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Backbench Business

[Un-Allotted Day]

Parliamentary Standards Act 2009

Mr Speaker: It may be for the convenience of the House to know that the Backbench Business Committee has recommended that the second of our two debates should last for at least three hours, which means that this first debate should finish no later than 3 pm. It may also be for the convenience of the House to know that I have selected the amendment to the motion in the name of the hon. Member for Aberconwy (Guto Bebb).

12.23 pm

Adam Afriyie (Windsor) (Con): I beg to move,

That this House approves the recommendations of the First Report from the Members’ Expenses Committee on the Operation of the Parliamentary Standards Act 2009, HC 1484.

It is a pleasure to open the debate. I do not intend to detain the House for too long, as there has been a lot of debate on this subject. I welcome this opportunity from the Backbench Business Committee to present the findings of our very thorough and carefully conducted review of the Parliamentary Standards Act 2009. The Committee on Members’ Expenses was tasked with reviewing the operation of the Act to work out what were its aims—what was intended by Parliament—and whether those aims were being fulfilled, and to make any recommendations that were felt necessary.

I am delighted that the House has the opportunity to debate this issue and I thank hon. Members on both sides of the House for their support and input during the process of constructing the report. I thank in particular my fellow members on the Committee. We worked very hard in very busy circumstances to try to put together a report that truly reflected the evidence we received. Hon. Members will be aware that in many cases when one is on a Committee one has to pull back one’s personal preferences to ensure that what is delivered is fair and balanced and truly reflects the evidence and information provided. I thank the Chair of the Backbench Business Committee for making it possible to bring these issues to the House in a non-confrontational environment in which we can talk about matters that relate to the House and, primarily, to Back Benchers. This is a good forum in which to do that.

The party leaders and the House in general deserve some recognition for the initiation and passing of the Parliamentary Standards Act in 2009 and the amending Act in 2010. The House clearly decided to get rid of the old discredited system, to have independent regulation of Members’ expenses and to have that level of remuneration set independently. It also decided clearly that it wanted there to be more accountability for that body and these things than there had been in the past. I thank in particular the former Leader of the House, the right hon. and learned Member for Camberwell and Peckham (Ms Harman), for stating very clearly what the intentions of the Act were prior to its enactment in 2009. I thank also the shadow Leader of the House at that time, the current Leader of the House and the former shadow Leader of the House in the current Parliament for being entirely consistent in their presentation

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of the aims and objectives behind the legislation and for being persistent in trying to ensure that those aims and objectives were met.

Contrary to most media reports, the review that I present on behalf of the Committee is not particularly controversial. It is completely in keeping with the aims of the Act, as they were laid out. There are seven fairly clear aims about, for example, value for money, accountability, not deterring Members from making claims, being open about what is going on—the transparency side of things—and not creating a system that is unfair for Members who do not have independent means or who do not have families. We were very mindful of those objectives when we conducted the review and I highly recommend that hon. Members read the first section of the report, which runs through the history of payments to MPs. That section also runs through each of the Act’s aims and analyses the extent to which they are currently being met.

Daniel Kawczynski (Shrewsbury and Atcham) (Con): My hon. Friend has thanked various people. Will he accept my thanks and those of many colleagues for all the work he has put into this report? This is an extremely controversial matter and he has shown great leadership and sacrifice in doing all he has done.

Adam Afriyie: I thank my hon. Friend. If I could, I would probably flush up at this moment, but luckily hon. Members would not know if I had.

The objective of the review and its recommendations was to make sure that the aims of the Act, on which the majority of the House agreed, were being met in reality. Let me dispel a couple of the misleading ideas that are bouncing around about the report before I go through its recommendations so that the House is fully aware of what we might be accepting or putting over to the Independent Parliamentary Standards Authority a bit later.

Mark Pritchard (The Wrekin) (Con): I, too, congratulate my hon. Friend on the hard work that he and his Committee have done over the past few weeks. During the expenses scandal, issues that came up included not only the misappropriation of public funds by a minority of Members in the House but the cost of politics. Could my hon. Friend set out whether his recommendations would drive up or drive down the cost of politics?

Adam Afriyie: That is one of the key issues that we looked at. If Members go through the recommendations—I will run through a few of them in a moment—they will find that their primary motivation is to find ways of reducing the costs of bureaucracy for the taxpayer and to achieve better value for money. At the moment, there is a huge burden on Members because of the unnecessarily long time that it takes to navigate the expenses system, and that places a cost burden on our constituents—the taxpayers. It also takes Members, and their staff, away from serving their constituents and performing the functions that they were elected to perform. My hon. Friend the Member for The Wrekin (Mark Pritchard) hit the nail on the head with his remarks, because at the forefront of our minds was the question, “What recommendations can we make that will reduce the overall costs and ensure that the system is still accountable?”

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Bob Russell (Colchester) (LD): I want to put on record my appreciation of the front-line staff of IPSA, who have to work a system that is not fit for purpose. In addition to there being costs to Members of Parliament and their staff, the National Audit Office believes that in 38% of cases the cost of processing a claim is higher than the amount for which the claim is being made. Will my hon. Friend confirm that?

Adam Afriyie: That is a fascinating statistic. We had a session in which we looked in particular at value for money, and that message came through loud and clear. Anyone in the House with a background in business or in a medium-sized organisation that runs an expenses system will recognise that something needs to be looked at if the cost of processing a large minority of the claims is higher than the value of the claims themselves. Some of the recommendations are very much directed at helping IPSA to move to a system that is less expensive to operate and in which taxpayers’ resources are being spent as they would wish: on activities such as supporting democracy and ensuring that constituents are serviced, rather than supporting unnecessary bureaucracy.

Mr Andrew Smith (Oxford East) (Lab): What would the hon. Gentleman say to the argument that the public might well see it as rather self-serving of MPs if his cost-saving proposals had the effect of there being less scrutiny of the money that they spend? Would not the public, in the wake of the scandal, be particularly concerned about that?

Adam Afriyie: That is absolutely right. The right hon. Gentleman could have been a member of the Committee, because that was exactly the attitude adopted by every member throughout. We asked ourselves, “Can we, with our recommendations, improve the transparency and the accountability to the public beyond what is being offered under the current regime?” That was exactly the direction of travel and I urge the right hon. Gentleman to have a good look through the 19 recommendations, because he will see that we seek to address that issue.

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): As a member of the Committee, I add my thanks to the hon. Gentleman for all the work that he has done. Does he agree that it is unfortunate that some of the media reporting has perhaps given the impression that the Committee was making recommendations for something that would be less transparent, when nothing could be further from the truth? We want to see more transparency, better value for the taxpayer and independence in setting pay, allowances and expenses for MPs.

Adam Afriyie: The hon. Lady makes the point very well. Those who actually read the report will see that that is exactly what we were attempting to achieve. I think that we achieve it elegantly in our recommendations to IPSA on how to improve the way it operates, and we achieve it in quite a moderate fashion in the recommendations that the Government may want to take up in the months and years to come.

Sir Peter Bottomley (Worthing West) (Con): I echo the words of my hon. Friend the Member for Colchester (Bob Russell) about anything that we say here not being

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derogatory about IPSA staff, who face the same problems we do. I draw the attention of my hon. Friend the Member for Windsor (Adam Afriyie) to the answers in annex 1, which show that four out of five MPs think that IPSA is not effective in helping us to do our job. I tried to ring IPSA this morning, because I see that 99 times out of 100 it answers the phone within 60 seconds. I started calling at 9 o’clock; it is now half-past 12. That is three and a half hours. It is a bit like the train operating company that said, “No trains this morning were late because we didn’t run any.” IPSA will not answer the phone before 1 o’clock, and then we discover that the person we want is at lunch. If the amendment is carried—I am not sure whether it should be—will my hon. Friend try to persuade IPSA to pay attention to the detail of the report? Does IPSA have to be the only public service that for half the day is not available to somebody who wants to ring it?

Adam Afriyie: That is another point very well made. I hope that the direction of travel in the recommendations will precipitate such an outcome when IPSA reflects on them.

I draw everyone’s attention to the survey in annex 1, on page 66, which contains some telling statistics. We conducted a brief survey towards the end of the inquiry to ensure that we were picking up contemporary, rather than historical, points of view of Members of Parliament. There are some striking figures. For example, 81% of MPs do not believe that the board of IPSA has been effective in supporting MPs in conducting their duties. Even if the intention was to be supportive, it is quite telling that over 80% of MPs do not think that it is. Another fascinating statistic is that 93% of MPs are subsidising their work here. That is a contemporary figure from two or three weeks ago.

Bob Russell: Does my hon. Friend know of any other profession or occupation—perhaps the world of journalism? —where 93% of the work force are subsidising the work that they do?

Adam Afriyie: It is incredibly unlikely. As I say, 93% are subsidising their work to some degree—some, about one in 10, to the tune of over £10,000 a year. One of the main reasons cited, by 83% of MPs, is that they are trying to protect their reputation. The bi-monthly publication cycle allows for misleading comparisons. The report calls for more transparency—perhaps we could publish in real time. However, the misleading bi-monthly publication routine means that MPs are trying to protect their reputation, which is the thing most valuable to them. Let us not think that that is a selfish act; it is an act that works to protect our democracy. If individual MPs are constantly being lambasted in their local media for making legitimate claims but having false comparisons made, that undermines democracy overall and harms the reputation of Parliament. That is why one of our recommendations is that IPSA should become a lot more transparent in its publications.

