Article I. UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 332-iSection 1.01 House of COMMONSSection 1.02 MINUTES OF EVIDENCESection 1.03 TAKEN BEFORESection 1.04 PUBLIC ADMINISTRATION COMMITTEESection 1.05Section 1.06Section 1.07 COMMITTEE ON STANDARDS IN PUBLIC LIFESection 1.08Section 1.09Section 1.10
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This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
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Prospective witnesses may receive this in preparation for any written or oral evidence they may in due course give to the Committee.
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Transcribed by the Official Shorthand Writers to the Houses of Parliament: W B Gurney & Sons LLP, Hope House, Telephone Number: 020 7233 1935
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Oral Evidence
Taken before the Public Administration Committee
on
Members present
Dr Tony Wright, in the Chair
Mr David Burrowes
Paul Flynn
Kelvin
Mr Ian Liddell-Grainger
Julie Morgan
Mr Gordon Prentice
Paul Rowen
Mr Charles Walker
________________
Witness: Sir Christopher Kelly KCB, Chairman, Committee on Standards in Public Life, gave evidence.
Q1 Chairman: It is a great pleasure to welcome Sir Christopher Kelly. We tend to see the Chairman of the Committee on Standards in Public Life annually. We saw you almost exactly a year ago. Looking at the transcript of our conversation then, I said my impression was that the Committee had been much less visible in the past year or so. That is not quite how I will introduce you today. Would you like to say something by way of introduction?
Sir Christopher Kelly: I am grateful for the opportunity to come and talk to you, not least because this Committee and mine are engaged in much the same areas of work with the same objectives. As you imply, our work last year was dominated by the inquiry into MPs' expenses. I do not think there is a great deal I need say about that by way of introduction. Our objective was to produce a robust and fair set of recommendations which struck the right balance between supporting you in the difficult jobs you do and reimbursing you for the necessary costs of doing it, at the same time providing greater transparency and stronger safeguards for the taxpayer. It is for others to judge whether we have succeeded in doing that, but I was pleased that our report was accepted by the leaders of all the main parties within hours of its publication. Since then the new Independent Parliamentary Standards Authority (IPSA) has been set up and has begun its own consultation, as it is statutorily obliged to do. We issued our response to that earlier last week which I hope you have in front of you together with our own brief annual report. It will not come as a surprise that in our response to the IPSA consultation we stood by the recommendations we had originally made since they were reached after a lengthy process of evidence-taking and discussion.
Q2 Chairman: When you came to us a year ago we pressed you quite hard on why you had not embarked on an inquiry into MPs' expenses. You told us basically that things seemed to be going along all right and you did not think there was a need to do so. I am sorry to return to it but I feel great frustration. I do not want to sound like Harold Wilson who kept quoting his own words, but in June 2002, which was before your time, I gave evidence to the Committee and said: "My guess is that any future difficulties with Members of Parliament are far more likely to occur around issues to do with the allowances that they now get." I went on to say: "Unless you get hold of these issues now and think about them they will come and hit us later on." That was said to your committee. Before your time your Committee said in its 2006 annual report: "Any allegations made that MPs claim excessive levels of allowance can damage the trust in which the public holds Parliament, politicians and public officeholders in general." It said that it might be necessary for the Committee to undertake work in this area, but nothing happened. We then had an increasing number of cases coming along and all the stories that emerged from them. I remember writing to you in deep frustration from my sick bed in February 2008 asking why you had not undertaken an immediate inquiry into MPs' expenses. I said: "In view of current events this has now become a matter of trust at the heart of our public life. If this is not something for your Committee to respond to in view of the reasons for its existence I do not know what is." Again, you wrote back to say things were going along, that you were keeping an eye on the situation and so on. The Committee has worked heroically over the past year, but looking back it did not actually do its job when required, did it?
Sir Christopher Kelly: Looking back, I hold up my hand and agree that we should probably have started the inquiry earlier. You were right and I was wrong.
Q3 Chairman: Why do you think the Committee did not do it?
Sir Christopher Kelly: Two points can be made in response. First, remembering the history of it I said in my opening remarks it was quite striking that the recommendations of our report were accepted within hours of it being presented. We are used to having our recommendations accepted but not quite as quickly as that. If we had undertaken the inquiry earlier would it have had that degree of acceptance? I do not know. Second, remember what happened the previous year: the reluctance of the House of Commons to accept that the Freedom of Information Act applied to it; the way the House overturned some of the significant recommendations made to it by its own Members Estimate Committee; and the length of time it took before the House finally agreed to the application of full-scale external audit. Therefore, there is something about timing here. If you examine my words carefully I never said things were going all right; I said we were intending to do an inquiry but it was a matter of the time at which we did it. I have a slight sense of frustration at being chided for not sorting out MPs' expenses, not by you because your record is impeccable, because the primary responsibility for sorting them out should not rest with an outside committee but, surely, with the House of Commons itself.
Q4 Chairman: But you have just told us that it repeatedly failed to sort it out and dug itself ever deeper into the problem. The reason the Committee was established in 1994 was to stop these things happening; it was an independent, authoritative body to sort it out. As we were digging ourselves in I cannot understand why you did not regard this as a key standards issue. It was only when the Prime Minister invited you to do it that you finally became involved.
Sir Christopher Kelly: That is not true. We did believe it was a key standards issue and we also responded to the determination expressed by the Prime Minister and Leader of the House that the House itself would sort it out. That happened in July 2008. It is quite true that the Prime Minister wrote to me and invited the Committee to conduct an inquiry. His letter arrived two weeks after I had written to him saying that was what we intended to do.
Q5 Chairman: But your predecessor has said he wanted to conduct an inquiry into MPs' expenses but was warned off doing it. This cannot be a satisfactory situation, can it?
Sir Christopher Kelly: I was not warned off doing it. It was made clear to me that if we wanted to do an inquiry we should do so. Frankly, I would not accept being warned off doing an inquiry if I thought it was necessary to do it. I do not believe that is the job of my Committee.
