Select Committee on Members Estimate Committee Second Report



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 place.

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.[5] 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."[6] The history of the allowance and its development are described in a note by the House of Commons Library.[7]

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."[8] 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."[9]

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 and audit
  • 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 off—not 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 feasible—in 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 home—covering 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.[10]

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 implications?

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 deductible—as with the current statutory provisions relating to the Additional Costs Allowance—would 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 provision—on 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

6   Review Body on Top Salaries, First Report, Ministers of the Crown and Members of Parliament, December 1971, Cmnd 4836, para 40. Back

7   http://www.parliament.uk/commons/lib/research/notes/snpc-04641.pdf  Back

8   para 5.55. Back

9   SSRB, Cm7270-II, para 4.15. Back

10   SSRB, Cm7270-II, para 4.15. Back


 
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