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Amendment 26 is also sensible, in that clause 3 should of course contain some reference to Members of Parliament. It would not cause any embarrassment, as Members of Parliament would merely be consultees in a list of other consultees. They may well have something useful to contribute, so excluding them from the clause is a rather strange thing to do.
The proposal in amendment 71 that HMRC should also be consulted is also very sensible, although I am not so sure about new clause 10. Our tax affairs are somewhat complicated, and the fact that Members are neither self-employed nor employed means that we are a hybrid in tax terms, but all that is clearly understood by accountants, who are properly paid for the work that they do. If we are saying, “The Revenue is bound to tell us every single thing that we should or shouldn’t do,” why should that not be extended to every other profession and trade?
Mark Durkan: New clause 10 and its provisions for general guidance apply only to considerations and principles relevant to parliamentary standards. It does not propose guidance on how Members can maximise claims or minimise the tax payable. Members who want that must employ their own accountants. The new clause relates only to parliamentary standards, but there are parliamentary standards issues in relation to tax.
Mr. Llwyd: Of course there are, and we have seen a few over the past few weeks and months. I accept what the hon. Gentleman says, and I think that his amendment 71 is worthy of support. I am still considering new clause 10, but that is by the by.
These amendments are useful, and the debate on them, though short, has been useful too. I hope that the Government will take note of everything that has been said.
Mr. Nicholas Soames (Mid-Sussex) (Con): In a long and highly competitive field, this is by any stretch of the imagination a very foolish Bill. That is exemplified by clause 3, and I wish to support amendment 68, moved by my hon. Friend the Member for Chichester (Mr. Tyrie), on including the Committee on Standards in Public Life in the consultation process.
Sir Christopher Kelly is a mild-mannered and sensible man, but if I were him I would be outraged that I had not been consulted by the Government. He has already started his work, but to some extent that has been negated by the introduction of this very foolish Bill, which is designed purely to show that the Prime Minister is doing something. If I were Kelly, I would be extremely angry as well that the Bill had been introduced after I had started the inquiries that the Prime Minister had asked me to undertake. Amendment 68 is absolutely essential to the Bill, and I hope that the Minister will take what steps she can to see that it is included.
Incidentally, I believe that the Government tried to consult on this matter. I was present at two pre-legislative meetings that the Minister attended, at which it was clear that the Government were trying to accept amendments and arrive at a consensus. However, to exclude the Committee on Standards in Public Life from the provisions of clause 3 is insulting and—much worse—incredibly foolish.
Sir Robert Smith: I want to reinforce the point that the Government should accept amendment 68. Clearly, the Committee on Standards in Public Life is relevant to the proposals on allowances, and it seems blindingly obvious that it should be involved.
In relation to amendment 26, the hon. Member for Foyle (Mark Durkan) said that Members should not necessarily be consulted, but I disagree. All hon. Members are here to represent their constituents, but many have different and even unique needs in terms of the allowance system. It is important that that is reflected in the introduction of the system. The system should be independent, but it should be informed by the variety in the House.
Amendment 71 makes a lot of sense. It makes sense to consult the Revenue because there is an awful lot of interaction between expenses and allowance systems and the work of the Revenue.
Under new clause 10, the hon. Member for Foyle (Mark Durkan) is trying to deal with public concern about the tax treatment of Members. I suspect that the Revenue might not want to be tied into giving advice over and above that which it gives directly through the Revenue system, so I am not sure that new clause 10 will achieve the hon. Gentleman’s objectives.
8 pm
Barbara Keeley: My job is quite an easy one because we intend broadly to accept the amendments. We are discussing amendments to clause 3, which sets out the authority’s duties in setting the scheme for MPs’ allowances and lays an obligation on the authority to prepare a scheme, review it regularly and revise it as appropriate. The authority is obliged to consult a number of bodies about the scheme. That already includes the Leader of the House, the Speaker, any committee of the House nominated by the Speaker, the review body on senior salaries, the Treasury and others, but hon. Members have tabled some useful amendments in this short debate. I thank the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith), the hon. and learned Member for Beaconsfield (Mr. Grieve)—the shadow Justice Secretary—and the hon. Members for Chichester (Mr. Tyrie), for Foyle (Mark Durkan), for Meirionnydd Nant Conwy (Mr. Llwyd) and for Mid-Sussex (Mr. Soames) for their contributions on amendments 68, 26 and 71, which we shall be happy to accept.
The Committee on Standards in Public Life was not included in the list of consultees. It may be necessary to consult it at the moment, but it may not be in the future. It may not be looking at matters that affect IPSA. However, the hon. Member for Chichester made a good case for including that body, and we are happy to accept amendment 68.
A number of points have been made about the need to consult Members of this House, and we are prepared to accept amendment 26. What we were seeking to do in not including hon. Members in the list was to avoid burdening the consultation process and making it too lengthy, but as hon. Members have just said, there are differences between Members. London Members are different from Members in other parts of the country in terms of, for instance, their staffing allowances. So there are issues to consult Members about, and we accept that point.
