To be published as HC 1484–i v

House of commons



COMMITTEE ON Members’ Expenses

The operation of the parliamentary standards act 2009

Tuesday 25 October 2011

Hugh Thomas

Dr Ruth Fox and Matt Korris

Sir Ian Kennedy, Andrew McDonald and John Sills

Evidence heard in Public Questions 201–288


1. This is a corrected 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.

2. The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the Committee on Members’ Expenses

on Tuesday 25 October 2011

Members present:

Adam Afriyie (Chair)

Guto Bebb

Mr Edward Leigh

Priti Patel

Mr Nick Raynsford


Examination of Witness

Witness: Hugh Thomas, Former Head of Compliance for the Conservative Party, gave evidence.

Q201 Chair : Welcome to our review of the Parliamentary Standards Act 2009, as amended in 2010. I want to thank you for taking the time to come in. I understand that you were previously head of compliance for the Conservative Party and in that role just give us a quick canter round the sort of compliance issues you advised on in that role, to give us an idea of your background.

Hugh Thomas: Certainly. I started with the Conservative Party in about January, February 2008 and stayed until January 2010. In that role, initially the focus was on the adherence of the party with the Political Parties, Elections and Referendums Act 2000 in liaison with the Electoral Commission, and increasingly during the period I was involved with the political leadership advising the leaders of the Commons and the Lords, and the Whips in both places on issues concerning transparency, expenses, the implementation of the Right to Know forms the Conservative Party did at that time, and all other related matters much more invasive on the political side than possibly my predecessors.

Q202 Chair: In terms of your work, the advisory role on compliance matters for the MEPs, again just talk us a little bit around the areas in which you were assisting there.

Hugh Thomas: In about, I think from memory, June 2008 there were some issues that arose concerning expenses in the European Parliament and David Cameron asked me to oversee a review of everyone and everything over there. From that period until the end of my time with Central Office, I put in place a robust transparency system on expenses, the Right to Know form for Members of the European Parliament, which is still in place. After I left Central Office, the leader of the MEPs in Brussels asked me to take on a direct role, which I commenced at the beginning of 2010 doing similar issues, expanding Right to Know into things concerning transparency generally, liaison with other European parties and the implementation of lobbying transparency, which is the latest issue.

Q203 Chair: It would be fair to say that you have good experience, not only of compliance matters generally but also within a political context, a public facing context, and tied up with issues of transparency as well; would that be a fair statement?

Hugh Thomas: Yes, I have had the privilege of being involved in quite a lot of interesting things in the last few years.

Chair: I bet you have. Nick, can I hand over to you to go through the compliance questions?

Q204 Mr Raynsford: Can I just take it a little bit further and pick up the point you make in the second paragraph of your written submission that you worked as legal counsel or compliance director for a number of large UK and international financial institutions. Can you just tell us some of them?

Hugh Thomas: Yes, of course. I was Global Compliance Director with Deutsche (Private Wealth Management) for about five or six years. Prior to that I was Senior Counsel and Compliance Officer of what was then Merrill Lynch International Bank and I was counsel for UK, France, Spain, Holland, North Africa and money-laundering officer for the whole of the West European and North African region.

Q205 Mr Raynsford: Can we now turn to your experience of the role of compliance officers and your perception of the compliance officer at IPSA? In your experience is the compliance officer role at IPSA similar to or different from those of other significant organisations, including those you have worked for?

Hugh Thomas: It is nothing like what I have ever seen before. I think I would probably describe it, as I think I did in my written submission, in my experience as more an investigation officer than what I would call a compliance officer working closely with the board of directors of that organisation.

Q206 Mr Raynsford: In that role, how do you see the compliance officer advising the board on the basis of your experience elsewhere-I am not talking about IPSA but elsewhere? Would you have seen a role for the compliance officer suggesting changes, improvements, either with provision of greater clarity in the rules or changes to the procedures, or the provision of more advice to people who might otherwise not understand the rules; would that be a normal part?

Hugh Thomas: It would be very much a normal part, which is why the restrictive nature of the job spec, if I can put it that way, of the IPSA compliance officer was somewhat surprising. My role in other organisations has been very much the conscience of the board and the chief executive, with unfettered access to any documentation or people I wished to speak to at any time, the ability to commence a review of any aspect of the organisation, not just a client complaint, which I suppose would be the comparable thing. Also to advise the senior executive on strategic developments that would have compliance/legal implications.

Q207 Mr Raynsford: There is no problem, as far as you can see, in the combination of those roles of advising the board and also helping to ensure that good advice is made available to people who make use of the system and submit claims?

Hugh Thomas: Absolutely not. If I can draw the analogy with the City and my roles, without exception in all the organisations where one’s role is clear, and it is under the FSA regulations that one has that responsibility, the chief executive of a regulated firm may have the ultimate neck on the block, so to speak, with regards the legislation, but his or her compliance officer is very much their right-hand aide-de-camp, so to speak, at their side.

Q208 Mr Raynsford: That sounds as though you feel that to do the job properly the compliance officer has to be integrated into the organisation rather than in some ways semi-distant from it, yet the structure seems to imply there should be an independence of the compliance officer from IPSA.

Hugh Thomas: One can be independent and still integrated. Let me explain: my reporting lines in compliance roles were short and direct to the more senior level, so as a compliance officer you always had direct access to the designated board director or the chief executive. That gives us the independence to tell the XYZ sales director, "I am sorry, old boy, that is not appropriate." So that gives one independence but you are still integrated; you know how the organisation functions.

Q209 Mr Raynsford: Should a distinction be drawn between regulation and compliance? Have those separate roles become a bit confused in your view in the definition of the role of the compliance officer at IPSA?

Hugh Thomas: I do not see a definition of regulation at all in the role of the compliance officer at IPSA. It is more that they use the word "compliance" and I would use the word "investigation".

Q210 Mr Raynsford: You also say in your report that you cannot envisage any large organisation dreaming of checking or verifying every single transaction and you say, "The NAO reported that of the 134,696 claims that were processed in 2010–11, all had been checked at least once, and some more, but only 0.5% had been rejected. If this was a ‘risk-based’ approach then the usual commercial approach would be to reduce the sampling size on the basis that the system seemed to be working." You do not have any reason to change that view?

Hugh Thomas: Absolutely not.

Q211 Mr Raynsford: Do you believe that IPSA would benefit if it adopted a risk-based approach?

Hugh Thomas: Yes, and it was my impression, even before I read the detailed submissions from the NAO and the Public Accounts Committee, which from my perspective reassured me that without the access to their detailed audit, which they did, my gut feeling was right.

Q212 Mr Raynsford: Can I finally ask you in your understanding of the legislation, which clearly governs the operation at IPSA, is there anything in the legislation that would prevent the operation of the compliance officer according to the broad approach that you have set out?

Hugh Thomas: Yes. The role and the details of the compliance officer were brought in by the Constitutional Reform and Governance Act 2010, so somewhat of an afterthought. It was not in the 2009 Act at all. Although I have commented that I do not think there is any substantive changes needed at all to the principal part of the Act in order to make it efficient and cost-effective, it seems a shame to me professionally that a role is not able to function in a way that would be most effective for the organisation and also to its users, being your good selves.

Q213 Mr Raynsford: So changes to the 2010 legislation in your view would be necessary to allow the compliance officer-

Hugh Thomas: To change the compliance officer’s spec.

Chair: Thank you very much indeed. We are going to come on to the independence and accountability features of the current set-up.

Q214 Guto Bebb: Good afternoon. Having read your evidence, an interesting concept I think we need to look at is the fact that IPSA is both a regulator and an administrator, so do you think that that arrangement causes confusion in any way?

