LIVING EXPENSES FOR WORKING AWAY FROM HOME
12. How should Members whose job requires them to
spend three or four nights a week away from home be reimbursed?
MPs are not the only people whose occupation involves working
away from home but there a probably few other jobs which require
close contact with a wide constituency of people in one location
and long hours of attendance in another. Which other jobs are
comparable with that of an MP in this respect? There are certainly
other public sector jobs which involve working in more than one
13. The current additional costs allowance (ACA)
reimburses MPs for additional expenses necessarily incurred when
staying overnight away from their main home for the purpose of
performing parliamentary duties. It is spent either on maintaining
a second home, whether in London or in the constituency or, for
a few Members, on hotels. The SSRB reports that out of the 586
MPs reimbursed from ACA last year, 343 MPs claimed over 90 per
cent of the maximum of £22,100.
It is not provided for MPs with inner London constituencies nor
claimed by some in outer London.
14. The Additional Costs Allowance was first introduced
in 1971 following a recommendation from the then Top Salaries
Review Body which envisaged "an allowance based on a fixed
daily scale would be paid to cover the reasonable additional cost
to provincial Members of staying either in London (£5.25
per day) or their constituency (£5 per day), when engaged
on Parliamentary duties.
The allowance would be paid at
the same time as the Member's salary against a certificate that
the amount had actually and necessarily been expended."
The history of the allowance and its development are described
in a note by the House of Commons Library.
15. The SSRB report says of the Additional Costs
Allowance "We believe this element of the expenses regime
gives rise to more problems and misunderstanding, both within
and outside the House, than any other and a fuller review of ACA
might be appropriate."
The operation of this allowance has received particular attention
because of the potential for Members who purchase a property to
benefit from a capital gain on its disposal, and more recently
as a result of the Freedom of Information Act requests concerning
expenditure under this allowance and the decision of the Information
Tribunal that details of Members' claims should be disclosed.
16. In the papers supporting the SSRB report, the
consultants stated: "It is difficult for us to comment on
the overall structure of the ACA on the basis of what would normally
happen in other organisations. Where employees are required to
work regularly away from home, it is usual for the employer to
provide accommodation, rather than to provide a cash payment which
can be used to purchase accommodation of his or her choice. The
best way to assess the appropriate level of allowance is to consider
what an employer would reasonably spend to provide accommodation
for an employee in central London. In this context an amount
of £425 a week, which is equivalent to the current level
of ACA, would pay for a furnished single room flat in central
London. The actual patterns of expenditure suggest that most
MPs spend rather less than this on rents and mortgage interest,
and the level of ACA was not a major concern amongst the MPs whom
we interviewed. For these reasons we do not believe that any
more fundamental changes to the structure of the amount of the
ACA are needed."
17. In our root and branch review of allowances,
we are considering four possibilities which range from the current
position to a radical option for change:
- the current Additional Costs
Allowance but with a tighter and more transparent regime for claims
- the House should own accommodation in London
for weekday use by Members
- A new budget for the food and accommodation costs
of working away from home
- Making overnight costs part of salary.
18. Retaining the Additional Costs Allowance
would involve continuing to reimburse Members for actual costs
incurred, properly supported by receipts. The emphasis would
be on tightening the rules and improving the regime for claims
and audit. Among the issues to be considered are whether the
rules should in future continue to permit reimbursement of spending
on furniture and on mortgage payments.
19. At the moment, Members are able to claim for
costs incurred in equipping unfurnished accommodation whether
rented or being purchased with a mortgage. To prevent extravagant
claims, the Department of Resources has referred to the so-called
John Lewis list as a guide to reasonable maximum amounts for certain
items. Some have told us that this list should no longer be used.
Others have said that it is reasonable for Members to claim reimbursement
for essential items in second homes and that the staff administering
such claims need some guidance as to what is reasonable.
20. On mortgage payments, some Members have said
that allowances should not be used to enable Members to acquire
ownership of property. Others have pointed out that, in the long-term,
mortgage payments may be cheaper for the tax-payer than rent.
