Members' Allowances (Hansard, 13 July 1994)

§ The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton)
I beg to move, That, in the opinion of this House, the following provisions should have effect— Part A. Office costs allowance

(1) The limit on the office costs allowance—

(a) for any quarter in the year beginning with 1st April 1994, should be the amount obtained by increasing the limit for a quarter in the immediately preceding year by 2.3 per cent; and

(b) for any quarter in any subsequent year, should be the amount obtained by increasing the limit for a quarter in the immediately preceding year by the percentage by which the retail prices index for March in that immediately preceding year has increased compared with the retail prices index for the previous March.

(2) The limit on the office costs allowance in relation to Mr. David Blunkett should be 2.57 times that determined in accordance with paragraph (1) of this Part of this Resolution.

(3) Any limit determined in accordance with this Part of this Resolution should be calculated to the nearest pound.

(4) In this Part of this Resolution—

"quarter" means a period of three months beginning with 1st April, 1st July, 1st October or 1st January;

"year" means a period of twelve months beginning with 1st April

(5) The references in paragraph (1)(b) of this Part of this Resolution to the retail prices index are references to the general index of retail prices (for all items) published by the Central Statistical Office; but if that index is not published for a month which is relevant for the purposes of this Part of this Resolution, those references in that paragraph shall be construed as references to any index or index figure published in place of that index.
Part B. Supplementary London allowance

(1) The annual rate of the supplementary London allowance—

(a) for the period of three months beginning with 1st January 1994, should be the amount obtained by increasing the annual rate at which the allowance was paid immediately before that period by 1.5 per cent;

(b) for the year beginning with 1st April 1994, should be the amount obtained by increasing the annual rate determined in accordance with sub-paragraph (a) of this paragraph by 0.4 per cent; and

(c) for any subsequent year, should be the amount obtained by increasing the rate for the immediately preceding year by the percentage by which the retail prices index for March in that immediately preceding year has increased compared with the retail prices index for the previous March.

(2) Any rate determined in accordance with this Part of this Resolution should be calculated to the nearest pound.

(3) In this Part of this Resolution—

"the supplementary London allowance" means the allowance payable in accordance with paragraph (1) of the Resolution of 20th December 1971 relating to Parliamentary expenses;

"year" means a period of twelve months beginning with 1st April.

(4) The references in paragraph (1)(c) of this Part of this Resolution to the retail prices index are references to the general index of retail prices (for all items) published by the Central Statistical Office; but if that index is not published for a month which is relevant for the purposes of this Part of this Resolution, those references in that paragraph shall be construed as references to any index or index figure published in place of that index.
Part C. Additional costs allowance (1) The annual limit on the additional costs allowance—

(a) for the year beginning with 1st April 1993, should be the amount obtained by increasing the relevant limit by 1 per cent;

(b) for the year beginning with 1st April 1994, should be the amount obtained by increasing the annual limit determined in accordance with sub-paragraph (a) of this paragraph by 1.81 per cent; and
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(c) for any subsequent year, should be the amount obtained by increasing the limit for the immediately preceding year by the percentage by which the retail prices index for March in that immediately preceding year has increased compared with the retail prices index for the previous March.

(2) For the purposes of paragraph (1)(a) of this Part of this Resolution the relevant limit is the amount equal to 144 times the Class A(i) London rate for a night's subsistence which took effect in the Civil Service on 1st August 1992. (3) Any limit determined in accordance with this Part of this Resolution should be calculated to the nearest pound. (4) In this Part of this Resolution— the additional costs allowance" means the allowance payable in accordance with paragraph (2) of the Resolution of 20th December 1971 relating to Parliamentary expenses; year" means a period of twelve months beginning with 1st April. (5) The references in paragraph (1)(c) of this Part of this Resolution to the retail prices index are references to the general index of retail prices (for all items) published by the Central Statistical Office; but if that index is not published for a month which is relevant for the purposes of this Part of this Resolution, those references in that paragraph shall be construed as references to any index or index figure published in place of that index. Part D. Car mileage allowance (1) Paragraph (1) of the Resolution of 20th July 1984 relating to the car mileage allowance should have effect—

(a) in relation to journeys commenced in the year beginning with 1st April 1994, as if the rates per mile shown in the Table were the rates obtained by increasing each of the rates at which the allowance was previously paid by 2.3 per cent; and

(b) in relation to journeys commenced in any subsequent year, as if the rates per mile shown in the Table were the rates obtained by increasing each of the rates for the immediately preceding year by the percentage by which the retail prices index for March in that immediately preceding year has increased compared with the retail prices index for the previous March.