Hugh Thomas: Yes, it can. What surprised me when I looked at the legislation in a bit more detail, is that there are quite broad powers that IPSA does have to delegate function but of course not responsibility. I think the confusion would be, in my experience-it is a relatively small organisation-that if you have staff with experience who are used to doing, if I can describe it that way, then they may not have the same experience and ability in the overseeing, so that is the confusion of the doing and the overseeing if they are too close.

Q215 Guto Bebb: We saw from your evidence, in addition to being compliance officer to the Conservative Party that you also worked with Members of the European Parliament. Are you aware of any other country that has a system that is similar to the way in which IPSA has been established, in terms of being both the regulator and the administrator?

Hugh Thomas: No. As far as my own research indicates that is not the case. In the European Parliament, there is quite a clear distinction; the Administration Division does the payment and the audit function that comes in periodically reviews against legislation and regulation.

Q216 Guto Bebb: And you would argue that would be a better system?

Hugh Thomas: Yes.

Q217 Guto Bebb: Finally, and obviously I am not putting words in your mouth, is it possible for an independent body to be responsible for the administration of the scheme without setting the payment levels and so forth so that in effect there is this division of labour? Is that possible within the Act as it currently stands?

Hugh Thomas: It is not possible to have an independent body deal with it, but it is highly possible under paragraph 19 of schedule 1 to delegate the function but keeping the oversight responsibility.

Chair: Thank you very much. Edward, can we pick up on taxpayer value for money?

Q218 Mr Leigh: The Act states: "IPSA should act in a way which is efficient, cost-effective and transparent." Do you think IPSA is fulfilling its statutory obligation?

Hugh Thomas: In a short answer, no. I came to that conclusion looking at the evidence provided to your Committee and others, but in a similar way to what I mentioned to Mr Raynsford earlier, the more detailed findings of the National Audit Office and the Public Accounts Committee did confirm to me that my impression and my professional experience is, "There must be a better way of doing it, chaps." That was my informal comment.

Q219 Mr Leigh: We have already had questions around this, but if they did move away from this practice of checking and verifying every single claim do you believe they could still fulfil their statutory obligations, and maintain public confidence?

Hugh Thomas: Indeed. One thing I have direct experience in is transparency and making the public aware of what is being done, so I understand the principle of transparency publication, and there is some thought about the frequency of that. I would argue for as frequently as possible; real-time preferably. That is what happened before the last Parliament with the Right to Know form I was involved in. I think a risk-based approach, which is justified, and a transparency publication of whatever is submitted when it is submitted, so utility bills will be less frequent than other things, for example, must be the right way forward.

Q220 Mr Leigh: IPSA operates a scheme in which some allowances are used, such as a London allowance. Do you think that an extension of allowances would offer the taxpayer better value for money?

Hugh Thomas: In theory, it could by reducing administration. My concern on that, in my professional experience, is that by using allowances you are reducing transparency. I can see the argument of certain allowances being in place, like the London allowance, but if you were to go to a broader allowance covering general expenditure, for example, then I think, as a taxpayer I may-

Q221 Mr Leigh: What do you mean by "general expenditure"?

Hugh Thomas: Office prerequisites.

Mr Leigh: I do not think anybody is suggesting an allowance system for offices.

Hugh Thomas: My point in principle is that allowances are less transparent than-

Q222 Chair: So in limited circumstances for them to be very carefully considered, but you are not in favour in general terms to cover office expenses and everything else?

Hugh Thomas: That is correct.

Chair: Understood, thank you very much. Priti, can you take us on to the section about Members being able to fulfil their duties and public confidence?

Q223 Priti Patel: Yes, absolutely. Good afternoon. I would like to take you to paragraph 33 of your written submission, where you say the way in which the scheme has been administered is less than helpful to Members of Parliament. Could you elaborate on your view a bit more, and in particular should the Act itself make it more explicit that the primary function of IPSA should be to ensure that Members and the House can function more effectively and if so, how?

Hugh Thomas: Yes. I did note in the 2010 Act that there was a proposal to extend the scope of cost-effectiveness to the effective function of MPs and their parliamentary function, although that has not been fully implemented yet. I would wholly endorse that approach. It seems to me that by merely proceeding as they are at the present time they are not able to help Members get things right. I know from my own experience working with Members of Parliament and MEPs and others that one needs to be pervasive with regard to getting to know the Members, what their concerns are. I think that being less than helpful to MPs is my impression: they appear to be too distant from what Members are dealing with on a day-to-day basis, from what I have seen.

Q224 Priti Patel: On that point, do you think that they need to be more hands on, more advisory, or just provide more guidance to Members of Parliament?

Hugh Thomas: They need to be more your "trusted adviser", rather than "Your investigator is about to fine you."

Priti Patel: That is very helpful, thank you.

Q225 Chair: Thanks very much. Last couple of questions from myself about the future. You state in your evidence that more effective implementation of the Act is required. I just want to explore very briefly what sort of things you were thinking about.

Hugh Thomas: I would wholly endorse what the NAO have mentioned about a risk-based approach. With my professional experience in compliance in the City it would be very unusual, to put it mildly, to have any other approach than a risk-based approach. That is how things happen, and how I would suggest that the vast majority of the general public would expect them to operate.

I think there is great opportunity for IPSA to look at outsourcing, as it has been seen to be very effective in other parts of Government. Outsourcing can bring not only cost benefits but also a more focused approach, and careful SLA’s-service-level agreements-could put people on their mettle.

Those are the two things I would suggest in addition to, subject to if it is appropriate, any alteration of the compliance officer’s brief to make them a more trusted adviser and pervasive in the House.

Q226 Chair: That is very helpful. If-and it is a big "if", and I hope it will not be the case-the aims of the Act were not being met regarding efficiency, cost-effectiveness, supporting MPs, public confidence improving and so on, what should be done? In general terms, with your compliance hat on, looking at it from that direction, what should be done and by whom if IPSA were to fail to make those necessary changes? Let us say three or four years from now public perception is worse, it is costing more money: who should act and where is the accountability, in effect? Who should do what to put the situation right?

Hugh Thomas: In terms of accountability, the accountability is back to Speakers Committee. I suppose the Speakers Committee and Mr Speaker would have the nuclear option, as I would call it, but it might be rather inconvenient in terms of legislative time. I would say by whom it should be done would be the Speakers Committee. They, after all, as I noted in their proceedings, hold the purse strings.

Q227 Chair: Finally, we talk about IPSA in a generic way, as if it is a single person or a single entity, but ultimately the board are responsible for the decisions that are made and if the aims of the Act are not being achieved, I guess they should be held responsible, but again, if so, by whom? Should Parliament have a motion that removes them or should the Speakers Committee make a recommendation? Once again, from the compliance point of view, standing back from it, what would be your observation in terms of the accountability to the public if the board were not seen to be making the right decisions?

Hugh Thomas: It certainly was the case-it is deliberately set up as a corporate entity so whether they are executive or non-executive directors of it, they carry the can. They would definitely be responsible, especially the chief executive. How that is done would have to be ultimately by the House who put the legislation in in the first place, acting through the Speakers Committee.

Q228 Chair: Hugh Thomas, thank you very much indeed. That has been very helpful, and thank you for coming in person to talk through your evidence. That has been quite enlightening as well, so I very much appreciate your time.

Hugh Thomas: My pleasure. Thank you.

Examination of Witnesses

Witnesses: Dr Ruth Fox, Director, Parliament & Government Programme, Hansard Society, and Matt Korris, Research Fellow, Parliament & Government Programme, Hansard Society, gave evidence.

