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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 10 2 2-ii
House of COMMONS
TAKEN BEFORE the
First Weeks at Westminster
Monday 25 March 2013
Andrew McDonald and John Sills
Evidence heard in Public Questions 30 – 70
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Taken before the Administration Committee
on Monday 25 March 2013
Sir Alan Haselhurst (Chair)
Mr Kevan Jones
Mr Marcus Jones
Mr John Spellar
Mr Desmond Swayne
Mr Dave Watts
Examination of Witnesses
Witnesses: Andrew McDonald, Chief Executive, and John Sills, Director of Policy, IPSA, gave evidence.
Q30 Chair: Can I formally, on the record, welcome you, Mr McDonald and Mr Sills? We are very grateful to you for coming to see us this afternoon. You will be aware that we are looking again-it is not for the first time that this matter has been examined-at how we look after new Members of Parliament. It is a daunting experience for many people, having got elected, to then suddenly come up against the reality of organising themselves. Over my span of years in this House, we have moved from very little, possibly to too much, in terms of what we try to say to new Members at the inception. It is about trying to find a proper combination of things that perhaps need to be known at the early stages, and then things that follow up on that.
The situation has become more complicated over the years, with the huge weight of extra correspondence that Members now get compared with some decades ago, obviously supercharged by e-mail, plus the fact that the staff have had to increase to deal with that. There has been a movement over the years, from Members perhaps at some point in the past being hugely dependent on their sponsoring parties for accommodation in their constituencies, to a point where that level of voluntary support is now very patchy throughout the country, and that has put the weight on MPs to make their own accommodation and staffing arrangements, and so on. That has been a new complication.
Then, of course, there is the complication of the arrival of IPSA, as from 2010, and each side getting to know each other, if I may put it in that way. It has been accepted on IPSA’s part that there are lessons to be learned from that initial experience. There will be a number of colleagues who wish to catch my eye, and I will start with Kevan Jones.
Q31 Mr Kevan Jones: Can I thank Mr McDonald for his presentation? It could not have been any worse than when it was started last time. You have answered one of the main points about cash flow for new Members, and existing Members. You left a lot of us high and dry with thousands of pounds’ worth; I do not know whether you thought we had money sloshing around everywhere to dosh out last time, so the idea of the £6,000 would be very helpful. Can I raise something in terms of the cash card? If you are a Member from the north-east or Scotland, £500 will not see you very far in the first few days, because that will take up your hotel. Could I suggest you look again at whether it would be possible to have a higher amount for constituencies further away?
An issue in terms of returning Members: will the cash card exist and have to be reissued, or will it just be carried over? The other thing is about what IPSA are going to do about people’s accommodation during the election. Previously what happened was that you did not claim during the election period, but if you were reelected you then reclaimed back that period. Have you given any thought to that? In my case, for example, I will be £1,500 out of pocket if I cannot claim for that if I get reelected.
In the interim period-I know you did it for obvious reasons, to reduce the staffing problems with the phone line-would it be a good idea that during that first few months possibly the phone line could be open longer than the period it is now?
There is one final thing. I welcome what you have done on direct payments, because it has helped a lot, but why is it you cannot do direct payments for things like my photocopier, which every quarter costs me £400? I accept that you are now paying it up front to them and claiming it back later on, but are there any technical reasons why certain supplies cannot be set up on direct payments?
Andrew McDonald: Thank you very much for those questions. I think I have counted five, so I will make sure that between us, John and I will seek to cover them. A general point at the start, which is that we might in some ways see the 2010 experience differently; you will not be surprised by that. What I would like to do is to focus-
Mr Kevan Jones: You did not have your bank manager screaming down the phone at you.
Andrew McDonald: What I would like to do is focus on our planning for the 2015 election. I am happy to go back to 2010 and talk about the history, where we may have different views on it. What I would like to do, and it may be more helpful to the Committee, is focus on 2015. The amount on the pre-payment card is not a fixed figure at this stage. The purpose of it is to help with the first few days. Regarding the £4,000 advance, which is to help with cash flow, once the request has been made we want to have that money available in MPs’ bank accounts within 36 to 48 hours. It is literally only intended for the first few days. We think that around about £500 is the right figure, but this is not set in stone at this stage.
Q32 Mr Kevan Jones: Are there any tax implications on that?
Andrew McDonald: I will ask John to comment on that, if I may, and if there are points that we cannot take now we will write to you subsequently. I will ask John to comment on the arrangements for the existing payment card for returning Members, and arrangements for accommodation during the election.
In terms of the availability of the phone line, on which, as you know, we have taken the judgement that we can most effectively provide support, given the scale of our resources, by having the phone lines available in the afternoons between one o’clock and five o’clock, yes, in the weeks after the general election we will have longer opening hours running through the morning as well, because that would clearly be of assistance to new and returning MPs.
You are right to say that there has been a very significant switch towards direct payments: by value, in 2011, just 15% of expenses were paid that way; that figure is now 53% and rising. We have an open mind as to whether or not it would be appropriate in future to open up the payment card more widely. Clearly, though, there are issues about making sure we get effective reconciliation of the cards; at the moment there is still some toing and fro-ing, and that is still a rather torturous process at times. We would rather that was operating more smoothly. Also, there are some issues with some merchants who will not or cannot provide the sort of data that we need, so that we can show transparently the way in which expenses have been incurred. Perhaps I can ask John to pick up those other questions.
John Sills: They are good questions; I am not sure I have got the answer today.
Mr Kevan Jones: I am glad to see you have survived, John, anyway.