(2) Any rate per mile determined in accordance with this Part of this Resolution should be calculated to the nearest tenth of a penny. (3) In this Part of this Resolution "year" means a period of twelve months beginning with 1st April. (4) The references in paragraph (1)(b) of this Part of this Resolution to the retail prices index are references to the general index of retail prices (for all items) published by the Central Statistical Office; but if that index is not published for a month which is relevant for the purposes of this Part of this Resolution, those references in that paragraph shall be construed as references to any index or index figure published in place of that index. Part E. Winding-up allowance (1) The following provisions of this Part of this Resolution should have effect with respect to Members of this House who cease to be Members after 31st March 1994. (2) Provision should be made under arrangements approved by the Speaker for an allowance to be made in respect of the expenses which, after a person has ceased to be a Member, are still required to be incurred in connection with his Parliamentary duties. (3) The limit on that allowance should be four-thirds of the amount which, for the year in which that person ceases to be a Member, is the limit for that Member on the office costs allowance for a quarter in that year. (4) The allowance should be paid to the person who has ceased to be a Member or, if he has died, to his personal representatives or a person nominated by him or selected under the arrangements approved by the Speaker. (5) Any limit determined in accordance with this Part of this Resolution should be calculated to the nearest pound. (6) In this Part of this Resolution— quarter" means a period of three months beginning with 1st April, 1st July, 1st October or 1st January; year" means a period of twelve months beginning with 1st April. 1107 Part F. Recall of House during a recess (1) The following provisions of this Part of this Resolution should have effect with respect to any occasion on which, during a recess, this House is recalled before the expected end of the recess. (2) Members who attend the House during the recall should be reimbursed in respect of such extra costs which are wholly and exclusively attributable to the recall as are necessarily incurred by them in connection with travelling—

(a) from any place to London; and

(b) during any further recess immediately following the recall, from London to any place (provided that the purpose is to fulfil, before the expected end of that further recess, plans which were in existence before the recall).

(3) For the purposes of this part of this Resolution—

(a) "recess" means not only a period when Parliament stands prorogued to a specified date but also any period when this House stands adjourned to a specified date, and the references to the expected end of a recess are references to that specified date;

(b) "reimbursement", in the case of a Member, means the payment to the Member of the amount of the extra costs concerned and the payment to the Inland Revenue, on account of the income tax liability of the Member, of the difference between that amount and such a sum as, after deduction of tax at the marginal rate applicable to the Member, is equal to that amount; and

(c) "extra costs", in the case of a Member means costs in respect of which the Member cannot be reimbursed otherwise than by virtue of this Part of this Resolution.

§ Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)
I inform the House that Madam Speaker has not selected the amendment.

§ Mr. Newton
In case anticipation has been aroused by the length and apparent weight of the motion, I should say at the outset that it represents no major or strategic change. I hope, conversely, that it does not create too much disappointment, either.
The first four parts of the motion replace uprating mechanisms that for various reasons have ceased to work with one that does work and can be expected to continue to work.
The fifth part meets a problem that has arisen because of the greater contractual commitments that Members these days are finding it necessary to enter into. It is merely designed to ensure that those commitments can be met if a Member dies or ceases to be a Member for any other reason.
The sixth part corrects an anomaly which has hitherto meant that, if Parliament is recalled during a recess, Ministers can receive help with the expenses incurred but Members cannot. I hasten to add that the correction takes the form of extending help to Members and not taking it away from Ministers.

§ Dr. Norman A. Godman (Greenock and Port Glasgow)
Will Members be reimbursed retrospectively for being called back? I was called back from Australia just over a year ago. That was hugely expensive.

