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It goes on to say that comparable circumstances were looked into and it concludes:

That must surely be included in the basket for consideration; it is nonsense to take that out altogether as if it were not a serious issue. It is an issue for Greater
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London MPs of all parties. I hope that colleagues will vote accordingly and that the Government will accept it.

Stephen Hammond (Wimbledon) (Con): My hon. Friend the Member for Cities of London and Westminster (Mr. Field) and I gave written and oral evidence to the SSRB on that point. The hon. Gentleman quoted the recommendation of £3,500, but if he reads the supporting evidence he will find that KPMG suggested that the comparator should be £4,000. We are asking not that that be put into effect—the hon. Gentleman has made that point—but for the appeal process and for it to go to the MEC. That must be right. If the SLA is pay, the additional cost allowance must also be pay; the Government cannot have it both ways.

Simon Hughes: Whether or not MPs represent Orkney and Shetland or the Cities of London and Westminster—the two most extreme examples—it must be right that all the issues are referred to the body. It cannot be right for the Government to be able to take one out and throw it away.

Mr. Mark Field: Although I may have been called extreme at certain times, I am sure that the hon. Member for Orkney and Shetland (Mr. Carmichael) has not been called that on too many occasions. I appreciate that the Leader of the House is also an inner-London MP, representing Camberwell and Peckham. She made the statement and it has been put that somehow the London allowance is simply an issue of pay, but in our view it is a small compensatory allowance that makes a contribution—only a small contribution—towards the otherwise un-reimbursed expenditure entailed in making a main home, as opposed to a second home, in central London. That is why we feel that this matter should go to the MEC. The option of taking an ACA is not open to us 26 Members, but for those who are not entitled to an ACA or who choose not to take it in preference for a London allowance, there is comparability. We hope that the Leader of the House will take notice and ensure that recommendation 29 goes to the MEC.

Simon Hughes: I ask colleagues not only to vote for that but to bear in mind that it is completely illogical to have recognised that relative office costs as well as relative staff wages in different parts of the country should be reflected in the allowances and not to apply the same to Members of Parliament who live in central London or inner London. I emphasise that we are not voting now for any extra expenditure on anything; we are voting only for these matters to be looked at, which is surely the responsible thing to do.

The proposed process will look at the additional costs allowance, which has been the most controversial allowance for parliamentarians. It allows MPs who do not live locally to claim for a second home or a second place to stay. Of course nobody would expect you, Madam Deputy Speaker, to go back to the west midlands every night or others to go back to Scotland or Wales, so there must be a process for recompense. That is perfectly proper. My personal view is that for outer-London MPs, the current situation is no longer justified—

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Richard Ottaway: Wrong!

Simon Hughes: Well— [Interruption.] I will give way to the hon. Gentleman, whom I respect, but I am saying only that the current position needs to be reviewed, which is the clear implication of the report. None of my outer-London Liberal Democrat colleagues claim it; though some Members claim it when they live very near to the borders of inner and outer London. I am simply asking for it to be reviewed because, in my judgment, that is what has brought the House into the greatest disrepute, so it needs to be sorted. That is all; I am arguing no more than that.

Richard Ottaway: I apologise for my intemperate reaction to the hon. Gentleman’s remark. I do not know when he last tried to get down to south Croydon but I can tell him that it takes a heck of a long time, due to the Government’s totally inadequate transport provisions. It is a fact that one can get to Reading quicker than one can get to south Croydon. If he pursues this argument, it will not stop at outer London: the whole of the home counties will have to be included. He might find that he will have some difficulty carrying people with him.

Simon Hughes: I respect the hon. Gentleman, as he knows, and I have been to Croydon, including south Croydon, many times. All that I am saying is that this has been the most criticised area of our allowances. To quote the report, it says that

All that I am arguing is that the matter should be looked at and reviewed. I will not give way further, as I do not want to wear colleagues’ patience; I want to carry them with me.

In relation to the point made by the right hon. Member for Maidenhead, the current proposal allows the Willie Hamilton election campaign grand finale to start again. At the moment, rightly or wrongly, colleagues have a final-year compensation amount when they finish their service as MPs. Under the proposal, an MP would get that payment only if their constituency was abolished or they had been defeated. So when they came to their natural retirement age, they would have to find a seat that they did not want to fight and that they absolutely hoped that they would not win—what would happen if they did would be a different question. Clearly, that is nonsense. The resettlement grant and the issue of compensation on leaving office need to be looked at.