John Sills: We will definitely have a proper look at it. I guess those who would object to it would probably say that we do not have the legal power to do so, if it is in that period where you are not regarded as the MP, once Parliament has dissolved. The second thing is some might argue-I am just stating the arguments here, because I am not sure I have got a view on this-that it would give incumbent MPs some kind of advantage against those who are challenging them. They are probably the objections, but I do not know what the answer is yet; we will certainly look at both.
Q33 Mr Kevan Jones: It would cost you more, because, if you do not do it, I intend to stop my lease a year before and stay in hotels, and I would advise all Members to do that, because then you turn it up straight away. If I stayed in hotels every week for a year that is going to cost you considerably more than it would to continue with my flat, so you need to look at this.
John Sills: Yes, we will definitely have a look.
Andrew McDonald: We just have the legal problem that John described, of the status of MPs during the campaign, but we will write to the Committee.
Q34 Mr Kevan Jones: You never got paid while you were in the election period. If you were re-elected, it was retrospective to cover that period, so you were not paid in advance for that period.
Andrew McDonald: I understand.
Mr Spellar: If so, when would the law have changed?
Chair: John, sorry, I have got a list.
Mr Kevan Jones: If you can let MPs know what you are going to do on that; we will have to get out of our flat arrangements very quickly.
Q35 Keith Vaz: Thank you Chairman. Can you just clarify what happens about staffing costs during the election period, because for all the elections that I have been involved with I have stopped paying my staff from the House of Commons, and they are taken on as party staff for that period. Is that what is going to happen?
Secondly, this concerns the first year’s budget for new Members and the second year’s budget. I have heard anecdotally, from 2010, that when new Members begin recruiting it is likely they will not be using their full budget for the first year, because they recruit later on after they settle themselves in-they advertise, etc.-whereas incumbent Members will probably have their same staff, and therefore their budgets will be higher. I do not know whether you have done any research into this, but it creates a problem for the year after, because in the second year your budget is limited to what you spend in your first year, so if you are not over your budget and you do not require a contingency, you cannot get a contingency for the second year. Whereas in the first year for new Members the amount is within the budgetary limits, it is likely that in the second year it will be beyond the budgetary limits. Does this make sense to you?
Andrew McDonald: It does.
Q36 Keith Vaz: My staff have been with me for 25 years, 20 years and 16 years, so they are at the top of the pay scale. Therefore, I will always be very, very high in my staffing allowances. A new Member next door-Jonathan Ashworth is next door; he has just been elected-will always have much smaller staffing allowances, because they have got new members of staff. If they are new Members they will have brand new members of staff. Does this make sense to you?
John Sills: Yes, it does. The answer to the first question is that your staff are still going to be carrying out parliamentary activities-helping the constituents, and so on. In that regard they should still be paid; that is certainly the working assumption on that one. There are obviously issues around what activities they are carrying out in that period, which you have to look into, but the basic principle is there.
On the second question, you are basically saying that the £6,000 startup may be needed to some extent the next year rather than the first year, because it takes a while, and so on. Contingency is available; contingency, as you know, is for excess over the budget limits that should apply to everybody. An MP in that position, who found themselves still catching up, as it were, could apply for contingency in that second year.
Andrew McDonald: Should there be any doubt, the budget limits for staffing remain the same for new or returning MPs; the only variation is that £6,000 additional startup.
Q37 Keith Vaz: That is irrespective of the length of service of your members of staff. This is the problem that we have, because a returning Member will have a member of staff who may have served five years and therefore be higher up on the scale than a new Member, who has employed someone on the £23,000.
Andrew McDonald: Yes. It is irrespective of that, hence, as John says, the possibility of contingency where appropriate.
Keith Vaz: Thank you; that is very helpful.
Q38 Karen Bradley: I am wondering if you could give any detail into thoughts you might have had about those first few weeks and temporary accommodation for new MPs. I remember in 2010 having to book my own hotel, which I could not get the parliamentary rate on. I was significantly out of pocket in those first few weeks, because there was nobody there to help me to say, "The hotel rooms are booked and they are at the parliamentary rate". I was funding it out of my own pocket. I wonder if you had given any consideration to that.
Andrew McDonald: That is a good illustration of a question that might either fall to the Commons or to ourselves to help with, and what we need to do is to work closely with the Commons, at the very least to see whether or not we can provide a seamless information service to new Members, so that a newly elected Member in 2015 would at least have sight of which hotels had those rates and how they may be claimed. We are part of the General Election Planning Group, with the Commons authorities; I would hope that we could nail such issues in that group.
John Sills: Another thing we are doing, as you may have seen, is looking at the whole issue of MPs’ accommodation in some depth. One of the issues that really struck me in a lot of conversations with new MPs in those early days is them saying, "I have come down to London for the first time; I do not really know where to find somewhere to live. I have got all these other things to do as a new MP." The analogy with businesses with expatriates is quite a good one. I have personal experience of this; in the past I have worked in Paris for BP. When I went out there I had a budget, and they hired an estate agent, they knew what my budget was, and they found me somewhere to live.
That is something we want to explore, whether that is something that we could do, because I am sure it would be very helpful, and it would enable MPs to secure accommodation much sooner, particularly if they do not really know their way around London. It is an idea; I am not saying it will happen, but it is one idea to look at.
Q39 Karen Bradley: I would urge you to do that. After spending 11 months living in a hotel, I would urge you to assist in any way you can with that.
Andrew McDonald: That accommodation review, which John referred to, is going to run through the coming financial year, so well ahead of the election.