§ Mr. Newton
I am afraid that it is not retrospective, and I cannot hold out hopes of anything other than sympathy to the hon. Gentleman this evening.
I will deal first briefly with the four existing allowances uprating mechanisms that have failed. The main one is, of course, the office costs allowance. That was formerly increased with effect from each April by reference to the pay of senior secretaries in the civil service. However, in the same way as the move to new civil service pay 1108 arrangements broke the old automatic linkage for Members' pay, which we replaced last year, so this one too is breaking down and needs to be replaced.
The additional costs allowance, to help with the problem of Members needing accommodation in two locations, was formerly uprated in August by reference to civil service overnight subsistence rates. With greater delegation to individual Departments, that too has ceased to be viable.
The position in regard to its near relation, the London supplement, is a little more complicated. Essentially, however, it is that it used to be linked to the inner London weighting paid to civil servants. That is being replaced by a recruitment and retention allowance paid at the discretion of individual Departments—which, once again, makes it unusable as an uprating mechanism.
Lastly, the motor mileage allowance used to be tied, in a very specific and detailed way, to a schedule of motoring costs which is no longer available in a form which can be operated within the terms of the underlying resolution of the House. Here too, therefore, we need a new uprating mechanism.
Against that background, we spent some time considering the possibility of devising what might be called fancy new mechanisms which could be presented as in some way cleverly and specifically related to each of those different purposes. We concluded that all of them would be vulnerable to endless argument, and probably in due course once again be overtaken by change comparable with what has caused the present problem.
We therefore decided that far and away the simplest, most straightforward and most sensible solution was to link them all to the retail prices index. That also has what I, and I suspect the House, regard as the inestimable advantage of being the most durable solution—that is, the one most likely to remain workable on an automatic basis, and thus to avoid the need for the House to have to keep passing new resolutions.
That is what the first four parts of this resolution do: they provide for all four allowances to be uprated with effect from April 1994 by reference to the RPI, and henceforth to be uprated with effect from each succeeding April by reference to the RPI.
The only reason for the slight variation in the actual percentage increases from April 1994 is that we have also taken the opportunity to make another sensible simplification, which is to end the variations of uprating date and to put everything on to an April to March basis.
Thus, the office costs and motor mileage allowances rise by 2.3 per cent., which is the RPI increase from April 1993 to April 1994. The London supplement rises by 1.9 per cent., which represents 1.5 per cent. due from January 1994 in respect of an earlier increase in the civil service inner London weighting, plus 0.4 per cent. for the RPI increase in the three months from January. The additional costs allowance rises by a little more—2.8 per cent.—but only, I emphasise, because that relates not to 12 months but to a 20-month period since its last uprating in August 1992.

§ Mr. Nicholas Winterton (Macclesfield)
I should like my right hon. Friend to clarify a point relating to the office costs allowance with particular reference to the amount that we pay our secretaries or research assistants. In essence, is the increase being limited to 2.3 per cent.? If that is the case, it is lower than the increase being granted to the civil service, and that would be very unfair to our 1109 secretaries, who do a great deal of work and who often have to work very long hours. Is my understanding correct?

§ Mr. Newton
I have explained, I hope fairly clearly—although I am moving fairly rapidly because I sense that it is probably the wish of the House that I should do that—that we have used the RPI as the most sensible and straightforward mechanism.
The office costs allowance, which was substantially increased a couple of years ago, as my hon. Friend the Member for Macclesfield (Mr. Winterton) will recall, embraces several other costs, such as equipment costs and others, which are not salary costs these days and which hon. Members meet. I judge that that mechanism remains the most sensible solution overall.

§ Sir Jerry Wiggin (Weston-super-Mare)
My right hon. Friend based his argument about the increase in the allowances on the basis that they were originally fair. However, the additional London living allowance is based on the average number of sittings days of the House multiplied by the allowance given to a civil servant for one night in London.
How is it possible for any hon. Member to rent a flat or have any living accommodation on the basis of such a calculation? Is my right hon. Friend seriously suggesting that there was any fairness in that calculation in the first place? Will he confirm that all the allowances are paid against proven costs, as costs, to hon. Members, and there is no question of them being a benefit?