Q6 Mr Walker: Although I have loathed what has gone on over the past 10 months as anyone would some good will come out of it. Part of it is that the power of the executive over its back-benchers will be weakened because many of them regard the executive as having been wholly complicit in creating this mess over the past 30 or 40 years. We have gone along with it and must take our share of the blame, but there will be a new order in Parliament after the next general election when we will think long and hard before we troop through the division lobbies at the request of the whips. I hope I am allowed to criticise and that you and I do not get murdered by the press for doing this. Sir Ian Kennedy of IPSA has a very difficult job in implementing this and getting it through and he has a very tight timetable in which to do it. He wants to have it in place by 7 May. I wonder whether in hindsight the slightly critical interview you gave on Radio 4 undermined him unnecessarily.
Sir Christopher Kelly: I do not remember which bit of it was critical. What I said was that he was doing the job he was asked to do in an independent way. I was wholly in favour of independent people doing their jobs in an independent way. By the same token, it should not be surprising if we continue to press for the recommendations we have made. That has been presented in the press as a kind of turf war. I do not see it as that and when I saw him on Monday he gave no indication that he saw in that way either.
Q7 Mr Walker: Colleagues who work with senior civil servants said it was a subtle raising of the eyebrows and that was how mandarins conveyed their displeasure. Was it a subtle raising of the eyebrows?
Sir Christopher Kelly: I could not possibly comment. I do not think so. I generally meant what I said. He is doing his job and I am doing mine. If he is given responsibility to implement a scheme he has to satisfy himself that it is one that can work reasonably. You passed legislation that obliged him to consult upon it and that is what he is doing. Would I do it in the same way? I do not know because I am not in that position. Surely, you would not expect me to say we had got it wrong and they were right, so if simply standing up for the recommendations we made after a lengthy process of evidence-taking, consultation and discussion is "raising eyebrows" about another colleague, so be it. I just think it is both of us doing the jobs we are supposed to be doing.
Q8 Mr Walker: You will probably get 95 or 98 % of what you suggested which is a good result. Members of Parliament - they will not secure much sympathy for it - complain that Kennedy is Kelly with knobs on, but you have been slightly more generous to Members of Parliament in the round than Sir Ian Kennedy. Do you think some of the personal criticism he has received - I do not suggest that it has come from you - is perhaps unfair?
Sir Christopher Kelly: I have learnt from doing this job that when you do something in the public eye you get criticism, particularly if you say things people do not like but find difficulty in arguing against them on rational grounds.
Q9 Chairman: Your own report puts it in these quite strong terms: "Our proposals are intended to be treated as a package, not as a menu of options. We recommend that they should now be handed to the independent regulator to be implemented in full in spirit as well as in detail." If there were to be any substantial rolling back of your package how would you view it?
Sir Christopher Kelly: I would want to know why there was a rolling back and whether it was done for good and substantive reasons that had not occurred to us when we produced our report.
Q10 Chairman: Might you resign?
Sir Christopher Kelly: I was asked that question yesterday on air and a number of the papers reported that I hinted I was going to resign. I would never say I would resign over anything. Certainly, if I thought I was being prevented from doing my job it would be a resignation issue, but it would surprise me immensely if this turned out to be such an issue.
Q11 Chairman: But if your report was not implemented in substance and spirit do you think you would go on?
Sir Christopher Kelly: I would have to think about the circumstances in which that had happened. I would be surprised if that was what happened.
Q12 Mr
Walker: Having read what Sir Ian Kennedy is
putting forward, there are only a few areas of disagreement. One of them is
about how far away from
Sir Christopher Kelly: I agree.
Q13 Mr Prentice: The issue of resettlement is quite fundamental. Mr Walker recommended that MPs leaving the House could get up to nine months' salary and Sir Ian Kennedy is telling the world that there is really no need for a payment to an MP on leaving Parliament. He goes on to say he believes there is a market for people to take out insurance policies should they lose their seats. Have you given any thought to how much the premiums would be for an MP representing a marginal constituency? This is not realistic, is it?
Sir Christopher Kelly: Have I given any thought to that question? No, none whatsoever. It was not an issue that came before my Committee.
Q14 Mr Prentice: But I want you to tell me whether that is realistic. I could not go out and get insurance to cover the eventuality of losing my super-marginal seat.
Sir Christopher Kelly: At first glance I would be inclined to agree with you. We made the recommendation we did and heard the same arguments he heard. When you lose your seat you are not in a "redundancy" situation. One of the pleasing things about what has happened since producing our report is that we have not heard any new arguments; there is nothing in the public domain that was not put to us. We addressed that issue and thought the fair thing to do was the package in relation to the resettlement grant we suggested.
Q15 Mr Prentice: We understand that MPs will not get any sympathy from the public; we are collectively guilty, but are there any elements of rough justice in what has happened? Are there any elements of rough justice in what Sir Thomas Legg has proposed?
Sir Christopher Kelly: I am very glad I was given the job I had to do and not his. You will have had the advantage of skimming through his report; similarly, before coming here I skimmed it.
Q16 Mr Prentice: I do not invite you to comment on the report.
Sir Christopher Kelly: But there was clearly a very difficult issue for him to address. I understand why he felt it necessary to reopen some claims that had been accepted. On the other hand, I can also see why people might regard that as being unfairly retrospective. What is hopeful about what has happened, if indeed the press reports are correct, is the fact that all of you have been tarred by this when large numbers of you should not have been in any way tainted and it is helpful if that is set out.
Q17 Mr Prentice: Sir Thomas Legg chose to make retrospective payments made in respect of gardening and various items of household equipment. I ask that because we have now capped the maximum monthly payment for rent or mortgage interest at £1,200. Do you believe Sir Thomas Legg was wrong in not making the mortgage payments retrospective?
Sir Christopher Kelly: I do not think I do.
