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Jacqui Smith, supported by the Prime Minister, Mr. Chancellor of the Exchequer, Secretary David Miliband, Mr. Secretary Straw, Mr. Secretary Hutton, Secretary Ruth Kelly, Mr. Secretary Woodward and Mr. Tony McNulty presented a Bill to confer further powers to gather and share information for counter-terrorism and other purposes; to make further provision about the detention and questioning of terrorist suspects and the prosecution and punishment of terrorist offences; to impose notification requirements on persons convicted of such offences; to amend the law relating to asset freezing proceedings under United Nations terrorism orders; to amend the law relating to inquests and inquiries; to amend the definition of ‘terrorism’; to amend the enactments relating to terrorist offences, control orders and the forfeiture of terrorist cash; to provide for recovering the costs of policing at certain gas facilities; to amend provisions about the appointment of special advocates in Northern Ireland; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 25 January, and to be printed. Explanatory notes to be printed. [Bill 63].

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Members’ Salaries, Pensions and Allowances

Mr. Speaker: Before we begin the debate, it may help the House if I indicate that there will be a single debate on the various motions in the name of the Leader of the House on salaries, pensions and allowances, and on all the amendments selected. A selection list has been placed in the No Lobby. The debate will take place on the motion about to be moved by the Leader of the House on “Members’ Salaries (Expression of Opinion)”. At 5 pm, if the debate has not concluded, I will call on the movers of any amendments selected to the first motion to move their amendments formally. I will then call subsequent motions and amendments, as necessary, which will be moved formally.

12.52 pm

The Leader of the House of Commons (Ms Harriet Harman): I beg to move,

Mr. Speaker: With this we shall consider amendments (f), (g), (d) and (c) thereto, and the following motions:

Members’ Salaries

and amendment (a) thereto,

Parliamentary Pensions


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Members’ Allowances

and amendments (b) and (a) thereto.

Ms Harman: Although the issue of MPs’ pay, pension and allowances is a thorny one, I hope that there will be agreement across the House on at least four things: that MPs should be properly paid for the important work that they do; that MPs should be reimbursed for what they spend doing their job, as are people in any other line of work; that as MPs are paid from the public purse, we should show the same discipline in our pay increases as other public sector workers; and that, like everyone else, we should not decide on our own pay and should not vote on our pay increases.

I am grateful to Sir John Baker and the Senior Salaries Review Body, whose report the Government published last Wednesday. With its 34 recommendations, it provides the context for today’s debate. Let me deal first with the issue of allowances or, as the SSRB rightly calls it, parliamentary expenditure. The report makes a number of recommendations about parliamentary expenditure. They include proposals on expenditure on offices, communications expenditure and expenditure on travel.

Many of the proposals raise complex issues, including the proposal for a central system for funding constituency offices and a corresponding reduction in the incidental expenses provision. We therefore propose that they should be referred for further detailed consideration to the Members Estimate Committee, which is chaired by Mr. Speaker and includes Members drawn from across the House. The Committee will have the advice of the advisory panel on members allowances. I am sure that the Members Estimate Committee will be interested to hear hon. Members’ views on the SSRB’s recommendations.

There is one SSRB recommendation on Members’ expenditure that I hope that the House can accept today: it suggests that given the big increase in casework that many hon. Members have experienced, staffing expenditure should be increased to allow for the payment of the equivalent of three and a half members of staff, up from three.

On pensions, the SSRB proposes that the pension for future Prime Ministers and Lord Chancellors be no greater than the pension provision for Secretaries of State. The Government agree. Furthermore, the Prime Minister and the Lord Chancellor both agree that that should apply not only to future holders of their office
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but to them personally. On the SSRB proposals on pensions for future Speakers, as retired Speakers are not in the same position as retired Secretaries of State, we do not propose that the House change the pension arrangements for future Speakers.

On severance pay, the SSRB makes recommendations to change severance pay for Ministers, so that if they are re-appointed to a salaried Government or parliamentary post within three months of leaving office—the period that is covered by severance pay provisions—they will be entitled to keep only a pro rata severance payment, and should return the rest. We accept that recommendation.