Q229 Chair: I would like to welcome the representatives of the Hansard Society to our inquiry. I would like to thank you as well for your very well-written and well-presented evidence. Also, I wish just to thank you for existing as an organisation that has the ability to objectively look at how Parliament is functioning, whether it is fulfilling the expectations or the duties that are expected in a democracy and also reviewing whether it is functioning correctly as well. First, could you talk us through, just in general terms, what you think the aims of the 2009 Act were, as amended in 2010? What do you think were the general aims of the piece of legislation?

Dr Fox: I think the overarching aim was to do something that would restore confidence in the system by which MPs’ expenses and future salaries, and so on, were paid, and in doing that the key purpose was to replace self-regulation with independent regulation, to establish a degree of transparency that had not existed before. That essentially was the key objective. Then there was the objective of needing to support MPs in the work that they did. The difficulty there is obviously how that is defined.

Q230 Chair: That is very helpful. In terms of the actual payments scheme for MPs, rather than the part on independence and public confidence, although that may form an element of your view, what do you think should be the objectives of the kind of payment scheme that is employed to do so? What should be the objectives of that scheme in terms of the measurable results, let us say, at the end of the initial period?

Dr Fox: In terms of the scheme and the way it is administered or the amounts that are available to Members to do their-

Chair: All of it.

Dr Fox: All of it? Okay. Clearly in terms of the levels of funding that are available to support Members in their duties our sense, certainly from our Year-in-the-Life research-and Matt can talk a little bit more about this, is that Members feel that perhaps the staffing budget is insufficient at present. In terms of our research, the 50-50 view is that accommodation is about right, 73% say travel is about right, 60% say constituency office rental is about right, and so on, so there are fairly mixed views but bordering on the side of it is not far off being a reasonable representation of what Members need.

More broadly, our concern is about how the system is administered. From our perspective, we have long said-and I said it right at the beginning of the process with IPSA-that the way in which payments are made is a big concern. The aim or purpose was to move to a system of transparency and accountability, yet it seemed to me to be a backward step to move to a system where direct payments were replaced with significant sums of money going through Members’ accounts and Members having to make, particularly in the early months of a Parliament, some very big decisions about what it was that they needed, and paying that money out themselves with no guarantees that they were going to get it back, certainly at the beginning.

Q231 Chair: Two more questions, but I will be as quick as I can. First, you said that the restoration of public confidence is a key aim of the legislation, and we need to judge whether that confidence is being restored. Do you think that public confidence is being restored now after a year and a half or two years of the operation of the Act?

Matt Korris: I think the fact that the expenses issue has disappeared from the national media largely takes it off the agenda and away gradually from the public mindset, so that has the effect of at least of no longer being something that undermines trust, but any change in the system was bound to move the story on. As to whether the creation of IPSA, the administration and so forth, improves trust or not, I think in general with the transition, as time goes by, we are moving to a situation where it ceases hopefully to be an issue.

Dr Fox: Can I just add to that? I think there is a real difficulty in trying to link cause and effect between the creation of IPSA and confidence when, for example, one could reference a general election that had a cathartic effect. The public had their say at that election and a significant number of Members left and a significant number of new Members came in. Also, there are the cathartic effects of seeing a number of MPs go to prison. I do not think we should underestimate that, because it does redress the view of "us and them", which is a lot of what public debate is about, and it is not what perhaps the public thought it was. It has maybe taken a long time, but the public may feel there has been a sense of accountability. Members may not feel that, and there may be a sense of rough justice among Members, but in terms of public perception, that is quite an important factor in the restoration of confidence.

Q232 Chair: That is very helpful. Finally, do you think that the principle that the payment scheme exists to enable or support MPs in doing their jobs needs to be enshrined any more tightly than it is in the current legislation? Do you think it needs to be clearer as an objective, given that we are in a democracy where MPs, believe it or not, ought to perform a reasonable job for their constituents in the country?

Matt Korris: The legislation says that the system should support MPs doing their jobs. I would probably not suggest that getting any more prescriptive is required. It is an operational factor, and clearly the operation needs to be got right, but I am not sure that a legislative solution for being prescriptive as to how IPSA should support you doing your jobs is necessarily the best approach, and nor will it necessarily be the best approach in the long term. It might solve the problems now if you said, "We want this and this and this to do our jobs properly", but looking to the future you would then have to come back and amend it to adapt to change in operational requirements.

Q233 Priti Patel: I would like to build upon some of Adam’s points on public confidence and trust in particular, because MPs are always on the end of a sort of misperception and all the rest of it. We have IPSA, which is doing its thing right now, and you have talked about public confidence. I guess perception has moved on, because the story has moved on. However, there does seem to be still a bit of a gap in understanding in terms of what MPs’ roles are, expenses, and so on. Do you have any thoughts or views on how that gap can be bridged and closed and what role IPSA could play in doing that?

Chair: We are worried by your pause in answering the question that it is going to be incredibly difficult.

Dr Fox: That is a hugely difficult question: if only we had a silver bullet. Public attitudes are complex, contradictory and rarely uniform, and being able to solve these difficulties with an eye to the changing tide of public opinion is incredibly difficult. What our Audit of Political Engagement shows is that in general, despite the tide of events, no matter what the issues are year to year-and we have been benchmarking the same questions and the same attitudes for eight years now-by and large, public attitudes are fairly stable. You will see some ups and downs as you have a crisis point to do with expenses, but then it settles back to a fairly settled level.

In terms of understanding of MPs, there is a problem in that what the public want MPs to do is largely in tune with what you do do. The problem is the public do not think that is what you are doing. So it is not that the work that is being done and the nature of it is wrong, it is the public understanding of it, and that is a huge educative issue. I do not think it is something that MPs and Parliament on their own can solve, and I do not think it is something that is going to happen within the course of this Parliament. The Hansard Society has worked for many, many years, decades, on citizenship education. I do think there is a real issue in terms of education-political literacy-among the future generations and where that goes. It is not something that is going to happen overnight, and it is the responsibility of Members; it is the responsibility, quite importantly of political parties as well. I do think political parties as organisations have a responsibility here.

Part of the issue is about the nature and the work of MPs and the expectations that fall on your shoulders. It is partly about the way parties operate and the way they present themselves and the extent of your responsibilities. The public see that through election campaigns and through general campaigning, year-in year-out: what are your responsibilities, what are the responsibilities of local councillors, and what are the responsibilities of MEPs and so on? Where are the boundaries? I think the media also have a responsibility. Whether they will take it up is a completely different question, but they have responsibility.

It is a mixed bag and I do not think there are one or two measures that are going to be taken that are going to address those, but you could look to IPSA, for example, and say they have a responsibility in terms of the information they provide and the context of the information that they give at the time they publish it. That is a concern we have raised in our evidence. They have a public education responsibility, it seems to me, even if it is not enshrined in the legislation, that goes alongside the work that they do, and they could make a contribution. Certainly they could not solve it, but they could make a contribution.

Q234 Priti Patel: That is very helpful. I have a couple of other points that I want to touch on. You touched on the whole issue of transparency and payments going into Members’ bank accounts and that that was a step backwards. Again in terms of perception, that is not good, if there is a view that that is untransparent and that is a backwards step as much as a forward step. What do you think IPSA could do around that in terms of transparency? Is it your view that such a system might perpetuate the appearance-I use the term "appearance" -very strongly of abuses?

