5. MEMBERS' CONSTITUENCY OFFICE ACCOMMODATION
INTRODUCTION
This paper considers the feasibility of the
House taking responsibility for local constituency offices. It
should be read in conjunction with the IEP data analysis circulated
separately.
CONSTITUENCY OFFICES
1. The SSRB recommends that office lease
or rental costs should be separated from the IEP and met in full
by the House, up to a maximum floor area (see annex A). Currently,
four-fifths of Members pay for office costs from their IEP. The
striking messages from the IEP data analysis are
(i) the relatively high proportion who do
not hire premises (22%) as a recognised constituency office. It
is not clear the extent to which this decision is an economic
one (ie unaffordable) or personal choice; and
(ii) that the majority (55%) of offices are
tied in some way to politically affiliated entities.
ISSUES UNDER
THE CURRENT
SYSTEM
2. On average Members currently spend about
£5,700 on office rent. The rest of the IEP is readily spent
on other office costs. Market data supports the SSRB's contention
that in more prosperous areas it is a challenge to find an acceptable
office within the IEP budget. Therefore, Members may sometimes
be forced to use premises smaller or less desirable than they
would wish or to have none at all.
3. The burden of administration falls mainly
on Members, who may not have experience in managing business property.
New members often need to acquire office space in a rush, and
will not necessarily find the best value and services in the time
available. However, the services provided by the Member to constituents
may be significantly affected by their choice of office. A common
solution to the cost and management problems appears to be to
rent from local political organisations.
SSRB RECOMMENDATION
4. The SSRB envisage a system whereby the
House meets rental/lease costs in full up to 800 square foot (74.5
square metres), instead of the Member paying out of their IEP.
They suggest that it would work in a similar way to the current
system, in which Members find an office and where necessary obtain
professional advice on suitability and fair cost. This does not
remove the burden of administration and property market research
from the Member. It also raises questions for the Accounting Officer,
namely if the House is to fund the use of commercial property
directly from the Estimate it would be necessary for the House
to have a greater degree of involvement in the process.
5. We have investigated a system where the
House would be responsible for constituency offices on Members'
behalf. We started from the basis that the House does not have
the necessary expertise to handle 600+ offices nationwide, but
would work in partnership with one or more management agencies.
We consulted two companies specialising in property acquisition
and management, and our discussions confirm that a partnership
of this kind would be workable. High street chains with national
reach often retain specialists to manage their property portfolio
in this way. However, it would have some complexity, which is
discussed below.
POTENTIAL COST
OF A
COMMERCIAL OFFICE
IN EACH
CONSTITUENCY
6. The current arrangement costs some £2.8
million per annum. To get some estimate of the cost of a change,
the cost of rental/lease only has been calculated using figures
for type three offices from the Valuation Office Agency
property market report 1 July 2007. This report covers office
space across the United Kingdom, from Chatham Town at under £6
per square foot per annum to central London costs of £650+
per square foot per annum.
7. The type three office is defined by the
VOA thus:
"Converted former house usually just off
town centre. Good quality conversion of Georgian/Victorian or
similar house of character. Best quality fittings throughout.
Self contained suite in size range 50 square metres-150 square
metres, with central heating and limited car parking".
| Office size |
Cost per annum for 646 offices excluding management costs
|
| 800 sq ft (74.5 m2)—maximum floor space recommended by SSRB
| c £6.4 million |
| 645 sq ft (60 m2)—recommended desk space for three full-time staff and one Member plus 370 sq ft for a small meeting room and other facilities
| c £5.2 million |
8. What is also obvious from the VOA information, on which we are seeking advice from our private sector contacts, is that retail premises are generally considerably more expensive than office premises, even if sites below primary retail are considered. This could easily double or even quadruple total costs.
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POTENTIAL OBSTACLES
TO "HOUSE
MANAGED" SYSTEM
9. There are at least three member related issues that
are worthy of note. The SSRB themselves seemed not to ponder these
practicalities. First, there is a question of choice.
— Will Members be able to choose their office
location and type?
Our current knowledge suggests that the key constraints should
be a combination of maximum square footage, maximum cost and type
of premises (eg type three office as the base option). However
within this, choice would be possible.
— Will Members be able to have more than one
office?
We suggest this would be largely controlled on the basis of geographical
necessity (eg Orkney and Shetland) and cost.
11. In addition, two other issues would need to be addressed
early. These are
(i) the legacy of current arrangements where, perhaps,
the assumption would be limiting current party political arrangements
to the next Parliament; and
(ii) linked to this is any handover of office premises
after a general election. This will be especially difficult where
the constituency changes political allegiance.