We make a recommendation about annual publications. At the moment, it is incredibly difficult for the public to see what is going on. They have to print out one page and then another, and try to compare them. That does

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not work, so we recommend that the annual publication is searchable and easily accessible to the public so that they can make sensible comparisons from year to year, rather than misleading ones drawn from the bi-monthly publications.

Jo Swinson (East Dunbartonshire) (LD): There are many helpful suggestions in the report, not only on how IPSA can pursue matters in a most cost-effective way but particularly on the issue of transparency, which is crucial. I wholeheartedly endorse what the hon. Gentleman says about real-time publication and making it easier for the public to search. I am also delighted to see that the Committee has recommended to IPSA that the underlying receipts should also be published so that anybody can see all the evidence, obviously with credit card details redacted for security. That is essential.

Adam Afriyie: I thank the hon. Lady. The whole thrust of the report was to make sure that there is value for money for the taxpayer and that transparency is enhanced and improved. However, our primary aim, which we reaffirm in recommendation 1, is that we want the independent determination of the payments system for MPs’ costs and independent regulation to continue, and to continue to be robust. Let me dispel myth No. 1. Nothing in the recommendations seeks to undermine the independence of IPSA and the power of the regulatory function performed by that outside body. That was paramount in what we were doing. The Act was right in that intention, and it should remain, which is why we reaffirmed it in recommendation 1.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): Many of us very much admire the hon. Gentleman’s work in this field. We all feel very exposed. We all have an individual relationship with IPSA. Being able to share in a debate such as this is very useful, but I constantly feel that we need a parliamentary association that can act for Members of Parliament across the Benches when these very important issues about how we best fulfil our functions come up.

Adam Afriyie: That is an interesting point.

Mr Edward Leigh (Gainsborough) (Con): I chair the liaison committee with IPSA, which includes Members from all parties, and know that it can be a deeply frustrating experience. We do our best, but one of the problems we have had is trying to convince IPSA that its primary motivation must be to allow MPs to do their job and have a system that is not bureaucratic, does not allow fraud or error and, above all, saves taxpayers’ money. That is why a central recommendation of the report is that there should be an independent cost-benefit analysis of whether a flat-rate, taxable allowance, so that there could be no fraud, error or detailed administrative costs, would save taxpayers’ money.

Adam Afriyie: I thank my hon. Friend for his intervention and for his work on the Committee. I think that together we came to a very moderate view that we hope will, if the recommendations are accepted, move the whole thing forward.

Mr Andrew Tyrie (Chichester) (Con): Does my hon. Friend agree that the key message that must come out of today’s debate and go to the Front Bench as well as to IPSA is, as my hon. Friend the Member for Gainsborough (Mr Leigh) has just said, that IPSA’s

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primary duty must be to ensure that we can do our job, and the plain fact is that many of us find it has become an obstacle to our doing that? That is why the legislation needs to be changed. Does he also agree that it is extremely important that these recommendations are not kicked into the long grass, and does he share my hope that Front Benchers will do nothing to obstruct this early implementation, which is clearly sensible?

Adam Afriyie: That is another point well made. I will tackle the point made by the hon. Member for Huddersfield (Mr Sheerman) first and then move on to deal with that made by my hon. Friend.

If we think about the rest of society and the work we do as MPs—this is not a sob story, but I am sure that it will be reported as such—we will realise that every other body has a pressure group, a trade association, a trade union or a communications or public relations company working for them. We want our great British democracy to be an icon of honesty, transparency and straightforwardness around the world, so it is curious that Parliament appears to be the only organisation that does not have a similar function. IPSA, which is a small organisation, has two or three people dealing with its communications, but in Parliament there is no one to give the other side of the story. That is not a recommendation of the report, but simply my own observation to back up what the hon. Gentleman said.

Mr Sheerman: The trouble is that the three main parties in the House tend to be represented by the Whips, whose view of what goes on here is very different to that of most Back Benchers, so the call that I would like the hon. Gentleman to make for a parliamentary association might be what we need.

Adam Afriyie: The hon. Gentleman makes his point well. It is not in the report, but I accept it.

To return to the point made by my right hon. Friend the Member for Chichester (Mr Tyrie)—[ Interruption. ] Have I just promoted him?

Sir Peter Bottomley: He should be right hon.

Adam Afriyie: Indeed he should.

The report contains two pretty uncontroversial recommendations, and again this brings me to the second misrepresentation. The first recommendation, which is for the Government, is that the primary duty of the independent regulator and its administration should be to support MPs to perform their duties cost-effectively and efficiently. The Committee on Standards in Public Life and the constitutional historians we spoke to recommended that, as virtually every body in the world has that kind of line in their legislation. There is no time limit on that, so we recommend that the Government should at some point get around to doing that, and I urge them to do so.

IPSA is unique in being both the regulator and administrator of an expenses system. The second recommendation is that the law should be updated to enable the separation of those two functions. We are not saying that the administration function should definitely come to the House of Commons. We say nothing of the sort. We are not going to recreate the old Fees Office, which would be absolute madness, so that will not

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happen. However, we should be able to separate those two functions within the legislation, and I urge the Government—there is no need to answer this now—to make headway and look at how we might facilitate that while ensuring that the regulatory role is entirely independent of the House.

Stephen Williams (Bristol West) (LD): As a member of the Committee, I would like to put on the record my thanks to my hon. Friend for his patience in trying to reconcile the views of the Committee. On the point he is making, in addition to the separation of IPSA’s regulatory and administrative functions, was not another stark factor presented to the Committee the extraordinarily expensive way IPSA administered a relatively small number of transactions and the fact that many other organisations, whether inside the House of Commons or elsewhere, could do that for much better value for money for the taxpayer?

Bob Russell: Tesco, for instance.

Adam Afriyie: My hon. Friend the Member for Bristol West (Stephen Williams) was incredibly helpful during the Committee’s deliberations, for which I thank him. We all have strong views on these matters, some of which will be very different, so I thank him in particular because we all moderated our views somewhat to look at the evidence and see where it pointed us. We came to a good conclusion on how the system can be become more efficient. I should also point out that there have been arguments from the press again, and unfortunately from elsewhere, suggesting that somehow the report wants the House to regain control of expenses. That is utter nonsense. There is nothing in the report that seeks to do that. If there is any lack of clarity, I am happy to tidy it up or answer any questions. All the recommendations, other than 2 and 3, are for IPSA. It has the power to accept or reject them. We hope that it will accept them, but it has the power. There is nothing in the report that alters the relationship. If anything, one or two of the recommendations seek to increase the distance between Parliament and the regulator and urge IPSA to be more transparent.

Alison Seabeck (Plymouth, Moor View) (Lab): I have a fairly straightforward question. Does the hon. Gentleman expect Sir Ian Kennedy and IPSA to respond publicly to the Committee’s recommendations?

Adam Afriyie: The amendment to the motion makes that point and proposes that IPSA should address the report in its annual review, and I have no objection to that and hope that it will respond. It seems to have indicated that it will respond at some point, which would be great. The House will await that response and then take a view on it, but it is for IPSA to decide whether to implement these cost-effective measures or reject them.

Alison Seabeck: Is not part of the problem, and part of the frustration that Members of the House feel with IPSA, the fact that we do not get responses from it? I have written to Sir Ian Kennedy on a number of occasions but have yet to receive a reply signed by him. I would like a public reassurance from IPSA that it will respond thoughtfully to the recommendations of what is an excellent piece of work by the Committee.

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Adam Afriyie: Again, that is a perfect observation. In the survey that was conducted, MPs were asked on how many occasions in the last six months IPSA lost paperwork that they had submitted in support of a claim. Some 62% of MPs replied the IPSA had lost paperwork. In response to a question on the consistency of advice, the majority of MPs said that advice has been inconsistent. We updated the survey specifically to ensure that we were talking not about the history of the organisation and what happened when it was set up, but about the current reality for Members trying to get on with their work. What the hon. Member for Plymouth, Moor View (Alison Seabeck) said is reflected in the information and evidence within the report.

I will focus on two recommendations for the moment before concluding my remarks. I just wanted to dispel many of the myths that have been knocking about.

We recommend that IPSA should move as far as possible to a system of direct payments. There are lots of reports in the media about MPs and whether they are pocketing money, but, as we know, certainly since the beginning of the new Parliament, that has not been the case. Even IPSA would agree, because it has robust systems, but the Committee says, “Why keep paying money to MPs, who then have to pay it to their member of staff who bought a toner cartridge three months earlier?” Many payments could be made directly to suppliers, so that the money does not go via MPs. They are not MPs’ expenses, they are the costs of running an office, and I cannot imagine that anyone in the country buys their own office furniture and then reclaims the costs.

Bob Russell: “Expenses” is the wrong word; those costs are allowances for us to do our job. My staff salaries are not my expenses.

Adam Afriyie: That point is reflected in recommendation 8, in which the Committee states that there should be a “clear distinction” between those costs that are commonly associated with an MP personally, and those costs that clearly relate to running an office and paying staff. They do not come anywhere near an MP; they are merely the cost of providing a service to the public.