The last issue is that of offices and staff location, which was raised by the right hon. Member for Maidenhead. This is only a suggestion, but I support the idea that there should be an assessment of how much space we need—it might be 800 sq ft or it might not. Having done that, there would be a process to pay for that separately, and the costs would be different in different parts of the country. We would probably need a system in which a similar person, company or body would do that assessment in Orkney and Shetland and in London, to avoid unfair comparison. Rather than the same outcome, there should be a standard process of evaluation of what is a fair and reasonable cost.

If we spend our time saying how important Parliament is, we must all assume that we are entitled
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to have at least one or two people working for us here as part of our job. If people ring the House of Commons and get a voice on an answerphone, that is not a satisfactory service. We cannot be in our offices when we are in the Chamber, in Committee or doing other things. We must have a system that allows MPs to have staff in the Palace of Westminster, as their base, without penalty, as well as staff in their constituency, where they are also needed. Those are important matters, and my request is that all, not some, should go for independent assessment.

In relation to salaries—I end where I began—we should move down a road of an independent process, but not assume that the Government will suddenly change the habit of a lifetime, speed through, come up with a wonderful solution and leave it to us to decide without interfering. We must put in place a system that protects us next year. Consistent with public sector pay restraint, however, it should give us only a limited increase next year, as we accept a limited increase this year.

2.32 pm

Mr. John Spellar (Warley) (Lab): I shall concentrate my remarks largely on pay, because the section on allowances has in the main been referred through the Members Estimate Committee to our panel. We wish to evaluate those suggestions properly without preconceptions.

I agree with the comments of the right hon. Member for Maidenhead (Mrs. May) that it would be much easier to deal with questions of allowances if elements of the media did not endlessly misrepresent them as part of our income. That is acknowledged in paragraph 1.12 of the SSRB report:

I also counsel Members that so-called transparency is no magic solution. The situation in Scotland has demonstrated that only too clearly, to the extent that one MSP was attacked for spending money on coffee in his constituency office.

The matter of pensions will be considered elsewhere, and the hon. Member for Bournemouth, West (Sir John Butterfill) is in the Chamber and will no doubt comment on that. I am concerned, however, about reference to so-called gold-plated schemes compared with other public sector schemes. We as MPs have a high contribution rate, much less security of tenure and later retirement. We do not have the early retirement enjoyed by many of the uniformed services—I hasten to add that those schemes are provided for understandable operational reasons. At the same time, however, we abrogated the option of retirement at 60 on the grounds that that example would be followed by those in the wider public sector. Unfortunately, they have not found that example particularly inspirational.

To return to pay, the basic facts are rightly outlined by the SSRB in paragraph 3.2, which records that the evidence given on Members’ behalf by the advisory panel showed that

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The PricewaterhouseCoopers study—which, admittedly, involves some difficulties—showed that the gap between MPs’ pay and that of private sector comparators had also grown.

As paragraph 3.18 of the SSRB report explains, unlike the annual increases of many in the public sector, ours is an actual earnings increase. Why? Because we do not have the increments, performance pay or other forms of pay progression that are common and, indeed, increasing in many parts of the public sector. That is why the mechanism that linked us to certain pay bands became so unsatisfactory in the end.

I must say in parenthesis, and partly in mitigation, that I only became chair of the advisory panel after the last election. I was astonished that anyone would agree to be linked to someone else’s pay rate rather than their earnings: I had thought that that was in chapter 1 of the shop stewards’ manual. Members will recall, however, that we did get a cycling allowance out of the last settlement.

The SSRB report acknowledges the problem, but I find it disappointing that the board did not want to address it earlier. The report states quite openly that it

although it seems to have been content to distort our pay system as a consequence. As we all know, we received only 0.66 per cent. last year. That is worth repeating, just so that the public get the message loud and clear.

The basic facts are these. If our salaries had kept pace with the retail prices index in the last five years, we would have not our current salary of £60,675 but a salary of £64,418. If our salaries had kept pace with average earnings, we would be on £66,170. If our salaries had kept pace with the public sector average earnings index, we would be on £67,684. The problem has been exacerbated in the last three years, with increases of 2 per cent., 1 per cent. plus 1 per cent. staged over the year and, most notoriously, 0.66 per cent. last year.

The SSRB has acknowledged part of the problem, and we should be grateful to it for that. It has taken on board not just the comments of the advisory panel, but those of many individual members who not only followed our evidence but made inquiries in their localities about the pay enjoyed by directors of services in their local councils, head teachers in some of the larger schools and so on. At least in my experience, many were slightly surprised by the change, and the rate of change, in those jobs over the last few years.