I next turn to the question of MPs’ pensions. The SSRB has proposed the introduction of a new optional one-sixtieth accrual rate. The Government accept that proposal in principle and are prepared to introduce it, if and when the change can be made as part of a cost-neutral package. The SSRB makes a number of recommendations on parliamentary pensions. They include a 50:50 sharing between Members and the Exchequer of future increases or decreases in pension cost pressures, and restricting the underlying Exchequer contribution to the scheme to a maximum of 20 per cent. of payroll. The SSRB also recommends that there be a review of parliamentary pension provision if the costs rise significantly, such that the 20 per cent. cap on the Exchequer contribution is likely to be breached.

The recommendations are consistent with the approach being taken in public sector pension schemes generally. The Government propose that the detail of the arrangements be worked up in consultation with the trustees of the parliamentary pension scheme, chaired by the hon. Member for Bournemouth, West (Sir John Butterfill), to whom we all owe a debt of gratitude. Chairing the parliamentary pension scheme on behalf of all hon. Members and the House is unsung but important work. Once the detail has been worked up, any changes on pensions will have to be brought back to the House for decision.

On MPs’ pay, there are three issues that the Government have put before the House. First, this year—April 2007 to April 2008—we should not vote ourselves a pay increase that is higher than that for the rest of the public sector. Secondly, we should rescind the 1996 measure that instituted the mechanism for increasing MPs’ pay in line with the average increase in pay bands in the senior civil service. Thirdly, in future we should not vote on our own pay increases at all; that should be decided on independently.

Richard Ottaway (Croydon, South) (Con): On the point about rescinding the 1996 resolution, might it not be sensible to keep the measure in place until the Baker review and the Members Estimate Committee have reported? The 1996 resolution could be scrapped when the new recommendations are introduced.

Ms Harman: It is really an earnest of our good intent that we propose to scrap the existing mechanism, but we do not expect the current situation to drift on; we expect there to be a new comparator and a new mechanism. The review is due to report to the Prime Minister in
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May. The issue will be back before the House before the recess, and there will be an opportunity for the House to decide. Our concern is that we should clear the decks now, at this vote, showing the House’s intention that we move forward to a different system. If we leave the current system in place, it can always continue. We should make the decision on April 2007-08 pay, but in future we will do it differently, with a comparator and a new mechanism. That is what we are asking the House to decide on.

There are amendments on that point, and I shall address them in more detail later in my speech. I will take interventions, and I do not mean not to answer hon. Members’ questions, but may I deal first with what the Government propose and the Government’s response on the amendments? If there are any points that hon. Members wish to take up or which they are not clear about, I shall take them at the end. Perhaps we can proceed on that basis.

Since 1996, MPs’ pay has been increased in line with the average of the increases to the maxima and the minima of the pay bands in the senior civil service. Over the past two years, this has meant that MPs have had below-inflation pay increases—2.2 per cent. in 2003, 2 per cent. in 2004, 2.8 per cent. in 2005, 2 per cent. in 2006, which was staged, and this year 0.66 per cent. The question of our pay increase for 2007-08 needs to be seen against that background, and also against the background of our strong commitment to our public services and those who work in them; in the context of our determination to sustain a strong and growing economy that can withstand global financial turbulence; and alongside the approach to pay that the Government are taking for the public sector as a whole. We ask the House, in the motions that are before it, to stage the 2.56 per cent. recommendation made by the SSRB and which we accept, but to stage that increase so that it amounts to 1.9 per cent. in value across this year.

For the same reasons that I have just set out, we do not accept the SSRB proposal that Ministers’ pay should increase faster than that of other hon. Members. For future years, we propose that we do not have votes on our own pay again. The public find it unacceptable, we know that it is inappropriate, and some other legislatures in parliamentary democracies are able to do it differently. For example, MPs in New Zealand do not vote on their own pay increases.

Mr. John Maples (Stratford-on-Avon) (Con): The right hon. and learned Lady and I have been in the House a long time. In the past, we have set links, but the problem is that when that link produces a reasonable pay increase, the Government say, “We can’t afford it and it blows a hole in public sector pay policy.” Whatever the mechanism, we have ultimate responsibility for our pay increases. If we create a link and the result is that we get, say, a 3 per cent. pay rise, will the Government say that that is too much in the context of public sector pay? Unless we are prepared to implement whatever the link results in, we end up with the problem of having to vote on our own pay.