Jo Swinson: The hon. Gentleman’s remarks on the separation of the administration and regulation of expenses are interesting and helpful, and I understand why those roles should be separate, but some media coverage might have been generated in part by the recommendation stating:

“The best arrangement would be for that separate body”—

the administration—

“to be within the House of Commons Service”.

Some Members, and certainly I, feel that that is absolutely the last place to which the administration of expenses should go. A separate accounting firm might be able to administer them more cost-effectively, but please let us not return them to the House authorities.

Adam Afriyie: I thank the hon. Lady for her view, and I can understand the shudder that would go up the spine if it looked as though we were making such a recommendation, but we are not. The Committee’s opinion is that the House is probably the best place for

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such an administrative role, because the IT systems and infrastructure are already in place, but that is not our recommendation. It would be misleading to suggest that we recommend the return of such administration to the House; we simply say that we think that that is the best way. All that is needed is to enable the separation of the two roles.

If Members are concerned about that idea, I challenge them to find any other body in the world which is both regulator and administrator. IPSA is unique: we would never allow such an arrangement in any other walk of life, and it is certainly unique when it comes to Parliaments and payments to Members.

Mr David Winnick (Walsall North) (Lab): May I pay tribute to the hon. Gentleman for his excellent work in this regard but, at the same time, strengthen and support what the hon. Member for Colchester (Bob Russell) has said? Among the general public, the thinking is that expenses are taxi fares and the rest, but they do not understand—understandably so—that expenses include the salaries that we pay our staff, without whose work we could hardly carry out our duties as Members. The sooner this silly and unnecessary term “expenses” is changed to a relevant one, the better we will be.

Adam Afriyie: That point is echoed and very well made as a recommendation in the report. IPSA is taking some steps in that direction, and I hope that the report encourages it to move more quickly.

Let us remember that all the changes we made in 2009 were about improving the public’s confidence in this institution, but that cannot happen if the way information is published misleads people into believing something different. I am concerned in particular about the new intake of MPs, and at some point I will ask IPSA, “How many members of the new intake do we honestly think have been terribly devious and tried to cheat their expenses?” I think that the answer is zero. The robust systems in place indicate as much, but every eight weeks Members are lambasted in their local press for claiming something, so something is wrong with the way information is presented, and that is what the report tries to tackle.

Daniel Kawczynski: I very much hope that as part of my hon. Friend’s recommendations to IPSA he challenges it also to interact with our suppliers to lower the costs that we pay to some of them, such as Cellhire, which I personally think are extortionate. I very much hope also that IPSA will use bulk purchasing contracts in future to drive down our costs.

Adam Afriyie: The report also makes that recommendation, urging IPSA to continue in that direction and, as far as possible, like most other organisations, to do some central purchasing and secure some wholesale agreements, as it has with rail travel. It is stepping slowly in that direction, but we urge it to move a lot more quickly, so that our time and that of our staff can be spent on constituents rather than on unnecessary bureaucracy.

It is very hard to see anything controversial in our report; it is incredibly moderate, calm and analytical. It also asks that IPSA be more transparent and explain to the public—on its website, or in a letter to us—its

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existing system of supplements for London, for the outer London area and for mileage; explain its rationale for those items, which it has introduced, because the public need to know why it has done so; and then to show very clearly the methodology behind the calculation that enables it to arrive at its figures for those supplements. That would be a very useful exercise, because then people might see how the numbers are calculated and where they come from.

In the second part of recommendation 17, we say that if the system that IPSA has already introduced to London and the outer London area were rolled out—so we are not making a decision on it, but saying, “if it were rolled out”—let us ask a third party, not us or IPSA, to undertake a cost-benefit analysis to see whether it saves taxpayers money and provides them with value for money. Even if it does, and it may not, that is not good enough, however, so we recommend that a third party evaluate whether the system continues to meet the aims of the 2009 Act. Again, that is pretty uncontroversial: we simply, and perfectly reasonably, ask for information, and for an analysis and evaluation to be undertaken.

Recommendation 17(c) may have caused a little concern. During my discussions with the Leader of the House and others, there was some concern that it implies that Members should take control of the expenses system again and “decide” what IPSA does. May I just be absolutely clear, however, and ask Front Benchers to reflect on the fact that, if that were the argument, I have made it clear—including in the amendment that I attempted to table—that that is definitely not the intention? If a word is slightly out of place, I would just say that the report is not legislation but merely a set of recommendations, and I apologise on behalf of the Committee.

The recommendation states that, once the cost-benefit analysis has been completed and we are able to work out whether the taxpayer would get better value while accountability, transparency and everything else are maintained, the House should express its opinion, which I imagine would be in the form of a motion or an early-day motion, stating: “In the opinion of this House, we think this piece of work is jolly good and IPSA should think about it.” We would not be overruling IPSA—nothing of the sort; it would be another recommendation in a report, and that would be it.

Sir Peter Bottomley: Will my hon. Friend explain recommendation 18, which states that MPs should have no increase in pay during a Parliament? I agree with that, but should it not read as IPSA setting, in advance of an election, what the pay will be?

When I searched for best matches for IPSA telephone operating hours, the search engine recommended that I go to the International Professional Surrogates Association, which deals with problems of “physical and emotional intimacy”. That is the problem we have with IPSA.

Adam Afriyie: I suspect that we have some of those problems in the House as well.

On recommendation 18, in the Welsh Assembly and many others throughout the world a figure is set for the duration of a Parliament. We now have fixed-term Parliaments for five years, but the Committee felt that, even if we did not, it would be far better to select a figure that remained the same for the entire Parliament.

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Then we would not have the constant moving around and unnecessary changes that we currently experience. The situation seems to work very well in Wales with the Welsh Assembly and elsewhere, so we recommend not that IPSA introduce the proposal, but that it look at it, so that we do not have stories every three months about another change—another shift in the level—and whether a figure relates to RPI or to CPI. Let us forget all that and just have a fixed figure that runs for a Parliament.

Mr Andrew Smith: I am grateful to the hon. Gentleman, who is being generous in giving way. I take him back to recommendation 17(c), which states:

“In not more than six months’ time, the House should have the opportunity to consider the merits of that cost-benefit analysis and evaluation”—

which the hon. Gentleman referred to—

“and to make a decision on whether there should or should not be a system of regional supplements instead of the existing travel and accommodation provisions.”

Does he accept that that is wrongly worded and inconsistent with what he has said? I, for one, would find it unacceptable because it compromises the independence of IPSA.

Adam Afriyie: We can quibble about one word in a report that is 100 pages long. I am telling hon. Members on behalf of the Committee that that was not the intention. The intention was simply to express a view about whether that was something that we would like to see. Basically, it would be like another recommendation to IPSA.

I hope that there is not going to be some massive argument about the issue; I have just made it absolutely clear to the House what was intended. By the way, I have also put the matter in writing to Front Benchers. Furthermore, I have now stated that I imagine that there would be a statement or early-day motion that said, “The House’s opinion is that we like it or do not like it.” The issue is for IPSA, not the House, to decide. We are looking for demons where they do not necessarily exist.

Mr Leigh: The right hon. Member for Oxford East (Mr Smith) can be reassured because the House cannot order IPSA to do anything, except by an Act of Parliament. We could pass any motion we liked to express an opinion, but that could not force IPSA to do anything. The right hon. Gentleman talks about the House making a decision, but it is making a decision to express a point of view, and IPSA is independent.

Adam Afriyie: I draw hon. Members’ eyes back to the first recommendation—the first thing that we are insisting on is that that independence should remain. That is what this whole thing was about. We were not tackling that in any way, other than to say that in some ways that independence should possibly even be enhanced through a separation of the administration and regulatory functions, so that IPSA would be in an even more powerful position to do the regulation, audit and checking, rather than doing the administration.

Mr Peter Bone (Wellingborough) (Con) rose—

Jim Sheridan (Paisley and Renfrewshire North) (Lab) rose—

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Adam Afriyie: I will give way twice more, and then I will definitely stop. I give way first to my hon. Friend.

Mr Bone: My hon. Friend is making an extraordinarily powerful and well reasoned case. But is it not a fact that a vote on his motion would simply say that the House approves of the recommendations? It could not force the Government or IPSA to do anything. May I suggest that a lot of misinformation is being given out by the usual channels?

Adam Afriyie: We have all heard my hon. Friend’s comments.

Jim Sheridan: Are there any recommendations in the report about the principles afforded to IPSA? Is it subject to the same transparency and accountability in terms of salaries, bonuses and hours of work, so that we can see exactly what it is doing?

Adam Afriyie: We did not make any recommendations in that field; I simply observe that, given how things are worded, IPSA should be equally transparent. We ask it to tell us what it is doing, explain its logic and show its calculations so that the public can make a judgment on whether that is the right way to do things. Point taken.

I shall conclude my remarks, as I have gone on a fair bit longer than I intended. I have seen the amendment to the motion. I was a touch surprised that it should have come from a member of the Committee, given that we had not spoken about it beforehand, but I thank my hon. Friend the Member for Aberconwy (Guto Bebb) for all his work on the Committee; he made a great contribution and we reached a moderate set of proposals.

