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Ms Harman: My right hon. Friend is right on that point. Our allowances are important for us to do the work that sustains public confidence, but we know that it undermines confidence in the House, and in us, if they are abused. We all know that the public are angry that a small number of Members have misused allowances.
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We want to ensure that that does not happen in future. It is not just the public who are angry. Most hon. Members are angry, because all of us who work hard and obey the rules are stained by the misconduct of a few, and the reputation of the House, which we hold dear, is undermined.

Anne Main (St. Albans) (Con): It is not only hon. Members who abuse the allowances who are pilloried by the press. Hon. Members who comply completely with the rules are also abused by the press. Indeed, the issue is used as a party political football by some people who aspire to enter this place. It is completely wrong that we should not look at this matter again, in the light of the fact that this is a media-driven thing. People who use their allowances properly should not feel bad about using them.

Ms Harman: I agree with the sentiment behind what the hon. Lady says. However, building on what the House decided on 3 July, we will be able to give ourselves, as well as the public, more assurance that the rules are clear, and will be properly complied with by all of us.

Mr. Tyrie rose—

Mr. Kevan Jones rose—

Ms Harman: I will not give way to the hon. Gentleman, but I will give way to my hon. Friend the Member for North Durham (Mr. Jones).

Mr. Jones: The right hon. Member for Maidenhead (Mrs. May) suggested that Labour Members of Parliament had been abusing the system. However, is not the reason why this matter has such a high public profile the fact that every case of Members abusing the system that has gone before the Standards and Privileges Committee has involved Conservative Members?

Ms Harman: We have only to check the reports of the Standards and Privileges Committee to understand the point that my hon. Friend is making about the situation in Parliament.

Earlier this month, we made decisions on pay and allowances. We set up a system that will rightly prevent us from voting on our own pay increases in future. Instead, they will be set by an independent review body. We have also made decisions to improve the system of allowances. On 3 July, we agreed that no staff should be paid out of public funds unless evidence of their employment—a contract of employment and a job description—had been deposited with the House authorities. We also agreed that there should be a strengthened system of audit.

As Leader of the House, it is my responsibility to consider how we put the will of the House into effect. That means implementing the resolutions of 3 July and considering how we can build on the clearly expressed view that we need to do more to ensure that the rules are clear and properly enforced, so that we protect public money and the reputation of the House.

Mr. Tyrie: Will the Leader of the House give way?

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Ms Harman: I will not give way to the hon. Gentleman again; I have already given way to him once.

After the vote on 3 July—and certainly before this debate was called by the Opposition—I have had a number of discussions with hon. Members, with the Chair of the Committee on Standards in Public Life, Sir Christopher Kelly, and with the Comptroller and Auditor General, Tim Burr. I have also prepared a written ministerial statement, which I have laid before the House this morning, and which forms the basis of our amendment to the Opposition motion. I want to reassure the House that what I have set out in my written ministerial statement today and in our amendment to the Opposition motion is based on a programme of work and discussions that I have been undertaking, and that it is not in any sense a response to this Opposition day debate.

I would like to outline briefly the measures that will build on the decisions the House took on 3 July, in respect of which I intend to issue a consultation document. The key elements include the proposal that the green book that sets out the rules on entitlements to allowances should be rewritten by the Advisory Panel on Members’ Allowances, in the light of decisions taken by the House on 3 July, and to abolish the so-called John Lewis list. The Advisory Panel on Members’ Allowances will keep the green book under review and advise on any further modifications to the rules that may be required, including in relation to reasonable costs of a second residence. I will consult on including capping furniture costs at 10 per cent. of the additional costs allowance. The membership of the Advisory Panel on Members’ Allowances will be increased to include two independent external appointees.

Mrs. May: In my speech, I expressly asked the right hon. and learned Lady to address the issue of the remit of the Speaker’s advisory panel and to clarify whether the next rewrite of the green book will be a matter solely for the panel. Is she suggesting a change to the rules so that the MEC will have no role in that?

Ms Harman: The green book is ultimately a matter for the House, but the important thing is to give to the Advisory Panel on Members’ Allowances, augmented by two independent external appointees, the responsibility of keeping the green book under review and ensuring that proposals come forward, including on the question of the reasonable cost of second residences.

Linda Gilroy: On the additional costs allowance, is my right hon. and learned Friend sympathetic to revisiting the issue of central provision of accommodation—not, as it has been caricatured, in a single block somewhere in central London, but in a range of rented accommodation—and, more importantly, to having the House authorities hold any capital gain, or indeed any loss, if Members are here for only a short time?