Matt Korris: I think a system that has all the money going through Members’ bank accounts has the potential to be abused, while direct payments, where the money is not going through your hands, hopefully have less chance for abuse. One would like to think-and I am fairly confident-that, especially in the near term, neither system is going to be abused because of the attention that has been put upon it, but the fact that the system has the potential for abuse, down the line people will look at it again and go, "Well, the opportunity is there." They will feel the need to scrutinise why money is going through Members’ bank accounts. So a system which diverts the money around you rather than through you, I think is probably better for public confidence and trust in the system going forward.

Chair: Edward, could you pick up on fairness for less well-off MPs and those with families?

Q235 Mr Leigh: You have done some research on this, but what impact has the operation of the Act had on Members and their families, do you think, and on family life?

Matt Korris: Are you trying to point to the operation of the Act rather than just the-

Mr Leigh: Or IPSA, the way IPSA operates, compared with the last election anyway.

Matt Korris: Certainly the general transition for new Members coming to Parliament is quite a change, and the evidence we found in our research is that new Members have expressed considerable dissatisfaction with the induction they received from IPSA, and that was ongoing six months later when we asked them about the administrative performance of IPSA and they expressed considerable dissatisfaction. I think it was 79% of the new MPs responding to our survey said they were dissatisfied with IPSA and how it was working. Certainly in the text responses we got to our survey, Members were saying, "IPSA has made my life really difficult." You will see in the submission quotes from new Members saying how much of a burden it has been, and especially dealing with family.

Q236 Chair : Do you believe that, out of interest? It is just in one or two bits of evidence it seems that it is not believed-that somehow it is not true that it was causing difficulty for Members. Do you believe them as the Hansard Society?

Matt Korris: I think in general we do. We have both worked for Members of the House in the past, so I think we come to this with a fairly experienced knowledge of what the daily life of an MP looks like, and therefore when we get survey responses with new Members saying they were working on average 67 or 69 hours a week-and that is before travel-that matches our experience, as we have seen this place in operation. If you are working a 69-hour week, especially if you have family commitments on top of that, in a new and challenging job where you have to set your own priorities and set out a lot to do, I do not think that that is an unreasonable thing to say.

Q237 Mr Leigh: I was also asking about the impact on family life, time spent with children, and that sort of thing.

Dr Fox: In terms of whether we believe them? Our research was based on anonymous surveys-people had the option to anonymise their details-but we also invited Members to give their details so that we could go back to them, and question them, with the promise that we would not reveal identities in the course of whatever we published without their permission. Almost universally they have given their identities. We are able therefore to pin individual stories to individual MPs, and they gave a lot of personal information. If that research had been anonymous it might have been a different story, but the fact that it is so personalised I think underpins, from our perspective, that it probably is accurate.

Bear in mind however, that that was earlier on in the life of MPs in their first year, so things have changed a little bit. You now have the payment card and IPSA say 70% of payments can now be dealt with on that, and I think there is probably a bit of easing-off in the problems, but I am convinced that those stories are accurate.

In terms of impact on family life, we received free text responses to the survey, so we cannot quantify it-it is more qualitative information that we are getting back-but the responses were overwhelmingly negative. There were a lot of them. There were concerns about the ability to manage the hours and the travel, and about accommodation issues. Those were the ones that kept coming up. It is not just IPSA, but it is that interaction of the culture and working systems of the House, coupled with IPSA’s system and particularly then real frustrations with the bureaucracy of the online system and the difficulties.

Q238 Mr Leigh: What about the impact on MPs of modest financial means? What did you find regarding MPs who have no outside earnings or private means?

Matt Korris: The surveys we have done, the research we have done, does not particularly identify the ongoing effects on Members. The question we asked at the start of the surveys was, "How has becoming an MP changed your salary?" More than half of new Members who responded to the survey said they had taken a salary cut, and more than a third a salary cut of more than £30,000 a year. There are certainly issues about changing financial circumstances for new Members, but as for whether that is necessarily the reason for the challenges they are facing, I am not sure you can make that connection directly.

Q239 Mr Leigh: Do you think that MPs without independent financial means might be dissuaded from standing for Parliament in future compared to previous years?

Dr Fox: I am not convinced that that is necessarily the case, because I am not convinced that a lot of people out there who may be candidates in waiting are necessarily aware in detail about the depth of these problems and the difficulties they have caused. I think a more interesting and more enlightening question will be in three to four years’ time how many of the new intake decide to stay on, or rather how many decide to stand down-not because of the reduction in seats but because of the culture of the House and the difficulties they face.

In terms of the family issues, certainly anecdotally, and this is based just on individual conversations with Members, we certainly picked up personally in the early months, quite a lot of concerns about the fact that having come into the House, a number of them have taken a salary cut. Perhaps they had not had a salary for a while as candidates before coming into the House, but they found that they were having to pay out a lot of money upfront with no guarantees about the swiftness with which they were going to get the money back, whether they were going to get all the money back, and so on. They found that very difficult, and particularly those with young families found the arrangements for settling their accommodation quite difficult. But again, IPSA has responded to some of that by saying at the start of the new Parliament they will look at things a little bit differently.

Chair: Guto, do you want to continue along the lines of deterrence?

Q240 Guto Bebb: First of all, I am sure your research will back up the view that many MPs do place a higher premium on their reputation-whether that is reflected by the public attitude towards them is another matter entirely-but do you think the fact that MPs do so has resulted in some Members under the current operation of the Act deciding not to claim legitimate expenses?

Matt Korris: We do not have any evidence in our research for that. Anecdotally, there seems to be suggestion in the conversations we have had that some Members are not claiming all that they would be entitled to. There is certainly the issue that if you are making a claim for a small amount of money-perhaps £2 or £5-and you know how long it is going to take you to work through an online payment system, you might simply decide, "This is not worth my time. My time is worth more than a £5 claim, so I am just not going to bother with it." But that is anecdotal rather than research-based.

Q241 Guto Bebb: So in view of the fact that you are saying that there is no actual research-it is anecdotal evidence that you have-is there any evidence that you have collected, which would indicate that better-off Members are in a position to ignore the expenses procedure whereas less well-off Members have to go down that route, which means obviously putting their reputation at stake. Is there any evidence of that?

Matt Korris: The research does not cover that directly I am afraid.

Dr Fox: Just to clarify, the research is a much broader project than just IPSA and expenses. It looks at a whole range of issues, so IPSA was just one strand and what we have done is extract the strand for the evidence.

Q242 Guto Bebb: That is appreciated. The other thing is there has been publication of the fact that the amount of money paid out by IPSA has been significantly less than in the last year of the previous discredited regime. Do you think that the difference in what was paid out represents a saving to the taxpayer, or does it reflect the fact that the system has deterred claims by Members?

Dr Fox: It is quite difficult, because there is no research that can get to the bottom of how many Members have not claimed-it is quite difficult to prove that. But obviously the NAO have done their study and have put an estimation on it of £2 million plus, in terms of staff time that has been perhaps spent in the system.

If you add in the number of claims that probably have not been submitted-I would suspect probably in most instances they are quite low-level claims, rather than the real big ticket items, which, in the course of a week or a month may not add up to much, but over the course of a Session or Parliament they will for an individual Member-you may well find that there is a discrepancy. If the old system had a degree of fraud or corruption, whatever word you want to put on it, it was not working well and it was being ill-used, and people were getting money they were not entitled to, so you would expect the new system to be paying out less if that were removed and extracted from it.