My own feeling is that we have presented the recommendations to the House, and IPSA can see them now. The Government may want to consider a few things in the medium term about these minor, non-controversial legislative changes. If the amendment to the motion is agreed to, I would not be happy about that but ultimately I would not think it was the end of the world.

I know from some of the feedback that I have had in the past few days that Front Benchers have been quite disoriented in their vehemence; I am quite surprised about some of the stories in the newspapers. I just ask Front Benchers to take the issue in a reasoned, calm fashion. Let us not be combative. They have heard my view on the amendment. Let us get on with this gently, without fear or favour, in the interests of taxpayers, transparency and making this place work. Above all, we need to ensure that we do not get a two-tier Parliament in which those with independent means enjoy an easy ride relative to those who need to claim because they cannot afford to subsidise themselves.

1.4 pm

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

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£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.

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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.

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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.

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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

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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.

1.30 pm

Guto Bebb (Aberconwy) (Con): I beg to move amendment (a), to leave out from “House” to end and add

“thanks the Members’ Expenses Committee for its First Report on the Operation of the Parliamentary Standards Act 2009, HC 1484; and refers it to IPSA to be considered as part of its Annual Review.”.

It is not often that I rise in the House as the villain of the piece, and that was certainly not my intention. If I have in any way shown a lack of courtesy towards my Committee Chairman, I want to apologise in front of the House. There is not another Member who is more courteous to other Members, and his chairmanship of the Members’ Expenses Committee was a model of courtesy. I apologise if my e-mail of this morning was slightly too late in arriving at his desk.

I want to make it clear that I signed up to the report and support it, and that I have been astounded by the vilification in the press of the modest proposals made in it. However, it is important to point out that there are recommendations in it that need to be taken seriously and taken forward. During the course of yesterday, it became increasingly apparent that there was a real likelihood that a vote would be called on today’s motion, and that it might be defeated.

Bob Russell: Would my hon. Friend like to inform the House whence that information came?

Guto Bebb: I am grateful. It came from various colleagues, and indeed from some Parliamentary Private Secretaries, who despite the fact that there is a one-line Whip are staying around today. That might indicate why I had my concerns.

The report is an important piece of work and contains proposals to better the situation. Crucially, and in contrast with the media comments on it, a large part of the Committee’s work examined not the unfairness of IPSA towards Members—we have spoken at length about that in the Chamber—but how it has discriminated against our staff. That issue has been ignored time and time again when we have discussed how IPSA operates. It has created real barriers to promotion for staff members, and they have found themselves worse off for child care. There are serious proposals on that in the report, which IPSA should take into account.

It is frankly astounding that IPSA has not formally spoken to any organisation responsible for our members of staff. There are recommendations in the report that it should be allowed to think carefully about and take forward. I would not want to end up with the report being rejected by the House, allowing IPSA to ignore its responsibility to consider those recommendations seriously.

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Before becoming a Member of the House, I ran a small business for 17 years, so I believe in a pragmatic approach to what can be done. There are 19 recommendations in the report, and I stand by them, although I would say that we need to explain recommendation 3 in detail. I take full responsibility for the wording of it, because I was a member of the Committee, but it has allowed the media to attack us on the basis that we want to bring the expenses system back in-house. A Committee of Members came up with that wording, and I am as responsible as anybody else.

We need to consider carefully whether the administration and governance of the system can be split, and whether better value for money can be achieved by allowing IPSA to subcontract the work of administering it. The media’s conclusion from looking carefully at the wording of recommendation 3 has been unfortunate—I do not believe the conclusion that has been drawn was the intention behind the report. As my hon. Friend the Member for Windsor (Adam Afriyie) and the right hon. Member for Greenwich and Woolwich (Mr Raynsford) have made perfectly clear, that was not the report’s purpose. If there were transcripts of our discussions in Committee, they would make that apparent.

Adam Afriyie: I respect the work that my hon. Friend has done with the Committee. I have already pointed out my slight frustration and disappointment with the fact that we have not spoken—there would have been other ways of achieving his goal, but his actions ruled them out.

I simply observe that the report is not a legal document. It is not a Bill or a piece of legislation but a general set of recommendations for small changes to legislation that are not that controversial. The absolute precision of the wording—one word here or there—does not make any difference. The report does not commit anybody to doing anything with such precision.

Guto Bebb: I am grateful to my hon. Friend and accept his comments, but that has not been my argument. My argument is that Members need to have a great deal of confidence in IPSA to believe that it would not see a rejection of the report by the House as an excuse not to take its recommendations seriously.

Mr Andrew Smith: To clarify what the hon. Gentleman’s amendment means, is not the crucial difference that the original motion would have the House approving the recommendations in the report, whereas agreeing to the amendment would mean that the House was not approving them but simply passing them to IPSA for consideration? I might be able to live with the amendment, but I would not have been able to vote for the motion; indeed, I would have voted against it.

Guto Bebb: I am grateful for the intervention and delighted that the amendment will make it easier for Members to ensure that IPSA examines the issues in the report. I joined the Committee with a great deal of reservation, because as a newly elected Member the last thing I wanted was to be vilified as being part of an attempt to make MPs’ lives easier.

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Mr Bone: I entirely understand the position of the right hon. Member for Oxford East (Mr Smith), but I really do not understand that of my hon. Friend the Member for Aberconwy (Guto Bebb). He voted for the report in December and supported it, so how can he move an amendment that would prevent the House from voting on it? It is very bizarre.

Guto Bebb: I have attempted to explain my reasoning. I believe that there are several recommendations in the report that should be taken forward, but I have clearly stated my concern and suspicion that if the House divided on the motion, the report would be rejected. That would be a great shame.

Bob Russell: Pursuant to my previous point and the one made by the hon. Member for Wellingborough (Mr Bone), I am not sure whether the Committee had 12 members, but of the Members who were prevailed upon to sign the amendment, only one is in the Chamber. Can my hon. Friend the Member for Aberconwy (Guto Bebb) tell me who leaned on him to table the amendment? He had sufficient time to find people to sign the amendment, but no time to discuss it with the Chair of his Committee, which produced a report that he had previously approved.

Guto Bebb: I enjoy the hon. Gentleman’s contributions, but I think I have already responded to that point fairly clearly. I refer him to my earlier answer.

Mr Bone: My hon. Friend is being exceptionally generous in giving way. Will he tell the House when the wording of the amendment came into his mind? It is great that Back Benchers are moving amendments, but did he have a little help? Did anybody perhaps give him a draft of the amendment?

Guto Bebb: Again, I am very grateful to my hon. Friend. In reality, when Members table amendments they do so in their own name and stand by them, so the implication of his comments does him a disservice.

I shall refrain from speaking about the report in general, because I agree with the comments that my hon. Friend the Member for Windsor and the right hon. Member for Greenwich and Woolwich made. There is a lot to be commended in it, and it contains 19 recommendations that can stand up to scrutiny, but it appears that three of them create a problem. I would rather IPSA considered them, and implemented 15 or 16 of them for the next financial year, than not consider them at all. That implementation would make a difference not just to Members but to our staff. More importantly, it would create more transparency and better value for money, and it would result in our constituents looking upon the House with more confidence. We would once again have proved that we are not looking to feather our own beds or change the situation in our interests. We are looking to change the situation in a way that is practical, effective and deliverable. In my view, delivering some of the recommendations soon is better than taking the view that we have to ensure that all of them are delivered now.

1.39 pm

The Parliamentary Secretary, Cabinet Office (Mr Mark Harper): I am grateful to be called at this stage of the debate, but it is worth saying at the start that because the report was published only on Monday, the Government have not had the opportunity formally to respond to the

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Committee and to set out our views. I thought it would be helpful for the debate and the House if I were able to do so at a relatively early stage of the debate.

My hon. Friend the Member for Windsor (Adam Afriyie) referred to the press coverage, but I can assure him that the Government are not responsible for that. We have said publicly that most of the recommendations of his report relate to the expenses scheme, and are therefore for IPSA to consider, and suggested that it might want to do so as part of its annual review. We have said that we will look carefully at the section of the report that is directed at the Government, that we are totally committed to an independent and transparent expenses system, and that we could not accept any recommendations that would be incompatible with that. I leave Members to judge, but I do not consider that to be particularly harsh. It is a perfectly calm and balanced response to the report.

Bob Russell: Will the Minister give way?

Mr Harper: May I make a little progress, because I need to set out the Government’s concerns about the report? [ Interruption. ] I will come to that.

The problem is that the motion asks the House—I will come to the amendment in a minute—to approve all the recommendations in the report. It is perfectly true that the Committee’s report in itself has no effect, but Parliament and the House of Commons are being asked to approve every single recommendation. It is therefore necessary to look at what they are and at whether they are acceptable.

It would have been more helpful if the Government had had a little more time, but the motion was tabled for debate today. Between noon on Monday and today, we have had to study the report and the recommendations that are directed at the Government. Because I need to be able to set out our position to the House, we have had to take a view on them, and I will do so.

Bob Russell: I thank my hon. Friend for giving way. He is a Minister for whom I have the utmost respect, and I would hate his future prospects to be diminished in the eyes of the House if he aligned himself with the amendment. Does he agree that what he has just said sounds remarkably like the wording of the amendment? Is that a coincidence, or was some pressure brought to bear on the hon. Member for Aberconwy (Guto Bebb), who moved the amendment?