Q40 Thomas Docherty: I have got a couple of questions. Let me start off with a negative. I am sorry, Mr McDonald, but I do not know a single new Member from 2010 who has a good word-singular-to say about IPSA in 2010. If you can find me a Member who has a good word, who had a different experience to the one that Mr Jones has articulated, I would like to meet them. You cannot decouple this process. You cannot say that there are no further lessons to be learnt from 2010 when planning for 2015.
On a slightly more positive note-having got that rant out of my system-on the training for new Members, one of the huge problems that I had as a new Member was that you had what was billed as your IPSA training event, and it was a 15 to 20 minute thing where they gave you this little coupon thingy for your remote access. There was no training at all about what you could claim for, how to claim, what the thresholds were, and how long it would take. When you are looking at the training, are you specifically looking at the system itself, about how to make a claim, or are you looking at what you can make a claim for? Are you considering making a pack available; something physically available to new Members, to be given either by the returning officer or via the party managers in the days after? I appreciate there is a danger we overload Members in that first slightly drunken weekend after an election.
I am slightly concerned to hear you say that you are not clear about where the line lies between House responsibilities and IPSA responsibilities. Would I be wrong if I was to suggest that pay and rations, and all associated with that, is IPSA? The physical accommodation in the building belongs to the Commons, but would you disagree that everything else is your primary responsibility?
My very final question: I welcome what you said to Mr Jones about the phone lines. Could I press you to say a bit more about whether you are looking at a dedicated set of phone lines for new Members, who might have quite different questions from returning Members?
Sorry, one final question, which Mrs Bradley asked me to ask, was: could you clarify what the view is about staff for Members who are seeking re-election and office costs? While we would not expect to necessarily get paid during the campaign, could you just confirm that you are saying that members of staff and office costs will be met during the campaign?
Andrew McDonald: Thank you very much for that; I think I counted five questions.
Chair: Yes, there was slight question inflation there.
Thomas Docherty: It was a bit boom and bust.
Andrew McDonald: I will seek to deal with them in turn. If I may, I will just respond briefly on your observations about 2010. I did not say that no lessons could be learned from 2010. I am absolutely clear that lessons can be learned from 2010, and have been learned from 2010. I am quite clear that there were elements of our service in the summer of 2010 that fell below a level that was what we would want to deliver; that is why I wrote to you and to all MPs in September 2010, to make that clear and to apologise for those shortcomings.
While saying that, I would also say that the only independent examination of the experience of the establishment of IPSA and its early running-independent examination-was by the Office of Government Commerce, which observed that the impossible had been asked of IPSA at its establishment, and the impossible had been delivered. That is not my assessment; that is the assessment from the Office of Government Commerce. It is important that any shortcomings there were in the summer of 2010 be understood in that context. Look also at the broadly positive assessment made by the National Audit Office in its report of 2011-an assessment that dealt both with the early services and with the establishment of IPSA. We may just be in a different position in terms of our perspective on 2010.
Let me turn to your questions. In terms of the scope of those two training induction services, yes, we want to cover the scheme itself, as well as how a Member goes about claiming. It seems to me important we do the two alongside one another. As you say, there are attractions to delivering a pack, but we are also conscious that one of the pieces of feedback that we received in 2010 was, "We get so many pieces of information coming to us, whether electronically or in paper form; please judge carefully how much you provide, otherwise it is just going to get lost in the great mound of paper that is delivered to us."
Thirdly, I did not quite say I was uncertain about the boundaries between IPSA and the House, more that there are some instances-the question raised earlier was one of them-where it could be that either the House or IPSA could step forward to pick up a role. In terms of the current distribution of roles, there is clarity between us. It is important that we work together-that is the point I was making-so that whoever picks up the responsibility, the service delivered to Members and to their staff is seamless. Relations with Commons authorities are good, we collaborate closely, and I think we can achieve that.
The fourth question was about dedicated phone lines specifically for new Members. It is a good point; I do not think we have considered that yet, and we will do so in the light of this question. We will take that away. I hope that what we are doing illustrates that we are keen to work collaboratively with Members, and with your staff, so that we continue to prepare as well as we can for the coming election.
The fifth question concerned the payment of staff. John, can I ask you to take that one?
John Sills: Yes, I think it was a similar question to Mr Vaz’s. The staff of MPs are still carrying out parliamentary duties, and therefore would be paid; likewise with the office, if there were specific costs arising that were clearly to do with campaigning, then we would not expect you to claim them, but the basics will remain, yes.
Q41 Mr Kevan Jones: Including our pay?
John Sills: I cannot remember whether you do or not. Do you?
Mr Kevan Jones: Yes.
John Sills: If you do you do, yes.
Thomas Docherty: Do we?
Q42 Mr Kevan Jones: Chairman, I am a bit concerned about this, because we are MPs until we get defeated; if Mr Sills is not aware of that then I am a bit concerned. If you are a returning Member, or even if you get defeated, if you are not paid for that month that means you are going to have to carry an entire month without any pay. Secondly, on the flat thing, which I accept you are going to look at, you could have substantial costs or hindrance to anybody wanting to get re-elected, to be honest.
Andrew McDonald: There has been no change to the legal arrangements here. We will write to clarify the position in a note afterwards.
Q43 Chair: It certainly has to be clear that a Member of Parliament standing for re-election has initiated correspondence right up to the point of dissolution and, frankly, beyond. A lot of people approach the person they recognise as the Member of Parliament, even though they may not intend to vote for that Member of Parliament in the subsequent election, but go to him or her during the campaign and expect to get the usual service. You are working very hard keeping that part of your life separate from the fact that you are seeking re-election. John, did you wish to come in? I was not sure whether you were trying to come in before and I cut you down.