Ms Harman: On these matters, the House is sovereign. It is possible for the House to decide on a framework, with primary legislation if necessary, to set the arrangements
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for making those decisions in future. The question is what mechanism would be appropriate, and what degree of independence would be appropriate. Of course, the House can always revisit any primary legislation and change it, but we are asking Sir John Baker to produce a proposal that sets up a comparator and a mechanism so that we will not have to vote on our pay in future.

Martin Salter (Reading, West) (Lab): So that the Leader of the House hears the same argument from both sides of the House, may I point out that there is a deal that can be struck? Does she agree that it is right and proper that we are no longer in the invidious position of having to vote for our own pay rises—even the massive pay increase of 0.6 per cent. for which the media gave us great credit last year? The other side of the deal that we need to hear is that the Government will keep their paws off the recommendation of any independent review. We need to hear from all those on the Front Benches that it is the intention of the House to move forward on the New Zealand and Australian systems, which link pay to a registered scale and take the politics out of the situation.

Ms Harman: Hon. Members will have seen the terms of reference that the Government set out for Sir John Baker, and it is precisely to identify proposals that would put into practice the sentiments expressed by my hon. Friend that we have asked Sir John to conduct that review and report to the House.

Several hon. Members rose

Ms Harman: I will, if I may, press on with my speech. I know that many hon. Members want to catch Mr. Speaker’s eye. All interventions are on the same points, and I will deal quickly with as many as I can at the end of my speech.

I am grateful to Sir John Baker for agreeing to the Prime Minister’s request that he will review the way other countries deal with the matter, look at our constitutional position and legal framework, and make proposals that I will bring back to the House for us to debate and vote on before the House rises for the summer recess. I know that colleagues are concerned about the timing of the publication of the Baker review and any consequential votes. I will ensure that the report is published at the earliest opportunity. If the House agrees to this approach, I will return to the House before the summer recess with proposals for a way forward.

Mrs. Theresa May (Maidenhead) (Con): Will the right hon. and learned Lady comment on the concern that a number of Members feel that a review that is taking place by the man who headed up the SSRB is not the independent review that Members would like, and not the fresh thinking in this area that would have been brought about by bringing in somebody else? Can she explain why the Government turned to Sir John Baker to hold the review?

Ms Harman: Sir John Baker is entirely independent. He also has a great deal of experience, and if any fresh thinking is needed, I know that, as part of his review, Sir John would look forward to receiving it.

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Let me assure the House that the terms of reference for the Baker review are designed to focus on identifying a pay comparator, coupled with a mechanism for setting pay, should that comparator become non-viable in the future. The review is not invited to propose structural changes to the parliamentary pension scheme.

Mr. John Spellar (Warley) (Lab): It is extremely important that we are clear on the timetable for the review. It is the view on both sides of the House and also in the Government that the issue should be finally resolved before we rise for the summer recess. That will require the report to be published preferably by the end of May, and at the latest by the middle of June. The House is looking for an assurance, or even a guarantee, that it will be published, debated and voted on before we rise for the summer recess.

Ms Harman: That is what we have said. My right hon. Friend is right. We need a clear timetable, not least because today we are asking the House only to vote on our pay increase for April 2007-08. We will therefore need a new comparator and a new mechanism. We have asked Sir John to report to the Prime Minister in enough time to enable the Government to consider the report and hon. Members to consider the report, debate it and make a decision before the House rises in the summer. I accept my right hon. Friend’s point.

Several hon. Members rose

Ms Harman: I turn to the amendments. I want to set out their effect and the Government’s response, but first I will give way.

Sir Michael Spicer (West Worcestershire) (Con): Has Sir John Baker accepted a specific timetable? If so, what are the dates?

Ms Harman: Sir John Baker has kindly agreed to do the work on this important review to the timetable outlined to him by the Prime Minister—as far as possible to complete the report by the end of May or the beginning of June.

Bob Spink (Castle Point) (Con): Why should not the proposals of the Members Estimate Committee be brought to the House in parallel with Sir John’s report so that hon. Members can decide which is the best system for the House?

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