Saturday, 9 May 2009

Keeping expenses row in proportion

Hysteria? Witch-hunt? Media feeding frenzy? Or all three? I think that just about sums up the current situation with regard to MPs' expenses.

As ever, earlier on today the sage Mr Quist had some wise words to say about the expenses row. Like him, my experience of MPs is that on the whole they are dedicated individuals who work hard for their constituents and are not all in it to make money. And I agree with him that we shouldn't expect MPs to be out of pocket or living in penury when doing their jobs.

Like it or not, if you don't pay MPs properly, you'll just expose them to all sorts of blandishments and inducements from private interests who, believe it or not, may not always have the wider public interest at the top of their priorities.

But I thought it worthwhile to do an international comparison to see whether our MPs are well remunerated or not. In the USA, for instance, the salary for rank and file members of Congress is currently $174,000. If I've done my maths correctly, at the current exchange rate of $1.52 to the pound, that works out at roughly £114,473 per year - which compares very favourably with the £64,766 our MPs get. In France, the figure is slightly lower at approximately £57,228, while Germany and Italy are £80,880 and £57,756 respectively, although the Italy figure is boosted by very generous expenses. (All figures courtesy of the BBC). In other words, the basic pay of our MPs is not that excessive by international standards.

But do our MPs have excessive expenses claims? Again, not really. As the BBC points out in the same article already referred to, MPs' average expenses claim is £135,600, which does sound a lot, until you realise that the most significant part of that is the salaries that MPs pay their staff. That means that the rough total we pay for our MPs (salary plus expenses times 646 MPs) is about £129.4m (note that I'm not including ministerial salaries in this figure).

Compare that to the USA, where, to take just a few examples at random, California Senator Diane Feinstein had a total staffing bill in 2008 of $4,066,020 to serve a population of about 36.75m, while in less populated Wyoming, Senator Michael Enzi spent $1.9m on staffing. For members of the House of Representatives, the cost of running their offices, including both staff and other expenses, is between $1.4 and $1.7m each. In 2008, the cost of running the US Senate was apparently $869.3m, while for the House of Repesentatives it was about $1.2 billion. Even if you take into account that the US Congress is serving a population of about 303m, while our Parliament serves just under 61m, I think our MPs are bloody good value.

And note that the above figures for the US Congress don't even include the regular trips and junkets which are on offer from a whole host of private organisations. A lot of these are doubtless all above board and worthwhile, such as the three trips by members of Congress to Afghanistan and the seven to Iraq in the last few years. However, that compares with 34 to Antigua and Barbuda, 35 to the Bahamas, and 48 to Jamaica. OK, these aren't paid for out of public funds, but the suspicion must surely be that some of these are pleasant trips to the sun in exchange for services rendered or future favours expected.

Now, our MPs are certainly not immune from accepting hospitality from private interests - just think of George Osborne and Peter Mandelson on the billionaire's yacht in Crete last summer, for instance - but their junketing and hospitality pales into insignificance when compared to the American experience. In all last year, members of Congress and their staff accepted trips totalling just over $2.85m.

I'm certainly not saying that some UK MPs haven't been abusing or milking the system, but I don't think it's true to say that our MPs are all a bunch of cheats, rogues and thieves. By international standards, and particularly in comparison with the USA, I think on the whole we get very good value from them.

6 comments:

Stephen B said...

Well that's all right then!

A couple of points though. Comparing the HoC with both the Senate and Congress is surely only art of the picture - don't you need to add HoL in as well for a comparable picture?

America is also a lot less densely populated (even California!) than much of the UK so I would expect cost requirements to be higher anyway (think the equivalent of Highlands MPs here).

Looking at the details of the staff employed by a senator, it does surprise me that so many for each are needed – I don’t understand the roles of many and wonder whether in the UK a lot of these roles would be civil service roles. Or, I suspect with a senator covering such large areas, there is a need for the equivalent of multiple constituency offices.

If I attempted to put many of these kind of expenses through as a business expense a) the tax man would either laugh at me or ask me to pay extra takes and b) the Lib Dems would be pointing to my company (if they could be bothered!) as an example of just the kind of shoddy tax avoidance that should be clamped down on as I was clearly taking the p*ss. I don’t think my defence that I was contributing more in tax and the local economy than an equivalent company in, say, Estonia, would really cut the mustard.

