12. ADDITIONAL COSTS ALLOWANCE: OPTIONS
PURPOSE
1. This paper looks at the options for change
as identified by the MEC. It considers the overarching design
concepts and not the detail of eligibility for London Members
and other similar matters.
KEY FACTS
2. As previously submitted to the Committee,
some key facts are
— 589 MPs claim ACA against an eligible
population of 621 (take-up of 95%)
— 70% claim mortgage costs; and 5%
claim only for ongoing running costs (ie no mortgage)
— Two thirds of MPs eligible for ACA
claim over 90% of the total allowance; average spend is circa
£20,000pa
— Average mortgage interest claimed
is circa £12,000pa
— Other costs met are varied and divided
fairly evenly between: furnishings etc; repairs and insurance;
service and maintenance; cleaning; telephones; council tax; utilities;
and food.
MEC OPTIONS
3. Three options are mooted as possible
replacements to the current arrangement, which involves reimbursement
of costs through fully receipted claims. The three are outlined
briefly below.
4. Combining with salary:
this is conceptually straightforward and only the quantum is to
be decided.
5. Overnight costs grant:
Sometimes referred to as "pay now check later",
this is understood to be a concept whereby:-
— MPs are paid a standard monthly grant
of equal value each month, possibly on production of a simple
form certifying that housing or other overnight costs had been
incurred.
— A rule book would be available which
defined eligible costs in some way, probably both in terms of
principles and detailed examples.
— MPs would themselves retain proof
of purchase or payment and this proof could be inspected by the
House authorities at any time, including during a quality assurance
visit.
— At the year end or after an inspection
MPs would be required to repay (i) the difference between total
grant made and expenditure as evidenced by the MPs records; (ii)
any purchases or payments that were outside the scope of the rules.
— Disclosure of spend would be by category
(not at item level) as reported by the MP to the House each year,
probably through a simple data collection exercise.
6. Per Diem rate: this involves
payment of a set sum representing a fair estimate by the House
of the cost of staying overnight in London, including subsistence
costs. For this to be genuinely considered a daily rate there
needs to be a linkage with actual attendance or overnight stay
in respect of Parliamentary duties. The linkage, whether daily
attendance or overnight stay, needs to be objectively assessable,
which would seem to argue for the former. If it were attendance
then careful thought would need to be given to the drafting of
the House resolution so that it dovetails with the section 292
of the tax law.
7. The per diem could be paid either in
equal monthly instalments to most MPs on the assumption that taking
one month with another the total amount will balance over the
year to the required number of days in Westminster; or it could,
say, be adjusted monthly to reflect actual attendance the previous
month.
CONSIDERATIONS
8. The attached table summarises the different
options and highlights issues that arise in each case. Some issues
are inherent in the fundamental design; others may be ones that
can be solved in slower time.
9. The MEC will wish to consider whether
(i) this paper has properly reflected the
options
(ii) any of the fundamental design issues
are potential showstoppers for the option in question
(iii) what, if any, modifications to the
options might be required.
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