Ms Harman: I will be issuing a consultation document, and the Advisory Panel on Members’ Allowances will be looking at this issue. My hon. Friend will no doubt be able to contribute to those processes.

The key elements will also involve an external financial audit by the National Audit Office that will cover all the allowances in the green book, not just the additional
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costs allowance. It will also cover travel, staffing costs, incidental expenses provision for other office costs, and the communications allowance. Furthermore, the NAO financial audit will be extended to include an NAO audit of the rules and guidance on what is and is not acceptable under the rules, an NAO audit of the management controls and processes used by the Department of Resources to ensure compliance with the rules, and NAO checks and testing of the controls, to ensure that they are adequate and effective. I propose that the NAO should report to the Members Estimate Audit Committee, which will include three external independent members.

I am encouraged that the Comptroller and Auditor General believes that, given the additional evidence to be provided in support of claims, there is an opportunity to strengthen significantly the assurance that public money has been properly spent.

John Mann: What time scale is my right hon. and learned Friend putting on the final decision making on these issues?

Ms Harman: The consultation document that, as is set out in my written ministerial statement, I will be putting forward, includes the strengthening of the audit and the putting into effect of the decisions of 3 July. The written ministerial statement has been put before the House today, and I expect to issue the consultation document shortly. It would be appropriate for us to have concluded that aspect of our work before the publication of the green book on hon. Members’ expenses in the autumn.

Simon Hughes: Following that last question, can the Leader of the House confirm that if, after the consultation, we adopt the approach that she is consulting on—which will involve trying to undo some of the decisions that we made a fortnight ago—there will need to be a vote here, and her Back Benchers will need to vote for the proposals, not against them?

Ms Harman: I hope that support for reasonable audit will come from across the House. The National Audit Office proposals—which were put to the MEC but which did not form the subject of the MEC’s proposals—provide a good way forward, and I hope that the whole House will agree that they would provide us with the assurance that we need that public money is being properly spent in respect of all Members’ allowances.

I now turn to the question of the European Parliament. As long ago as 2000, Labour Members of the European Parliament who were concerned about the lack of accountability for spending on allowances in the European Parliament introduced their own system. This includes, among other provisions, an independent financial audit for each MEP’s total expenditure every year, which is then published on their website. For eight years, the UK’s Labour MEPs pressed for other UK parties to follow this example. Until eight years later, when the Leader of the Opposition announced his so-called “deep clean”, nothing was heard from them. At Government level, we have raised with the President of the European Parliament the need for greater accountability for spending by all the European Union’s MEPs.

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In conclusion, if the Government amendment is carried today—and pursuant to my written ministerial statement—certain things will happen.

Mrs. May: The Leader of the House made a statement a couple of minutes ago about the National Audit Office and the Members Estimate Committee report. She said that the MEC report did not include references to external auditing by the NAO, but it did—in recommendation 2, under audit and assurance. Will she explain how what she is proposing now differs from the MEC proposals?

Ms Harman: It differs in a number of ways. It goes beyond the additional costs allowance to include travel, staffing, the incidental expenses provision and the communications allowance. It will not only look into the spending of individual Members, but audit the Department of Resources to make sure that the rules are effectively applied.

Mr. David Hamilton (Midlothian) (Lab): May I bring us back to a housekeeping issue? The consultation will take place for nearly three months over the House of Commons recess, so will the Leader of the House ensure that there is a dialogue, and that people can be contacted to try to clarify any points during the recess? That is a simple matter of housekeeping.

Ms Harman: My hon. Friend makes an important point. I want to reassure people that when the House returns after the recess, there will be an opportunity to consider the proposals further.

As for the abolition of the “John Lewis list”, which is mentioned in both the Opposition motion and our amendment, I remind the House that that was a list that no MP had ever heard of until it appeared in the newspapers.

I will consult on the proposals I have set out, so that when the House returns in the autumn, we will be able to put into effect new rules and a new system of audit that gives Members and the public the confidence that the payment of expenses is on a proper footing so that we can all get on with the job that our constituents elected us to do, which is not to debate and discuss ourselves, and our own pay and allowances, but to focus on them and on their day-to-day concerns, and to take the action that they want us to take in the interests of this country.

1.42 pm

Simon Hughes (North Southwark and Bermondsey) (LD): Although it is controversial, I am glad that we are having this debate today.

Sir Patrick Cormack: You would be.

Simon Hughes: Yes, I would be, because the House made a bad mistake on 3 July. This is a brave move and the Leader of the House is right to bring the matter back to the Floor of the House.

