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7 pm

Finally, it is important that compliance is proportionate and that we have safe harbour-that we can seek advice from qualified, expert people on how to comply. If the compliance system is to be successful, there must be a focus on ensuring that we, as Members of Parliament, get things right first time and that we understand the rules. As my hon. Friend the Member for Cities of London and Westminster (Mr. Field) has said, so much of the advice that we have received from the Fees Office was given in good faith but has proved to be totally wrong. We cannot afford to allow that to happen again.

Mr. Straw: I thank all right hon. and hon. Members who have contributed to this important debate. I hope that its conclusion on Report will be provisions in the
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Parliamentary Standards Act as amended that will ensure that the new system of parliamentary pay, allowances and pensions command the respect of the public-that is fundamental-and enable Members of Parliament to do their duty without harassment or undue penalty to them or their families. Let me pick up the remarks of the hon. Member for Broxbourne (Mr. Walker). He made a generous and heartfelt apology, probably not for the first time, to his wife and children for his eccentricity in choosing to put himself in the public firing line, and I think that his position will be echoed in the experiences of Members on both sides of the House.

It is worth recalling that there was a great fight to have Members of Parliament paid at all; I think it was the Liberal Government of Asquith who first provided for their payment. The right hon. Member for North-West Hampshire (Sir George Young) and I have been in the House for more than three decades, and certainly when I came to the House 31 years ago, the pay was lousy.

I was at the Bar at first, which was fine, and then I became a special adviser, which was also fine, but then I had to be found outdoor relief when I was peremptorily dismissed as a special adviser because I had become a parliamentary candidate, and I did not have a particularly good job in those two years. I thought about going back to the Bar but, as colleagues who have been in that noble profession will know, although I might have earned quite a lot of money, I would have received virtually nothing from ever difficult solicitors. Granada Television offered me a job as a researcher, and even that was better paid than the pay I "enjoyed" when I became a Member of Parliament.

I was fortunate, because I was able to earn a bit of extra money through journalism-quite a lot in due course-and I had a wife who had embarked on a sensible and stable career, but notwithstanding the beginning of Short money when I went into the shadow Cabinet in 1987, my office costs had to be subsidised out of my family's income every year until I became a Minister. Every year, the Fees Office would approach me with an estimate of what I had to pay it, not because I had over-claimed and had to repay, but so that my staff in Blackburn and in the House could be paid and so that other costs could be met. Yes, the House went too far in correcting that situation, but we are all anxious-I am sure that Sir Ian Kennedy and his colleagues at IPSA are taking this on board-that the situation should not revert to that which obtained before, when a lot of people were actively prevented or put off from coming to the House.

I worry that future generations of very good people will be put off, partly by public scrutiny. We all have to accept such scrutiny because the House signed up with great alacrity to the Freedom of Information Act 2000; indeed, it was the House itself that demanded that Parliament should be included in that Act. Ever compliant with the wishes of the House, I, as the sponsoring Minister, said yes to that. I worry that future generations will also be put off by the overall remuneration, which is a worry for us all. It is the people of the country, rather than the people in the House, who will suffer if we cannot attract into politics people of quality and assiduity, whatever their social background, monetary wealth or lack thereof.

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Mr. David Winnick (Walsall, North) (Lab): When I first came to the House, there was no secretarial allowance at all, and the pension for MPs had been introduced only the year before. However, will my right hon. Friend reflect on the comments of several Members in this debate, at least since I came into the Chamber, who seem to blame the Fees Office for much of what has occurred and what has been exposed in recent months? I believe that, on the whole, the Fees Office did a useful job and gave good advice, and we should be careful not to transfer the blame from ourselves on to officials who have given very good service over the years.

Mr. Straw: I have had the benefit of being in the Chamber for the whole debate and I do not think that there has been any personal criticism of members of the Fees Office. Everybody understands that a system that was not fit for purpose developed and that officials in the Fees Office did their best. Some completely impersonal general points about the experiences of Members have followed from that, one of which was that if a Member has made a complete disclosure to the Fees Office about an item of expenditure that they believed to be consistent with the rules, and if the Fees Office, after proper examination, then said that it was consistent with the rules and paid the Member, it is a little hard, to say the least, if subsequently there is a retrospective judgment that the Member should pay back that money. That would be even harsher in future, when the rules will be much clearer.

Let me go through the points that have been made in the debate. I thought that the right hon. Member for North-West Hampshire was cavilling at the beginning, when he was tweaking my tail about Kelly and legislation. I could have been cavilling in advance, by tweaking his tail about the fact that we would not have needed some of the legislative changes if the House had stuck to the original proposals that I put forward rather than those that he persuaded it to accept. I hope that we can conduct the rest of the debate in the spirit in which it proceeded after he had read out that cavilling stuff, which was no doubt put in there by Andy Coulson just to prove that the right hon. Gentleman is as partisan as the next person. I have to say that that act is not very convincing.

Peter Bottomley: Is that the kind of advocacy for which the right hon. Gentleman would not have been paid very much if he had practised it before coming to Parliament?

Mr. Straw: I would not have been paid at all for that, but I thought that I should offer the right hon. Member for North-West Hampshire a gentle rebuke for departing from his usual ecumenical approach.

I shall now come to a variety of issues raised by the right hon. Gentleman and other right hon. and hon. Members. He talked about the possibility of double jeopardy under new clause 70 and new schedule 6. Double jeopardy applies where someone has been through a criminal trial and is tried again for the same offence. There is double jeopardy: if someone commits a criminal offence, there can be consequences in respect of their employment. If someone in a position of trust with their employer commits fraud, even if it is not against their employer, and it is drawn to their employer's attention, they are unlikely to continue to be employed. There cannot be a rule to say that someone who has
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committed fraud against the building society that is nothing to do with his employer-let us say that it is a building firm, not a building society-cannot be drawn to the attention of the employer and has an absolute right to continue in that employment, notwithstanding the fact that it is plain that he was a fraudster from beginning to end. We all understand that, and the truth is that if someone egregiously breaks IPSA's rules, leaving aside whether he or she is prosecuted, other consequences are bound to flow from that, aside from any general reputational damage.

On the firewall between IPSA and the compliance officer, as the right hon. Member for North-West Hampshire knows, there was a lot of discussion about the architecture. The direct responsibility for administering the scheme of allowances and paying them-and, I accept, giving day-to-day guidance and advice-rests not with the authority qua the authority, but with the chief executive officer and his or her employees. The only job that IPSA has to do in respect of the compliance officer is to make the appointment. We have discussed whether there can be any alternative ways, possibly to dismiss the compliance officer, but on very limited grounds.

Once appointed, as schedule 6 makes clear, the compliance officer is appointed for a fixed term of five years and then they go. So having been appointed, no purpose would be served by their toadying to IPSA in the hope of getting a further term, because no further term is permissible. That is sensible, and it is certainly something that Sir Christopher Kelly wanted.

The right hon. Gentleman implied that the system could fall down if the compliance officer was asked to pass judgment on the people who appointed him. In a sense, it is not the first time that people in a judgmental, quasi-judicial position may be asked to do that. He or she will be appointed by IPSA. He or she is a separate, independent officer. Yes, it is very unlikely that he or she will pass judgment on the authority itself. He or she may well pass judgment on the chief executive officer and his or her staff. That is his or her job. I do not think for a second that the system will break down.

Let us bear in mind the fact that the tribunal is run by entirely independent judges who are appointed formally by the Queen or me, but on the recommendation of the Judicial Appointments Commission. It is entirely independent, and we can go all the way up the judicial tree. So the right hon. Gentleman was right to raise the concern, but I do not accept it; I do not think that things will work out that way.

On pensions, about which there has been a lot of discussion, I accept and have said that there should be the same protection on accrued rights as for anyone else. I quite understand where the hon. Member for North Devon (Nick Harvey) was when I was opening the debate. I referred to provisions in the Pensions Act 1995, which provides protection for accrued rights, whereby they can be changed only with the active consent of beneficiaries or potential beneficiaries. Our officials are looking closely at whether we can introduce such provisions on Report, and I will write to the relevant spokespeople, as I normally do, when I have draft clauses or proposals.

7.15 pm

On trustees, I have already said that we will seek to replicate the provisions of the Pensions Act 2004, so that a third of the trustees will be appointed by the
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beneficiaries or potential beneficiaries. We should consider the other aspects of the general law that applies to pension trusts and trustees. To repeat the point that was implicit in many of the remarks, we want to be in neither a better nor a worse position than other people in the public sector-and in the private sector, for that matter. I looked at my payslip yesterday, and the hon. Member for Broxbourne is entirely right to remind the House and public that, although we get good benefits, the deductions are huge. I understand that civil service deductions are about 3.5 per cent., but my deduction, which I could not quite understand and on which I might seek further evidence, amounted to well over 10 per cent.

Mr. Walker: The Secretary of State is now paying 12 per cent., but in addition, for the next three months, he will be making backdated payments equivalent to £200 a month, because we changed our pension scheme on 1 April last year and the changes are coming into force in the last three months of this tax year.

Mr. Straw: Ah, that saves me a letter, and I am very grateful to the hon. Gentleman for that information.

I think that I satisfied the hon. Member for Somerton and Frome (Mr. Heath) on the point about different classes. Although I had not thought about those different classes-class 1 parties, the main ones; class 2, the territorial ones; and class 3, the Liberal Democrats-I am warming to the idea, and if the general view in the House is that I should move a manuscript amendment on that, I would b happy to comply.

Sir George Young: Can the Secretary of State tell the House when IPSA will assume responsibilities for running our pension scheme?

Mr. Straw: That will be done by order.

Mr. Shailesh Vara (North-West Cambridgeshire) (Con): He has not got a clue.

Mr. Straw: No, I have got a clue. I have got lots of clues, the first of which is that it will happen during the next Parliament, but I promise the right hon. Member for North-West Hampshire that my right hon. Friend the Minister of State will deal with that when he handles the next set of amendments. [ Interruption. ] Oh, here is the answer: 2011-12. Even Homer nodded.

The hon. Member for Cities of London and Westminster (Mr. Field) spoke about MPs' pay and asked why new clause 73 explicitly provides that the first determination would not come into force until 1 April 2012. I want to make it clear that, until then, the decision of the House of July 2008 will apply. There is an automatic regulator of our salaries: the House has said by resolution that any recommendation of the Senior Salaries Review Body will be implemented. An agreement has already been reached for 2010, so the 2011 pay increase will arise from the SSRB and it will come from IPSA thereafter. It is proposed that there will be a first determination, which will be the equivalent of the quinquennial review that the SSRB carries out, for example, in respect of judicial salaries, and the frequency of further determinations will be a matter for IPSA thereafter.

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The hon. Member for Worthing, West (Peter Bottomley) proposed that a flat salary, fixed at the beginning of a Parliament, should apply irrespective of whatever happened thereafter. That has certain attractions and would certainly mean that every Member of Parliament carefully checked the inflation rate. Over a normal Parliament, if the Bank of England's target had been stuck to, one's salary would have been eroded by a compound 10 per cent. He and the right hon. Member for North-West Hampshire were sitting in the House-I was a hired hand-in the 1975 period, when inflation rose to 27 per cent., through no fault of the Labour Government. It then rose again to 22 per cent. in 1981, through every fault of the Conservative Government, including the doubling of VAT. Leaving aside the cause, the fact is that inflation was very high under both parties; that was difficult; and a fixed, flat salary would have caused all sorts of problems.

Peter Bottomley: I will not return to that point now. Will the Secretary of State kindly say what will be the arrangements for the staff of Members of Parliament, whether there will be guidance, and whether we will know the change in scales by April, when many of our staff will be expecting an annual review?

Mr. Straw: The arrangements for members of staff will be a matter for the Parliamentary Standards Authority. I cannot anticipate what it will say. Meanwhile, one of the good things that has happened in recent years is that scales are now laid down. Members of staff must have contracts of employment and so on. That is a dramatic change from the ramshackle arrangements that existed years ago, when MPs themselves had to run the PAYE schemes, as those of us of a certain antiquity will remember.

I am very grateful to the hon. Member for Moray (Angus Robertson) for the constructive approach that he has yet again taken, and for the consistent support that we have received from him.

The hon. Member for Worthing, West queried the term "compliance officer". It is not an elegant term, but I beg the Committee not to change it again. We could have used "independent regulator," but the Kelly report calls IPSA the independent regulator. We could have used "commissioner," which I would have preferred, but we have a Commissioner here. The term "compliance officer" may be prosaic, but at least it tells everyone what the person will do.

The hon. Gentleman made some strong points about whether we should move from a final salary scheme to an average salary scheme. I understand that. It will be for the PSA and the SSRB to recommend. I understand the point that the hon. Gentleman went on to make, that part of the pay should be non-pensionable and non-taxable. Personally, I do not agree with either proposition. If small businesses, which is essentially what we are for these purposes, want to offset an item such as batteries against their tax, they have to keep receipts. [Interruption.] If the hon. Member for Broxbourne is saying, "No, they don't," I would be pleased to hear from him.

Mr. Walker: Small businesses are allowed to claim for the cost of accountancy, and according to Sir Christopher Kelly and IPSA, Members of Parliament will not be allowed to claim for the cost of accountancy.

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Mr. Straw: That is a fair point. Another point, which I thought the hon. Gentleman was going to make, but which I now make for him, is that small businesses claim under schedule D, which is rather wider because it refers to expenses "wholly and exclusively incurred" in connection with the business, rather than "wholly, exclusively and necessarily incurred", which is the provision under schedule E, the rubric for us.

The hon. Member for Worthing, West spoke eloquently about Members who had employed members of their family. I have never employed a member of my family, but not because I regarded myself as a superior being. I see no prospect of employing a member of my family, so that may allow me to say that I think that some of the adverse publicity that members of families have received in the course of the expenses row has been very unfair indeed. Everybody knows that because of serious abuse by one Member in particular, there need to be proper controls, but if members of the public want Members of Parliament to do two jobs, which they do-representing them in the House and also being available with great frequency in their constituency and at weekends-they must accept that that produces greater disruption even than working away from home. That is true.

One of the biggest changes that has occurred in the past 30 years, or even in the past 15, is the huge increase in the constituency case loads of all Members of Parliament, and the dramatic increase in the expectations of members of the public regarding the availability of their Member of Parliament. My predecessor could go to my constituency one Friday a month for about six hours. She never had a house in the place and never wanted one. She saw eight people by appointment, did a couple of other things and was correctly regarded as a good constituency Member, because she went to Blackburn much more frequently than many Members of Parliament went to their constituencies. Those days are gone, and the allowance system and the pay need to recognise that.

I hope I have satisfied the hon. Member for North Devon, who speaks for the Members Estimate Committee, on the issue of pensions. We will also consider whether there should be a requirement to consult the Government Actuary's Department where there is a shift in the rate of Exchequer contribution. Officials worked extremely hard and under time pressure on the provisions. They sought to replicate the existing statutory provisions under the parliamentary scheme, but I accept that those may not be entirely replicable.

With that-

Sir George Young: I sense a peroration. The Secretary of State will recognise that a number of questions have been asked that he has not had time to answer, such as questions on the costs of the arrangements before us and about a number of areas where the amendments go way beyond what Kelly proposed. If he does not have the answers now, I quite understand. Perhaps he would be good enough to drop me a line with the answers to the questions that I put to him.

Mr. Straw: I am grateful for the intervention. There will not be much of a peroration. It is the Member for Blackburn speaking, not a latter-day Enoch Powell.

I shall answer some of the more specific questions. The hon. Member for Somerton and Frome asked about what he thought was a tautology in new schedule 7, paragraph 5(4), which states:

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