Mr Spellar: No, I was just following up.
Chair: Relevant to the question about the division of responsibility between the House service and IPSA’s, one of the difficulties that has been thrown up is the provision of certain types of equipment. Up to now, all matters such as computers and so on have been provided by the House service, either on issue or, in the case of mobile telephony, as that became a regular need, as a legitimate expense. Some candidates for election made their own decision, it is true, to say that there were certain things they would not claim, because they did not wish to be criticised in the press for so doing.
That has led to an uneven situation, so when it has become the practice of the House to have paperless systems, and to have tablet computers, we have found in some cases that IPSA regarded that as a legitimate expense; it was a tool of the trade that was necessary alongside a mobile phone. At the same time, if someone had committed themselves to not making any claim on IPSA, and the House was not prepared to play ball, this was a very difficult situation.
For a Committee that decided to go paperless, and therefore all Members were expected to be reliant on a tablet, and some of them virtually denied themselves having it, there was pressure on the House service to do something, and that led to an overlap with what IPSA might do. Do you see any hope that that can be clarified into the future, so that there would be no stigma attached to a newly elected Member seeking that equipment?
Andrew McDonald: I will ask John to comment on the specifics in a moment, but I will make two general points, if I may. First, we are very keen that there should be no stigma associated with any legitimate claim within the system, and that is something that IPSA has worked hard at, not least the renaming of the scheme as the Business Costs and Expenses Scheme, making it quite clear that legitimate claims within the scheme are about reimbursing Members for legitimate business costs.
Second, there is a broader strategic conversation that we and the Commons authorities are now beginning, about how MPs are supported in respect specifically of IT equipment. As the nature of IT equipment changes, with a greater emphasis on ever more sophisticated mobile prices, it does raise questions as to where the boundary should be in future. Those conversations are just beginning, so I cannot tell you how they are going to end up, but we both recognise that that needs to be resolved for the longer term. John, I do not know whether you want to comment on the short term.
John Sills: I would simply say that IT equipment is a completely legitimate cost that you can claim out of the office costs expenditure budget. IPSA would not be turning down purchases of that nature. We all know that the media still gets a bit excited about iPads and reports them from time to time, but they are rapidly becoming a very important business tool. Again, we do not make judgements about that. We get asked about it, of course, but we do not make judgements.
Chair: It is very helpful that you have put that on the record.
Q44 Thomas Docherty: On this issue about mobile devices, tablets, iPads; can you just clarify for me what discussions you have had at a senior level with House officers? For example, I am aware that the House bought 300 iPads; do you do a similar bulk buy? What do you do about software? Is this something that you see a "There is the House and there is IPSA"?
John Sills: Andrew might know more about this than I do, but the House provides us with a basic level of IT, does it not? A certain number of stations and things like that. Where MPs need more then they can claim that out of their office costs budget. IPSA itself does not bulk purchase equipment; you may well be able to get some of those things directly now. You can get things like invoices, so you do not have to pay for them up front, and so on, but we are not in the business of buying things ourselves.
Andrew McDonald: I have nothing to add.
Q45 Chair: I would just add that that there is the difficulty that we are advised by PICT that the world is moving to a situation in which any kind of tablet or device will be presented by a Member and be expected to be connected to the parliamentary system. It is going to be Members’ choice, in a sense, whether they go for this type of gadget or another. The speed with which these things change is also a complicated matter; no sooner have you got something you think is a good piece of equipment than six months or a year later you are very disappointed that you are behind the curve.
Andrew McDonald: We are absolutely conscious of that speed of change, hence the need for this exchange with the Commons authorities.
Q46 Tessa Munt: I have a few general questions that I would like to ask. I was going to ask for your comments about the tacit encouragement of MPs to base their staff in Westminster rather than in the constituency, because it is much more effective costwise for me to do so. As I understand it from my accountant, the £4,000 float that I have-which I had to have, because I have no income other than what I do here-is a taxable benefit. I wondered about the loans in advance, when you get interest-free stuff like that, the arrangements for repayment when one is approaching an election. Am I going to be required to return the float a month before the election? How am I meant to deal with the taxable benefit side of that, which places me at another disadvantage?
A more general point is that, as I understand it, as a public servant I am going to get a pay rise of 1%, and yet my staff, who appear not to be public servants for some peculiar reason, are not going to get a pay rise, which is something I resent hugely. It is totally inappropriate. I do not understand how, if we are public servants, those who work for us and execute the duties in reality that we do cannot be considered public servants. Have you have done any work to look at how that might be dealt with?
As a general request, I was going to ask if there is a schedule of salaries and expenses claimed by members of staff for IPSA, and whether those grades are available for the staff in IPSA, and the numbers of staff employed on each grade by IPSA. That is not something I would expect you to magic out of the air now, but I would be amazed if you are paying your staff what we are required to pay ours, and I would be quite interested to know the number of people who are involved in looking after the 650 of us.
Chair: I think that latter point is stepping outside the scope of the inquiry.
Tessa Munt: It may be; I want to place it on the record.
Chair: Yes, you were lucky to get away with as much as that.
Andrew McDonald: I will take the questions about the pay rise and I will deal briefly with that final point about staffing, and then I will ask John to take the point about any implicit incentive to base staff here, and the taxable status of the advances.
In terms of the pay rise, you are right that Members will receive a 1% pay rise come 1 April this year, and then 1% again next year, in line with the broader public sector pay policy. The board of IPSA has consciously chosen to follow that policy; it has a free choice as to the course it chooses.