Mr Harper: I have not commented on the amendment yet. It is a fact that most of the report’s recommendations are for IPSA to consider. One or two are for the Government to consider, and I shall set out our view on them because the House has been asked to take a view.

It is probably appropriate at this point to thank my hon. Friend the Member for Windsor. Not only has he chaired the Committee very well, but he has taken a great deal of interest in this issue since the debate earlier this year and the House’s decision to set up the Committee and give it the mandate that it has. I also thank all members of the Committee, some of whom are present, for their work. They have carried out a great deal of research, taken a great deal of evidence and put a great deal of work into their conclusions.

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The Government are unable to support the motion. It is helpful for the House that my hon. Friend the Member for Aberconwy (Guto Bebb) has moved the amendment, because I fear that otherwise, I would have urged my hon. Friends, and indeed every Member of the House, to vote down the motion, because there are flaws in some of the recommendations and it would not have been appropriate. The amendment enables the report to go to IPSA for its consideration. Indeed, IPSA has said that it is very pleased to consider the report as part of its annual review.

Cathy Jamieson: Before the Minister moves on, will the Minister explain to the House exactly which recommendations he feels are flawed and why?

Mr Harper: I will. In summary, the recommendations that trespass on IPSA’s independence are recommendations 2, 3, and 17(c). It is worth drawing the House’s attention to one other thing. My hon. Friend the Member for Windsor and the right hon. Member for Greenwich and Woolwich (Mr Raynsford) made it clear that they did not in any way want to trespass on IPSA’s independence, but however frustrating we find an independent regulator, we cannot give it instructions—

Adam Afriyie: Will the Minister give way?

Mr Harper: Hang on. Let me finish this point and I will give way. Paragraph 204 of the report acknowledges that some of the Committee’s “recommendations require legislative changes” but also states that other recommendations do not require legislation

“but could be brought about in that way if IPSA does not act.”

The report also says that the Committee believes that legislation should be introduced to implement its recommendations if

“IPSA’s Board has not implemented”


Adam Afriyie: Will the Minister give way?

Mr Harper: I have said that I will take my hon. Friend’s intervention if I am allowed to finish my point.

We cannot have an independent regulator and expenses system, and then say that if it does not follow the views and advice that we give it, we will legislate to implement them. Those things are not compatible. In paragraph 205 of the report, the Committee states:

“We urge the Government and Parliament to have the courage to reform the system of payments…by implementing our recommendations.”

From the way I read that—I am happy to be put straight by hon. Members—it seems that there is a conflict between the recommendations in the report and an independent system. It says to IPSA, “If you don’t do them, we will legislate to do them anyway,” which trespasses on the independent system.

Adam Afriyie: I shall be polite in this intervention, but frankly, my hon. Friend has had to work very hard to find a tiny little thing to object to, but it does not say what he is suggesting. Nowhere in the report does it say that we should not have independent regulation and nobody is saying that—the first recommendation is that independent regulation should be reinforced.

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Paragraph 204 merely states the obvious. In a parliamentary democracy, Parliament ultimately has the power to do anything. It does not recommend that the Government make legislation. Only recommendations 2 and 3 recommend change. Paragraph 204 is not a recommendation but an observational statement. The Minister could dig out a sentence from any report to try to make a point that simply is not there.

Mr Harper: I want time to set out our recommendations, but the report states:

“Some of our recommendations require legislative changes; others are not dependent on legislation, but could be brought about in that way if IPSA does not act.”

If the Committee had stopped there, my hon. Friend’s point would have had some force, but it did not. The report goes on to say:

“We believe that step should be taken”—

meaning that legislation should be introduced—if IPSA

“has not implemented the recommendations of this report by 1 April 2012.”

Mr Andrew Smith: I strongly support the line of argument that the Minister is advancing. Quite apart from the unacceptable proposals within the recommendations—the hon. Member for Windsor (Adam Afriyie) tries to belittle them, but they are there, they mean what they say, and the House is being invited to approve them—is it not crucial that this House does not give the impression that it is seeking to use its legislative power to lean on IPSA? That would be wrong, and we must make that clear.

Mr Harper: I welcome the right hon. Gentleman’s point, which is an important one.

The House set up a proper way in which to express its views when it legislated to create IPSA—statutory consultees include Members. IPSA also has an annual review, as the amendment makes clear. The proper thing to do is to state our views through that. IPSA has published a document in which it acknowledges quite a number of the concerns that Members have raised today and in the report, including, for example, those on staffing. IPSA has made dealing with staffing one of its focuses. It seems to me that Members need to respond to IPSA. The consultation stage is open until 20 January. I urge every Member of the House who has a concern about how the system works to take full advantage of that opportunity and to feed their views back to IPSA.

Mr Tom Harris (Glasgow South) (Lab): I am not following the Minister’s argument. Is he saying that the 2009 Act, alone among every Act over the past 100 years, is the one piece of legislation that is so perfectly crafted that it will never require any amendment ever again? Unlike any Criminal Justice Bill or any other Bill that has been introduced by the previous Government, this particular Act is sacrosanct. It has been set in stone and must never, ever be considered for amendment. Is that really the Government’s position?

Mr Harper: No, it is not the Government’s position and it is not what I said. If we were simply transmitting this report to IPSA, I would have no problem with it;

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the report has a number of sensible recommendations. However, if we were considering the motion, which asks this House to approve every single one of the recommendations in this report, I would have a problem and I would be urging members of the House to vote against it. What this says is that if IPSA has not implemented all the recommendations, the Committee thinks that legislation should be brought in to implement them. I am simply saying that that is not appropriate if we are going to have independent regulation.

Bob Russell rose

Adam Afriyie rose—

Mr Harper: I will take one more intervention on this before moving on. I will therefore take it from the Chairman of the Committee.

Adam Afriyie: I am sorry to disappoint the hon. Member for Colchester (Bob Russell). The point is that this is not a recommendation of this report. It is merely an observation that members of the Committee have made. If the Minister goes through the 200 or 300 pages of the report, he will find plenty of other observations that people have made. This is not a recommendation, so the Minister is working a little bit too hard on an argument that does not really exist.

Mr Harper: It is one of the conclusions of the report. I will now move on to the three recommendations. Most of the recommendations in the report are for IPSA to consider. As Members on both sides of the House have said, many of the recommendations are very sensible and I hope that IPSA looks at them and takes them into account. In response to the report, IPSA has said that in some areas, it and the Members’ Expenses Committee are in agreement. Indeed, it has already introduced some of the suggestions that the Committee has made. IPSA has gone on to say, and has confirmed, that it will consider the recommendations of the Committee as it carries out its annual review of the scheme, which is very welcome.

Bob Russell: Is the Minister saying that IPSA has already responded to the report?

Mr Harper: Yes, IPSA put out a press notice, which is on its website for everyone to see. It has confirmed—[Interruption.] Will the hon. Gentleman let me answer his first intervention? IPSA has confirmed publicly that it will look at this report and consider the recommendations of the Committee. Indeed, it has said that it is in agreement with the Committee in a number of areas, which is a constructive response. It has learned from some of its previous responses, and is indicating that it wants to work with Members. It recognises that there are issues with the way in which the scheme works and it wants to improve it.

Bob Russell: I understood the Minister to say that the Government had not had time to consider this report, yet IPSA has had time to consider it.

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

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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

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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—

Alison Seabeck rose

Mr Harper: Let me just finish what I am saying. These are not my words; they are the words of the Committee.

Bob Russell rose—

Mr Harper: Given that the hon. Gentleman’s previous remark was uncalled for, I will not give way to him any further on this particular issue. I will give way to the Chairman of the Committee.

Adam Afriyie: What is clear from the statement in the report, and clear overall, is that the purpose of creating the legislation was to improve the public standing of Parliament, but the primary duty of the body administering and regulating must be to support. The CSPL said that there cannot be any other primary purpose than to support Members in performing their functions. The Minister is slightly confusing the two issues—one is the purpose of creating legislation and the other is a primary duty provided to IPSA, rather than a statement that it must have regard to something, which it may or may not decide that it wishes to.

Mr Harper: I do not think that the two are mutually exclusive. Indeed, I would argue that if Members are to be able to carry out their parliamentary functions efficiently, there must be public confidence in them. If the public lose confidence in us and in this institution, we shall be in deep trouble.

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Alison Seabeck: The Minister is making an important point, but it is slightly at odds with his suggestion at the beginning of his speech that we were becoming frustrated with IPSA’s status as an independent body. I do not think that we find independent scrutiny at all frustrating. Will the Minister correct his earlier statement? It was a bit misleading and, as I have said, it is contradicted by what he is saying now.

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.

Mr Andrew Smith: In common-sense terms, does it not come down to the question of whether IPSA is seen as working for us—which should not be the case—or as working for the British public? Yes, it has a responsibility to ensure that we do our job in an accountable and transparent way and so forth, but ultimately, if public confidence is to be restored, it must be seen to be working for the public and not for Members of Parliament.

Mr Harper: The right hon. Gentleman has put it very well. I cannot really add anything to what he has said.