Others still have added that this only applies if mortgage payments
reduce and the mortgage is paid offnot if a mortgage is
extended or transferred to another property. The Independent
Review of Parliamentary Allowances in Scotland has recently recommended
that mortgage payments should not be reimbursed.
If the current Additional Costs Allowance is retained,
in what ways should the rules be tightened and the controls improved
to ensure transparency?
Should the John Lewis list be abolished? If so,
what guidance should be followed by staff in handling claims for
reimbursement under the current ACA?
21. It has also been put to us that, instead of paying
for overnight accommodation, the House ought to provide Members
with a flat or hotel room in London by acquiring one large
accommodation block. We understand that the Polish parliament
has one accommodation block on the parliamentary estate. While
this suggestion is attractive in principle, we doubt whether it
is feasiblein view of central London property prices and
the various accommodation arrangements already entered into by
existing Members. Unless we receive further evidence to support
this option, we will not explore it in more detail.
Is this possibility likely to be financially viable
and worth pursuing?
22. Another possibility which has been suggested
to the Committee would involve retaining a separate allowance
for working away from home. The original recommendation for
the Additional Costs Allowance in 1971 was on this basis. This
might be a fixed sum for each day a Member was away from homecovering
both accommodation and food. The current average claim under
the ACA for the 489 Members with constituencies outside London
and the South east is about £19,500. The House normally
sits for about 155 days a year. This works out at about £125
a day/night. This is considerably less than the £165.50
paid to Members of the House of Lords and, as the SSRB points
out, daily subsistence for the private sector working in London.
23. Given that Members may have to attend meetings
in the constituency on sitting days or meetings at Westminster
on non-sitting days, we do not envisage that this would be an
attendance allowance calculated daily. It would be based on the
established sitting pattern that requires Members to work away
from their home for four days a week for 35 or so weeks a year.
24. Members would be paid this regularly and whether
their actual costs came to this amount would be subject to validation
[by staff of the House, with independent assurance provided by
the audit process]. One possibility is an annual "health
check" in which each Member would have an annual meeting
with officials to go through rent or mortgage statements, council
tax and utility bills etc to confirm that payments were made for
the purposes intended. Areas of uncertainty could be clarified,
advice given and a checklist ticked. Such a process could include
some form of external validation as well.
Is a separate allowance for accommodation and
food while working away from home worth pursuing? What are the
25. The most radical option which has been raised
is that there should be no separate allowance for second homes.
In this case MPs would be paid a higher salary from which overnight
costs would have to be met. This extra pay need not be pensionable
and tax would be deducted at source. Whether actual expenditure
on accommodation in support of the job would be tax deductibleas
with the current statutory provisions relating to the Additional
Costs Allowancewould have to be discussed with the tax
authorities (HMRC). While this proposal has been put forward
by people inside and outside the House, we should emphasise that
it is also the suggestion which has attracted most opposition
from Members themselves. It is being aired in this issues paper
without any commitment that it will be supported by the Committee
when we come to produce our emerging conclusions.
Is merging salary and the Additional Costs Allowance
a realistic possibility? What are the implications? How should
Members representing inner or outer London constituencies be treated?
26. In our earlier report on reducing the threshold
for receipts, we said we would look further at claims under the
Additional Costs Allowance for food. At present up to
£400 can be claimed a month for this. Some Members have
told us there is no need for such provisionon the basis
that an individual can only eat in one place at one time. Others
have pointed to the inevitable extra food costs of working away
from home. We are aware that [many] Members claim less than the
current maximum, allowing themselves a notional amount for each
day spent away from home.
Is it reasonable for Members to be able to claim
for food when away from home on parliamentary duties? Should
separate provision be made for this?
5 Cm 7270-I, para 5.53. Back
Review Body on Top Salaries, First Report, Ministers of the
Crown and Members of Parliament, December 1971, Cmnd 4836,
para 40. Back
para 5.55. Back
SSRB, Cm7270-II, para 4.15. Back
SSRB, Cm7270-II, para 4.15. Back