Unfortunately, the SSRB proposes to remedy that by means of a mechanism that I still find confusing. It talks of linking us to the average percentage increase in the base pay of the senior civil service, by which, it says that

It then states that the amount

That sounds to me like an unnecessary complication, possibly containing the seeds of further difficulties in
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the future. It would have been much simpler, even within that indicator, to take a straightforward figure, namely the amount by which senior civil servants’ take-home pay rises during the year. I hope that Sir John Baker’s further study will take that into account. We should also ask him to examine the question of remedying the considerable shortfall.

It also concerns me slightly that the report does not really capture the life and work of Members of Parliament, although, as we know, the subjects are very much intertwined.

John Bercow: For the avoidance of doubt, will the right hon. Gentleman say whether he agrees that it is not to the rate of increase that we need to be linked, but to the base from which the increase takes place?

Mr. Spellar: I was going to deal with that later, but I shall do so now. There are two elements that we need to disentangle. One of them is the extent to which, for a variety of reasons, we have fallen behind comparators in earnings, and therefore the extent to which there needs to be catch-up in order to establish the proper base. The second element is how we decide what the increase will be year on year in the future—what mechanism might we put in place to prevent this matter from having to come back before the House. I urge that they are treated as two separate issues. We do not need to say, “This is the comparator we are dealing with to look at what should be the base figure”, and to be for ever tied to that particular group. It might be the case that we are tied to that group, but we might instead look at a basket of groups and at an average increase. The two issues are not integrally linked, and it would be a mistake to link them as we would then be back in the situation of having reports and analysis, all of which become arguable, debatable and, ultimately, votable.

Let me return to the issue I was addressing. The PWC report states boldly that the evaluation results do not take account of the extensive working hours of a Member of Parliament. It says that it assumes that we work a normal professional working week. I remember a good colleague of mine who was an Australian Senator and who then entered the private sector saying to me, “The big difference between full-time in this game and in the private sector is weekends.” I think all Members will understand that comment. I do not say that we work every hour of every day of the week, but there are always pressures on us to do so. That is underestimated and misunderstood.

Sir Nicholas Winterton (Macclesfield) (Con): I am delighted that the right hon. Gentleman has raised the number of hours that the overwhelming majority of Members work, particularly when the House is sitting which is for more than half the year. Including time spent travelling to and from my constituency, I estimate that I spend an average of 85 hours per week on parliamentary and constituency work when the House is sitting. That is more than twice the normal working week in this country.

Mr. Spellar: Some Members used to be trade union officials. I remember people saying, “You should be paid the average wage of the members.” As I was negotiating for Fleet street at the time, that was not so
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bad, but my response always used to be, “Would that be with overtime at premium rates?” I do not say this by way of complaint, but Members should look at their hourly rate.

Our job has a high level of input, and there have been changes that have increased that. One of them is the increase in our case load. Another is the increase in the number of campaigns that are directed at Members, and which require either correspondence or attendance at meetings. In the past, many examples have been given of the increase in mail, but I am sure that all Members will have experienced an exponential increase in e-mail, even over the past 18 months—and not just the standard correspondence on issues, but many more constituents e-mailing about individual cases and problems.

Linda Gilroy (Plymouth, Sutton) (Lab/Co-op): Has my right hon. Friend’s office noticed that whereas organisations used to send us hard copies of material, they now tend to e-mail it so that it needs to be run off? As that might happen 20 or 30 times a week, that also has to be fitted into our time and our staff’s time.

Mr. Spellar: My hon. Friend is right. The PWC report misunderstands the situation when it says that problems of work load are to some extent within MPs’ own control. There is an element of truth in that, but it underestimates some of the pressures that MPs are under.

As I was saying in reply to the hon. Member for Buckingham (John Bercow), we should try to disentangle these elements. The Government motion helpfully provides the opportunity to do so. The first such element is the baseline for our calculations. The SSRB says that we are some 10 per cent. behind, although that is if everything is taken into account. Our basic salary is 14 per cent. behind, even on the SSRB’s comparators, and we are 15 per cent. behind on total cash. The figure needed to catch up is somewhere between where we are and £66,742. Interestingly, that figure is only a little above what we would have received had we kept pace with average earnings.

I must take slight issue with the comments made by my hon. Friend the Member for Sunderland, South (Mr. Mullin). He said that some past increases had not been connected with the real world. In fact, those past recommendations were designed to catch up with changes that had already taken place in the real world.

Mr. Mullin: Up to a point, Lord Copper. When my right hon. Friend was saying how far we had fallen behind, he drew the line at 1997. In 1996, we voted ourselves a 26 per cent. increase, at a time of 3 or 4 per cent. inflation. It is that kind of thing that gets us a bad name.

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