as the power to determine, with Treasury consent, the rate of the Exchequer contribution, without consulting the Government Actuary.
Although, in a sense, those powers replicate the existing arrangements by vesting with IPSA the powers that are currently vested in the Leader of the House, the difference, of course, is that the Leader of the House has to bring these matters to the House for its consent. We need proper and detailed consideration of whether it is right for IPSA to have these extensive new powers that go far beyond what was recommended in the Kelly report. I think it would be better to leave vested with the trustees some of the powers that they already have. I do not think we should undermine the objective of MPs' pensions being influenced by an independent body, but the arrangements as proposed today go too far.
For example, IPSA has the power to appoint a trustee body without any member representation on it. I do not think anybody would take exception to the idea that IPSA should nominate a member of the board of trustees, but to give it the power, in effect, to remove the trustees and to appoint its own board of trustees seems to me to be going much too far. Is there any other pension fund anywhere that could be subjected to such a degree of interference? It would be unlikely, in practice, that IPSA would ever do so, but the measure goes too far in terms of the sweeping powers that it gives the authority.
The legal structure of the fund is highly complex and the detail is largely set out in 1993 regulations, which are regularly amended. I think that the wholesale transfer of powers to IPSA, as proposed by the Bill, will in effect empower IPSA to rewrite the rules of the fund and could jeopardise the ability of the trustees properly to manage it. I welcome the fact that the Secretary of State has said that there will be further consultation with the trustees, but as the Bill is drafted all Members should be deeply concerned at what is being proposed. We frequently say that we want our arrangements to be comparable to those elsewhere and those in the real world, but my concern is that these proposals go to lengths that no other pension fund anywhere would expect.
Mr. Mark Field: Although I have a lot of sympathy with what the hon. Gentleman has to say, does he not understand that it is not a matter of whether the pension fund is working well and whether the trustee arrangements provide an arm's length between Parliament and the taxpayer? The issue is the perception that we are enriching ourselves. As my hon. Friend the Member for Worthing, West (Peter Bottomley) rightly said, a lot of MPs' spouses do a fantastically good job and provide tremendously good value to the taxpayer, but none the less there is a perception of our own enrichment. The changes therefore apply not only to employing spouses and issues to do with our salary but to our pensions. We have a different and rather more generous pension scheme than many others, even in the public sector. The public perception means that IPSA needs to have its tentacles across this matter, and that is no reflection on the ability or otherwise of the trustees who have done their work in this regard over the past few years.
I sympathise with what the hon. Gentleman is saying, but I said categorically at the outset that I accept that the world has changed and that the
Kelly report made two recommendations on pension arrangements. Specifically, IPSA will have a say in what we get out of the scheme and what we pay into it. I am not trying to resist that at all. The hon. Gentleman just used the expression "IPSA needs to have its tentacles across this matter". I am not resisting that-I am merely resisting the idea that IPSA should delve its tentacles into these matters in an attempt to run the whole thing. It is possible to hit the right balance but, as the Bill is drafted, the Government have failed to do that. I would welcome it if they would get into a meaningful dialogue with the trustees so that on Report we can arrive at some arrangements that will take account of the points that the hon. Gentleman is making while leaving a viable pension arrangement with a scheme that will have the same sort of autonomy and power to organise its own affairs that any other pension fund would take for granted.
Mr. Walker: I shall be very brief. I want to start by apologising to my wife Fiona, my son Alistair, my other son James and my daughter Charlotte. I wish, on reflection, that I had made a great deal more money before I got into this place. If I had private wealth, I would not need to rely on the taxpayer to fund my excellent staff, my travel and the cost of my office. If I did not have to rely on the taxpayer to do those things, I would not fear the knock at the door from the media, the investigators or the new compliance officers. I and my family fear that knock at the door. We fear the reputational risks that now go hand in hand with being a Member of Parliament.
Let me conclude my opening remarks by saying that over the past nine months I have seen many good and decent colleagues have their careers needlessly destroyed to sell a few newspapers. The loss of those colleagues to public life will be sorely felt by their constituents and this country.
IPSA is going to take over the management and control of our pensions. I recognise that I will get an extremely good pension from having been a Member of Parliament-it is one of the best pensions in the public sector-but there should be a recognition that my colleagues and I make one of the largest contributions to their pension of any public sector worker. I think that the only comparable public sector group that makes such a significant contribution is firemen and fire officers. Yes, our pension is generous, but it is not as generous, when set against other pensions, as the press would have our electorate believe.
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