A number of Members talked about costs and how efficiently IPSA did its job. I should emphasise that IPSA itself has a legal duty to be efficient and cost-effective. The National Audit Office’s report, which has been

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mentioned by a number of Members, noted that IPSA had significantly reduced its cost per claim, observing:

“This is impressive by the end of its first year of operation”.

The report went on to say, however, that

“IPSA is dealing with a much higher number of claims”

than were made in other UK legislatures in the UK,

“and should therefore be able to be the most efficient in the future.”

Given that, as I said, IPSA itself has a legal duty to be efficient and cost-effective, I think that it will be mindful of the thorough work done by the National Audit Office and the important recommendations that it has made.

I shall read out recommendation 3 so that Members can be clear about what it says:

“IPSA’s current administrative role should be carried out by a separate body, so that IPSA is not regulating itself, and the Act should be amended to permit this. The best arrangement would be for that separate body to be within the House of Commons Service, both because such a body would avoid imposing undue burdens on MPs and because it would benefit from the economies of scale of being part of a larger organisation in areas such as human resources and IT. Independent regulation by IPSA and transparency would ensure that it did not replicate the deficiencies of the old expenses system.”

I entirely accept that the Committee’s intention is not—here I paraphrase a media report—to go back to the old Fees Office, but it did not exactly go out of its way to make it difficult for the media to draw that conclusion, and I think it would be difficult for the House to agree to a recommendation that contains such a reference.

Another point requires clarification. IPSA’s administrative role falls into two categories: deciding whether claims should be allowed—what is called in the legislation “determining” claims—and paying those allowed claims. IPSA already has the power to contract out the payment of those claims, which is set out explicitly in the legislation. It can also contract out the payment of our salaries and the administration of our pensions, now that it is responsible for those. Under the legislation, however, it must retain direct control of the scheme for our expenses and decisions on the claims.

I believe that the deciding of claims should remain with IPSA, and the best way of explaining why I believe that is to quote paragraph 74 of the report, which quotes the Committee on Standards in Public Life:

“The CSPL noted in 2009 that both the Scottish Parliament and the National Assembly for Wales”—

the way in which the Scottish Parliament carried out its work was referred to in our debate in May, and has also been touched on today—

“had felt able to retain self-regulation by adding safeguards, but noted that ‘the difference is that neither ... has suffered a crisis of trust remotely comparable to that which has affected Westminster.’”

I think that, for that reason, the determination of our claims should remain with IPSA. The payment can already be contracted out if IPSA considers that to be more cost-effective and sensible. Other Members have said that we should not return to the old Fees Office approach, and I accept that the Committee did not mean to suggest that we should, although some may have interpreted its observations in that way.

Words mean what they say, and we must judge them on that basis. The House is being asked to approve these words in paragraph 17(c):

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“In not more than six months’ time, the House should have the opportunity to consider the merits of the cost-benefit analysis and evaluation”—

as proposed in recommendation 17(b)—

“and to make a decision on whether there should or should not be a system of regional supplements instead of the existing travel and accommodation provisions.”

My hon. Friend the Member for Windsor said that what was meant was that the House should simply express a view—nothing stronger than that—but I am afraid that that is not what the report says. The right hon. Member for Oxford East (Mr Smith) spotted that point and drew it to the attention of the House, and I think that it raises a fundamental issue.

Adam Afriyie: I understand my hon. Friend’s point, but both I and other members of the Committee have made it absolutely clear that nothing in that recommendation suggests that IPSA would be bound by it. He will know that earlier in the week when we were discussing these matters, I tried to table an amendment to change the motion to make that clear, but it was firmly turned down. I can only suspect that the aim is to engineer a difference. Furthermore, primary legislation would be required to enable this place to force IPSA to do anything, and that is not what the recommendation suggests. I realise that the Minister will persist in his noble attempt to make this a bigger point than it is, and I respect that, but I think that we need to be clear about it.

Mr Harper: I know that my hon. Friend has set out clearly what he intended by the report, but his motion asks the House to approve the words in the recommendation, and those words mean what they mean—they ask the House “to make a decision”. Although he said that only primary legislation could bind the House, his Committee wrote, in paragraph 204, that if IPSA did not implement the recommendations, primary legislation should be used. The Committee has set out its view clearly. It might not have meant to say that, but it did say it.

Adam Afriyie: I will leave the Minister alone from hereon in because the point has been well made. Let us be clear: in paragraph 204 the Committee merely states, “We believe”. It is not a recommendation. He is working hard and doing a good job at creating the sense that this is legislation that is going through when it clearly is not. I commend him on his efforts, therefore, but the House should be clear on that point.

Mr Harper: I am happy to agree with my hon. Friend that we have explained the matter enough to the House. I have set out my view of what the Committee report states, and he has set out his. The House will be asked shortly to take a view on that, and I am happy for it to do so.

The creation of IPSA was an essential step in cleaning up politics by bringing to an end the discredited system of self-regulation. IPSA has handled expenses for some time now, and the House recently resolved to commence IPSA’s powers to determine our pay and pensions. Those powers had been on the statute book since the previous Parliament, and my right hon. Friend the Leader of the House commenced those powers after consulting Members from across the House. I mention

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that because the Leader of the House said, in moving that motion, that under the relevant legislation MPs would not vote on their pay again, and his opposite number, the hon. Member for Wallasey (Ms Eagle), confirmed that the principle of independent determination was right. During those debates, several Members on both sides of the House were very firm in their view that the House should never again vote on our pay, pensions or expenses, and I think that recommendation 17(c) is incompatible with that, which is why the Government cannot accept it.

Mr Tom Harris: I apologise to the Minister for intervening now, but it took me some time to find the reference to his previous point about recommendation 17(c). He seems to be saying that he opposes the recommendation because it advocates a particular allowance system in six months. Actually, he seems to oppose it because it recommends that in six months

“the House should have the opportunity to consider the merits”

of the recommendation

“and to make a decision”.

Surely he is not saying that the House should be denied an opportunity to consider whether this is acceptable. [Interruption.]

Madam Deputy Speaker (Dawn Primarolo): Order. A lot of private conversations are going on in the Chamber. It is very distracting, particularly for those who wish to take part in the debate. If people want to have private discussions, perhaps they should leave the Chamber, so that the Minister can be heard.

Mr Harper: I am grateful to you, Madam Deputy Speaker.

If the recommendation simply stated that the House should have a general chat about the proposals, that would be one thing, but it specifically states that the House should be asked to make a decision on whether to change the system of allowances. If we have an independent system, we can write to IPSA asking for something different—for example, a different system of payments or a cost-benefit analysis. That is one thing. We could make those recommendations to IPSA, which could then consider them and, as an independent body, make a decision. If we decide, however, that the House can decide to change the system of allowances, we do not have an independent system any more. Members cannot have it both ways. I listened to the previous debates, and Members on both sides made it clear that we did not want to vote on our pay, pension or expenses. That is where we want to be and it is where we want to stay.

I shall conclude my remarks so that others can speak. [Interruption.] I have been generous and taken many interventions. The Government believe that recommendations 2, 3 and 17(c) are unacceptable. I therefore urge the House to support the amendment tabled by my hon. Friend the Member for Aberconwy, but if it does not, I urge it to vote against the motion tabled by my hon. Friend the Member for Windsor.

2.15 pm

Mr Wayne David (Caerphilly) (Lab): Many of us remember only too well the collective trauma experienced by the House during the previous Parliament over expenses. It is worth remembering that the then Prime Minister,

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my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), had support from both sides of the House when he introduced plans for an external and independent body to have responsibility for Members’ allowances. It was rightly seen that a system of self-regulation had been thoroughly discredited and that a fundamentally different approach was required—one that could command public confidence and one that meant establishing a body that was truly independent of Parliament. That body was the Independent Parliamentary Standards Authority.

Today, the Opposition still strongly support that approach and are firmly behind the principles that underlie IPSA’s operation, but it is fair to say that because Parliament moved swiftly to address the wholly understandable public concerns about the House’s expenses regime, after IPSA was established there were a number of shortcomings in the administration of the new system. I am encouraged that IPSA has listened and that significant improvements have been made and are still being made. For instance, the system for the submission of duplicate documents relating to Members’ accommodation has been simplified and Members’ mileage claims are now much more straightforward. These are just two examples of how things have gradually improved over the past 12 months.

That is not to say that the process of improvement should come to an end. On the contrary, we need to consider carefully two reports that highlight the fact that ISPA can and should make further improvements. The first report is that from the National Audit Office, published in July. It suggested that IPSA ought to consider a number of points. For example, it stated that IPSA needed to consider how it could improve relations with MPs and provide reassurance that it was truly committed to doing all it could to facilitate our work as MPs. Similarly, it suggested that IPSA ought to consider the introduction of centralised procurement contracts. It was argued that such contracts would allow more progress to be made in achieving IPSA’s goal of a cost-effective scheme. Other points in that report are also worthy of consideration.

John Mann (Bassetlaw) (Lab): I thank my hon. Friend for robustly supporting the coalition position in this debate, which I, too, endorse. However, does not his point about the National Audit Office go to the crux of the dilemma? There are many different views on what a good system would be. My personal preference would be for local supplies, rather than national supplies, to boost local economies; the National Audit Office, backed by some, is suggesting something centralised and national. Does that not go to the crux of the matter, and is that not precisely why IPSA should remain independent?