§ Mr. Newton
That is certainly the case, and I was going to say later that it is absolutely clear that allowances are generally paid against claims that the expenses have been wholly and necessarily incurred in the performance and pursuit of parliamentary duties.
On my hon. Friend's first point, it will ultimately be a matter for the judgment of the House, but I judged that some attempt to look strategically at this or any other allowance now would not have been the most sensible thing to do. I thought that it would be better to establish a sensible uprating mechanism.
In the process of what I am proposing, we have moved away from the position whereby the uprating depended on overnight subsistence costs, which in turn related partly to hotel charges. One reason why the additional costs allowance rose very little for a couple of years was the effect of the recession on hotel charges, which rose very little. The move to an RPI indexing system will at least ensure that my hon. Friend will receive a more sensible deal than he would otherwise have done.
I can sum up this part of my speech in two sentences. The purpose is simply to allow the limits on claims for expenses necessarily incurred by hon. Members in fulfilling their duties to be updated for inflation, and to ensure that they are annually updated in future. None of the increases, looked at on an annual basis, exceeds 2.3 per cent.
I turn now to the fifth leg of the resolution, which involves the winding-up allowance. That is the amount, currently a maximum of one sixth of the office costs allowance, which is intended to enable Members—or their executors where the issue unhappily arises as a result of death—to clear up their obligations after leaving the House. It has become clear that this amount is now inadequate in the light of, for example, prevailing contracts 1110 of employment with staff and the periods of notice which are often required in relation to the increasing amount of equipment that Members have.
Having taken advice from the Fees Office, I now propose that the allowance should be set at a maximum of one third of the annual office costs allowance, although Members will see that, for technical reasons connected with the way that the basic allowance is defined, the motion is drafted in terms of four thirds of the quarterly allowance.
In addition, the motion widens the scope of costs that can be covered from purely secretarial to all necessary costs. I emphasise, of course, that, in common with the OCA, and indeed others, the new figure is a ceiling to which legitimate costs can be claimed, and not in any way an entitlement.
Finally, I come to part F of the resolution, which introduces a new allowance to cover the necessary expenses of Members returning to Westminster in the event of a recall of Parliament during a recess—not, I should say, that we are planning one. [Interruption.] We are planning a recess.
As I said earlier, the present position is that Ministers faced with a recall can have their expenses covered by their Departments, but no such protection is available to other Members. The motion proposes that Members faced by a recall during a recess should be covered for all costs wholly and exclusively attributable to the recall", which includes, assuming that time and plans make it reasonable, the expenses also of travelling to resume a holiday. This is not, of course, an allowance we would expect to be activated very often, but I think it a reasonable safeguard to introduce for Members who need or wish to attend the House in the event of a recall, and I hope hon. Members will agree with me.
Indeed, I need hardly say that I hope they will agree with, and support, the resolution as a whole. I believe it to be reasonable, realistic and restrained, and I commend it to the House.

§ Mr. Paul Flynn (Newport, West)
We are considering the recommendations in the shadow of recent events. We all recall what happened two years ago, when we took a decision, by a majority of the House, to increase the allowances paid by a large sum. That decision was unpopular outside the House, and the decisions that we take tonight will be seen in the twilight of the events that have taken place in the past three or four days. There is a great deal of cynicism about our status here. Most of it is unjustified, but we have to bear it in mind.
We heard tonight from the hon. Member for Southwark and Bermondsey (Mr. Hughes) for the Liberal Democrats that an offer in excess of £10,000 was made to a Member of this House for secretly carrying out a small duty of booking rooms. That is the type of information that will be presented in the press tomorrow along with the recommendations that we make tonight. I believe that the recommendations are prudent and sensible.
We could put into our recommendations, if not tonight then on a future occasion, the same conditions that we lay down for other people who live off public money—those who live on income support. Those people have their ceiling of income support, as we have our recommended ceiling, which we have agreed. If they receive income in excess of that amount, of even a fiver a week, that amount is deducted pound for pound from their income support. In 1111 order to defend our position, if income comes into our pockets for doing parliamentary duties, we should consider deducting that amount pound for pound from the amount that we receive.
When we took the decision to increase our allowances two years ago, 53 hon. Members opposed the increase. Those awkward 53 Members had substantial outside interests, which I believe brought them in a great deal of money. They opposed the increase, and I presume that they do not take the full allowance now. I believe that we are equal as Back-Bench Members of Parliament. We have agreed on a certain amount, and that should be the ceiling.