Q18 Mr Prentice: Therefore, it was okay for the Leader of the Opposition to claim these huge mortgage payments every year going back five years and not be caught by this retrospective rule which applies to gardening?
Sir Christopher Kelly: As I understand what Sir Thomas Legg has done as a result of having skimmed the report and relied on press reports, he drew a distinction between rules that were potentially misguided but quite clear at the time - that includes the cap on mortgage interest payments - and rules that allowed for a measure of discretion about what it was reasonable to claim in the circumstances. Under the rules it might be reasonable to claim for gardening and cleaning since that was allowed. What is a reasonable amount to claim? Did the Fees Office make the right judgment? That was the field he got into. I would not have liked to have to take that decision because I can quite see how people might regard it as unfair.
Q19 Mr Prentice: Do you think it was appropriate for underclaims not to be offset against overclaims because Sir Thomas Legg went back five years? I am aware that some colleagues underclaimed thousands of pounds but in one year overclaimed a trivial amount and what appears in the Green Book would be the overclaim of a trivial amount, not the underclaim of thousands.
Sir Christopher Kelly: I do not know; I would need to read the details.
Q20 Mr Prentice: You have not given any thought to the process?
Sir Christopher Kelly: I have not.
Q21 Chairman: You say that you would not have liked to do the Legg process. Had you done it would you have conducted it in the same way?
Sir Christopher Kelly: I do not know. That is a very hypothetical question and I honestly do not know the answer to it.
Q22 Chairman: To put it differently, many complaints from MPs centre on what they regard as the retrospective character of this exercise. Applying the seven principles of public life, of which you are the guardian, does that claim stand up?
Sir Christopher Kelly: When individual MPs sign claims saying these expenses were wholly, necessarily and inclusively incurred in order to perform their duties and it was necessary to claim x thousands of pounds for cleaning and gardening it is a difficult judgment whether one should reopen it in cases where, looking back on it now, people think such claims are excessive. I have already made that clear and I am not sure what else I can say.
Q23 Chairman: But he said never mind what the rules were and how they were applied at the time; one should go back to the underlying principles. I am asking you: is that is the proper way to proceed?
Sir Christopher Kelly: I can only say what I have said before which is that I believe that is a very difficult thing to do.
Q24 Mr Liddell-Grainger: One of the things Professor Kennedy is doing is talking to members of the public, MPs, staff, officials and others. With the greatest respect, do you believe you should be going out to talk to a much broader circle than perhaps you are to see what people out there think generally?
Sir Christopher Kelly: In relation to what - MPs' expenses? We went through exactly the same process in relation to MPs' expenses as he is going through now, so I am not sure I understand the question.
Q25 Mr Liddell-Grainger: I have just been looking at the members of your Committee. As far as I can see there is only one who has been in private practice, that is, PricewaterhouseCoopers; everyone else has come from the public sector, for example a senior police officer and a civil servant. Would it be sensible to have people more like Sir Ian Kennedy who have come from private practice? You have Jacquie Ballard and another gentleman who has come from private practice. Do you believe you need more people who come from the business sector?
Sir Christopher Kelly: The manner of appointing them to my Committee is the normal public appointments process. The term of office of a number of members comes to an end this year and I think the point you make is a very reasonable one.
Mr Liddell-Grainger: Given what you have just said do you believe you should say that next time you would like to have retired company directors or whatever?
Chairman: Bankers?
Q26 Mr Liddell-Grainger: Possibly they understand expenses - bigger, overseas ones in particular - more than we do. Would you be pushing to get a broader spread?
Sir Christopher Kelly: The appointments are not for me, although I sit on the panel. When the time comes to write the job specification and advertisement I shall certainly want that to be written, as I think it was before, to attract the widest range of expertise. These jobs are not always attractive to everyone you might want to fill them.
Q27 Mr
Liddell-Grainger: I attended one of
Kennedy's sessions. I had never met him but knew him by reputation because of
his work in
Sir Christopher Kelly: I would repudiate the suggestion that members of my Committee are somehow less in touch with real life than people with previous experience in the private sector. They include among others a very distinguished social worker.
Q28 Mr Liddell-Grainger: I am not sure that counts. We as MPs deal with social workers and find them quite difficult. I take the point on board, but do you think you should have a retired senior director of, say, Shell, BP or something like that?
Sir Christopher Kelly: We would welcome as diverse a range of experience on the committee as we can get.
Q29 Mr Liddell-Grainger: You worked for Mr Alan Milburn, did you not?
Sir Christopher Kelly: I did.
Q30 Mr Liddell-Grainger: At the time you found it quite tough. I know he is very outspoken because I have been at the wrong end of his tongue a couple of times. You thought that you could not work with the man, which is fair enough; I am not sure I could do so. There was a good deal of speculation at the time that your face did not fit, that you had to go and you were kicked out. Does pressure get to you? Do you suddenly think you have had enough and you are off? If you do not mind my saying so, you have a nervous giggle. Will you suddenly say that you do not like this bunch of spiders and off you go?
Sir Christopher Kelly: I do not know what response to make to that question; it is rather like being asked whether I have stopped beating my wife. I do not recognise at all the account you give of my history with Mr Milburn.
Q31 Mr Liddell-Grainger: You should because it was the subject of an article in the Financial Times.
Sir Christopher Kelly: I saw that article and it caused me and my wife a degree of amusement. It is easier to write history if you are not there at the time and are not too worried about the facts.
Q32 Mr Liddell-Grainger: Therefore, the broad Kelly shoulders are in place?
Sir Christopher Kelly: You may think that working in the Treasury and the Departments of Social Security and Health does not bring you into contact with stress and so on, but I have to say that has not been my experience.
Q33 Mr Liddell-Grainger: Compared with MPs at the moment?
Sir Christopher Kelly: That may well be true.
Chairman: We need to get back to the agenda.
Q34 Julie Morgan: I want to pick up Mr Liddell-Grainger's point. Parliament is very unrepresentative of the public generally. We do not have many women here and given many aspects of the workings of Parliament it is quite difficult for women to cope, particularly if they have small children. Were the varying circumstances of different MPs part of your consideration?
Sir Christopher Kelly: It was at the forefront of our minds all the time. I was therefore quite concerned when the allegation was made that somehow what we proposed would make the diversity of Parliament more difficult. Having examined our consciences very carefully I cannot see how anything we proposed should have that effect if what we are doing is simply making recommendations to turn the expenses system into what it should be; that is, one that reimburses MPs for the expense necessarily incurred in doing their job. If there is an issue about the diversity of Parliament I do not believe it is something that can be dealt with by continuing the previous confusion between pay and expenses.
Q35 Julie
Morgan: I completely agree with you that
there should be a distinction between pay and expenses. Though it does not
apply to me, if one has small children and one has the main responsibility in
caring for them - on the whole, women take the main responsibility - and one
must work between the constituency and
Sir Christopher Kelly: I agree. We said in the report it was important that flexibility to deal with those different circumstances should be built into the system.
Q36 Julie Morgan: Therefore, you strongly agree that there should be flexibility so we can encourage more women in particular to come forward?
Sir Christopher Kelly: I do very strongly.
Q37 Paul Rowen: A record number of MPs - 179 - are to stand down at the next election. Do you think the whole saga of MPs' expenses has had a material effect on that number?
Sir Christopher Kelly: You are probably in a better position to judge than I am, but it would not be altogether surprising if that was the case.
Q38 Paul Rowen: We may have over 200 new MPs following the election. What further steps do you believe need to be taken to restore confidence in what MPs do as a body?
Sir Christopher Kelly: I think that starting with a clean sheet and a reformed system of expenses is a necessary condition for doing that and that is in hand.
Q39 Paul Rowen: Beyond that what do you say should happen?
Sir Christopher Kelly: As your question implies, it is by no means a sufficient condition. One of the points made to us most strongly in the consultation we undertook in this inquiry and some of the responses to our biannual surveys was that what the public valued most of all in their Members of Parliament was independence of mind. I think that takes us back to some of the things in the report about how to reinforce the way in which MPs exercise independence of mind and can be independent of the whips.
Q40 Paul Rowen: A survey of prospective MPs has shown that a large proportion come from the lobbying/media end. Do you believe that a concentration of such people, which is not representative of the vast majority of the population, is helpful?
Sir Christopher Kelly: A number of people have commented on the way in which Parliament is becoming more and more the domain of people who have spent their entire lives in politics or lobbying of one kind or another. I am among those who regret that tendency, but I do not have any immediate solutions to offer to you as to how it should be dealt with.
Q41 Paul Rowen: In terms of moving forward, the report makes a comment about certain other aspects of your work like party funding that have not been addressed. What do you see as some of the wider issues which in your view are a priority if we are to get diversity and confidence is to be restored in the work of this place?
Sir Christopher Kelly: That is a very wide question and I do not believe I have any particular wisdom to offer in answering it. Diversity and competence are two different issues. What we need to create are circumstances in which people with different backgrounds both want to enter Parliament and have the ability to get through the nomination processes of your parties.
Q42 Paul Flynn: On the previous occasion you attended, or perhaps the time before, Mr Liddell-Grainger suggested you were a very boring person.
Sir Christopher Kelly: I remember that bit well.
Q43 Paul Flynn: You promised to bring along some party games next time you attended. I do not think anyone would call you boring; you have been very interesting. While accepting the recommendations of your Committee, is it fair to suggest that you have gone for the low-hanging fruit and have not become much involved in some of the major problems in the House? Recommendation 34, which was the subject of written evidence from the Committee, was: "MPs should remain free to undertake some paid activity outside the House of Commons, provided it is kept within reasonable limits and there is transparency about the nature of the activity and the amount of time spent on it." There has been progress on that. What are reasonable limits? In part of the evidence you received it was said that MPs received up to £1/4 million in addition to their parliamentary salary. The parliamentary salary is paid for doing a full-time job but sometimes they are doing two or half a dozen full-time jobs. You made no detailed recommendations there that had any force.
Sir Christopher Kelly: We did make a recommendation; we said that being a Member of Parliament ought to be a full-time job and therefore in our view it was quite incompatible with doing another full-time job. At the other end, it did not seem to the Committee unreasonable for MPs to earn some additional income from journalism of one kind or another or, as some do, occasionally doing a bit of work to keep up professional qualifications they might need if they returned to their former professions. That seemed to us to be a quite reasonable thing for Members of Parliament to do. Where they meet in the middle is a very interesting question and the recommendation we made was about the need for complete transparency about whatever else one does - things move on and maybe one would take a different view at a different time depending on experience - not only through the register of interests but at the point at which the individual comes up for election. He should say that, yes, he is standing for election but he also intends to continue with this or that. It seems to me that it is then up to the electorate to judge whether they want a full-time MP or one who will be distracted by doing all those other things.
Q44 Paul Flynn: In our evidence to your Committee, which represented our view of the dangers of the revolving door, we pointed out that often those who retired from top jobs - it does not apply just to ministers but to top civil servants, admirals and generals when they retire - went into jobs that paid twice, three times or sometimes 10 times the salary they had formerly in what could be regarded as the pinnacle of their achievement. We pointed out the danger that the decisions they take when they are working as ministers, generals, admirals or civil servants might well be influenced by the prospect of future employment so they can have their retirement haciendas in Spain. There appears to be evidence of it. We have heard it said it does not matter that there are 195 doing public jobs that pay more than the Prime Minister's salary because when the PM retires he can get a job earning millions. Is that not a serious matter that you should have addressed and asked for measures to take action on it?
Sir Christopher Kelly: I agree that it is a concern. I am not sure that it would be right to address that in an inquiry about MPs' expenses.
Q45 Paul Flynn: We had evidence to suggest that was the case.
Sir Christopher Kelly: But that is not a matter which falls within MPs' expenses.
Q46 Paul
Flynn: The other element of rough justice
that we would all recognise is the huge difference among various MPs. An MP
just elected with a young family is in an entirely different position from
someone in his sixties with a grown family who has been here for 25 years. It
is very different for an MP who is a millionaire and who is given a second
house; he may already own 20 houses in
Sir Christopher Kelly: I do not believe it is and I am not sure I understand why you say that.
Q47 Paul Flynn: Let us take mortgages. Someone coming in as a young MP may want to buy a home. If someone has been here for 25 years presumably he or she has paid for accommodation and so there is less need for any support at all, but a young MP entering the House faces all those initial costs together.
Sir Christopher Kelly: Let us take that example. We recommended that support for mortgage interest should be brought to an end and that in future support should be provided for rent. In a sense that deals with your issue, but we also recommended that if in future support was to be provided only for rent there was a lot to be said for procuring properties for MPs to rent through a commercial agency. If you do it in that way it becomes a lot easier to reflect different family circumstances because reasonable accommodation in Westminster, if that is the way round it is, for a single person with no children is one type of accommodation and reasonable accommodation for a married man with young children or an elderly relative for whom he or she cares is a completely different consideration. One of the advantages we saw in the use of a rental agency was that it could create exactly that kind of flexibility.
Q48 Paul Flynn: For women MPs of my generation to have children was hardly an option. Many of them made a sacrifice. It is now possible to do that. There has been an improvement and it is now possible for women to get into Parliament and have a family life. Do you not think that some of the recommendations will make that more difficult in future?
Sir Christopher Kelly: No. I do not see which recommendation you think will make it more difficult. Our approach to accommodation ought to make it easier, not more difficult.
Q49 Paul Flynn: I think Members would recognise the well-known distinction between the payment of capital and interest on a mortgage. You accept that the capital payments are not paid out of the public purse; they come out of the MP's pocket?
Sir Christopher Kelly: In the present situation, yes.
Q50 Paul Flynn: What puzzles me - I declare a lack of interest in this because I do not claim the second home allowance and do not expect ever to claim it again - is that you say if an appreciation in property value takes place that should be clawed back from the individual; if there is a depreciation in value that is tough on the person involved. But if the capital costs are the MP's own money it is his or her own risk, so if there is an appreciation that should come to him and if there is a depreciation the Member should suffer the loss. How did you reach the conclusion that a gain had to be repaid but a loss was not?
Sir Christopher Kelly: If you are talking of the transitional period, the key recommendation was that support for mortgage interest should end. It was represented to us - it seemed perfectly reasonable - that it would be unfair to end it as of now for those Members of Parliament with existing mortgages. That is why we propose the transitional arrangement of five years. One then comes back to why we came to the recommendation that it was wrong to continue to support mortgage interest. In part it was because of the perception that this was the thing that had led to a whole lot of abuses that angered members of the public most and created the unusual situation in which it was possible for somebody to acquire a private asset at public expense. It seemed to us that if in order to be fair to those with existing mortgages support for mortgage interest should continue that feature - the ability to continue to build up a private capital asset at public expense - should be brought to an end. Therefore, the recommendation was that that element of the increase in value which was supported by the mortgage interest payments from now on should be surrendered as a quid pro quo for its continuation.
Q51 Mr Prentice: There is a big difference between a one-bedroom flat in Kennington and a six-bedroom house in Witney, is there not?
Sir Christopher Kelly: Yes. I do not understand the point you make.
Q52 Mr Prentice: It is the point I made earlier. You could have capped mortgage interest, which is what has now happened, but you chose not to do so. You have said that mortgage interest is beyond the pail and it will not be allowed in future and MPs will have to rent?
Sir Christopher Kelly: Yes.
Q53 Mr Prentice: I said earlier that the Leader of the Opposition claimed £24,000 a year going back five years which went exclusively on mortgage interest, not for a house in the capital but in his Witney constituency. That sounds a bit unfair to me.
Sir Christopher Kelly: This was one of the anomalies.
Q54 Mr Prentice: It was a big anomaly.
Sir Christopher Kelly: If the point you make is that one of the anomalies in what happened in the past was that those who claimed only mortgage interest escaped criticism whereas those who claimed for other things within the £24,000 limit did not I agree with you, but you ask whether in that situation it should apply retrospectively. I am pretty clear that the answer to that is no.
Q55 Mr Prentice: I shall not rehearse the argument, but it applied to gardening and more trivial things.
Sir Christopher Kelly: I did not apply it to gardening and more trivial things.
Q56 Mr Prentice: What you are telling me is that some people got off really lightly.
Sir Christopher Kelly: That is what you are telling me, Mr Prentice.
Q57 Paul Flynn: Do you believe you followed the perception of certain newspapers on this? It was not highlighted that some people were abusing the system by claiming 100 % of their allowances which are meant to cover mortgage interest, council tax and utility payments. The system was abused by people who claimed 100 % of their allowances for interest. Surely, that is part of the system that should be clawed back if you are to justify clawing back money for other things like gardening.
Sir Christopher Kelly: I am not suggesting clawing back that money from the individuals. My job was to design a system for the future and that is what we have done.
Q58 Mr Walker: One laments the rise of the professional politician, but if you make this a full-time job, which is what the consensus round the table seems to be, you will have full-time professional politicians doing it. I do not think you can have it both ways. The danger is that if you make it harder and harder for people to retain a foothold in the private sector naturally you will have just professional politicians. Someone who is in a marginal seat, like many of my colleagues, will be very reluctant to have any form of outside interest that he must declare before the general election because his Lib Dem opponent will eviscerate him for having such outside interests. There is a flaw in the argument because you cannot have it both ways. Maybe the public would be satisfied if MPs were not paid. I would be quite happy not to be paid because I could do whatever I liked. I could not answer constituents' letters except those that interested me and I would come here perhaps two or three times a year. What do you think my constituents want? Do they want a full-time Member of Parliament or one who costs them nothing but they never see?