I start with what I hope will be non-controversial comments, so I guess that what I say after that will be more controversial. First, I join the Leader of the House and the shadow Leader of the House in paying tribute to our staff. We could not do the job the public
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expect of us without our extremely hard-working, diligent and committed staff. They are often in the front line of people’s life tragedies, dramas and pressures, which sometimes means that they encounter threats of suicide, fears of eviction tomorrow, deportation today and so forth. The reality is that they do a fantastic job.

Let us be clear. At the moment, the allowance for our staff is something between £90,000 and £100,000. To put it simply, that means that if we have four staff fully on the payroll as I do—two here and two in my constituency office—and if we include national insurance, they are receiving something in the order of £20,000 to £25,000 each. That is the amount if we divide the cake four ways. If we had fewer staff, they would of course get more, but this is what we are talking about. We are not talking about staff earning £30,000, £40,000, £50,000 or £60,000 as part of a staff team; rather, it is a wage that other people with the same abilities working in the private sector would vastly exceed. I hope that we are clear about that and that it is not a matter of dispute. Our staff do a very important job for us.

We need to clarify what happened in the famous debate of 3 July. Some areas were not controversial and were agreed. There were 14 substantive recommendations from the Members Estimate Committee: they were unanimously proposed by the right hon. Member for Penrith and The Border (David Maclean), the hon. Member for Middlesbrough (Sir Stuart Bell), my hon. Friend the Member for North Devon (Nick Harvey), the Leader of the House, the shadow Leader of the House and Mr. Speaker.

Of those 14 recommendations, those on constituency offices and communications, of which there were two, and on travel, of which there were two, went through without any dissent. Two substantive issues, emanating from the amendment proposed by the right hon. Member for Islwyn (Mr. Touhig), were disputed and were not agreed. First, three different recommendations put forward a clear proposal, which everyone here will understand:

Secondly, it was proposed that

That was to deal with the perceived abuse surrounding colleagues in outer London who were claiming in respect of two homes, irrespective of the fact that they lived just over the line between inner and outer London and were actually able to get home relatively quickly. They received the full allowance on the same basis as a colleague living in Orkney, Shetland, Cornwall, west Wales or the like.

The third proposal that was not accepted was that

That was the proposal and it meant that MPs could have furnished accommodation, stay in a hotel or have the money for the purchase of accommodation as well as a daily rate for subsistence, but that the allowance did not include furnishing.

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Mr. John Spellar (Warley) (Lab): Is not all this in the nature of a differential allowance? In such a scheme, there is a always border and a line, and anyone with any experience knows about London weighting allowances. There will always be people living just one side or the other of a border. Unless we have an overall national rate, that will always apply, so is not the hon. Gentleman putting forward a rather silly argument?

Simon Hughes: No, it is not a rather silly argument and it is not my argument. It is an argument supported by the top salaries review people, by Sir John Baker in his report and by the Members Estimate Committee. The argument is that the abuses of some people who live nearby—only 20 to 25 minutes away, in some cases—and have two homes have to be reined in.

The final set of proposals from the MEC, which were backed up by the independent review, suggested that there should be a full audit of all expenses, not just of the additional costs allowance. The amendment, which was carried, limited audit to the additional costs allowance and not the other things.

Mr. Kevan Jones: I think that the hon. Gentleman has fallen into the same trap as many others since that debate in believing that the MEC report has somehow become the Ark of the Covenant and that everything in it was wonderfully transparent. The fact of the matter is that if we had voted for the proposal, we would have given ourselves £4,200 a year—an unreceipted, tax-free bung. Secondly, on the audit of offices and other aspects, the proposal was not for a financial audit but for £1,500 a day to be paid to consultants for snooping around offices. What I am in favour of, which is being proposed now, is a rigorous audit of all budget heads. What the hon. Gentleman is talking about is not what was being put forward— [Interruption.]

Simon Hughes: I am afraid to say, as the right hon. Member for Maidenhead (Mrs. May) is saying, that the hon. Gentleman is misrepresenting the position— [Interruption.] I am reading it; the proposal is in front of me. The recommendation was quite clear:

Mr. Touhig rose—

Simon Hughes: I shall give way to the right hon. Gentleman in a moment.

The difference was that it would have been an audit of everything, not just— [Interruption.] Potentially of everything. It was not just of the additional costs allowance. Most people out there cannot understand why we are not willing to have everything audited and willing to have only some things audited. [Interruption.]

Mr. Deputy Speaker (Sir Michael Lord): Order. The hon. Member for North Durham (Mr. Jones) might not like what he is hearing, but I would be grateful if he did not keep chuntering from a sedentary position.

Simon Hughes: I give way to the right hon. Member for Islwyn.

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