Annex A
SSRB REPORT NO 64 VOL 1 PG 48-49
EXPENDITURE ON
OFFICES
5.25 In conjunction with IEP, the House provides office
accommodation on the parliamentary estate free of charge and we
heard from MPs who believed that this can act as an incentive
for MPs to base their staff there rather than setting up an office
in their constituencies. They are then typically free to transfer
any surplus into staffing budgets, an option not available to
MPs with constituency accommodation outside the parliamentary
estate. We addressed this issue in our last report after we had
received evidence from MPs who based the majority or all of their
staff away from the parliamentary estate and who felt they were
being disadvantaged by being largely based in the constituency.
We sympathised with that argument and recommended that IEP should
be increased from £19,325 to £27,500, but that the sum
should be abated by £7,500 for every workstation an MP kept
on the parliamentary estate for a member of staff. The reasoning
for this recommendation is explained more fully in our last report.
However, the House voted to reject that recommendation. At
the time, some MPs objected that the SSRB was straying outside
its brief in seeking to tell MPs where to locate their staff.
That was most definitely not our intention: we simply sought to
treat MPs equally so that no financial advantage or disadvantage
flowed to them or the taxpayer from their individual decisions
on where to locate their members of staff. The principle we proposed
remains sound and we set out further recommendations below to
give effect to it.
5.26 Since we last reported, various changes have become
appropriate to the structure of the IEP, particularly in relation
to office costs and communication expenses. During this review
we heard evidence from MPs that IEP was not sufficient to cover
the rental costs of reasonable office accommodation in some of
the more expensive parts of the country, especially if offices
are to be located in town centres where rents are usually high.
PwC reported, on the basis of information from the House authorities,
that average office rental costs incurred by MPs were £5,000.
However, they also noted that office rental costs vary widely.
A sample of locations suggested that the typical annual rent per
square foot for offices averaged £22 but varied by location
from £14 to over £30 in London. Some MPs made similar
points in their evidence and gave examples of office costs in
their constituencies which simply could not be afforded under
IEP. We do not believe MPs should have extravagant offices and
they need not be in prime locations, but if an MP believes that
he or she needs an office in the constituency, it should be reasonably
central so that constituents have ready access. We have considered
how the IEP ceiling could be adjusted to allow for the wide variation
in costs across the country but we cannot find a simple, workable
solution using a single figure for a cap to the expenditure. Instead,
we propose a cap on the maximum reimbursable floor area for an
MP's constituency office. In calculating the maximum reimbursable
area we have sought to allow for office space for the MP and up
to four staff as well as for space for meeting constituents or
other visitors. We have also referred to publications of the British
Council for Offices and the National Audit Office. However, as
with all ceilings, we expect many MPs to be able to manage with
less.
5.27 We therefore recommend that, in order to ensure
that MPs in high cost areas can afford reasonable constituency
offices, actual office and "surgery" lease or rental
costs should in future be met in full subject to the following
conditions:
(i) the maximum area of the premises for which cost reimbursement
can be claimed should be 800 square feet, with this area to be
reduced by 100 square feet for each member of an MP's staff who
is based on the parliamentary estate (so an MP with all 3.5 staff
on the estate would be entitled to reimbursement for a maximum
of 400 square feet); and
(ii) before renting or leasing premises an MP must obtain
and forward to the House authorities a certificate from an independent
chartered surveyor (ie one not otherwise involved in the transaction)
stating that the premises are suitable for the purpose and that
the cost is reasonable in relation to typical office premises
in the constituency. The cost of obtaining that certificate should
itself be reimbursable as part of the cost of the office.
5.28 We believe that this recommendation will enable
MPs who cannot at present afford to rent constituency offices
within the IEP ceiling to do so in future. It should also help
to relieve pressure on the parliamentary estate, although that
is an incidental benefit and not the purpose of the proposal.
In addition, we believe this recommendation will help newly elected
MPs, some of whom told us that IEP is insufficient to cover initial
start up costs and running costs in the first year or so.
5.29 As a transitional measure, MPs who currently have
premises larger than the suggested limits should be allowed to
keep them and continue to claim the actual cost until the expiry
of the lease or the next election, whichever is sooner.
Recommendation 23: We recommend that office and "surgery"
lease or rental costs should be met in full up to a maximum area
of 800 square feet, this area to be reduced by 100 square feet
for each member of an MP's staff who is based on the parliamentary
estate. Before renting or leasing premises an MP must obtain a
certificate from an independent chartered surveyor stating that
the premises are suitable for the purpose and that the cost is
reasonable in relation to typical office premises in the constituency.
Annex B
SSRB REPORT NO 64 VOL 1 PG 66
7.5 Our recommendation on the funding of offices is designed
to enable some MPs to rent offices in their constituencies who
currently cannot afford to do so because of the ceiling on Incidental
Expenses Provision. It is hard to estimate how many MPs will make
use of this and how much rent they will pay but as a working assumption
we estimate that the average rental paid by an MP may rise from
£5,000 to £6,000 because, the MPs now able to afford
constituency offices will be those in high cost areas such as
the centres of large towns. On this basis, the additional cost
in a full year would be £0.65 million.
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