As for a pay rise for Members’ staff, that is ultimately a matter for Members, because Members are the employers of those staff; IPSA is not. In the staffing budget for last year, you will be aware that we made a 20% increase in the amount of funding available to Members. In the current year, we are forecasting that the staffing budget, taken as a whole, will be underspent by 13%. Were MPs to choose to pay a pay rise of 1% for their staff then there would be scope, as a general point, for that payment to be made. Clearly there may be some MPs who are right up against the maximum of the budget, and they may wish to consider an application for contingency. I cannot predict what the outcome of that will be, given that each case will be taken on its own merits, but ultimately a pay rise for MPs’ staff is a matter for the MPs as the employers.
In terms of availability of information about our own staffing and expenses claimed, I would refer you to our website, where we are very open about the expenses that IPSA staff claim, and about the staff pay ranges as well. We are very happy for you to visit our website. John, do you want to take the other two points?
John Sills: On the 1% pay increase, our new version of the scheme of costs and expenses, which becomes operational at the beginning of April, does refer to that; it suggests that Members may wish to take that into account. As Andrew said, the vast majority of MPs would have the leeway in their budgets to do so, if they wished to do so.
The question about tacit encouragement does come up quite often, but to some extent it rather depends on how MPs run their operations, and everyone does it differently. There may be some MPs, particularly if they are based in the London area, who may wish to use facilities here more than a constituency office. We provide a budget of getting on for £25,000-around that amount-in London and £22,000 to £22,500 outside of London for office costs, including rent and so on. Again, that has proved on the whole to be enough for MPs to cope with. I do not think, in terms of our budgets, we are particularly providing an incentive for more staff to be based in Westminster, but I know it is an issue for the House; it is something they are looking into, so we do talk to them about that.
The other question was about the loan and its taxability. This is something I used to know off by heart, but I have not thought about it quite so much recently; we can confirm it in writing if you would find that helpful. If you have had interestfree loans of over £5,000 in the course of a year, then the bit that is over that amount becomes taxable. The way that it is calculated is that it starts to look at notional interest rates, the sort of thing the Government use. I think it is 4%, or something like that, and it is that 4% of the excess that gets taxed. In the end it is a relatively small part of the loan. What will not happen to you is a 40% tax on the full £4,000; that just will not happen, but we can confirm the details of that.
Q47 Tessa Munt: Am I required to return the £4,000 a month before the general election?
John Sills: We will have to think about that. I would guess so, yes.
Andrew McDonald: We will be recovering loans and advances before the election.
Q48 Nigel Mills: In the written submission you talk about how we can get loans for deposits once we have submitted a draft lease and various things. One of the issues I remember from May or June 2010 was that you wanted draft leases sent to you for approval, and if there was anything unusual in there that could take quite a long time. My own office lease comes including business rates and energy costs, which was quite unusual at the time; even staff had not seen it, although it has probably been quite a good deal for the taxpayer given what has happened since.
I urge you to be careful about exactly what you need to have signed off before we can sign, versus what resource you put to that, because that delayed me signing my office lease for quite a while, which then slows down everything else that you can do. Okay, yes, I can get the money once the lease is approved, but if you cannot approve the lease that does not take us anywhere forward.
Andrew McDonald: I take that point. One of the pieces of learning from 2010 was that our requirements for documentation were probably more onerous than we would want them to be in future, so one of the things that we are going to do over the coming months is to look at documentation requirements, including the requirements as they relate to leases, to see whether or not there is any streamlining we can do there, so as to speed the process. It is a point of learning; I take it.
Q49 Mr Marcus Jones: I have a couple of points. Going back to this point of potential tax liability for loans, I got into that situation just after 2010, because I took a £4,000 loan and about a £1,900 for a deposit for accommodation. Would it be possible to advise Members going forward, when they are taking these loans, that there may be a liability at that point? I do not think that was ever explained. It was probably in the IPSA guidance, which was obviously a huge document, but it was not explained at the point that you took the loan. If that had been explained to me, I possibly would not have taken the whole £4,000 at the time, because I did not need it. I have since repaid a substantial amount of that, but that is something it would probably be good to advise Members of.
The second thing is a general point about claims. Quite often you put a claim in for goods or services that you have procured, and even where the invoice has not yet been settled with the particular supplier, sometimes it seems to take quite some time to receive a payment. The Government are trying to prompt payment to SMEs and so on and so forth. I use several SMEs, and sometimes it can take two months or so to pay an SME for goods and services they have provided to you as a Member of Parliament. If the Government and Members of Parliament are trying to set an example to industry in relation to paying promptly, and we are not able to do that, it does not set a very good example. Would it be possible to do something about that?
Andrew McDonald: Thank you. I will take both points in turn, and John may wish to add to each of them. On the advice, your recollection is correct; the information was there at the time, and this is a point when we are very much open to advice from current Members of Parliament about how we can target the information best, so that it lands with new Members. We are conscious, as I was saying a few moments ago, that new Members are receiving information from all directions; we are one of many who are seeking to get new Members’ attention. We have somehow got to find the sweet spot where we provide just the right information to attract MPs’ attention, without drowning you with too much information.
I am sure the advice was there; we need to, and we are going to, look at how we provide focused information. One thing we will have the opportunity to do this time round-it did not happen last time around-is to do some trialling of that information on existing Members. Should there be any volunteers in this room who are willing to have a look at some of the sample information packs, we would be very keen to have that sort of advice.
Q50 Mr Marcus Jones: Chairman, just on that point, I think it is quite simple. All it requires is a note on the claim form saying, "Please be aware that this is the tax limit in relation to loans; please check our guidance notes if you think you are going to exceed this." It would be quite simple.