The problem is that we do not know exactly how much the Fees Office administration of the system cost in comparison with IPSA, so it is quite difficult to make these kinds of comparisons. But I have said all along through this process, since I first went before the Committee on Standards in Public Life and with IPSA, that you cannot have good democracy on the cheap. I recognise that in the current economic circumstances the issue of cutting costs is an important debate, but simply trying to drive down the cost base does not necessarily represent value for money. It may represent less payment, but it does not necessarily represent value for money, and the question is what is it in the system that we are valuing in terms of supporting the work of Members.

Q243 Priti Patel: We have already touched on the theme of MPs’ reputations, and on page 4 of your submission, alongside transparency, you give an example in which published data can effectively mislead the public and effectively harm the reputation of an MP. Are there other examples where this has been the case? I am looking at this from the point of transparency, public confidence and how, in particular, data can be published in a meaningful way to the public so that MPs’ reputations do not come under false attack and suffer harm? Can we have some meaningful comparisons-this goes back to my earlier point-to help build that understanding in the eyes of the public about the role of the MP?

Dr Fox: In terms of transparency, we struggle to come up with an example in recent days, where the data has been released, of what you are talking about. There are plenty of examples, whether it is FOI, whether it is party funding, where you can deluge the public with information and if it does not have context to aid interpretation and understanding, then how useful is that information? I very much take the view of Baroness Onora O’Neill on these things. Her work on trust and transparency and so on is that it is no good deluging information and data and so on unless it has context. I think the concerns we alluded to in our report and recommendations are about the way in which the material and data about expenses are published. Is there a danger that it is all about deluging the information out there without the context of understanding what that money is used for? For example, the publication takes place every two months, but Members will have different payment times for items, so the two-monthly league table frankly is meaningless. It is the annual sum that reflects a Member’s work.

I think the public would be very understanding of a situation in which MPs make the argument, "You know what, staff are not an expense." Staff at the Hansard Society are not the expense of the chief executive. They are an essential ingredient of the job, a necessary part of the job and support provided, but they are not something that is personal to you in a financial way. That, to my mind, is just one obvious area where it should just be taken out. The staff salary entitlement is X: Members will pay up to that, depending up their circumstances and the number of staff they need, but I do not see any reason why that needs to be published and linked individually to Members in a personal way. I think the public would be understanding of that.

Q244 Chair: I think the subtext I hear from what you are saying is that there are different ways in which one can have a transparent system. Argue with me, but would it be fair to say that transparency needs to have a purpose and therefore you choose the type of transparency that achieves that purpose, whether it is public confidence or whether it is something else?

Dr Fox: Transparency is also about the avoidance of secrecy. That is an important element to it. You do not want to be seen to be trying to hide something and therefore everything is out there in order to be seen to be transparent, but beyond that, what is the purpose? If the information that is being provided is to be of any use to anybody, whether constituents or the media and so on, context is important. It seems to me you have to have both, but simply deluging lots of information out there will not necessary lead you to any kind of informed perspective.

Q245 Guto Bebb: Just coming back to that issue-Mr Korris touched on this, and I think in evidence it has also been touched on-and the claim that the publication of expenses has killed the issue of MPs’ expenses as a national story. I think the evidence is that it has killed it as a national story, but it has created an easy story for the local media every two months. Is that the experience you had in terms of feedback from MPs, or have you any other comments, because the league tables are certainly appealing at a local level?

Matt Korris: It has not appeared in the research but anecdotally, yes. We have certainly seen that that has taken place. I go back to what Ruth said: a two-monthly cycle of publications does not reflect overall spending and all the work you have been doing, and give any meaningful comparison whatsoever.

Q246 Chair: If there are no other questions, I have one final question. I think you say in your evidence that more than half the MPs took a pay cut as they arrived here in Parliament, which is not the perception out there but, hey, one cannot win them all. Historically, to what extent do you think from, say, 1911, when the payments were first introduced, the allowances and expenses and all these clever schemes, even to this day, have been in some way a substitute for merely increasing the headline figure that is paid to MPs? I just wonder if you have any insight into that.

Dr Fox: I think from the 1970s onwards-and I am not as familiar with the pre-history before that-Governments were imposing pay settlements and inflation squeezes and so on, and there was no desire, as there is not now, for Governments to be seen to be putting MPs pay up. I have always thought that the big tidal point or change was 2001, when a decision was made to put the additional costs allowance up by 46% on one vote. It was a free vote.

I was working for a Member at the House at that time and I can completely understand, given the difficulties we had with the budget prior to 2001, why that would be. It was a necessary increase in the resources available to Members to do their job, but I think what happened was that the regulations and the culture around how that money was then managed did not change in proportionate ways and carried on being seen as something that could supplement salaries by too many Members.

Chair: Thank you very much indeed, Ruth Fox and Matt Korris, for coming in from the Hansard Society. That has been very useful and has helped us supplement the evidence you provided in writing.

Examination of Witnesses

Witnesses: Sir Ian Kennedy, Chair, IPSA, Andrew McDonald, Chief Executive, IPSA, and John Sills, Director of Policy, IPSA, gave evidence.

Q247 Chair: Sir Ian, I would like to welcome you back to the Committee, and again I appreciate you sparing the time. John Sills, welcome back, and Andrew McDonald, thank you very much for taking the time to speak to us today. On 13 September, we were not talking about future policy, and that was because you had a board meeting on the 20th. I just wonder, Sir Ian, whether you could just give us a bit of an insight into what occurred at that meeting and any outcome from that meeting.

Sir Ian Kennedy: My hearing is very poor. Forgive me, I did not hear the question.

Chair: The question was that last time you came to see us there was a board meeting scheduled for 20 September and I was just wondering if you could let us know what sort of outcome there was in that board meeting that may be relevant to the inquiry we have.

Sir Ian Kennedy: As I recall, your briefing papers prior to my coming here suggested that that meeting would be one in which we would make, as a board, decisions about changes or progress. I think if you check the record I said that was not the case: the board would be considering papers with a view to the review that is going to take place towards the end of the year, but there was no matter before the board, which would be, as it were, of specific reference to what this Committee is addressing, albeit everything the board considers is of interest and relevance to this Committee.

Chair: Thank you very much indeed, Sir Ian.

Q248 Mr Raynsford: Sir Ian, you state in your written submission that the legislation does not itself specify what constitutes the public interest; that is for IPSA to determine. Taking into account the views of the public and others, including MPs, as well as the intentions of the legislation, and the fundamental principles which underpin the scheme, I am in some difficulty because, as I understand it from the next paragraph of your submission, you say, "IPSA should have regard to the principle that it should act in a way which is efficient, cost-effective and transparent. The second is that it should have regard to the principle that members of the House of Commons should be supported in efficiently, cost-effectively and transparently carrying out their parliamentary functions." Are those the two fundamental principles or are the nine or 10 listed in annex A of your submission the fundamental principles?

Sir Ian Kennedy: Both are fundamental.

Q249 Mr Raynsford: You cannot have both. They cannot both be fundamental principles.

Sir Ian Kennedy: Help me as to why the organisation cannot internally, in terms of setting its own vision, have certain principles, which after all were the principles, as I recall, which were suggested by Sir Christopher Kelly for the most part, and then also take account of those principles that are set out in legislation?

Q250 Mr Raynsford: If you are talking about fundamental as against subordinate principles, you would presumably have some sort of pecking order. All I was saying was, you have an annex, in which you refer to fundamental principles. It contains 12 separate proposals. It would be quite difficult to see those as fundamental principles in the same way as the two that are enshrined in legislation. I am trying to get an understanding of your reading of what are the fundamental principles.

Sir Ian Kennedy: I can do no more than say that the two principles set out in the legislation are those that guide us in carrying out our statutory duty, but also in our understanding of what the public interest might be. We also have to take account of other principles, which are set out in that annex and which are set out in our original vision document and on which we consulted.