Mr David: My hon. Friend makes a good point, which underlines the point that IPSA should always effectively be independent of Parliament, as he says. The only point I would make—and which the National Audit Office has also made—is about the general principle of collective procurement, which could be done more effectively to save taxpayers’ money. IPSA has made advances in ensuring a cost-effective scheme, but more can be done, and this is a clear example.

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The second report that we are discussing today is that from the Committee on Members’ Expenses. I pay tribute to the hon. Member for Windsor (Adam Afriyie) and his Committee for their assiduous work. Their report is reasonable in tone and contains a raft of practical proposals to improve IPSA’s performance. However, I have some reservations about aspects of the report. For example, I am somewhat concerned about the recommendation that a separate body be established within the House of Commons service. That body, the report says, would be independently regulated by IPSA, and

“transparency would ensure that it did not replicate the deficiencies of the old expenses system.”

I welcome those words of reassurance, which are honestly expressed, but I am not convinced that we should run the risk of creating a perception that MPs could once again exercise influence over their expenses. For me, independence means independence, full stop.

Adam Afriyie: I do not think there is any disagreement, actually. The recommendation is merely that the legislation should enable the separation of those functions, because IPSA is unique in the entire world in its existing set-up. The Committee goes on to suggest what we think might be the best way to work more cost-effectively, but that is not the recommendation. The recommendation is merely that the legislation should enable a separation to take place, just to tidy things up a little.

Mr David: I hear what the hon. Gentleman says, but it still worries me that we are talking about at least an aspect of IPSA’s work coming in-house, to this place. Indeed, recommendation 3 says clearly:

“The best arrangement would be for that separate body to be within the House of Commons Service”.

However, if that body is in the House of Commons service, it is under the control of Members of Parliament, and I do not think that is desirable, nor is it something that would be easily understood by the general public.

That said, the report makes a number of good practical suggestions. For example, it is suggested that IPSA should extend its use of direct payments to cover as near to 100% of transactions as possible. That is to be welcomed. It is proposed that Members’ office and staff budgets should be merged, which would also be welcome. The report proposes that IPSA should make it easier for MPs to find out online how much of each budget has been spent. That would be a step forward. It is also suggested that IPSA should always ensure that MPs’ staff should have their expenses reimbursed directly and that this reimbursement should be made promptly. We would all endorse that. Those are just some of the practical and positive suggestions that are well worth active consideration and, I hope, implementation.

There are many policies and proposals in the report that I believe require careful deliberation. However, because of that, I am of the view that simply approving all the recommendations in their entirety might not be the best approach. That is why I have sympathy with the amendment, tabled by Government Back Benchers, which asks that the report be considered by IPSA as part of its annual review. I also hope that the Government will not merely wrap the report in warm words, but

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ensure that active consideration is given to those proposals that relate directly to the Government—in particular, recommendation 2—or the duties of IPSA.

I believe that the House has begun the process of restoring the reputation of Members of Parliament in the eyes of the public. However, to be honest, we still have a long way to go. That is why I believe that IPSA’s independence must be unequivocally maintained and that this House should not have any determining influence over any aspect of its expenses regime.

Bob Russell: Would the hon. Gentleman like to follow that argument through? Had it not been for the determination of the hon. Member for Windsor (Adam Afriyie) in getting the House to agree that this Committee should be established in the first place—we should remember that the Front Benchers did not want this Committee to exist—we would not be having this debate now and we would not have been able to discuss the important points to which the hon. Member for Caerphilly (Mr David) has alluded, including allowing Members to make progress and enhancing public confidence. It is not thanks to Front Benchers, but thanks to the House collectively—and the hon. Member for Windsor particularly—that we are having this debate and that this Committee was set up in the first place.

Mr David: I certainly endorse that point. The House has been mature in its approach to the issue and, as I made clear at the start, I genuinely commend the work carried out by this Committee. I would make the point, however, that for the next stage, it is not for us to accept everything before us on a blanket basis; we should pass matters on for further in-depth scrutiny and appropriate implementation. That is my important point.

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I come back to the central issue of the independence of IPSA. That is a cardinal principle, and I would not want any message to go out from this House, either deliberately or inadvertently, that undermines that independence. That is important both for the practical implementation of expenses and for public perception. The standing of Members of Parliament is, I believe, something that we are all genuinely concerned about.

Finally, we all recognise that the system needs to be improved and made more effective. That is why Labour Members and I personally welcome this report from the Committee on Members’ Expenses and why I shall support the amendment.

2.26 pm

Adam Afriyie: I have enjoyed hearing the constructive contributions to the debate. One thing that has been emphasised over and over again is that nobody wants to undermine the regulation of payments to Members and that everybody would like greater transparency, greater efficiency and greater value for money for the taxpayer.

The amended motion would not be my preferred route, but it would not prevent other actions from being taken by the Government as they revisit some of these issues. On balance, I shall not object to the amendment. I hope that we can therefore move swiftly on the next business.

Amendment agreed to .

Main question, as amended, put and agreed to .


That this House thanks the Members’ Expenses Committee for its First Report on the Operation of the Parliamentary Standards Act 2009, HC 1484; and refers it to IPSA to be considered as part of its Annual Review.

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Financial Education

2.27 pm

Justin Tomlinson (North Swindon) (Con): I beg to move,

That this House notes that young people today grow up in an increasingly complex financial world requiring them to make difficult decisions for the future, often without the necessary level of financial literacy; believes that financial education will help address the national problem of irresponsible borrowing and personal insolvency and that teaching people about budgeting and personal finance will help equip the workforce with the necessary skills to succeed in business and drive forward economic growth; further believes that the country has a duty to equip its young people properly through education to make informed financial decisions; and calls on the Government to consider the provision of financial education as part of the current curriculum review.

First, I would like to thank the Backbench Business Committee for allowing us to have this excellent opportunity to raise the profile of our ongoing campaign calling for greater provision of financial education and to make it compulsory in the national curriculum. I also extend my thanks to Martin Lewis of MoneySavingExpert.com, whose e-petition secured the magic trigger of 100,000 signatories. It is only the fourth to have done so.

A number of people have asked me why this subject caught the public’s imagination. A couple of recent studies perhaps explain that. It was found that 94% of people agree that financial education is important; that 69% of parents feel that their children will get into debt; that fewer than a quarter of parents feel confident in educating their own children in money matters; and that 72% of parents do not believe that enough has been done to educate young children.

I am personally passionate about this subject because I believe society is changing. Here are some examples. This year was the first in which debit card usage exceeded cash usage. Only a few generations ago, people were paid weekly in cash. They often ran out of money, so were effectively forced to try to manage money in a controlled manner. Nowadays it is easy for the money to come in and flow out very quickly. We are seeing a greater prevalence of direct debits and standing orders, so if people get themselves into financial difficulty—the majority because of an unforeseen change of circumstances, such as the loss of a job, a bereavement or a family breakdown—they think that they will apply the financial brakes and not go out that weekend for a meal or to the cinema and that they will not spend any money, but the direct debits and standing orders are still flowing out of the account. People quickly become overwhelmed.

We are seeing ever more complicated marketing messages from different sectors, which are often misleading.

Mr Andrew Smith (Oxford East) (Lab): I am very grateful to the hon. Gentleman for giving way and I congratulate him on tabling this motion, which I strongly support. Does he agree that one of the big problems is that a lot of people, faced with the marketing to which he refers, simply do not understand the rate of interest they are being charged? That underlines the importance of basic mathematics in the curriculum alongside the financial education that he is rightly advocating.

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Justin Tomlinson: The right hon. Gentleman is absolutely spot on with that point and I am just about to come on to it.

We have already had a number of debates in this Chamber on debt management companies, doorstep lending and payday loans. In fact, on annual percentage rates, we have already seen worrying evidence that consumers often think the higher the APR, the better. When people take out loans, they are not necessarily taking them out for a simple 12-month period. Most people could probably calculate 10% on a £100 loan, but it becomes complicated. Sometimes, the high-interest rate loans can be better than what people think is a safe bet. A good example of that is someone who wishes to borrow £100 for two days. They can borrow it from one of those well-known payday lenders who charge 4,635% plus £5.50 for the product fee, or they can go into their unauthorised overdraft facility at their local bank, which will charge them an understandable flat fee of £10 a day and a £2.50 fee for the privilege of using their debit card. Nearly everybody would accept the bank’s offer, because it is understandable.

Mrs Jenny Chapman (Darlington) (Lab): I feel obliged to intervene, given that my hon. Friend the Member for Walthamstow (Stella Creasy) is not here, but how many people does the hon. Gentleman believe sit and make the calculation when they are working out whether to take a loan from Wonga? How many of them does he think roll over their loans at the end of the borrowing term?

Justin Tomlinson: I thank the hon. Lady for that intervention and that is exactly the point. It is so complicated. In my example, the bank was not the right option, but on many other occasions, it would be the other way around. The majority of consumers cannot calculate the interest rates to make those informed decisions. The market benefits from that and targets its marketing to take advantage of the situation.

Dr Andrew Murrison (South West Wiltshire) (Con): I have a great deal of sympathy with my hon. Friend’s motion and I congratulate him on tabling it. Does he agree that the fundamental problem is not so much financial literacy and numeracy skills, although they are important, but that basic literacy and numeracy need to be improved, as evidenced by the unsatisfactory key stage 2 results that we saw in May?

