Committee on Standards in Public Life

PRINCIPLES TO GOVERN A REVIEW OF MPs’ ALLOWANCES

This note sets out the principles which the Committee on Standards in Public Life believes should be followed in the review of MPs’ allowances currently being conducted by the Members Estimate Committee.  It has been produced following a discussion between the Chairman of the Committee and the Speaker, and a separate discussion with the Members Estimate Committee.

It starts from the premise that it is in Members’ own interest, as well as that of the public, that the arrangements for their remuneration and reimbursement of expenses should meet the highest standards of transparency, probity and accountability.  It is clear from recent events and the reaction to them that the current arrangements fail to meet those standards in a number of respects.  Our understanding is that a large number of MPs share that view.

We therefore welcome the decision to review the current arrangements and the steps that have already been taken, or set in train, towards greater transparency and accountability.  The public credibility of the outcome of the review is, however, likely to be greater if it had been undertaken independently of the House of Commons, as with the recent review of Parliamentary allowances in Scotland conducted by a panel chaired by Sir Alan Langlands.  In the event that the outcome of the current review fails to command public confidence, we may wish to undertake such a review in any event.

In the meantime, and in the absence of hearing the evidence which we would expect to take should we mount our own review, we have not felt it right to express firm views at this stage on the detail of the allowance structure.  But we are clear about the principles which we would expect reforms to follow if confidence in the system and in the probity of Members of Parliament is to be restored.

The principles which we suggest should govern the review are as follows:

General

1. Members of Parliament have a duty to demonstrate leadership in the observation of the 7 Nolan principles of public life, as set out in the Parliamentary code of conduct.  We expect they would wish to do so anyway.
2. There should always be a clear distinction between pay, reimbursable expenses, and the resources provided to Members to enable them to carry out their jobs effectively – accommodation, staffing, IT etc.  Nomenclature should reflect this
3. The system for claiming costs incurred by Members of Parliament in performing their public duties should be based on the reimbursement of actual expenses, not on entitlement to “allowances”. Again, nomenclature should reflect this.
4. Members of Parliament should take personal responsibility for ensuring that any expenses claimed or resources used in pursuit of their duties are properly incurred.  They should be at least as careful in the spending of public money as of their own.
5. Members of Parliament should be as open and transparent as possible about their expenditure and the claims they make on public funds, subject only to data protection or security considerations.
6. Arrangements should be as simple as possible both for ease of administration and for transparency. 
7. Robust but proportionate audit is needed to restore confidence.  It must be shown to be sufficiently independent.

Pay

8. Members of Parliament have the right to expect to be paid a reasonable salary for the work they do.
9. But they should not be responsible for setting their own salaries, both because that creates a conflict of interest and because it exposes settlements to political pressures.

Expenses

10. Members of Parliament should be entitled to be reimbursed for reasonable expenses incurred wholly, necessarily and exclusively in the performance of their Parliamentary duties.
11. But such expenses should never be regarded as a substitute for pay.
12. Nor should Members seek any personal financial benefit from them, either directly or indirectly.
13. Wherever reasonably possible, all claims for expenses should be backed up by receipts or other appropriate documentation, available to be produced if necessary.
14. Claims should be subjected to robust audit on a sample basis using a proportionate and risk-based approach.  Members should be expected to retain receipts for a set period, perhaps three years, to make this possible.
15. Maxima placed on claims for expenses should be regarded as such and not as entitlements. 
16. In deciding whether to make a claim, the spirit of the rules should be respected as well as the letter. 
17. There should be no double benefit for Members who are also Ministers.

Resources

18. Members of Parliament should, in line with other public servants, be given the means to undertake the duties for which they have been elected.
19. Wherever practical and economic, such resources should be centrally procured, and subject to occasional audit to ensure propriety and value for money.
20. There should be no cross-subsidisation between resources provided to enable Members to undertake their Parliamentary duties and party political activities. Preserving this boundary is important to public confidence in the arrangements and it must be rigorously policed.  Where premises or staff are shared, it should be possible to demonstrate that such cross subsidisation is not occurring, and the arrangements should be subject to occasional audit.
21. Members of Parliament should be able to select their own staff.  But the need for each post should be clearly established and staff should always be employed against a contract setting out their duties.  They should be able to demonstrate that they have appropriate skills for the job; and their salaries should be commensurate with their responsibilities, experience and skills. Observance of this should be auditable.  Ideally all such payments should be made centrally and direct to the staff member concerned.  In accordance with best practice, employment of all staff should be supported by a statement of objectives and by periodic appraisal.

Transition

22. While a transitional period may be necessary for any major changes, this should not extend beyond the next general election. Existing Members of Parliament should know the basis on which they will be remunerated and supported at the time they choose to stand for re-election. There is a compelling case for tightening up the arrangements for transparency and audit immediately.

Committee on Standards in Public Life

April 2008