Q251 Mr Raynsford: As you rightly say, that includes the "views of the public and others, including MPs". Can you now try and give us your definition of the public interest?

Sir Ian Kennedy: As I understand it, the public interest in this context-and I shall preface it by saying that, in my experience, it is the role of a regulator, which is an independent regulatory body established by whatsoever means, above all else to seek to serve the public interest, whatever the statutory scheme within which it operates. The context in which we are seeking to reflect the public interest is to strike the right balance: we must, on the one hand, provide for the taxpayer a system of assurance and accountability, which is robust and reliable, and which is backed by transparency, so that where taxpayers’ money is spent can be determined and is spent within the rules that have been agreed; and, on the other, we must do that in a way that seeks to support MPs and the performance of their parliamentary duty. We have to weigh those two objectives and strike the right balance; that is what independent regulators do.

Q252 Mr Raynsford: What is the right balance?

Sir Ian Kennedy: Give me a particular example; I will give you an example if you like. Sir Christopher Kelly, if you remember, was very strongly opposed to the notion of members of family being employed by MPs on the public purse, and indeed the view of the public to the extent that one could gauge that, and certainly of commentators, was certainly very much persuaded that that was the right way forward. We, on the other hand, took evidence and were persuaded that there was real merit to the electorate locally, and to the taxpayer therefore, in MPs having that opportunity to employ a spouse or related party, because we had lots of evidence that the spouse usually worked longer hours, had very good contact with the electorate and so on and so forth, so we had to weigh where the public interest lay and we made our decision, which was not necessarily welcomed by all.

Q253 Mr Raynsford: Your judgment in reaching that decision presumably was that this was in keeping with the second principle that you should facilitate MPs in the performance of their duties, providing these are done in a cost-effective and efficient way.

Sir Ian Kennedy: In part yes, but it was much larger than that. It was, where do we think that the taxpayer is going to get most value for their money in this specific context, and the answer was we thought that maintaining the system, which we developed a little bit, and we called it related parties, was in the interests of the taxpayer and provided good value for money.

Q254 Mr Raynsford: Would it surprise you that we had a witness earlier this afternoon who, when asked whether IPSA was satisfying the statutory requirement that it should act in a way that is efficient, cost-effective and transparent said he considered that you were not.

Sir Ian Kennedy: I am never surprised by what is said about IPSA, and there we are. I can say this to you, Mr Raynsford, that we have to appear before SCIPSA, which is the committee to which we have to render account and present our estimate, and their statutory obligation is to ensure that what we do is done in a cost-effective and efficient manner and they have, as has the Treasury on the occasions that we have appeared before them, approved our estimate, having reached the view that we do, that we are acting in a cost-effective manner. So I guess it is: whom you listen to at what time, you get the answer.

Q255 Mr Raynsford: If I tell you the witness was someone who had a career as a compliance officer in major international companies and said he knew of no example of any company that would have a system that involved checking every single claim individually, whatever the magnitude, without a risk-basis for the procedure, would that surprise you?

Sir Ian Kennedy: No, but bear in mind it is very important not to confuse apples with pears. In large companies, first of all, those who choose online expenses, which are systems that are quite common, there is ordinarily a manager between the ultimate rendering of the account and the person doing the accounting, and in the context of MPs and so on there is no intermediary person. The responsibility falls first on the MP and then on IPSA. Secondly, we are talking about public money-we are not necessarily talking about shareholders or other money-and, thirdly, we are talking not in a historical context, we are talking in the context in which things went badly wrong.

Against that we have adopted what is clearly a risk-based approach. We initially set the level of risk we were prepared to accept high, because that was the climate and that was tenor of the times. You as MPs and we as the operators of the system get more used to it, as we are more and more persuaded and as the public is more and more persuaded the claims that are rendered are legitimate as to 99.3%-we talked about this last time. So the notion of checking each and every one comes back on to the agenda. I am not going to discuss here the precise mechanisms we might use to slowly introduce a more risk-based system because I would not want to give anybody the notion of how to game the system. But clearly it is on our agenda and the board is actively considering it.

Q256 Mr Raynsford: I will now just draw your attention to the second group of witnesses we heard this afternoon from the Hansard Society, who essentially gave us some pretty convincing evidence that public confidence in Parliament may have had spikes up and down, but in general there was very little change in the pattern from their first survey in 2004 and the most recent one they have conducted. Can you be confident that you can judge whether the mood of public confidence has changed sufficiently to enable you to adopt a more risk-based system?

Sir Ian Kennedy: Those are two different points, if I may make so bold. The adoption of a greater risk-based approach is a function of our estimation over time by reference to the data we have received as to where the risk is properly placed.

Q257 Mr Raynsford: But is public confidence not in any way relevant to that?

Sir Ian Kennedy: Of course, and it is our job to enter that debate and make it clear, as we have done many times, and as I have said publicly, that claims are now increasing as to the proportion I have just mentioned within the scheme. That being the case we think-and it is not we alone, it is you and the National Audit Office-there is an improvement in public perception of how public money is being handled in the context of costs and expenses and that they can attribute that to IPSA.

Once again, I am afraid that in some ways you pays your money, you takes your pick. We have significant evidence from the NAO, which persuades us of a significant movement in confidence based upon IPSA’s work and based upon what the NAO said, that there is a very significant sense that public money is now much better looked after than under the old system.

Mr Raynsford: We will come back to the NAO later, if I may. Thank you.

Q258 Guto Bebb: We shall come to the NAO now-good afternoon. The evidence that you presented, I think in paragraph 18, mentions the National Audit Office conclusion that some £14.5 million less was spent on the expenses system in 2010–11 compared with the system in 2009–10, but the National Audit Office have also stated that they are of the view that MPs are subsiding their own work. If you ignore the second National Audit Office statement, is it not clearly the case that it is difficult to argue that the £14.5 million of savings are entirely a result of the Act? Would you accept that point?

John Sills: I think the £14.5 million will have been primarily down to underspends on staffing in that particular year, and that is partly because it took time to get things going, as much as anything else. The other areas where there was a reduction in spending through policy changes, if you like, was primarily around accommodation, because a number of London area MPs were no longer able to claim for accommodation expenses; and to some degree the reduction in spending on communications. We still built into the general budget some money for communications, but it was not as much as the old allowance. So I think those three areas-I have not seen the detail of the NAO’s figures-will have been the main causes.

Q259 Guto Bebb: Do you accept in any way the comments of the National Audit Office about MPs subsidising their own work?

John Sills: I think the NAO surveyed something like 200 MPs, a lot of whom were telling them that, so of course we have to accept that. I think the point we have made in our evidence and here before, and so on, is that we need to try and encourage people to claim what they are entitled to claim, because the money is there.

Q260 Guto Bebb: In view of the fact that you take the issue quite seriously, have you as an organisation done any research to identify why this is the case and why MPs possibly have been deterred from claiming expenses, which they should be claiming? Have you done any research on this?

John Sills: We have consulted pretty widely, for example, on the third edition of the scheme-we got a lot of returns from MPs, so we get it from there. The NAO themselves came up with four or five key reasons, which included the simplicity or otherwise of the system but also the concern about publication. So, yes, I think to that extent we do have evidence. We are also looking to develop what we are calling a user survey at the moment where we will ask MPs how they are finding the system, and so on, and that will give us further evidence in the coming months.

Q261 Guto Bebb: Finally, on the evidence that you have collected, is that available in any way, shape or form to be shared with this Committee?