It is clear that matters relating to HM Revenue and Customs have been serious issues, as the hon. Member for Foyle said, and I am sure that it would be appropriate to consult HMRC, so we shall accept amendment 71.
We accept the principle that the hon. Member for Foyle has outlined in new clause 10, but we shall need to look at the drafting so, if it is acceptable to him, we shall do that and table a similar new clause later in the proceedings.
Once IPSA has drawn up the scheme, it will be laid before the House and it will reflect the amendments.
Amendments made: 68, in clause 3, page 2, line 11, at end insert—
‘( ) the Committee on Standards in Public life’. — (Mr. Tyrie.)
Amendment 26, page 2, line 14, at end insert—
‘(ca) members of the House of Commons.’. (Mr. Grieve.)
Amendment 71, page 2, line 15, at end insert—
‘(da) HM Revenue and Customs,’. (Mark Durkan)
Amendment 1, page 2, line 18, leave out ‘IPSA’ and insert ‘Speaker’.— (Sir George Young.)
Mr. Heathcoat-Amory: I beg to move amendment 56, in clause 3, page 2, line 18, at end add
‘and shall not come into effect until they are approved by a resolution of the House of Commons.’.The Chairman: With this it will be convenient to discuss amendment 57, page 2, line 19, leave out from ‘effect’ to end of line 20 and insert
‘only after the general election following the resolution of the House of Commons referred to in subsection (5).’.Mr. Heathcoat-Amory: The amendment provides that the House should approve the allowances system that has been prepared by IPSA. It brings this aspect of the clause into line with clause 5, whereby the scheme of financial interests, and the rules governing that will be approved by the House, having been recommended by IPSA. I believe that we should do the same for the allowances system.
Of course, allowances should be administered externally. That is generally agreed. The Fees Office is too close to us and if the Bill had been all about setting up an external body to administer, judge and enforce the expenses system, there would not have been very much controversy. However, I believe that the making of the rules, which are then handed over to the external body, should be decided ultimately by the House. We should not permanently transfer to an external body the making of the rules. Obviously, we would accept recommendations. Others would design the system, but the ultimate approval should remain here so that they become our rules and it is up to us to defend them, explain them and be elected on them. I do not believe that a sovereign body should permanently and irreversibly delegate these matters to an external body of whatever kind.
Of course we all know that reform is urgently required of the entire expenses system, and that is happening. The second purpose of my amendments is to rescue the Bill from a collision between what Sir Christopher Kelly and his committee are doing and what IPSA will do. Both are bringing forward proposals on expenses and allowances. There is a much bigger collision between the Kelly committee and the Bill. In the Bill, we are
setting into statute matters that are being investigated by Sir Christopher and his committee. This was raised yesterday, and remarkably the Justice Secretary denied that there was any confusion or conflict here. He said when questioned by my hon. Friend the Member for Louth and Horncastle (Sir Peter Tapsell):
“Sir Christopher Kelly and his committee will come forward with proposals for the scheme of allowances, ... However, that is about the content of the scheme. The Bill is about the operation of the scheme”.—[ Official Report, 29 June 2009; Vol. 495, c. 50-51.]
I have to say that that is simply untrue, and the Prime Minister would agree. He made no distinction between the content and the operation of the scheme when he wrote to Sir Christopher Kelly on 23 March. He made it clear in his letter that Sir Christopher was not confined to going into and designing matters of content and detail about expenses. He wanted that Committee to look at everything. He said:
“I would welcome a review of MPs’ support and remuneration, including outside interests, carried out by the Committee on Standards in Public Life as it offers the opportunity to consider the full picture. For example, you will have greater freedom to consider issues such as the impact of MPs holding second jobs and their roles outside of Parliament.”
Mr. Leigh: Is there not an inconsistency in logic here? On the one hand, we are saying that we should accept whatever IPSA imposes; on the other, the Government have been careful to say that they will not necessarily accept what Kelly proposes—in other words, we will be prepared for a little bit of pain, but perhaps not too much from an external source.
Mr. Heathcoat-Amory: That is exactly the point that I am making. We may or may not accept the Kelly recommendations; we have discretion on that. However, under the terms of the Bill, we have to accept the scheme brought forward by IPSA. To conclude the point that I was making, in another letter, dated 30 March, the Prime Minister went on to repeat the point about the breadth of the Kelly inquiry:
“I am keen you should not feel bound in your discussions but free to consider a wide set of issues”.
The Government could not have been clearer. The Kelly inquiry is looking into everything, including the structure of the allowances and the content of the scheme, yet we are legislating for such a scheme in the Bill.
When pressed, the Justice Secretary conceded earlier today that future legislation might be required, so this is only an interim Bill. I think that he is already retreating from his earlier remarks, if I interpret his body language rightly, but they are on the record. He must concede that there is a conflict between setting up an inquiry into everything, as required by the Prime Minister, and prejudging that inquiry in a Bill that is being rushed through the House in a week. There is nothing that I can do to rescue the Government from that collision except try to throw the Bill out, which I tried to do yesterday by voting against it.
However, through my amendment 56, I could at least prevent the House from having to accept the scheme of allowances that IPSA will bring forward under clause 3. It is required, under the Bill, to bring forward a scheme of allowances, and we do not have any say on it; we have to accept it. Again, there is a conflict between the Kelly inquiry findings, which we may or may not accept, and the terms of the Bill, which require the House to accept the scheme that IPSA must present.
I believe that the House must have the last word on such matters. That is desirable both because we are a sovereign Parliament and must decide the rules and be accountable for them, and because, as I have explained, that would give us discretion if the Kelly inquiry brought forward rules and suggestions that were incompatible with those that we have to accept from IPSA, under the Bill as drafted. That is why I ask the Government to accept amendment 56.
My second amendment, 57, proposes that any scheme of allowances that is proposed, agreed and accepted by us should come into effect only after an election. As I mentioned yesterday on Second Reading, I borrowed the idea from the 27th amendment to the United States constitution. I will not weary the Committee with a long history of that amendment; it is a very long history. It took more than 200 years for that amendment finally to be ratified. It was first proposed in the 18th century. In essence, it prevents any change from being made to the pay and compensation of Senators and Representatives until after the next election. “Compensation” is the word used in the amendment to the constitution; it chiefly refers, I think, to salary, but its meaning could easily be extended to cover allowances and expenses. The amendment to the constitution requires that any such change should take effect only after the next intervening election.
I think that we could adopt a similar system here. It would counter the charge that we are setting our own pay and allowances. As I have explained, I believe that the House ought to set such matters. A sovereign body should not transfer those matters to any other body. Under my amendment, we would not set pay and allowances for this Parliament and for ourselves; the change would take effect only after an election—after the implied endorsement of the electorate.
8.15 pm
Mr. Grieve: I am grateful to my right hon. Friend for bringing amendments 56 and 57 before the House. I see his exact purpose in doing so. The difficulty that I perceive with amendment 56 brings us back to a debate that we had earlier on a fundamental issue—the extent to which we wish to set up an independent authority to regulate our allowances. If it is the desire of the Committee to have such an authority, so that it can distance itself from the decisions taken, amendment 56, while it would achieve the aim that my right hon. Friend desires, would effectively defeat the intention behind the legislation. It would turn IPSA into something very similar to the Fees Office, as it currently stands. That is a difficult issue.
All that I can say to my right hon. Friend is that I do not think that the sovereignty of Parliament is involved in the matter, because just as we have the power to set up the authority, which would be at one remove from us—we would have to accept what it came up with—if at a later date we decided that we wanted to get rid of it, we could do so through primary legislation, so the power remains with us. The question is: to what extent do we wish to interfere with its daily operation?
My right hon. Friend makes a powerful point when he highlights the fact that when Sir Christopher Kelly’s report comes out, there may be incompatibilities between it and the structure that we have set up. I have no idea who will be in government when that happens, so all
that I can say to him is that if there are incompatibilities, we will have to have primary legislation to resolve them. It is quite apparent that we cannot have those incompatibilities. If they occur, the fault will be due to the way in which the Government approached the matter. On that, I agree entirely with my right hon. Friend.
Barbara Keeley: Amendments 56 and 57 would insert a parliamentary filter into the setting of the allowances claim, and would delay the introduction of an allowances scheme by setting a scheme for a later Parliament, rather than for now. Both amendments are unacceptable to the Government. It is important, for the restoration of public trust, that we are seen not to set our own pay and allowances. As discussed earlier, we have decided that we will allow our main pay to be set automatically by reference to movement in public sector pay, and a review will be carried out once in each Parliament by the Senior Salaries Review Body. We will not set our pay. We must take the same hands-off approach to setting our allowances; we on the Labour Benches believe that that is the only thing that will satisfy public concern. I urge the Committee of the whole House to reject the amendments.
Clause 3, as amended, ordered to stand part of the Bill.
Sir George Young: I beg to move amendment 6, page 2, line 32, after ‘to’, insert ‘or on behalf of’.
The issue raised by the amendment is of a less constitutional nature than those raised by my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) in the amendments that we have just discussed. Clause 4 states:
“No allowance is to be paid to a member of the House of Commons under the MPs’ allowances scheme unless a claim for the allowance has been made to the IPSA.”
I want to make sure that the facility that exists at present, whereby the allowances are not paid directly to a Member, but are paid on his behalf to a third party, can be carried through into the new regime. I was concerned that, as drafted, clause 4(1) did not allow that facility.
It is often convenient for Members to pass the invoice on to the Fees Office to be paid with the requisite authority, rather than to pay it themselves and claim it back. I hope that advantage can remain. Also, the audit trail—
Sir Robert Smith: I may be interrupting the right hon. Gentleman as he was about to make the point that with the Fees Office paying directly, there is much greater clarity about where the money has gone.
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