Andrew McDonald: That may well be easily done. I can assure you, though, that in other cases where we were seeking to get information to MPs, or get information from MPs-for example, to get bank account details so that salaries could be paid-that proved far more difficult than one might initially have expected. There were three requests for bank account details in May 2010, and we still had 50 MPs who had not provided the details at the end of May, and we still managed to pay everybody, although 50 through cheques. There is information at issue there that I would be keen that we got on top of.
We are absolutely focused on speed of payment. Our target for the current financial year is that we pay reimbursed claims within 12 working days. We are currently exceeding that. From the point at which we get a claim with the relevant information, through to the money reaching the bank account of MPs, we are paying in an average of 9.4 working days in the current year. We are absolutely focused on delivering speedy payment.
Q51 Mr Marcus Jones: Chair, could I just ask another question out of that? Would it be possible to have an individual breakdown for my claims on how quickly they have been paid from the system that you use? I am not sure that that is the case with my claims?
Andrew McDonald: What I am talking about here is an average, so there will be variations from the average.
Q52 Mr Marcus Jones: I appreciate that. I think that 9.4 days is quite interesting, because, for example, if you put a mileage claim it is paid within about five minutes. Now, that is completely different from having hundreds of pounds outstanding to a stationer, for example, where you are waiting 60 days for the payment. If you average it out in that sense, you are always going to come up with 9.4 days. The point I am making is, where either substantial sums are being paid out by the Member up-front, or you are relying on the good will of a supplier, I believe that most of those claims are not settled within 9.4 days.
Andrew McDonald: We look not just at an average but at a distribution curve, which shows those claims that are either side of the average, and we are not paying at 60 days, we are paying much closer. The curve is much more closely grouped around 9.4 working days, but if you want an average in your case I am happy to do it.
Mr Marcus Jones: Thank you.
Chair: I think we are straying a little way from induction here, although there may be a point to be learned from it.
Q53 Mr Watts: I was not going to raise anything, because I think we have covered most things in some depth in other venues. I was taken by the fact that you said that the decision on an increase in pay is a matter for individual MPs to make a decision, and yet when it comes to redundancy pay for staff, it is not left to the MP to make a decision to bring it in line with the public sector. Can you tell me what the rationale is between, on one hand, saying that the MP has freedom to set the pay, but on the other hand that he or she does not have the ability to set the redundancy pay in line with everybody else’s?
John Sills: As you are aware, we doubled the redundancy entitlement for staff on IPSA contracts. The issue is, of course, for staff who are not on IPSA contracts. I know that is a difficult one, but if they moved on to IPSA contracts then they would be entitled to it. That will only be an issue for staff whose pay is above any of the limits of the pay ranges, which IPSA contracts apply to. I do not know how many people are affected in that way, but my guess would be that it is relatively few.
Q54 Mr Watts: That may be the case, but I am still looking for the rationale as to why pay is left to the MP, but the redundancy payment is not left to the MP. It seems to me that once you have made the decision that the employee is a member of the staff for the MP, it is up to the MP to set the pay; I do not understand why it should not be left to the MP to set the redundancy, providing it does not go above the IPSA scheme. I am not seeking to have a more generous scheme, but if someone does remain, for one reason or another, on an individual contract outside of IPSA, and it is within the budget, there is a case for allowing individual MPs to make that choice.
Andrew McDonald: What we are keen to have is clarity as to the contract, and the IPSA contract establishes a certain redundancy deal; that is a contractual term, whereas the level of pay is not. What we do not want to do is to have a hybrid contract where staff have an amalgam of old terms and new terms; that ultimately would cause confusion for MPs and for their staff.
Q55 Mr Watts: If you do not mind, Chair, I will have just one last go. What I am advocating is that this element of it would be brought into line with the IPSA scheme, because all I am seeking to do is to allow MPs to pay the same level of redundancy pay as already exists within the IPSA scheme for IPSA employees.
Andrew McDonald: Not IPSA employees, but those on IPSA contracts. That would then be creating a hybrid contract somewhere between the old terms and the new, and we are very happy for staff to come across on to IPSA contracts, but it should be a wholesale move rather than a cherrypicking of particular terms.
Q56 Mr Spellar: It would not necessarily be cherrypicking. What I find slightly odd in all of this argument is that it would be quite proper for IPSA to go back and say, "These people are being paid over and above the IPSA rate". If, however, that is not the case, why are IPSA insisting that they are only entitled to half the redundancy pay of those who have gone on to the IPSA contracts. There is a very real concern amongst Members of Parliament and, indeed, staff that ultimately IPSA’s intention-and this is a surfacing thing even before IPSA, with the House of Commons-is that they will become employees of IPSA and not employees of the Member of Parliament, because ultimately their contract will then be with IPSA. That is a real concern: that they will effectively start to move into becoming public servants, as opposed to employees of Members of Parliament. If there is no loss to IPSA-in other words, no extra expenditure incurred-why are IPSA so stubborn on this point?
Andrew McDonald: Perhaps I can provide reassurance on what seems to be the core concern underlying this: we have no intention of moving employees of MPs-
Q57 Mr Spellar: I have to tell you, in political terms "no intention" means "not this week". I have to tell you that that is a wellknown coded term for, "We are not doing it immediately".
Andrew McDonald: Perhaps I can reassure you that I am not a politician; I am a mere public official. I am just saying that this is not part of IPSA’s plan at all. Why should IPSA want to take all MP staff on to the IPSA payroll as IPSA employees?
Q58 Mr Spellar: Because then they are your employees; you control them.