John Sills: All the stuff from the consultation is on the website and I was quoting the NAO report as well, so again they have that evidence.

Q262 Chair: Can I just continue with that for a minute? You say that IPSA exercised its independent judgement about what best met the public interest and that you did so on the basis of evidence-based analysis; that is in paragraph 21. We are quite curious to see some of the evidence, otherwise it would appear it is just the chairman making a judgement without seeing what the evidence was on which the judgement was based. I just wonder whether you could give us some examples of some robust evidence on which things are based so that there are no accusations.

John Sills: Of course. First, where we mentioned that was particularly in reference to the connected parties issue, which Ian has already discussed, we looked at the evidence rather than just how people felt about it. For the first edition of the scheme, a lot of research was done into issues such as rentals across the country, where we used the Valuation Office Agency’s data to establish the right levels, and did quite an intensive exercise there. On accommodation in London, we have done a lot of research into property rents across different parts of London to see what is available for the prices, and we did that again for the third edition.

There is another thing we did, which we will be able to share with you very soon, and we are very keen to do so. We are close to releasing a paper which we worked on in March to advise the board on the full range of issues for the third edition of the scheme after the consultation. That goes up to annex M, so there is a lot of data in there and I think if you get a chance to read that in detail you will see we have worked hard to make sure we have evidence for what we are doing. That will be quite soon.

Q263 Chair: One more question from me, and then I think Priti may want to go into the transparency area. You mention a number of revisions to the scheme, and we have mentioned them again today, including changes to the rules on family accommodation; the supplement to the London area living payments; a widening of the definition of extended travel; that is all in paragraph 22. Is it possible that these measures, especially the family accommodation allowance, might be interpreted by the public as MPs again being given special treatment that other members of the public may not be receiving?

John Sills: I think you do get that sort of accusation from time to time, but there probably was not as much of that as we were expecting, because we did make a significant number of changes back in March. But on the whole, I think, things were quite well received and I like to think that is partly because we have explained why we are doing things and it is not a knee-jerk reaction to issues. I think what we have also tried-and there is more to do on this-is to get across this message that these are legitimate parliamentary costs, and we are trying to do that and we will carry on doing that because that is very important.

Q264 Chair: In what way have you tried to communicate that to the public?

John Sills: I think if you were to read, if you have not already, the report on the consultation in March, for example, we structured the whole report around showing that these are business costs. We have structured the new scheme around the same thing, so it is almost a subliminal message. We keep on trying to get across that these are legitimate.

Q265 Mr Leigh: Just on that, after the changes you made in March, how many members of the public complained?

John Sills: I am not aware of a great welter of complaints.

Q266 Mr Leigh: How many members of the public complained?

John Sills: I don’t know. If you want an exact number, I don’t know.

Q267 Mr Leigh: Will you let us know please?

John Sills: We can have a look at the emails.

Chair: Perhaps write to us afterwards, that would be helpful.

Q268 Priti Patel: Good afternoon. You state the fact that claims that are not paid are published is very much likely to act as a deterrent to MPs against making any inappropriate claims-that is in paragraph 25. Do you acknowledge-I know the system has moved on a bit-that a number of claims were not paid due to, dare I say it, administrative difficulties both with IPSA and Members of Parliament, and that when they were made public, they were almost made to be seen as if they were inappropriate claims, and that is very much down to the publication of them and the interpretation of some of these claims by members of the public.

Andrew McDonald: A couple of points, if I may. First of all, it is clear that early on, there was confusion in terms of understanding of the scheme and, in its early months, its administration. We have said that-we have acknowledged it-and for our part we have apologised for it. We seek not to make any judgment when we are publishing claims. It is important that we do not seek to discriminate between claims when we are publishing them.

What we have sought to do-and this is a change since the early months of the scheme-is ensure that we give Members every opportunity not to put a claim in, not to lodge it formally with the system, if they have not supplied appropriate evidence, so we return it to Members so that they can supply the appropriate evidence before it is lodged and formally counted as a claim. That has reduced the number of not-paid claims within the system where it is simply because Members have failed to provide the appropriate evidence. With the appropriate evidence supporting the claim, the claim is then on the whole paid. We see that pattern reducing over time.

Q269 Priti Patel: Has there also been, in relation to that, a reduction in the number of administrative errors on the IPSA side as well, because obviously MPs have been going through their learning curve, they were making errors, IPSA made errors as well, but since the system has moved on, have the number of errors gone down on the IPSA side?

Andrew McDonald: If we distinguish two things. First of all, in terms of errors of publication, there are 12 since the system started. That is a remarkably good record. In terms of validation, our record in terms of accuracy has equally improved through that time.

Q270 Priti Patel: Claims are published on a bi-monthly basis, and I think we are awaiting another set to be published quite soon. Do you believe that this system of publication allows members of the public to make meaningful comparisons between Members of Parliament within the region or across the country? I say this very much within the context that we took evidence earlier from the Hansard Society, who referred to the fact that the public can read things about Members’ claims but without the context they lack the understanding to get a full view as to what this means basically.

Sir Ian Kennedy: When we dealt with this point last time-it is a well taken point, if I may say so-what we thought would allow for the kind of overview is the annual publication. We have only been going a year, so there is only one year, but all things being equal, as one carries on, one is going to get the annual report, rather like an annual audit, and everybody can, as it were, look at that. Meanwhile we have the bi-monthly publication. It is said by some, "Why bi-monthly, why not quarterly?" on which we do not take any particular theological view. What we do say is that we have examined very carefully, as we are obliged, by reference to the proper use of funds, whether it should be publication in the instant, as it were, or alternatively six-monthly. We have examined both of those, and as regards the publication instantaneously, perhaps Andrew could comment further on that.

Andrew McDonald: A rolling publication would be extremely expensive, especially if it were to include the process of checking back with MPs whether or not the data they are about to release is accurate. Monthly publication, if we take that as perhaps a more viable option, would be about 10% more expensive than the bi-monthly system we operate at the moment. The board has taken the view that it is appropriate to stick with the bi-monthly publication cycle. As Sir Ian says, there is no theological position being taken here; it is a judgment call on frequency between what is appropriate to get the data out into the public with some regularity without holding it all back and then making a big event about its publication once every year or so.

Sir Ian Kennedy: It has become increasingly routinised. It is now understood by MPs, and the iterative process before publication we regard as very important. Rolling publication would not allow that, or some would come onstream more quickly than others, because you would still be in a conversation with one MP but not another, so that is unsatisfactory. We do not want to be in a position where the publication becomes another opportunity for some kind of blood lust by whomsoever, so bi-monthly is, if you like, a compromise, which gets us into a routine but gets the information out. On your well taken point about the fluctuations and hiring staff here but not hiring staff there, we are aware of that and that is what the annual publication is intended to do.

John Sills: You mentioned, for example, the regional context, which I agree is very important. Just to take one example, a Scottish MP is going to have very high travel costs and we are looking, I think, at seeing if we can make some changes to the way you can search the data and so on. That is going to take a little while, but we are aware if we can make it a bit more user friendly it will enable people to do that sort of thing.

Q271 Priti Patel: It just seems there is this huge issue about public perception and public confidence. It sounds to me like there could be an opportunity to increase the amount of information and to boost public confidence; transparency is clearly there and obviously you are working on more transparency, but it is the context-contextualising the information-that helps to explain why claims are of a certain nature.