§ Mr. David Ashby (Leicestershire, North-West)
We are talking about the office costs allowance, which is the expense of running an office. Is the hon. Gentleman suggesting that the money that he receives from the trade union, which goes for running his office in the constituency, should be deducted from his allowance? If hon. Members receive money to run the parliamentary office from other sources, the hon. Gentleman has a point. Most Labour Members receive large amounts of money from the unions to run their offices.

§ Mr. Flynn
I must explain to the hon. Gentleman that I and many other hon. Members receive not a penny from a trade union or any other organisation. I believe that the 14 per cent. of Labour Members who receive sums of money from trade unions and commercial bodies should act in exactly the same way as the 85 per cent. of Conservative Members who receive such pay.
If the amount that the House decided was appropriate for the office costs allowance was applied to everyone, the House could take a more realistic decision on what the office costs allowance should be. Some Members voted for a low office costs allowance when they realised that vast amounts of other funds would come into their office to do exactly the same job that all the rest of us do.
We have to look at the matter with some realism, and recall the decision that we took two years ago. The many Members who opposed the increase two years ago should consider the amount of money that comes into them. We must restore respect to the House, which we all love. It is the centre of our lives. We regret the comments that are being made about the House and Members of the House.
We have to say that any money that comes in to us, wherever it comes from, whether it is for making speeches or acting in the long term for a company, should be set against our allowance. As has been said, there is little difference between someone being paid a set amount to ask a single question, and someone being paid a substantial amount to act on behalf of a certain company over a period of years.
There is another point, which has probably been made. We have had a debate on the pensions industry and a debate on the Trade Marks Bill in the Chamber in recent months. In both debates, only one Conservative Member spoke who did not have a financial interest in the subject. Those hon. Members were speaking not on behalf of their constituents or their party, but on behalf of companies outside. Neither a trade union party nor a Transport and General Workers party stood at the election. There was not 1112 a Legal and General party—or an Ian Greer party—standing at the general election. People voted for the Labour and Conservative parties.
We have degraded our own democracy, and we have prostituted it. We have become so used to the atmosphere of soft corruption in the House that Members are shocked when they hear that what they are doing is wrong, and deeply wrong.

§ Sir Peter Fry (Wellingborough)
I do not intend to follow what the hon. Member for Newport, West (Mr. Flynn) said. My inclination is to say that any Member of Parliament who feels that his allowances are too high does not have to claim them. Anybody who feels that he is paid too much can pay it back to the Chancellor, who would be delighted to receive it.
My comments will be confined to the car mileage allowance. I say to the Leader of the House, with respect, that I believe that the car mileage allowance is rather different from other allowances. It was historically fixed to a scale of mileage allowances proposed by the Royal Automobile Club, but we know that that scale of allowances has long since disappeared. The problem has been how we are to peg the car allowance to a more realistic figure.
The fact that the original figure upon which we now base the allowance is years out of date does not give me the utmost confidence that we have the right formula. I would point out to my right hon. Friend that, perhaps unlike other allowances, the amount of money that is required to run a car could well rise, and, if the Chancellor keeps to what he said in the previous Budget statement, it will rise considerably faster than the cost of living.
Therefore, we shall progressively find that, unless some other things happen, Members will be increasingly expected to provide more out of their other taxed income to use on the car on parliamentary business. The only way that that can be avoided is to ensure that, when the Inland Revenue comes to the point of deciding whether any of the car allowance should be taxed, it should take into account what the cost is, and raise the amount that it allows before tax applies.
The present system for those who are now roughly paying the full amount of tax on the mileage allowance is such that, in many cases, Members are literally at break-even point. Certainly there is no question of their making any additional income from the car allowance. That makes it more important that we are careful in that respect.
If we accept my right hon. Friend's recommendations tonight, does he not agree that a message should be imparted to the Commissioners of Inland Revenue that the figure that they accept before tax is due on the mileage allowance is also altered to take into account not just the rise in cost of living but the actual rise in the cost of running a car while on parliamentary business?