I think there is a danger of a feeling that 'they're all at it' but serious reform does need to take place. At the moment it feels like a) they're gorging themselves at our expense and b) it's a case of one rule for them and one rule for the rest of us.

Bernard Salmon said...

Stephen, I'm not saying that reform is not needed - quite clearly it is, for instance by not allowing MPs to profit from selling on their second homes and by preventing the sort of switching of main homes which allows MPs to maximise their allowances. That sort of thing does need to be stopped. I agree there is a perception of 'they're all in it for themselves' and that is deeply corrosive for democracy.
But I do also wonder why people are getting so worked up about the 125m for MPs' expenses, but don't seem to be too concerned about the 15-20 billion being splashed out on ID cards. Wouldn't that be a better target for people's anger?

Stephen B said...

"But I do also wonder why people are getting so worked up about the 125m for MPs' expenses, but don't seem to be too concerned about the 15-20 billion being splashed out on ID cards. Wouldn't that be a better target for people's anger?"The answer to that I think is twofold. There are a lot of folk supportive of the idea of ID cards and, more importantly, ID cards are still an abstract idea of interest mainly to us anoraks. Politicians with their porky snouts in the trough are more human. But I think it does raise the question whether people who act in this way can be trusted to perform honourably for society and thus, inter alia, in something like the introduction of id cards.

It's another debate but I fear that people are far too trusting when it comes to their personal data - they're happy to give Google, Tesco and God knows who else stuff that they really ought to keep to themselves.

stephen said...

I'd challenge your assertion that MPs are underpaid. £65K basic seems a quite reasonable sum for a bog standard constituency MP. Comparing them to legislators in a country with a radically different system of government isn't relevant. Moreover, many of us could get higher pay if we were prepared to move to the US to work. I'm sure that many MPs think they are underpaid, especially those who came from well remunerated professions, and think of the system of expenses as a legitimate supplement to their income. And I'd have sympathy for that point of view if they were truly badly paid. But they are not. How many headmasters are paid such a sum? Not many and I'd see running a large school as being rather more demading and responsible than being a back-bencher.

Bernard Salmon said...

Erm, I don't actually make the claim that MPs are underpaid. I merely made the point that in comparison with legislators from other countries, their pay and expenses are not that excessive.

Matt Wardman said...

Stephen, I'm not saying that reform is not needed - quite clearly it is, for instance by not allowing MPs to profit from selling on their second homes and by preventing the sort of switching of main homes which allows MPs to maximise their allowances. That sort of thing does need to be stopped. I agree there is a perception of 'they're all in it for themselves' and that is deeply corrosive for democracy.

>But I do also wonder why people are getting so worked up about the 125m for MPs' expenses, but don't seem to be too concerned about the 15-20 billion being splashed out on ID cards. Wouldn't that be a better target for people's anger?

I think that people are worked up about the ID cards - witness the trend in polls over the last several years.

I'd suggest that the specific anger concerning MPs' allowances is because the amount of money involved is not a measure of the problem: it is about double standards, hypocrisy and a lack of basic integrity at the heart of the political process. That really matters, however small the sums involved. It is perceived, I think, as a personal insult. Also, repeated attempts over years to conceal information that should be public does not help (to put it mildly). I think that level of anger is justified, and - critically - that nothing less would have generated political change (this has been ramping up for years). That latter problem indicates a more fundamental failure of politics to be responsive..

I think there are a few issues with your comparisons, and that you have left a lot of data out:

* I don't think you can rely on snapshot comparisons when the rates have fluctuated by 30% (pound - Euro, Euro - dollar) or 50% (pound - dollar) over just the last 15 months.

* You need to look at things such as pensions; MPs pensions are worth - what - 25-30% or so on top of the 10% contribution made? Also resettlement grant, which is 6-12 months salary, while in Norway (where I have been doing comparisons) they get 1 month.

My view is that a basic salary which is at the 92-93rd percentile for the country cannot be regarded as inadequate when there are hugely generous allowances, perks and supplements even after any reform proposal I have yet seen.

The number we should be looking at is not "basic salary", but "package value" which is closer to 80-100k.

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