Andrew McDonald: They are not our employees; they are your employees.
Mr Spellar: They would not be.
Andrew McDonald: Why should we want that sort of control? That is not at all what we want.
John Sills: Because it is sometimes put to us, especially by some MPs’ staff, that we should do this, we consulted on it last year. We did, as you might recall, a pretty in-depth review of MPs’ staffing requirements, which was what led to the 20% to 25% increase in the budget. The issue was raised, it was considered, and we said quite clearly we would not do it. That is the end of it.
Chair: We are going to have to move quickly, because we are getting into a quorum situation.
Q59 Mr Kevan Jones: Can I say that it is not just about levels of pay for staff? Some might have different holiday entitlements. Most of my staff are on the IPSA contract, but one is not, and the reason for that is that she does not want to go on to the IPSA contract, because of the holiday entitlement that she had under the old contract. I cannot understand why she should be treated any differently in terms of redundancy from the other members of staff who are on IPSA contracts, because it would not cost you any more. Short of me saying to her, "I demand you go on to this contract", which I cannot do without giving her proper legal notice, she is not going to. I have asked her. I just do not understand what the problem is, because it is not costing you any more.
Andrew McDonald: We are not requiring anybody to move across.
Q60 Mr Kevan Jones: I know you are not, but you are treating them differently in terms of redundancy from somebody who is on one of your IPSA contracts, and I cannot see why that should be the case.
Andrew McDonald: We are saying that that is a choice, and the choice has been the same since IPSA’s establishment-either to move across to the IPSA contract, or we said that we would honour existing contracts.
Mr Spellar: No, but the choice is your redundancy-
Chair: Order. We are really flogging this one to the edge.
Mr Kevan Jones: No. I am sorry, Chairman, I do not think we are, with respect.
Chair: There is a difference of opinion.
Q61 Mr Kevan Jones: No, there is not, because it is about the way you are treating our staff just because they are on an existing contract. It is not about me saying it to my secretary; that is her choice. I cannot understand why you are treating her differently in terms of a redundancy situation from somebody on your IPSA contract. To be honest, it is not costing you any more.
Andrew McDonald: There is just a basic difference of view here. We have offered a choice between a contract established by IPSA that we take the view provides good terms and conditions for your employees. That is there as a choice, compared with saying we are willing to honour former contracts to the time when they expire.
Q62 Mr Kevan Jones: Could an employee go onto the new contract and change, for example, the holiday entitlement and things like that?
Andrew McDonald: The contract is the contract.
Q63 Mr Kevan Jones: Yes, but that is the point. You are telling her to give up her different holiday entitlements, as opposed to getting redundancy; that is the trade-off, is it?
Andrew McDonald: There is a choice.
Mr Spellar: Why-
Chair: Order. This is meant to be about induction, and we are getting way away from it, and I do not think there is progress being made on the point; there is a difference of view. I cannot see any further point in pursuing it in this way in the scope of this inquiry.
Mr Kevan Jones: There is. This is about if people are retiring, and members of staff are then finishing, it will affect especially some older Members possibly, who have got staff on different contracts.
Chair: An answer has been given, and I do not think we can-
Mr Kevan Jones: We get the usual we get from IPSA, which is, "We have decided, and that is it".
Mr Spellar: Yes, that is-
Mr Kevan Jones: I had two questions.
Chair: You have had one bash.
Mr Kevan Jones: It was actually fair, Chairman-
Chair: We were on a particular question-ask the question.
Q64 Mr Kevan Jones: It is about 2015. We talked about the pay position. Can I ask a question about when will IPSA be in a position to say what the pay is going to be for MPs post-2015?
The other issue is about the living in London allowance, which this year you have increased by £100, not on the rental side, but on the cost side, even though for most people the electricity bills have gone up more than that this year. We are now finding a situation where a lot of Members are subsidising their London accommodation. I do not know what mechanism you use to get to that figure, because my rent is going up 5% this year, which will mean that I will be paying out of my own pocket. The alternative is to move, which obviously involves more cost. Are you going to review that properly, rather than what you have done this year in just pegging it? Otherwise what is going to happen-it is increasingly happening with Members, and one of my colleagues has moved three times now-is that each time Members move, they incur a lot of cost, because they cannot claim for the proper industrial cleaning that landlords insist upon. That colleague is out of pocket by nearly £2,000.
We have got to take a realistic view about this; otherwise you are going to have Members constantly on the move, which is not good not only in terms of making our life easy, but also in terms of costing you for administration.
Andrew McDonald: I am sure that you will understand that I cannot comment on individual cases, but I will, if I may, take the two general questions that you raise. First, on the question of timing for MPs’ remuneration, the timetable for this year is that we plan to publish in May the second of the two consultation documents-essentially a White Paper in character, rather than the Green Paper that was published in the autumn of last year-then to consult through to the summer. The board will then take its view in the early autumn and the decision will be published in the autumn.
Prospectively, the timetable is for remuneration to come into effect from the first day of the new Parliament. That is the overall timetable. I will ask John to comment in detail on the London rental question, but I would refer you back to the earlier answer about the accommodation review, which will be beginning in the new financial year and will pick up these questions amongst others.
John Sills: As I mentioned earlier, we are going to be looking at MPs’ accommodation in some depth this year. We will be looking in even more detail at some of the issues around that. What the board decided this year was that we should have an inflation-based increase for what we call the associated costs-utilities and things like that. That is what the £100 figure is based on. On London rents, we are aware that some MPs pay some of the rent themselves-that is clear-but we did some pretty detailed research this time around, with the Valuation Office, about rents across London. With the exception of Kensington and Chelsea, the City of London and pockets of Westminster-but only pockets-the rental amount is adequate to find accommodation as required.