Justin Tomlinson: I thank my hon. Friend for that intervention and I agree with him 100%. My speech and that of my hon. Friend the Member for Brigg and Goole (Andrew Percy) will cover those exact points.

To conclude this part of my speech, consumers too often take advantage of what they see as instant pain-free solutions without understanding the implications of what they are taking on.

Jim Dowd (Lewisham West and Penge) (Lab): Before the hon. Gentleman moves away from payday loans, does he not agree that anybody who finds themselves even contemplating taking one out—I accept his point that there are different ways of calculating the best way out of a situation—needs to address their whole financial position? It tends to be indicative of a problem, although

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I would not necessarily say that it was systemic. Once someone starts robbing from next week, they will be short then and it will go on and on. They need at that very moment to get the most careful and wise advice on their personal finances.

Justin Tomlinson: I thank the hon. Gentleman for his contribution. Let me be clear. Everyone has individual circumstances, priorities and challenges, and what one member of the public thinks is the right thing to do might be different to what the next person thinks. For me, the driving force is the idea that we have a duty to equip people to make informed decisions so that they can understand the implications of what they are doing and therefore do the very best according to their own priorities and circumstances. As we find in our debates, however, all too often people are not in a position to do that. MPs often end up referring to our casework because time and again we see people who have made wrong decisions not necessarily through any fault of their own, but because they did not have the skills to make the right decisions. Indeed, Citizens Advice has highlighted that 60% of its work is finance-related.

We have a competitive market and the Government have been encouraging people to take advantage of competition within the energy market. We say to people, “Go and shop around and look at energy tariffs,” but the market is incredibly complex and people need to be clued up if they are to be savvy consumers. I recently attempted to look at energy tariffs, but they are not all like for like, so consumers need a good level of skills to unravel that complicated market and seek out the best deal.

Another reason why I am passionate about this subject is that my generation could be pretty rubbish at handling money. We could go to university, drum up huge amounts of debt, including expensive debt on credit cards, and then secure our first graduate jobs—in my time that was relatively easy to do—get on to the housing ladder with a 100% or 100%-plus mortgage and watch house prices increase. When we had learned the error of our ways, we could reconsolidate our mortgage, pay off all our expensive debts and carry on, but that option will not be available to the next generation. As things stand, it is very difficult to get into the housing market and there is no guarantee that house prices will rise so that one could take advantage of that should one get on to the housing ladder. It is harder for young people to get credit and harder for people to correct any mistakes they may have made.

Claire Perry (Devizes) (Con): I commend my hon. Friend, who is a near neighbour, and all the MPs involved in this issue—this is the House of Commons working at its best. Does he agree that this is a big issue for women and girls, who are often the particular target of very expensive consumer demands, such as, “You must have this big handbag,” or “You must buy these incredible clothes”? I think we do our young women and girls a real disservice in this area. Not only do we not educate them about finance but we encourage them to borrow and spend as much as possible.

Justin Tomlinson: I thank my hon. Friend for raising that point. This is part of the problem. We want people to be equipped to make informed choices and also to be savvy consumers who understand how to get the best for their money.

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I want to say a little about how we got to today’s debate. Just over a year ago, I innocently asked a parliamentary question calling for greater financial education within our schools. I was then contacted by the national charity, the Personal Finance Education Group, which told me when we met that it had been campaigning on this subject for 10 years. Its representatives said, “That was a very good question. Would you like another 30 to ask?” for which I was very grateful. I submitted those questions, which made me look very intelligent. I was then contacted by Martin Lewis of MoneySavingExpert.com, who said, “Can I come and meet you? I’m very impressed by the 31 questions you’ve now asked on this subject. You sound very knowledgeable and I’d like to get behind you.” We decided between us that I alone could not champion this cause and that we should launch an all-party parliamentary group. Following a little gentle persuasion from the 6 million subscribers to MoneySavingExpert.com, MPs keenly queued into a very busy Jubilee room. We clocked up a staggering 225 Members from different parties, making us the largest such group.

At that point, we were tempted to go and knock on the Minister’s door, offer him a cup of tea and some biscuits and talk about how overwhelmingly we were supported by people, but we knew that the Minister is often contacted by people championing worthy causes. I have called for basic cookery and life-saving skills to be taught in schools so I have been guilty of making lots of requests of the national curriculum. We thought that instead we would be patient and launch a constructive and positive eight-month inquiry so that when we met the Minister and said, “This is our worthy cause,” we would have answers to all the questions that could be raised.

The inquiry was chaired by my hon. Friend the Member for Brigg and Goole who, despite having been called a supply teacher by the Prime Minister, has an extensive knowledge of a variety of roles within schools. We conducted a significant amount of research. More than 900 teachers responded, telling us what is happening, and what they think could and should happen. More than 50 relevant organisations met us, face to face, in oral sessions. We set ourselves up as a mini-Select Committee. We heard from organisations from the banking sector, financial institutions, teachers unions, financial education providers, the Financial Services Authority and the Money Advice Service. We heard from mathematicians so intelligent that the lights in the room started to flicker. We are extremely grateful for the support given by Carol Vorderman, who had previously been commissioned by the Conservative party when it was in opposition to look into mathematics standards. She was ably supported by Roger Porkess and Stella Dudzic, who wrote the mathematical example questions in our report.

We met representatives of the personal, social and health education sector, and we also talked to young people themselves because if we championed this cause but young people did not wish to engage, it would be a flawed campaign. We were overwhelmed by their support. In particular, I thank Katie Emms and Alex Harman, who took part in the oral sessions, but who on Monday, promoting our launch, got banned by Twitter for tweeting rather too enthusiastically about how good our 52-page report is.

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Diana Johnson (Kingston upon Hull North) (Lab): Has the hon. Gentleman had an opportunity to look at the evidence presented to the Education Bill Committee at the end of the last Parliament? An attempt to get PSHE, including economic education, on to a statutory footing in the national curriculum was debated at length, but unfortunately his party prevented that from going through in the wash-up. A lot of very good evidence was presented to that Committee.

Justin Tomlinson: I thank the hon. Lady for that intervention. That was part of the evidence that we considered, but that was a rather simplistic description of what happened in the wash-up. That was not a stand-alone issue, and we referred to that in the report.

Andrew Percy (Brigg and Goole) (Con): We did indeed look at that issue but was it not the case that we were not convinced from the start about simply putting financial education into PSHE? We wanted to discuss examinations and mathematics and all the rest of it, which is why we have come up with a solution that I think is much better than that offered before the election.

Justin Tomlinson: Absolutely. It was important to include that as part of the evidence, but as we are about to set out in our recommendations, it was not the conclusion that we came to.

Kevin Brennan (Cardiff West) (Lab): I commend the hon. Gentleman on his work and on the report that he has produced. Does he not accept that if his Front-Bench colleagues had not taken that position, compulsory financial education would have been delivered through PSHE in secondary schools since last September?

Justin Tomlinson: I thank the shadow Minister for his intervention. We are trying to reach consensus on the very best way to deliver that education. We considered that approach as part of our report and concluded that it was not the right way to go. I am about to set out what we feel should be done. I am aware that a number of other Members will also go into detail to explain why we came to that conclusion.

I am going to whizz over the key recommendations. My hon. Friend the Member for Brigg and Goole will explain the mechanics behind them because he chaired the inquiry. We believe that the Government should promote the provision of high-quality financial education in schools in England. They should do that by acting on, or supporting, the following recommendations. I hope that the Minister’s pen is poised.

With regard to national provision, personal financial education should be a compulsory part of every school’s curriculum. Resources produced by outside organisations and visits of providers to schools should be available and accessible if considered helpful by teachers and quality-marked by a trusted body. There are many and varied examples of volunteers and financial institutions that already go into schools to do a good job. There is also evidence that some people felt that that was sometimes a marketing exercise.

It was also clear that provision was very patchy. We saw lots of evidence that if a school governor happened to have a connection to a particular financial institution, their school was more likely to have that opportunity

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than others. That said, those institutions can play an important role as long as the teachers lead. For example, a PE teacher providing a wide variety of sports may be particularly competent in football and rugby, but if his students want to take part in, say, trampolining, he may invite the local trampolining club to come in and give a lesson. That should be under the control of the teacher and be quality-marked so that we can be sure that it is not a marketing exercise.

Mr Robert Buckland (South Swindon) (Con): My hon. Friend is absolutely right to say that such lessons should be teacher-led. I had the pleasure of seeing a teacher-led money management workshop run by the charity Credit Action at St. Joseph’s college in my constituency a week or so ago. The year 8 group were really engaged. I could see that there was strong merit in the approach that was being taken in that lesson. I am delighted to support my hon. Friend and congratulate him on all the hard work he is doing.

Justin Tomlinson: I thank my hon. Friend for that important intervention. A number of members of the all-party group, including several who took part in the inquiry, visited local schools to see at first hand the enjoyment and fulfilment of young children who had such an opportunity. If we ask them whether they are interested in mobile phone contracts, the cost of driving lessons or the fact that ultimately they will have access to credit cards and loans, we see that they are enthused by money and buy into financial education.

The report recommends that: