The Operation of the Parliamentary Standards Act 2009 - Committee on Members' Expenses Contents


Written evidence from Dr Paul Seaward

A SUMMARY OF MEMBERS' PAY AND EXPENSES 1911-71

INTRODUCTION

This note outlines the history of the issue of Members' pay and expenses, and concentrates on the period from the introduction of the salary a century ago to 1971, when the Top Salaries Body became involved, and when a system of allowances was separated out from the salary. It is intended as background to the current discussion. The period between 1971 and 1988, when a system for linking pay to civil service pay began to operate, is more briefly outlined. The period after 1971 is covered in more detail by the House of Commons Library Standard Note Members' pay and allowances—a brief history (SN/PC/05075), and numerous other research papers and standard notes from the Library. This note is indebted to the 1974 SPG publication edited by Michael Rush and Malcolm Shaw, The House of Commons: Services and Facilities.

The note concentrates on the salary and the initial creation of the main allowances. It does not attempt to deal with the parallel issues of ministerial pay, and the Members' pension. The following points have been themes of the debates on Members' pay and allowances throughout the period:

—  The lack of any separation until 1971 between salary and provision in respect of Members' expenses, and a consequent ambiguity about the purpose of the payments, and also some doubt about tax treatment.

—  The changing roles and backgrounds of Members of Parliament, and how these have required a changing approach to the problem of pay and allowances.

—  The controversy over whether Members should set their pay themselves (or if they did, do so only after the general election at which the issue had been explicitly raised) or find some external mechanism that would ensure that it adequately kept in line with other public sector pay settlements.

THE 1911 RESOLUTION

The Liberal government's decision to establish a form of remuneration for Members in 1911 gave effect to long-standing party policy, although it was only after the Osborne Judgement of 1909—a decision in the House of Lords against Trades Unions' use of the political levy which rendered their existing support for Members illegal—that the party was actually forced to put it into effect. Reluctance to do so reflected a deep and common unease about the creation of a class of professional politicians, which was voiced frequently in the debate—held amid deep controversy over the Liberal government's proposals to remove the House of Lords' veto on legislation.[23] The opponents of the 1911 scheme regarded it as an insidious corruption of Parliament. Some thought that the effect would be, sooner or later, to encourage other voluntary public servants, especially those who sat on local boards and committees, to require allowances too. Arthur Lee, who spoke for the Unionist party, referred to the motion in an amendment as the "violation of the principle of gratuitous public service", and suggested that paying MPs would encourage a new breed of dubious characters to enter Parliament.[24] Lee said that:

I think we have a notorious example before us of what happens—and I only speak of countries with which I am thoroughly familiar—in the United States of America and Canada. There we know that representative and influential men, speaking generally, have the greatest reluctance to enter politics at all. As a matter of fact, with very few exceptions they do not enter politics. How often have I myself, when I raised that very point with men of that description in Canada and in the United States, heard them reply, "Why should we? We pay others to do that for us." I am afraid that will be the case very soon here, and, as a result, I believe we will get a different type of Member in this House from that which we have been used to. We will get a type of Member and a much larger proportion of men, resembling the paid professional speakers of political parties to-day, and, while these men are able men and do good work, I do not believe they will be a satisfactory substitute for the present personnel of the House of Commons.[25]

Payment, wrote another unionist, "attracts the very worst class that a country can be governed by—the caucus-fed professional politicians. Log-rolling and corruption are the inevitable corollary."[26]

It was no doubt in an attempt to rebut this line of attack that Lloyd George, the Chancellor of the Exchequer, presented the payment as an allowance, rather than a salary:

[I]t is not a recognition of the magnitude of the service, it is not a remuneration; it is not a recompense; it is not even a salary. It is just an allowance, and I think the minimum allowance, to enable men to come here, men who would render incalculable service to the State and whom it is an incalculable loss to the State not to have here, but who cannot be here because their means do not allow it. It is purely an allowance to enable us to open the door to great and honourable public service.[27]

In another passage that would be frequently quoted afterwards, he insisted that:

The only principle of payment in the public service is that you should make an allowance to a man to enable him to maintain himself comfortably and honourably, but not luxuriously, during the time he is rendering service to the State. That is the only principle, and it is the principle on which we have proceeded.[28]

Despite the talk of allowances, the 1911 resolution for an annual payment to MPs of £400 incontrovertibly referred to the payment as a "salary" (Lloyd George himself also called it in his speech as "just the salary of a junior clerk in the Civil Service").[29] The exclusion from the 1911 resolution of those Members who were in receipt of a salary as an officer of the House, or as a Minister or as an officer of the royal household seemed similarly to emphasise that the payment was intended as a salary, as did the fact that the Inland Revenue, initially at least, charged income tax on the full amount. From 1912, however, the Inland Revenue routinely treated a quarter of the amount as provided for expenses and free of tax, creating a confused situation in which the payment was treated as both a salary and covering expenses.[30] The Revenue said in 1921 that it received a number of claims against tax beyond the standard £100.

THE 1920 SELECT COMMITTEE

Inflation during the First World War significantly eroded the value of the salary, and resulted in pressure to increase it during the Parliament elected in 1918.[31] Prime Minister Bonar Law recognised the strength of feeling at least for an inquiry into the subject when speaking on the establishment of a select committee to review the issue in November 1920.[32] The Committee took evidence in December 1920.[33]

The ambiguity over whether the payment should be regarded as a salary, and the continuing controversy as to whether membership should be paid, was at the heart of many of its discussions. Some Members of the Committee clearly had difficulty with the notion of a salary on the basis that it was paid by the state but that there was no contractual relationship with the state. Major Farquarharson was particularly exercised by the philosophical question of the extent of the state's obligation to cover the expenses of individual members in working for their constituencies. "Do you reason that election by a constituency, which, after all, is an election by a majority of a constituency, creates an obligation upon the State to pay for such service as you voluntarily render under that arrangement?... can you give any other instance, in your own knowledge, whereby a similar obligation upon the whole State is created by the action of a small section of a community?".[34] The Committee heard from a number of Members who continued to oppose it, and from J.M. Hogge (a whip for the Independent Liberal party) who argued that "whatever payment… is made to a Member, that payment should be in the nature of expenses, and expenses only."[35]

I hope the Committee will make it quite clear that they are not discussing this even on the basis of salary. I think that is really important, because the word has been used so loosely from the time that the original payment was made to Members that the public have the notion that this is a salary. I say with regard to that, that if it is a salary, then you are altogether in deep water. Nobody has ever yet attempted to assess what might be the salary of a professional politician. I do not want to have professional politicians, and any provision that is made now is not made in the way of a salary, but as a relief to the charges which incidentally occur to any man who must come here.[36]

Hogge appeared to be unaware that the word was used in the original resolution: "if it has been it is very unfortunate".[37]

It was Labour Members who most strongly put the alternative view. The Chairman of the party, William Adamson,, insisted that the payments ought to be regarded as a salary—"I do not see how the Members of this august assembly, which we fondly describe as the Mother of Parliaments, should be treated in respect to salary on a different footing from the Members of all the other Parliaments of the world, as far as I can ascertain".[38] He claimed that the £400 should have been uprated to £1,100 to retain its value,[39] but proposed an increase to £800 on the basis of inflation in travel and hotel costs. Dan Irving, another Labour Member, enumerated his costs: £105 for a third class railway pass, and the costs of keeping up his own home and accommodation and other expenses in London brought his annual expenses up to £370. It meant, he said that he did not have "a penny piece for clothing either for myself or my wife".[40]

A common view was that a period of austerity was not the right moment to increase the sum "because of the bad effect on the people outside",[41] but some of the conservative Members opposed to paying salaries were prepared to concede the justice of paying travel costs on the basis of the importance of frequent communication with the constituency, and the much greater difficulty for Members living at a distance from London. The Committee professed to be impressed by the evidence they had received of the "difficult financial position of certain members at the present time". They recognised that "if the sum of £400 per year was necessary in 1914, and no evidence has been submitted to the contrary, such an amount is inadequate today". Although they did not recommend a change to the salary, they did recommend the provision of first class railway travel for all Members, and the introduction of facilities for free postage of Members' letters. The Committee also noted the evidence they had received that many Members' expenses were substantially greater than the tax-free sum allowed for within the £400, and raised the question whether it should be regarded as an allowance or as salary. They did not however make a specific recommendation on this, although they noted that it was open to the Treasury to issue a Minute "to the effect that the whole £400, or any part thereof, should be treated as expenses".[42]

In a Treasury Minute of May 1921 the Inland Revenue duly deemed that it was reasonable to treat the whole amount of £400 as "wholly, necessarily and exclusively incurred in performing the duties of the office".[43] When the House debated the consequent increases in the estimate for Members' expenses, Austen Chamberlain as Leader of the House explained his own conversion to the idea of paying Members, and supported the Committee's proposal. The division on it was treated as a free vote, however, and motions allowing for the changed treatment of the £400 salary and allowing for free travel between the House and constituencies and homes were all defeated.[44]

Members were still able to charge expenditure above £100 against tax, although they did so, as before, on a case by case basis.[45] Some pressure for uprating the amount was eased by post war deflation, although in 1924, during the first Labour government, free railway passes were finally introduced for Members of Parliament.[46]

THE BALDWIN INQUIRY, 1937

Under the emergency measures introduced in 1931 (the National Economy Bill) Members' Salaries were reduced by 10% in line with the reductions in other public sector salaries.[47] They had returned to £400 by 1935. By 1937 sentiment had decisively turned towards raising the level of Members' pay. Prime Minister Stanley Baldwin undertook to investigate the issue in April 1937, after it was raised in the context of debate of the Ministers of the Crown Bill that year.[48] In a debate a few days later on Ministerial salaries he said:

The time was, when I was a boy, when people hardly dreamed that the day would come when there would be large numbers of Members in this House who could not afford to perform their duties here unless they had an allowance; but I think, looking at the whole Continent of Europe, that the more the basis of our liberty and our Constitution is broadened, the better for our country. Would anyone who remembers the old days here go back to them and give up what we have gained? This Chamber, the most famous Chamber in democratic government in the world, is now open to all, and, once you admit that everybody has a right to be elected to this House if he can, you cannot logically create or leave a financial bar.

Baldwin announced in May his decision to increase the level to £600.[49] In moving the proposal in June to give effect to the change, Neville Chamberlain, who had replaced Baldwin as prime minister a few weeks earlier, referred to his own surprise and distress on discovering the difficulties in which many members found themselves. He accepted that the cost of living had declined since 1920, but argued that it was still at least 50% higher than it had been in 1911; moreover, there had been a considerable increase in the electorate since then. Although there were a number of voices arguing for caution, and arguing that the motion should only be brought forward after a general election, the increase itself was carried with only a small dissenting minority.[50]

THE 1945 COMMITTEE

The new level was still well below what had been advocated in 1920 (and even despite the reduction in prices that had occurred in the 1920s, the value had considerably diminished, as Baldwin stated). Hugh Dalton, Chancellor in the new postwar Labour government, moving for a new Committee in November 1945 to look at the issue, referred to the increase in constituency pressures on Members; for the opposition Osbert Peake again made the point that professional politicians were undesirable, but recognised the need to re-examine the subject.

The Committee said that practically all of its evidence and responses to its questionnaire recommended "some material increase" in remuneration. It concluded, as had its predecessors and as would its successors, that "many Members are finding themselves in a position in which they cannot perform those duties without financial anxiety". Enumerating the various expenses that a Member found necessary, it avoided regarding the remaining payment as a "professional salary": "though a member may be called upon to devote a great deal of time to the business of the House, he has complete freedom to allot his time between his parliamentary duties, either at Westminster or in his constituency, and his personal affairs. It would be most unwise to take this freedom from him by paying such a figure as would unequivocally demand his full time in return".[51] They proposed an increase in the overall salary to £1,000, and that £500 of this should be allowed free of income tax to cover expenses (with Members still able if necessary to claim for expenses over and above that). Because of these increases they did not recommend further increase in travel allowances (the free rail travel concession had already been enhanced by the government to include travel between Westminster and Members' place of residence as well as the constituency)[52] nor the introduction of a car travel allowance. The government's proposals for change on the basis of the Committee's report were considered on 29 May 1946. The government agreed with the increase to £1,000, but rejected the idea that £500, rather than the original £100, should be regarded as tax-free, and insisted that Members should have to make a claim to set their expenses against tax as previously. Osbert Peake, for the opposition, agreed with the government: "I found that [the idea that an increased proportion of salary should be tax-free] very abhorrent to my constituents. They took the view, and I think they were right, that it would be all wrong for hon. Members to come under what in practice would be a different Income Tax law from the ordinary citizen." The government's proposals were approved, resulting in an increased annual payment of £1,000, with £100 automatically tax-free.[53]

THE 1953-54 COMMITTEE

The £1,000 rate remained in operation over the next eight years, despite increasing concern from Members about the failure to raise it in line with inflation. Although the post-1951 conservative government seemed not to have been particularly sympathetic towards the idea of an increase,[54] it established a committee in July 1953 primarily to consider the Members' fund,[55] but also with the remit of reviewing the "nature and extent of the expenditure incurred by Members of this House in the performance of their duties". The committee believed that the expenses of Members had increased considerably even since 1946: in 1946, they said, the average amount allowed by Inland Revenue as expenses was £550; by 1953 it was £750. The committee commented on the difficulty of establishing proper rates for expenses, because of the "different modes of life and individual tastes" of Members, the differences in their constituencies, and especially the difference in accommodation needs and secretarial assistance. Nevertheless, the committee reported similar stories to those referred to by their predecessors:

some have sold or mortgaged their homes: the savings that others had made before entering Parliament are now exhausted and debts are accumulating: others have sacrificed pension rights which they had established with a company or firm, in whose employ they were before entering Parliament, and are now at an age when it would be difficult, if not impossible for them to find employment when they leave the House of commons: some have to refuse invitations to public functions which they ought to attend: in some cases, in order to supplement the family income, the wife of the member has had to find employment: for a long time some have not been able to afford lunch or dinner in the dining room of the House of Commons and use only the tea room.

The Committee recommended an increase in the annual payment to Members to £1,500, though it recognised the case for a larger increase and noted that the House might wish to consider in future "in broader terms than your committee are instructed to, the status and degree of financial independence appropriate to Members of Parliament in relation to their duties as these have developed in the modern world".[56] The Committee also recommended a non-contributory pension scheme payable to Members on retirement who had completed at least ten years' service beyond the age of 45.

The Prime Minister (Winston Churchill) gave the government's response to the report in April 1954, saying that in the government's view it would not be right in the present circumstances to proceed with the increase in salary, or to insist on a non-contributory pension scheme.[57] The recommendations were further discussed in an adjournment debate in May, at which the Chancellor (R.A. Butler) reiterated the government's opposition to the proposals as they stood, but suggested an alternative approach of expanding the provision of allowances in cash or in kind, including a daily subsistence allowance of around £2 per night that the House sat, the equivalent, he thought, of £200 to £300 a year.[58] Some Members complained that this was simply to fudge the issue.[59] In a debate later in May, George Thomas (Labour), in introducing a motion giving effect to the Committee's original proposal for an increase of £500 a year in the salary, said:

The proposal to base an increase on expenses incurred wholly and exclusively in the performance of our duties here means that hon. Members would have to be saving up chits for expenses into which they had entered throughout the whole year. It could mean all sorts of embarrassing and awkward situations for the House, and, in the end, it could be far less desirable than dealing with this question as Parliament after Parliament has felt it necessary to deal with it. This is not the first Parliament which has had to consider whether it would deal with the problem of allowances for Members of Parliament by way of expenses or of an allowance. I believe I am right in saying that, each time—in 1911, 1937 and 1946, as also this time—there have been suggestions that these allowances should be by way of expenses, in its wisdom each successive Parliament has rejected the idea of the expenses account as being not nearly as desirable as a straight increase which the public will appreciate.[60]

The House, on a free vote, but against government advice, adopted the original proposals of the Committee. The government, however, subsequently persuaded the opposition to back the proposal that Butler had outlined, and the prime minister announced this to the House in July—although Clement Attlee nevertheless complained about the government's decision to proceed contrary to the declared will of the House.[61] The result was the addition of a £2 daily allowance to members' remuneration for the days except Fridays on which the House sat. At the same time the Treasury withdrew the automatic relief from tax for £100 of the salary.[62]

Attlee continued to reflect the view that Members were grossly underpaid, and argue for a proper increase. His successor as Leader of the Opposition, Hugh Gaitskell, initiated talks with the government on the subject, and a debate in July 1956, in which he referred to the government's failure to implement the House's decision of 1954 and suggested that the allowance (averaging about £280 per session) amounted to less than half the increase in pay proposed by the Select Committee. He claimed that it was impractical for many politicians to obtain other jobs, and indeed that the possession of other jobs by some Members made it difficult for the House to work properly, with committee attendances affected. The Prime Minister did not contest the case for a raise but reiterated, as had been said in 1954, that now was not the right moment to raise salaries:

I need not tell the House after that that an increase here at this time in the full glare of publicity, in which we have to live as Members of Parliament, whether we like it or whether we do not, cannot but have its effect at once on other sections of the community, at a time when we are urging restraint.[63]

By 1957, however, the government did accept that the situation had eased sufficiently for it to accept a proper increase,[64] and about a year after Gaitskell's debate, R.A. Butler introduced a series of resolutions which, leaving the salary at £1,000, introduced a payment of £750 in respect of expenses, which would be "a straightforward addition to salary". The sum was the same as that which the 1954 Committee had mentioned as the average which had been claimed as expenses against tax by MPs. "The fact that it is equal to the figure of average expenses quoted by the Select Committee", Butler emphasised, "must not lead hon. Members to believe that it is an expense allowance and as such exempted from taxation". He abolished the daily allowance introduced three years before.[65] Gaitskell supported the proposal, although he pointed out that the sum was not quite equivalent to the amount proposed by the Committee in 1954 taking inflation into account, that that figure had been based on the assumption that there would be a non-contributory pension (something which was still not conceded), and that the sum was still much less than some continental Parliaments. He argued once more for a proper system for uprating Members' pay:

I think that in due course we ought to consider the possibility either of relating the payment of Members of Parliament to some other salary which is paid in some official capacity or to the possibility of an outside tribunal considering the matter from time to time. I realise that there may be differences of opinion on this, but when one remembers the difficulties which we have encountered in the last years, I believe that this should now be looked at.[66]

THE LAWRENCE COMMITTEE, 1964

As on previous occasions, an uprating was followed by several years of inflation and inaction.[67] The Committee on the Remuneration of Ministers and Members of Parliament (the Lawrence Committee) was established by Alec Douglas Home as Prime Minister in December 1963 following consultations with the leaders of the main political parties in both Houses—though with an all-party agreement that the results of the review should not be presented to the government until after the general election.[68] As Michael Rush has emphasised, it was the first time that a review of Members' pay was given to a body outside the Government or Parliament.[69]

The Lawrence Committee report was the most thorough consideration of the subject of Members' pay that had been attempted. As previous committees had done, they canvassed the opinions of Members themselves with a questionnaire. Members themselves, they recognised, continued to be divided on whether the job should be considered a part-time or full-time activity, with a number still resisting the idea that there should be "full-time professional politicians". They also recognised that the personal circumstances of Members made it impossible to fit a salary at a level which would meet everyone's needs perfectly.[70] They concluded that the only practical way of proceeding was to make "the salary for all members, whatever the type of their constituency… such as will enable those Members who are without private means or the opportunity to earn income outside the House efficiently to discharge the duties of the service without undue financial worry and to live and maintain themselves and their families at a modest but honourable level". The Committee firmly rejected the idea of an automatic link with the Civil Service, or any other comparator: MPs' pay "should be determined on its own and should not enjoy any automatic built-in protection". The current salary of £1,750, they pointed out, fell well below the value of the original £400, and had long been inadequate, and echoing their predecessors, they accepted that there were cases of real hardship:

those Members, of whom there is an increasing number not limited to one side of the House, are forced to endure the discomfort, in spite of tax relief, of cheap and shabby lodgings in London; they cannot afford to use the Members' Dining Room; they have to submit to the humiliation of not being able to return hospitality even at the most modest level of entertainment; they are forced to impose considerable sacrifices upon their families and they find it necessary to cut down the number of days on which they can attend sittings of the House.[71]

The Committee recommended an increase in the salary paid to Members to £3,250 a year, with £1,250 of the sum as the amount of this which it was assumed might be required to cover expenses.[72] The Committee also finally recommended a contributory pension fund. It however made no very significant recommendations concerning allowances, which it largely regarded as beyond its terms of reference.

The changes were effected by resolution and the introduction of a pensions bill in December 1964, although the coincidence of a decision on Members' salaries and pensions with the deferment of a general pensions increase until the following spring was politically awkward, and the cause of some embarrassment to the government.[73] The innovation of referring the issue to an external body was widely welcomed; but one member regretted the fact that the Committee had:

seen fit to prolong this fiction of tax-free expenses. … it is not a sensible or reasonable thing to do, because the public get the idea that Members of Parliament receive part of their salary tax-free—tax-free expenses—but this is not so. The nonsense of this arrangement can be clearly seen by the fact that if one spends less than £1,250, one gets a less allowance for tax purposes, and if one spends more than £1,250, one gets more than £1,250.[74]

Some lamented the Committee's failure to agree with the idea that salary should be linked automatically to another comparator, but this point was not taken up with any force: the proposal for automatic linkage was not yet popular, despite the difficult history of Members' salaries over the previous fifty years, no doubt partly because of a reluctance to concede (shared with the Lawrence Committee itself) that the role of a Member could in any way be compared with that of a "normal" job; and partly perhaps because of a hope—expressed by Selwyn Lloyd in the debate—that inflation might not be a persistent factor.

THE TSRB REPORT 1971: DIVIDING SALARY AND EXPENSES

In fact, inflation grew rapidly in the late 1960s and before it rose very quickly in the 1970s. The failure of the salary to keep pace with the cost of living and the lack of any means to ensure that it was reviewed were again the subject of comment in the late 1960s.[75] The introduction of a secretarial allowance in 1969 was one response to the issue. The sixth report of the Services Committee of 1968-69 argued that "the provision of a secretary is essential". Remarking that the value of the salary set at £3,250 in 1964 had fallen, and "that no machinery exists for its review", it recommended that provision should be made at public expense for secretarial assistance at the rate of a maximum of a full time secretary for each Member. A secretarial allowance was brought into effect by a resolution of December 1969, although it was pegged at a maximum of £500 per Member, which many regarded as inadequate.[76] In the debate James Dickens said that "This House of Commons is by far the worst serviced and poorest paid of any assembly in any major democracy", and Douglas Houghton complained that:

We are constantly having thrown at us that one of the first things that this Parliament did when it was elected in 1964 was to increase its own pay. This is because of the absurd method of combining remuneration and expenditure for hon. Members. I regard the Lawrence proposals in this respect as being quite unacceptable and based on wrong principles. I believe that we should get this matter straight before long.

The government had already conceded that the subject needed to be rethought. In July 1969, in its response to the Services Committee Report, it acknowledged the links between facilities and the expenses issue, and agreed to refer the matter to the National Board for Prices and incomes during the next Parliament.[77] It also proposed that the matter would become part of the regular business of a proposed Commission for Industry and Manpower. The Commission, however, was never established, and the government changed at the general election of June 1970. Early in the new Parliament, backbench concern on the subject was further signalled by Douglas Houghton's private members' bill to establish a review body for Members' pay, allowances and pensions and conditions of service.[78] The new conservative government had previously announced that it would establish three pay review bodies, one of which would deal with top salaries in the public sector, and in December 1970, on the second reading of the private member's bill it announced that the question of Members' and ministers' salaries would be referred to this review body.[79]

The first report of the new Top Salaries Review Body (TSRB) dealt with the issue. It began by observing that "the extent… to which Members of Parliament pay expenses of their work out of their salary is much higher than is generally the case in other occupations; indeed most salaried employees expect all their reasonable expenses to be met in full by the employer and not merely treated as deductible for tax".[80] It estimated that the average net pay for Members after meeting all necessary expenses but before tax, was a little under £2,000 a year.

As a measure of the standard of living which their salary has represented during this time (while not implying that the pay of MPs should be fixed in relation to that of a given grade of civil servant), it is interesting to note that the equivalently paid official (in approximate terms) in the civil Service was, before the first world war, a Principal, between the wars a Higher Executive officer (two grades below a principal), after the second world war a Senior Executive Officer (one grade below a principal) and in 1964 a Principal again. The nearest equivalent grade now is a Senior Executive Officer. These comparisons are even less favourable to the MP if account is taken of the fact that the civil servant, within standard limits, is reimbursed for all expenses incurred in performance of his duties.[81]

The body complained that:

the difficulty of assessing a fair level of pay is compounded by the way in which the notion of the Member's payment has developed. It has come to be regarded as being composed of two parts, one being in the nature of a salary from which Members have to meet their living expenses, and the other being intended to meet the expenses of carrying out their Parliamentary duties. But these expenses have varied not only according to the nature of the Member's constituency, whether it is rural or urban and its distance from London, but also according to the way in which an individual Member sees his role and deals with his work.[82]

As it pointed out (and as had frequently been said before), the more expense a Member incurs in carrying out his job, the less were his disposable earnings: "this may mean also that the more work he does in visiting his constituency and dealing with his constituents' problems, the less money is left in his pocket."[83] It regarded as one of the most basic questions whether a Member's salary should be independent of expenses. They concluded firmly that it should: "as a general rule we believe that, in future, a clear separation should be observed between salary, on the one hand, and provision for expenses on the other… it should not normally be the responsibility of the individual Member to finance the facilities he needs to do his job". It acknowledged that it would be difficult to make this distinction perfectly, but it laid this down as a basic principle. The Body continued to resist the notion of an automatic system of uprating, and rejected linkage with a civil service comparator. It accepted that there was pressure from some members for such a system, which they attributed to "a desire to remove the question of salary determination from the political arena and to provide protection against the erosion of their salaries through inflation", but believed it quite wrong that negotiations on civil service pay might be affected by the question of Members' pay. "The question of remuneration should be examined periodically (and we would hope regularly) on its merits and in the light of the relevant circumstances at the time".[84] The Body said that there should be a review once in the lifetime of each Parliament.

The Body recommended a raise in salary to £4,500 a year, as well as a system of allowances, the most significant of which was to cover the additional costs of living away from home: "it is clear from the evidence we have received that many Members find the costs of additional accommodation, especially in London, a considerable burden, and we are of opinion that Members should not be expected to meet them entirely out of their salary". The additional costs allowance system was based on the notion of a subsistence allowance, and was a fixed daily sum paid to cover the additional cost to Members of staying in London or in their constituency when engaged on parliamentary duties, a sum set at £5.25 or £5 a day; London members would receive a £175 London supplement to their salary instead. The Committee also recommended the widening of the system of travelling expenses, and the increase in the secretarial allowance to £1,000 a year, to meet both secretarial and general office expenses, which might include the employment of research assistants. Another innovation was three month's severance pay to a Member who lost his or her seat during a general election.

The government implemented the rise in salary, although it rejected the additional costs system as proposed by the Body, on the grounds that it was too complex. It substituted a simpler scheme, an annual flat-rate payment of £750 for Members based outside London, with the London allowance of £175.[85]

With expenses finally divided from salary, following the 1971 report and consequent resolutions four principal allowances existed: car allowance (which replaced free travel vouchers); secretarial assistance; additional costs (subsistence) allowance and London supplement.

1971-83 AND LINKAGE TO CIVIL SERVICE PAY

Inflation began to pick up in the 1970s very rapidly. While trying to enforce pay restraint more generally, the government was extremely reluctant to allow Members' pay to rise. As at least an interim approach, a strategy of increasing allowances while holding down the salary was explicitly stated by the then leader of the House, Ted Short, in May 1974:

The Government do not feel that it would be right at the present time to review the level of Ministers' and Members' salaries as these would more properly form part of a major review. But, on the other hand, there is no doubt that the value of the various allowances which Members may draw to help them defray the necessary expenses they incur in the course of their parliamentary duties has fallen to a level which is causing serious difficulties for many Members. I have in mind the secretarial allowance, the motor mileage allowance, London allowance, and the allowance which covers the additional cost of overnight stays away from home.[86]

He therefore invited the TSRB to review the allowances only. The result, announced to the House in July 1974, increased them significantly. The secretarial allowance went up from £1,000 to £1,750; the additional costs allowance from £750 to £1,050 a year, with a London supplement increased from £175 to £228. Many Members regarded this as inadequate. William Hamilton called it "a backhanded way of giving increases to Members", and argued that "it would be much more honest if we were to be paid an adequate salary and allowed to decide how much we chose to spend on secretarial assistance and other things". Ted Short agreed to invite the TSRB to review salaries and allowances again in the autumn, and did so in December 1974,[87] after the October election. The TSRB recommended an increase from £4,500 to £8,000, an increase of 78%, designed not only to take into account the two thirds increase in the retail prices index since 1971, but also the changing demands of the role of the Member. The secretarial allowance it recommended raising to £3,200 a year, the additional costs allowance to £1,350 a year, and the London supplement to £340 a year (and in future automatically in line with changes in civil service London weighting). The Body again considered the question of an automatic link with civil service pay, only to reject it, arguing that it would not make the issue any less politically sensitive, and other automatic linkages, to inflation or wage movements, might put Members into a more advantageous situation than other people. It urged, however, that reviews be held more frequently than they had originally recommended, suggesting a biennial review, rather than one review in each Parliament.

The government felt unable to allow the full salary increase, limiting it to £5,750 in 1975. In each of the following three years it was supplemented within the current policy of wage restraint, despite pressure to bring it up to the level recommended by the TSRB more quickly.[88] Many Members were angry about the failure to pay the recommended increase, and returned to the argument, rejected by the Review body, to bring the salary into line with civil service comparators, a point on which the government promised to consult.[89]

In July 1978 the government announced another periodic review by the TSRB, which was published in June 1979, after the General election. The increase proposed by the Body, to £12,000, was agreed by the new Conservative government, but would again be staged. The 1979 discussion marked the beginnings of a more general acceptance of the principle that Members' pay should be set on the basis of a comparator. The Leader of the House, Norman St John Stevas, signalled a radical shift in the general view when in 1979 he introduced the government's proposals for an increase:

The tradition in this country is of unpaid and voluntary public service. … That tradition, although it is not sustainable in the conditions of today, dies hard. It influences public attitudes. It seems to me that the contemporary manifestation of it is that Members should be paid, but not paid adequately. That is not a principle of great logical merit, but it is a principle of powerful effect. I would make clear at the outset, both to the House and the country, that the Government's view is that Members of Parliament should be adequately paid. Hon. Members occupy a position of prestige, influence and responsibility and that position should be reflected in their remuneration. Furthermore, the Government believe that ad hoc arrangements by which hon. Members' salaries are reviewed once in each Parliament are no longer satisfactory by themselves in inflationary periods. It is therefore the Government's intention that if the proposals that I have put before the House command support Lord Boyle's committee should be requested to find one or more professional analogues to which the pay of hon. Members should be linked between reviews.[90]

In its response to this, the Body held to its view that automatic linkage was not an appropriate solution to the problem, but it said that it recognised the frustration of Members about the unwillingness of governments to implement the Body's recommendations. It therefore set out some ideas concerning what sort of linkage might be established.[91] In February 1981, the government established a select committee to further examine the question, which proposed a link to average earnings.[92] When the government set out its proposals in relation to the uprating of Members' pay following the next periodic report by the TSRB, in July 1983, however, it accepted backbench amendments, proposed by Edward Du Cann, to raise the level of the salary over four years to the level recommended by the TSRB, and thereafter to link pay directly to the civil service pay scale. The linkage to civil service pay began in 1988. More detailed information on pay and allowances since then is provided in the Library's standard notes and other publications.

October 2011

This chart shows the value of the sum provided to Members as salary over the period 1911-2011. It is included here to show the fluctuations in the value of the salary over time, particularly before 1971. It should be remembered that until 1971 a substantial part of the salary (all of it in some cases) was treated as expenses, and therefore to compare the pre- and post-1971 situation it would be necessary to add in the sums available for these purposes: however it should also be noted that the changing conception of the role of a Member of Parliament also makes it difficult to compare in any straightforward way their remuneration across the century.

Chart

THE VALUE OF THE MEMBERS' SALARY FROM 1911-2011 IN CONSTANT 2011 PRICES (House of Commons Library)





23   The debate was on 10 August 1911: HC Deb 10 August 1911 vol 29 cc1365-483. In the division on the main question the government won 256-158. Back

24   G R Searle, Corruption in British Politics, 1895-1930, Oxford, Oxford University Press, 1987, pp 108-9. Lee, later Viscount Lee of Fareham, was the man who donated Chequers to the state in 1917. Back

25   HC Deb 10 August 1911 vol 29 c.1391. Back

26   Frank Meyer, in 1914, quoted in Searle, Corruption in British Politics, p 109. Back

27   HC Deb 10 August 1911, vol 29, c 1383. Back

28   HC Deb 10 August 1911 vol 29 c 1382. Back

29   10 August 1911. Although as the TSRB said in its 1971 report, the relevant grade was that of Principal. Back

30   Under section 3 of the Finance Act 1913 the Treasury was empowered to fix a sum representing a fair equivalent to the annual average expended "wholly, exclusively and necessarily in the performance of the duties in respect of which the salary is payable, and a 1913 minute fixed this sum as £100 in respect of Members of Parliament": Back

31   HC Deb 05 March 1919 vol 113 cc515-29; HC Deb 14 July 1919 vol 118 c36. For the effect of inflation, see the chart in the appendix to this note. Back

32   HC Deb 26 November 1920 vol 135 cc817-27. Back

33   For the appointment of the committee, see HC Deb 26 November 1920, vol 135 cc817-27Report from the Select Committee on Members' Expenses, HC (1920) 255. Back

34   QQ 324, 437. See also QQ 101-17. Back

35   Q 359. Back

36   Q 370. Back

37   Q 371. Back

38   Q82. Back

39   Q 84. Back

40   Q 170. Back

41   In the words of G.R. Lane-Fox MP, Q. 520. See also Sir John Butcher, Q 641. Back

42   HC (1920) 255. Back

43   Note by the Board of Inland Revenue on Expenses of Members of Parliament, May 1921, Cmd. 1352. Back

44   HC Deb 01 June 1921 vol 142 cc1087-153. Back

45   HC Deb 23 June 1921 vol 143 cc1541-3. The clerk of the House said in 1945 that the system for travelling expenses had been put into operation for a week when the vote was defeated in the House: HC (1945-46) Q. 235: see also HC Deb 03 June 1921 vol 142 c1402. Back

46   HC Deb 25 February 1924 vol 170 c35; HC Deb 19 February 1924 vol 169 c1533; HC Deb 26 February 1924 vol 170 c299W; HC Deb 10 March 1924 vol 170 cc1899-900; HC Deb 13 May 1924 vol 173 c1159W; HC Deb 24 July 1924 vol 176 cc1505-7; HC Deb 05 August 1924 vol 176 cc2745-6. Back

47   HC Deb 11 September 1931 vol 256 cc419-90; HL Deb 30 September 1931 vol 82 cc168-245. Back

48   HC Deb 07 April 1937 vol 322 cc180-1. Baldwin expanded slightly on the format his inquiries would take in the debate on the Ministers of the Crown Bill on 12 April 1937. Back

49   HC Deb 27 May 1937 vol 324 cc425-6. Back

50   HC Deb 22 June 1937 vol 325 cc1049-122. The vote was 325-17. The resolution was moved by Neville Chamberlain, who had replaced Baldwin as prime minister on 28 May 1937. Back

51   Para 7. Back

52   Air and sea travel had also been included from 1945. Back

53   On a division, 345-26: Back

54   For complaints about the situation, especially from Mr Arthur Lewis see HC Deb 16 March 1953 vol 512 c170W (in which Boyd-Carpenter gave the current value of the £400 original payment as less than £1,500, in response to a question from Arthur Lewis); HC Deb 17 March 1953 vol 512 c174W; HC Deb 20 March 1953 vol 513-c45W; HC Deb 06 July 1953 vol 517 c66W; HC Deb 07 July 1953 vol 517 cc1043-5. HC Deb 23 July 1953 vol 518 cc589-90. Back

55   In the debate on 22 June 1937, Chamberlain indicated openness to the idea of a pension for Members, but told the House first that it would require legislation, and secondly that it would require further consideration. A scheme was established under the House of Commons Members' Fund Act 1939, although this was a fund for the relief of hardship of former Members, rather than a pension. Back

56   HC (1953-54), 72, para 62. Back

57   HC Deb 14 April 1954 vol 526 cc1150-2. Back

58   HC Deb 13 May 1954 vol 527 cc1439-1562. Back

59   Eg: any subterfuge that is attempted means that we shall be creating more inequalities and injustices than would occur by a straight increase' (John McGovern); 'I should have preferred a flat increase, and I say quite frankly to my right hon. Friend that I believe that a number of my hon. Friends and the Government have been unduly scared by the reactions of popular opinion' (Henry Raikes). Back

60   HC Deb 24 May 1954 vol 528 cc30-157. Back

61   HC Deb 08 July 1954 vol 529 cc2347-9. Back

62   HC Deb 16 July 1954 vol 530 cc68-70W. Back

63   HC Deb 12 July 1956 vol 556 cc607-720. Back

64   For continuing pressure (especially by Mr Arthur Lewis) in the interim, see e.g. HC Deb 06 March 1957 vol 566 cc78-9W; HC Deb 05 March 1957 vol 566 cc176-7; HC Deb 14 March 1957 vol 566 cc1308-9. Back

65   Although at the same time he introduced the Lords' daily attendance allowance. Back

66   HC Deb 09 July 1957 vol 573 cc227-49. Back

67   One Member referred to Members being subject to a 'pay pause' in the Debate on the Address in 1961: HC Deb 01 November 1961 vol 648 cc166-311; an all party-deputation visited the prime minister on the subject in late 1962: HC Deb 20 December 1962 vol 669 cc234-5W. Back

68   HC Deb 19 December 1963 vol 686 cc1441-5; Edward Short, Whip to Wilson (1989), 77. Back

69   The House of Commons Services and Facilities edited by Michael Rush and Malcolm Shaw (for the SPG, 1974), 168. Back

70   Paras 29-33. Back

71   Para 42. Back

72   Para 54. Back

73   Short, Whip to Wilson, 77-8. As Selwyn Lloyd observed, when responding to the resolution, "some quite embarrassing Amendments could have been thought up about the timing and the amount. We take the view, rightly or wrongly, that though responsibility rests with the Government, this is a House of Commons matter and divisions on party lines are not really in the interests of Parliament." HC Deb 18 December 1964 vol 704 cc739. Back

74   William Shepherd ' HC Deb 18 December 1964 vol 704 c809. As he commented, the reason for this continued division of salary into salary and a notional amount expected to cover expenses was to provide a benchmark for the sum Ministers would receive in respect of their parliamentary expenses, in view of the fact that they were not entitled to a Member of Parliament's salary. Back

75   See HC Deb 05 May 1969 vol 783 cc40-4W for a comparison of Members' emoluments with those available in other countries. Back

76   HC Deb 18 December 1969 vol 793 cc1693-722. Back

77   A suggestion that it had previously rejected: see Rush and Shaw, The House of Commons: Services and Facilities, 192; HC Deb 24 July 1969 vol 787 cc474-6W. Back

78   The House of Commons (Conditions of Service) Bill, Bill 30 of Session 1970-71: Rush and Shaw, The House of Commons: Services and Facilities, 192. Back

79   HC Deb. 4 Dec. 1970, vol 807, cc 1721-5 Back

80   Review body on Top Salaries, First Report: Ministers of the Crown and Members of Parliament, Dec. 1971, Cmnd 4836, para 6. Back

81   Para 22. Back

82   Para 27 Back

83   Para 28. Back

84   Para 35. Back

85   HC Deb 20 December 1971 vol 828 cc1132-1251. The government previously announced its acceptance of the report on 6 December. Back

86   HC Deb 21 May 1974 vol 874 cc194-8. Back

87   HC Deb 19 December 1974 vol 883 cc1821-30. Back

88   Eg, HC Deb 23 July 1976 vol 915 cc2337-47. Back

89   HC Deb 16 July 1975 vol 895 cc1503-15; HC Deb 22 July 1975 vol 896 cc441-516. Back

90   HC Deb 11 July 1979, vol. 970, cc. 479-80. Back

91   Top Salaries Review Board, Report No 12 (June 1979), Cmnd. 7598, chapter 5. Back

92   HC (1981-2) 208. Back


 
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Prepared 12 December 2011