§ Mr. Doug Hoyle (Warrington, North)
I congratulate the Leader of the House on his report to the House. It is never the right time to talk about allowances or salaries. I know full well that, despite the interventions from one or 1113 two Members, what has been done tonight shall be seen in the press as being a payment to the Member, not a payment relating to costs incurred.

§ Sir Jerry Wiggin
indicated assent.

§ Mr. Hoyle
The hon. Member nods his head, and he made a similar point a little earlier.
I know that that will happen. We are rightly bringing some relief to our hard-worked secretaries and research assistants, who are absolutely necessary for us to run our offices. It is pleasing to hear tonight that, in future, there will be an automatic allowance based on the retail prices index.
Speaking as a Back Bencher, and not in my position as chair of the parliamentary Labour party, I should like to ask that thought be given in future to ensuring that that allowance is not part of a Member's allowance, and that secretaries and research assistants are paid as though they were in the civil service. That would not prevent Members from choosing their own research assistants or secretaries, but it would mean that they were paid the right salaries, based on a civil service grade. It might also offer them career prospects.
I believe that, if a Member dies or retires, his staff should be kept on if possible. New Members arriving after an election could then select staff with experience. These people would also be available to help out Members whose secretaries were ill or on holiday—a better system altogether.
It would be good to have a House personnel officer to advise us on these matters. What I propose would also remove the uncertainties surrounding what research assistants and secretaries should be paid; they would be paid against a definite grade.
Perhaps the employer's element of our assistants' national insurance contributions could be paid, too. That would remove from Members the difficult choices of how much they can afford to pay in salary increases for their hard-worked staff, or whether to spend the money on office equipment. That too would afford us some relief.
The rest of the proposals are correct, in my submission. The change to the supplementary London allowance will help Members with London constituencies. I agree also with what has been said about the additional costs that may be associated with the car mileage allowance. It is right, furthermore, to equate Members with Ministers when it comes to reimbursement for the costs involved in a recall of Parliament during the recess.
1114 I know from conversations with the Leader of the House that one of the difficulties has been finding a civil service grade to which to attach these figures. Now we are to base them on the retail prices index, so we shall not have to go through the whole process again. That is welcome.
I congratulate the right hon. Gentleman. I know that it has not been easy to achieve what he has done—there is never a right time, as I said—but the proposals in respect of the office costs allowance will, I hope, benefit our staff.

§ Mr. Simon Hughes (Southwark and Bermondsey)
Can the Leader of the House assure us that the car mileage allowance policy is consistent with Government policies on reducing car use, and compatible with the idea of using the smallest, most fuel-efficient cars that are commensurate with our duties?

§ Mr. Peter L. Pike (Burnley)
I ask the Leader of the House to reconsider the position of staff who are off sick or on maternity leave. Our current allowances do not adequately cover this problem. I recognise the difficulties, but increasingly Members' allowances are fully committed, and that can put Members whose staff are off sick or on maternity leave under pressure.
I appreciate that the right hon. Gentleman cannot give me a commitment tonight, but I ask him for an assurance that he will review an arrangement which has been in place now for a number of years, and which should be updated.

§ Mr. Newton
Other hon. Members have raised with me the same point as the hon. Member for Burnley (Mr. Pike) has just mentioned, and I am looking into it. I am sorry that I have not managed to find a solution to put before the House tonight.
I have taken note of other hon. Members' points. I have to say to the hon. Member for Newport, West (Mr. Flynn) that I view his points with a little less sympathy than some of the others that were put to me.
I shall certainly ensure that the point made by my hon. Friend the Member for Wellingborough (Sir P. Fry) is drawn to the attention of those to whom it was directed, and I would say to the hon. Member for Southwark and Bermondsey (Mr. Hughes) that I am a member of the Government, so I regard what I have suggested as being consistent with Government policy.