Q65 Thomas Docherty: Coming back to the issue of training, first of all, what training are you considering giving to new Members on being a good employer? I do not know if you saw the evidence last week from the staff that said they thought that would be helpful.
Andrew McDonald: We do not currently have that within our plans. It is arguable that that would be a question more for the Commons authorities given that the Personnel Advisory Service is something that sits with the Commons rather than with IPSA. I am not sure what their plans are for induction of new MPs, but that would be more likely to be a question that would fall to them, rather than to us.
Q66 Thomas Docherty: I have a very quick followup. Are you entirely comfortable with that logic, given that you are responsible for paying the staff of new Members-all Members who are not pre-2010? Would you consider that it is more logical, given that the pay and rations of staff are an IPSA responsibility, for the training of Members on how to manage their staff budget to be part of IPSA’s responsibility?
Andrew McDonald: Managing the staff budget would be a matter for us, but if it is training on how to be a good employer, that is more a matter for the Commons. What is crucial here, referring to my earlier answer to you, is that we work closely with the Commons authorities, so that what the Member receives is something that is coherent, makes sense, and is helpful to him or her. That is what we are working to achieve.
Q67 Chair: Mr Sills, you made a very helpful declaration about the business equipment that is required. This Committee also has a responsibility for catering, and is very conscious of the fact that we are facing cost increases, which may require prices to be increased for Members. The last time prices were increased for Members it led to some migration off the parliamentary estate. We are under constant attack for the amount of subsidy that the catering service receives for all sorts of factors, but the situation is not going to be made easy if more and more people decide they cannot eat on the Estate, and some declared in their election manifestos that they would not claim for the overnight cost of eating when they were away. If you are a businessman away you would normally get remunerated for the actual costs. For those that have come down from distant places, they are here for three nights probably, in which case they eat more than one meal a day. The House of Commons is not able necessarily to provide for them while they are here at a level that fits in with what, at the moment, is your scheme. It would be helpful to some new aspiring Members not to find themselves trapped into declarations, which then, when they get here, they find are very uncomfortable.
Thomas Docherty: It is a ludicrous rule that the House has got to sit beyond 7.30 pm. Mr Sills, you said you worked in Paris. I imagine that when BP were working out whether or not you had a subsistence requirement, you did not have to watch the clock and not leave the physical office until 7.31 pm, which is what we have here. Would you look at that as well? You are either away or you are not away from home, if that makes sense.
John Sills: Yes. I often worked beyond 7 pm when I was at BP, and I am not sure I did claim for meals afterwards, but that was my choice. As you know, we have the £15 subsidy-up to £15 for a meal. Currently we have said that is after 7 pm; that is something we can look at again. In areas like taxi claims, you will recall in the first year of the scheme we did have a timing put on that, and in fact we moved away from that and said that it was up to MPs themselves to decide what did and did not constitute lateness. We have the 7 pm rule-is it 7pm or 7.30 pm?
Thomas Docherty: 7.30 pm.
John Sills: We have the 7.30 pm rule at the moment; like most of the scheme we are always willing to look at it again.
Q68 Chair: What about the point that I made, about the fact that the prices may have to go up?
John Sills: Obviously we then have to make a judgement about whether £15 is enough. A lot of claims are well below that. Some MPs make a straight £15 claim; maybe it is easier, and so on. Many claim far less than that, at the moment. Again, we just have to look at that in future.
Andrew McDonald: It is a while since I saw the average claim figure, but I think it was well within £15 the last time I saw it.
Chair: We are between a rock and a hard place, the rock being the public perception of subsidised food in the workplace, which is common in other organisations, and the fact that then there is a limit on what anyone who wishes to claim can claim.
Q69 Mr Kevan Jones: On that, I never claim the £15 full amount, but what you have now stopped doing, which I cannot quite understand, is if, for example, I choose at lunchtime to have a meal and then have a snack in the evening, you will not pay for the one at lunchtime. You will perhaps pay for the snack in the evening, even if it all comes to less than £15. Why is that?
Andrew McDonald: Simply that that provision in the scheme relates to the additional costs that MPs would incur if the House is sitting late.
Q70 Mr Kevan Jones: Yes, but I might choose to have my large lunch at lunchtime, and perhaps have a sandwich at teatime, and that is how I choose to eat. You do not allow me to claim now for the lunchtime costs.
Andrew McDonald: Just as we would not make any provision for your lunch through the rest of the week. I do not think that that is inconsistent.
John Sills: There might also be a tax issue here. There are some very strange rules around tax in this area. You may or may not be aware that, according to the tax rules, where you consume your food, either on the House estate or off it, determines whether or not it is taxable.
Mr Kevan Jones: Look at comparable rates: for example, civil servants, when I was a Minister, I think claimed £24 a night for receipted food. Another example is £29 for serving soldiers.
Mr Swayne: I would just say you need to remember that a number of Members are in hotel accommodation; they do not have the opportunity to cook breakfast, lunch or their dinner at all. Therefore, whether they choose to have it at lunchtime, which is frankly healthier than the evening meal, is something that you might properly take into account.
Chair: We are just about to lose our quorum. I am grateful to colleagues who have hung on. I am also grateful, indeed, to you, Mr McDonald, and you, Mr Sills, for spending some time with us. I have tried, as far as possible, to make sure everything was induction-related, but I think the temptation has gone a little wider, and I may have even been partly guilty myself, but we are very grateful to you for coming to help us with this inquiry. Thank you very much indeed.