Sir Christopher Kelly: I think you are having that debate with your colleagues on the other side of the table rather than with me. It is very difficult to argue that there should not be transparency about the way in which you intend to do your job when you are elected. If you intend to do what you have just suggested in your extreme case then you should come clean about it and tell your constituents. All we are saying is that you should tell your constituents at the point you ask them to re-elect you whether or not you intend to continue with other activities.
Q59 Mr Walker: You talk to a lot of our constituents. What do you believe they want? Do they want full-time politicians whom they resent because they have to fund them to the tune of £170,000 a year, although the vast majority of that sum is accounted for by staff salaries, or would they prefer Members of Parliament that cost them absolutely nothing but did not respond to their letters or emails, did not come to open their fetes and probably visited the constituency once or twice a year, if they are lucky?
Sir Christopher Kelly: The answer to that is obvious.
Q60 Mr Walker: What is it? I do not know what it is but you have talked to these people.
Sir Christopher Kelly: Between the two choices you offer me of course they want MPs who do the job for which they elect them: to represent them in Parliament, look after their interests, scrutinise legislation and do all of the things that MPs do.
Q61 Chairman: Behind Mr Walker's question is the point that we do not know what people require of their Members of Parliament, we do know that essentially all MPs are in different categories and in many respects do different jobs. There is no job description and they have to make it up for themselves. Some work hard and some do not; some do this and some do that. It is the job of IPSA to find answers to these questions. How on earth can you decide how to remunerate them?
Sir Christopher Kelly: That is a good question. You could decide how to remunerate them if you wrote a job description for Member of Parliaments and insisted that every one of them followed it. I would personally regret that. We have been told by a lot of people that Members of Parliament do their jobs in different ways, some more assiduously than others, but I suspect that an attempt to prescribe what Members of Parliament should do would be something most of your colleagues would resent and it would lead to a less effective House of Commons.
Q62 Mr Burrowes: You said in your report that the system should give MPs the resources they need to do their difficult jobs. Does that include increased salaries?
Sir Christopher Kelly: To my mind there are two important things. One is that the confusion between expenses and salaries should end. It should be absolutely clear, unlike the past, that expenses should be reimbursed only if they are properly incurred et cetera. Second, there is a quite separate question about whether or not salaries should be increased. In many ways one of the most important recommendations we made was that IPSA should be given responsibility for determining salaries, not on the basis of my giving you a glib answer now about whether you should be paid more but on the basis of a proper independent assessment, accepting all the difficulties of assessing it as the Chairman indicated, of the kind that the Senior Salaries Review Body has performed in the past. That would be done in the knowledge that when recommendations are produced they are not then interfered with either by the House of Commons or the Prime Minister of the day for whom any increase in the salary of a Member of Parliament will always be difficult. I believe that responsibility for that recommendation should be handed to IPSA as an important part of ensuring that the situation that has developed in the past does not recur.
Q63 Mr Burrowes: I recall that when you first came before us you indicated a willingness to consider an increase in salaries. Given the matter you have been looking at - the whole issue of expenses - without accusing you of being glib, do you have a view that on balance there should be an increase or reduction in salary?
Sir Christopher Kelly: If I gave you a view it would be a personal one and the Committee has not taken evidence on the right level of salary. I believe the right way to do it is by way of the process that will now happen which does not single out head teachers, police superintendents or any single job where salaries have increased by a lot but looks across the board. If that independent review did come to the conclusion that MPs' salaries were too low and should be increased that should be accepted.
Q64 Mr Burrowes: Is that a personal view?
Sir Christopher Kelly: Absolutely.
Q65 Mr Burrowes: In the first evidence session of the inquiry into expenses you hit out at MPs for lacking principle and exploiting expenses for personal gain. Now you have been through that inquiry how many did exploit the system for personal gain and lack principles?
Sir Christopher Kelly: I genuinely do not know the answer to that, and in many ways what has happened has been extremely unfair to large numbers of your colleagues. Tom Legg's report will presumably go into it in more detail. My impression is that a significant number have behaved with integrity throughout and have been unfairly tarred with the same brush.
Q66 Mr Burrowes: What is "significant"?
Sir Christopher Kelly: A number of others have been widely criticised for what they did, but particularly for some of the older Members what they did was in the context of an impression they had been given that £24,000 was an entitlement. If it is an entitlement you can bung in any old expenses vaguely related to accommodation that add up to £24,000, which was presumably how people thought it was reasonable to claim for duck houses, manure and everything else.
Q67 Mr Burrowes: You have highlighted individual examples. A year ago I accept that we could talk in generalities, but you have now looked at this line by line and Member by Member.
Sir Christopher Kelly: It has not been our job to do that; it has been the task of Sir Thomas Legg.
Q68 Mr Burrowes: Nevertheless, you have held an inquiry and you must have developed a broad view of it. In June you talked about it in terms of generic numbers when referring to the values of selflessness, integrity and honesty and said that if they had been followed by more MPs over the past few years we would not be in the situation we are in now. Therefore, you formed a judgment about a number of MPs, so it would be useful to set out now those who according to the headlines lacked principles.
Sir Christopher Kelly: I am genuinely unable to answer that in quantitative terms. To get back to what I said right at the beginning in response to the Chairman chiding me, I believe that all of you are guilty of having gone along with a system which you must have known was flawed even if you were not personally guilty, although I suspect most of you were as unaware as everybody else until the Daily Telegraph revelations in particular of the extent to which people were exploiting the system for personal advantage.
Q69 Mr Burrowes: In the foreword to your report you distinguish between healthy scepticism and deep-rooted cynicism towards public life. What do you believe is the public attitude? Is it focused now on deep-routed cynicism or healthy scepticism?
Sir Christopher Kelly: We have not done our usual survey since all of this started. I cannot give you a quantitative answer; I can give only a qualitative one based on the number of letters we received during the course of the inquiry and through the focus groups. On the basis of that we are well beyond healthy scepticism and are now in a situation that is a matter of concern to me, as I am sure it is to you, which is the reason for the earlier questions about what needs to be done to restore trust and confidence.
Q70 Chairman: I pick up one point you made in answer to Mr Burrowes' question. You referred to MPs having abused the system and so on. I know that you do not want to comment on the scale of it because that is not what you have done, but on the Today programme this morning there was a discussion involving the Chairman of the Members Estimate Committee. He was asked whether he thought this would impact on the general election and people standing in it. He said he thought it would not; everything would be caught up in the normal battle of policy and party. Listening to it I wondered whether he was right. That is what normally happens, but is it not the case that when people find out things about the character of people who offer themselves for election they want to make judgments about them? Let us say someone does some work in your house and you find that over quite a long period that individual has been systematically overcharging you. When that person comes back again he will probably not get any work, will he? Should not the same be true of Members of Parliament?
Sir Christopher Kelly: There is a distinction. If some of what you read in the newspapers or the reports of the Committee on Standards and Privileges about individual MPs was true and they were standing for election in a constituency of which I was part of the electorate speaking personally I would not want to vote for that individual irrespective of party. That is a judgment about what has been revealed about individuals. I would expect to find a number of people in that category. Of more concern to me is the generic issue which is: is there likely to be a larger vote for extremist parties because of dissatisfaction with the more mainstream parties? On that I have no particular expertise to offer, but I imagine that the polling you and your parties are doing may cast more light on that than my personal view.
Q71 Mr Prentice: Knowing what you know about all this, do you expect to see successful prosecutions?
Sir Christopher Kelly: I read the same press as you. I have no idea what the quality of the evidence is.
Q72 Mr Prentice: What about the long-term implications of the expenses scandal? Do you believe good people - I hate to use the term but everyone knows what I mean by it - will want to stand for Parliament given the increased transparency and being in the spotlight and so on following the publicity we have all had, or are they likely to prefer to do something else with their lives?
Sir Christopher Kelly: Again, you are asking for a personal opinion and all I can offer is that. A number of people must be thinking: do they want to subject themselves and their families to the kinds of vehement and unpleasant attacks that have taken place? I suspect there is nothing new in this; you have been subjected to that sort of thing in the past.
Q73 Mr Prentice: This is unprecedented.
Sir Christopher Kelly: In principle it is nothing new. People will want to consider that. I hope they will feel when Ian Kennedy has finished his task that as far as expenses are concerned there is now a system that is clean, robust, properly audited and transparent and therefore they should have nothing to fear from that particular aspect of the way they do their work.
Q74 Mr Prentice: Do I take it from what you have just said that this maelstrom in which we have been involved for the past six months or so will not deter people from standing for Parliament? You say it will not have an effect?
Sir Christopher Kelly: That was not what I said; I said I had no idea whether or not it would.
Q75 Mr Prentice: All I ask is your personal view.
Sir Christopher Kelly: I am sure some people will think twice about whether to expose their families to this sort of attack. It is not unusual for people in political life to be attacked unfairly, although this has been extreme in terms of the number of people, but it is important for precisely the reason you give that we start the new Parliament with a completely clean sheet with no suspicion or possibility of abuse. That ought to be a comfort to those who think of standing.
Q76 Mr
Prentice: One of the suggestions is that
only very wealthy people will be able to stand for Parliament because they
really do not give a toss. Have you given any thought to the publication of tax
returns? It happens in some jurisdictions, for example in the
Sir Christopher Kelly: I would have to think about it.
Q77 Mr Prentice: I will give you a few moments.
Sir Christopher Kelly: Earlier this week I was visited by a delegation of Argentinean legislators who asked me a similar question, except that in Argentina politicians and senior civil servants do not have to publish their tax returns but they make a statement of their wealth at the point they take up office and when they leave.
Q78 Mr
Prentice: Bring us back from the Argentine to
the
Sir Christopher Kelly: As always there is a balance to be struck.
Q79 Mr Prentice: You do not want to answer?
Sir Christopher Kelly: I do not want to answer off the cuff a question to which I have not given a great deal of thought, frankly.
Chairman: I think that is a perfectly proper response, though not one politicians like.
Q80 Paul
Flynn: The question is as old as democracy.
Who guards the guardians? We all agree that the guardians have not been
guarding the guardians very successfully, but do you not believe that ideas
about disclosing tax returns and the requirements in
Sir Christopher Kelly: As a general principle I am all in favour of transparency. Whether or not that is a step too far or a necessary one I do not know.
Q81 Kelvin
Sir Christopher Kelly: Speaking as a citizen, I would have much preferred Parliament to sort out this issue for itself some years ago so democracy would not have been damaged in the way it has.
Q82 Kelvin
Sir Christopher Kelly: Yes, and the reputation of this House and the many individuals of great integrity working within it.
Q83 Kelvin
Sir Christopher Kelly: Indeed. Expenses cannot have helped. I said earlier that one of the points made to us most strongly was that people valued independence of mind. Another interesting point was they did not believe that when people offended against high standards they were brought to book. This is not just a question of MPs; they say this in general about people in public life, so one aspect is what happens to people in these circumstances.
Q84 Paul Rowen: Your annual report and the report of this Committee last year raised the issue of whistle-blowers. There are now stronger provisions in place to protect whistle-blowers.
Sir Christopher Kelly: I agree, not least because you have raised this point in the past. We do include whistle-blowers in this, but the point I was making was that some of our recommendations were about the way in which the Committee on Standards and Privileges exercised its functions and the range of sanctions at its disposal. As I understand it, that committee has taken the decision to propose to the House that the resettlement grant should be withheld from one Member of Parliament but that also the Committee on Standards and Privileges should have on it independent members to give greater competence to address precisely this point, namely whether when peers judge peers they are being sufficiently robust in forming judgments. That protects both the public and in this case MPs against a suspicion that they are not being judged appropriately and robustly.
Q85 Chairman: I want to ask about the dangers of overkill. Often when we respond to issues we set up vast structures that turn out in the long term not to be very helpful and we have to change them again. Heather Brooke, the redoubtable campaigner for transparency in this area, said not long ago that you do not make a system more effective by increasing the number of regulators; you improve it by making the lines of authority clear, simple and transparent so everyone knows exactly who is responsible for what but instead the muddle is getting muddled. If you look at it we now have quite a dense network of people who have a finger in the pie. One wonders whether we could simply have made the rules simpler and the position more transparent with a simple audit.
Sir Christopher Kelly: Up to a point I agree with that. One of the things we may very well do before the end of my term in office is conduct an inquiry that looks at precisely that issue. I make two comments. First, I agree with Heather Brooke almost to the end of the quote you made. Second, I would also emphasise as I tried to do in the report the importance of leadership. What matters is culture. You can have as many codes of practice as you like but what really matters is the culture, and leadership is very important in cultural issues.
Q86 Kelvin
Sir Christopher Kelly: They are well-known principles rather than mine, although I endorse them. Leadership is in many ways the most important one because in issues of standards it is culture that matters. If high standards are not led from the top of an organisation and people see that they are not rewarded and recognised for high standards then human nature being what it is you will not have them.
Q87 Kelvin
Sir Christopher Kelly: It is moral leadership and also an insistence on the way in which organisations conduct themselves.
Q88 Mr Liddell-Grainger: What is your pension per year?
Sir Christopher Kelly: I wrote it down somewhere and I cannot find it.
Q89 Mr Liddell-Grainger: Can you write to me?
Sir Christopher Kelly: I can tell you that it is of the order of £64,000. I cannot see what relevance it has to anything we are considering here, but I do not particularly want to conceal it.
Q90 Mr Liddell-Grainger: Bear with me. When you left the Civil Service did you receive a resettlement grant?
Sir Christopher Kelly: I got a standard early retirement package, if that is what you mean.
Q91 Mr Liddell-Grainger: How much was it all told?
Sir Christopher Kelly: In those days it was not converted into a capital sum; I had my pension paid earlier.
Q92 Mr Liddell-Grainger: You did not receive a resettlement sum when you left the Civil Service?
Sir Christopher Kelly: As part of the pension arrangement one receives a lump sum, if that is what you mean. I guess my pension arrangements look pretty much like yours, except they were based on a higher salary.
Q93 Mr
Walker: My next point is more a statement
than a question, but I hope you find some comfort in it. Despite all the stuff
that has hit the fan over the past 10 months, to put it delicately, what is
still great about our democratic system is that my constituents can see me
pretty much at a week's notice; they have incredible contact with me. If it is
really urgent they can come into the office any day during the week. I will
answer their emails at
Sir Christopher Kelly: Yes.
Q94 Mr Walker: Do you still have confidence in the relationship between Members of Parliament and their constituents at the most basic level, ie constituency level?
Sir Christopher Kelly: Since I was a civil servant for 30 years I have worked with a lot of Members of Parliament both as ministers and in other capacities and I have considerable admiration for large numbers of them. In the course of this inquiry from what I have seen of the way in which many Members do their jobs, not the way they have dealt with their expenses, my admiration has grown, if that answers your question.
Q95 Kelvin
Sir Christopher Kelly: At the risk of spoiling this mutual admiration I have to say that a number of people told us in evidence that the case work of an MP was very important, but were they absolutely sure that all the case work they did was properly done by an MP as opposed to a local authority councillor, recognising that he or she might be of a different political party, or citizens advice bureau or a Member of the Scottish Parliament? Issues were raised about the extent to which the amount of case work now done was absolutely necessary. I express no view about it myself; I am just saying that that point was raised.
Q96 Chairman: I take us back to where we started: the role of the Committee itself. Given the way the Committee has vindicated itself in the past year, which is not a view shared by all my colleagues, is it necessary for it to be, as it were, in constant inquiry mode? A suggestion has been made that when it was set up the idea was that it would sit there and be available when issues arose to intervene and conduct inquiries. It has gone into a mode where it is conducting inquiries continuously and is thinking what to do next. When the issue of MPs' expenses arose and I was pressing you to do it you told me you had an inquiry under way into local government leadership that you wanted to get on with. It is perhaps a good moment to revisit the model of operation and consider whether you could do a desk operation, keeping a general eye on standards issues but standing ready to go when a particular issue emerged. You would be far more nimble-footed and responsive than you were in this case.
Sir Christopher Kelly: What you have described about the way we could operate is quite close to the way we think we do operate. We do not necessarily assume that we have to do an inquiry. Indeed, before we started the local authority inquiry we set up a series of seminars designed to expose issues in a different way. We continue to do quite a lot of work all the time either in the public eye or not in which we exercise some influence over standards. To give a trivial example, unusually the Prime Minister's Independent Adviser on Ministers' Interests, Sir Philip Mawer, produced a report on a minister which initially was not going to be published. We said we thought it should be published and next day it was. Therefore, we exercise some influence in that way. We are a small committee of part-time people with a very small secretariat. Sometimes on these occasions, not this one, I think that what I say to you is the exact opposite of that, namely there is this, that and the other where we should be intervening and we cannot. How we best exercise influence and work with and through other people is a subject of great interest to me and we discuss it a good deal.
Q97 Chairman: Thank you very much for this morning. I am not sure that I should wish you a quieter year, but thank you for all your endeavours this year.
Sir Christopher Kelly: Thank you, Chairman. My only regret is that I shall not have the pleasure of appearing before you on another occasion.
Chairman: This is probably the end of our relationship but it has been an interesting one.