The Liverpool View: Fixes, fudges and failures to act – the past, present and future of MPs’ pay

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Dr Stuart Wilks-Heeg is a Senior Lecturer in Social Policy at the University of Liverpool

“Today, announcing the Independent Parliament Standards Authority’s (IPSA) recommendations for MPs’ pay after 2015, the organisation’s Chair, Sir Ian Kennedy, described the history of MPs’ pay as ‘a catalogue of fixes, fudges and failures to act’.

Kennedy’s historical analysis is bang on the money. So it’s a shame that IPSA’s report can already be added to the unwanted back-catalogue which Kennedy identifies.

It’s not just that members of parliament and the public have been queuing up to criticise IPSA’s proposals. The report also ducks the closely-related historical question of what to do about MP’s earnings from other sources.

Lloyd George’s allowances

MPs’ pay has always attracted controversy. Before 1911, MPs received no remuneration at all, since almost all were independently wealthy or held other jobs. Six attempts to introduce payments for MPs were defeated in parliament during the nineteenth century.

The election of the first clutch of Labour MPs after 1900, without personal fortunes or lucrative outside jobs to sustain them, forced the issue. Even then, when David Lloyd George introduced a payment of £400 per annum for MPs in 1911 (about £30,000 in today’s prices), he stressed it was an allowance rather than a salary.

From allowances to salaries

MP’s allowances did not rise above £400 for another 26 years. During the depression of the 1930s they were initially cut. Irregular increases between the late 1930s and late 1950s kept allowances at about the 1911 level in real terms (i.e. adjusting for price inflation). For Labour MPs without trade union sponsorship, this often meant genuine financial hardship.

In 1961, Conservative Prime Minister Harold Macmillan dismissed complaints about parliamentary pay, noting that MPs were free to earn additional income externally ‘subject to the accepted rules and conventions’.  But, in 1964, the recommendations of the independent Lawrence Inquiry prompted a hefty increase in payments to MPs, at a level approaching a senior professional salary.

Governments remained reluctant to allow further increases, and the real value of MPs’ dropped once again, particularly with rampant inflation in the late 1970s. It was only after 1979 that MP’s pay began to grow steadily, based on the principle of pegging MP’s salaries to those of senior public sector employees.

Members’ interests and working hours

Meanwhile, there have been big changes in attitudes towards MPs earning income from outside employment or interests, and in the nature – and volume – of work undertaken by MPs.

From 1974, MPs were required to declare other sources (and, since 1996, the amount) of income in a Register of Members’ Interests.  The workload of the typical MP has also grown substantially, with most working at least 60 hours per week. The growing importance of select committees is one factor. The sharp growth in the volume of casework brought to MPs by constituents is another.

External sources of income

Nonetheless, many MPs continue to earn money from external sources – giving rise to frequent accusations of conflicts of interest. In 2008, Helen Goodman, deputy leader of the Commons, found that second jobs were held by 66% of Conservative MPs, 37% of Liberal Democrat and 19% of Labour MPs.

Goodman’s findings sparked proposals to bar or limit MPs from taking additional paid roles, but these were never followed through. IPSA has determined that it had ‘no remit’ to intervene on such matters and that only a handful of MPs earn significant amounts through second jobs.

While IPSA is probably right about its remit, the issue of second jobs is not set to go away. Earlier this week, Ed Miliband promised that no current Labour MP whose outside earnings amount to more than 15 per cent of their total income will be allowed to stand for re-election.

Despite the best of intentions, the attempt to remove the question of MP’s pay from the political arena has manifestly failed. Both IPSA’s proposals and Labour’s promise on second jobs are certain to feature prominently during the 2015 General Election campaign, ensuring that the issue will have to be settled politically. Expect more fixes, fudges and failures to act.

Follow Stuart on twitter @stuartwilksheeg

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