Sir Ian Kennedy: Absolutely. One of the conversations we had with the Public Accounts Committee, with Amyas Morse sitting alongside, was about whether there might be introduced some mechanism whereby we say that this is the bi-monthly publication and all of this was a legitimate kind of signing-off of the audit. There is a downside to that, that claims were not paid, which might provoke someone running after that particular hare, but that is something I immediately undertook to take back and see if we can devise a way whereby not just annual, but bi-monthly we can, if you like, editorialise without editorialising.

Q272 Priti Patel: Finally, if I may, Sir Ian, on your point of blood lust, there is still a general interest in reporting on Members of Parliaments’ expenses. Maybe it is too early to conclude anything about local newspapers and the impact of their reporting on bi-monthly claims in particular, as well as the impact on Members of Parliament, but because of the microcosm of bi-monthly claims, there could be a bit more forensic analysis in the press. Do you have any analysis of whether that is putting Members of Parliament off making claims?

Sir Ian Kennedy: As regards the last point, I do not have that evidence. We have categorically said we would wish MPs to claim for that which they are entitled, and I mentioned last time that we resisted SCIPSA’s invitation to reduce the amount of money we were going to ask for because we said that was MPs’ money for them to claim.

We do see, first of all, a dropping off of attention in the national media, there is no doubt about that. We were asking the people who know about these things within SCIPSA only the other day, is there a similar falling away in terms of local press and media, and the sense is that first of all it has become more regionalised: it is the emergence of regional league tables rather than any particular MP. Secondly, there is discernible falling away of interest. We have always taken the view that if we do this routinely-and you are quite right, we have that obligation as well as everybody else to say this is routine, these are legitimate; it is a robust scheme, it is giving assurance-the more one gets used to that and publishes these figures about compliance, something more interesting will appeal to the local press.

Chair: Edward, do you want to just ask a few questions on bureaucracy?

Q273 Mr Leigh: You say that IPSA, in paragraph 68, is able to measure how long MPs spend on the online system before submitting their claims. Do you have any evidence on other parts of the submission process, how much time MPs spend on, for instance, consulting the rules, clarifying issues with IPSA by email and phone, or time taken by online crashes, or duplicating the whole online process with a paper-based system as well, or time taken away from position; can you measure all that?

John Sills: First, we have the NAO evidence on that which, as we said in the paper, would suggest that it took 51 minutes per claim on average, the online side 13 minutes per claim; that leaves another 38 to do some of the things that you suggested there. The second answer to that question would be again through the user survey that we are planning that will give us, I hope, a better understanding about those issues.

Q274 Mr Leigh: Does that worry you, the length of time?

John Sills: Yes, we want to make it as short as we can, obviously, but in terms of the bit we can control directly, which is the online side of it, it is 13 minutes.

Q275 Chair: Do you just want to say a little bit more about that? You are not just controlling the 13 minutes online; you are controlling the entire expenses system and payments system and checking systems, and publication of systems, I just wonder if you want to expand a little bit on that. I just felt that was an attempt to minimise it to 13 minutes.

John Sills: That is just the online expenses, submitting claims. It is just that piece. As I said, if you take the NAO figures and reduce them down to average minutes per claim then it is 51 minutes.

Q276 Chair: I am sure you would not wish to create the impression that the only bit that you can control is the 13 minutes, that was all I was inviting you to-

John Sills: No, it is just that one element that we are able to measure directly.

Q277 Mr Leigh: A lot of the 51 minutes, just from our personal experience, is dealing with the online system and the complexities of it. I know we have been over this before but it is worth emphasising, as it is a very important point. I thought the original point of the online system was that you could publish in real time, and I can understand that, but you cannot do that because you have to redact for security reasons people’s private addresses and things. I know we have been over this before, but I am still struggling with the reason to have quite a complex online system and a paper-based system at the same time. I quite understand having a paper-based system because, of course, if you claim for a gas bill you submit the gas bill, but I am still struggling with why you have to have an online system as well, which is often difficult to cope with, given that you cannot publish in real time. I do not see the point of it, but perhaps you can enlighten me.

Andrew McDonald: Two points that might help. First, the online system is not something that is uniquely of our creating. It is a system that is in place in organisations employing thousands of staff. We have evidence of 1,500 organisations that use the same system. It is not a peculiar creation of our own; it is one of the standard market products. In terms of the amount of time that MPs use to submit expenses, aside from the time spent online-and if you look at a 12-week moving average, the amount of time spent online has reduced since the system was introduced-presumably similar activities were going on under the previous system, so I think one has to ask what is the comparator, because claims had to be prepared and lodged with the Fees Office under the old system,

Mr Leigh: A paper-based system .

Andrew McDonald: It still required the collation of evidence, submission and discussion with the Fees Office.

Q278 Mr Leigh: Nobody is denying that. If you claim for something you submit an invoice. Anyway I think we have gone as far as we can on that.

Sir Ian Kennedy: If I may, Chairman, there is a degree of unreality in picking that figure out, as if in the previous system, you could magic it away and it did not involve anything. In fact we know-and you have experience of this-you would phone the Fees Office, you would have the green book, which you would have to peruse, and you would seek advice on it. No one, to my knowledge, has ever calculated the time taken to deal with that, but I venture to suggest that it is not a dissimilar time to the time currently taken sending an email or looking at our guidance. Then there is the online procedure, which frankly is, as some of your previous witnesses have said, arguably a cheaper system, a more modern system, and furthermore reduces the risk of error, which is very important, given the need to preserve reputations of MPs. It would be pretty awful if pieces of paper got lost or the wrong thing was published. With the online systems, as Andrew has already indicated, in many, many, many thousands of claims published we have 12 wrong and in each case we corrected it very quickly. That is 0.2%.

Q279 Priti Patel: Just very quickly on the electronic system, with the IPSA system, has some work been done to compare it to another system, like a corporate system, an SAP or something like that, in terms of the time it takes to process a claim?

Sir Ian Kennedy: LWT is a very good example, as it uses exactly the same system, but the time is a little bit difficult to compare, because you always have the manager interspersed between the claimer and the ultimate paying system, so that adds time, but it is the corporate mechanism for assurance that we do not have. We rely upon on you and then on ourselves. It makes it more efficient.

Chair: Thanks very much. Nick, would you like to pick up on the NAO report?

Q280 Mr Raynsford: Yes, I did say I would come back to the NAO report. When some of us read it we felt they had taken a fairly balanced view of the subject highlighting some positives and some negatives. When I look at your evidence it does appear to be, shall we say, slightly less balanced. You focus a lot on the positive comments from the NAO and there is very, very little in your evidence to us about the negative points made by the NAO about it, so why is that?

Sir Ian Kennedy: If that is the impression you gain, that is the impression you gain. Certainly, as I said to the Public Accounts Committee, which was the body that was receiving the NAO’s report, those matters that the NAO pointed to as worthy of being further improved we would go away and improve them, of course we would. We are working on that as we speak.

John Sills: Can I add to that? The issues raised by the NAO, such as whether MPs are subsidising, how long it takes, all those kind of things, we have addressed those. In one of the annexes, for example, we went through every single question that you very kindly gave us in advance last time, and I think those questions pretty much cover the issues raised by the NAO, the negatives as well as the positives.

Andrew McDonald: And in the standard way we will be submitting our reply to the Public Accounts Committee next month, dealing with each of those recommendations made to us.

Q281 Mr Raynsford: In the last session when you were here, the Chairman asked you whether there were any points in the NAO report that surprised you. You responded to him by saying close to a third of MPs were rather in favour of the old system and could not understand why there was a need for a change. Are you aware the NAO figure was actually 23%?

Sir Ian Kennedy: I thought it was 33%. If that is the case, I apologise. But I would say in my defence, Mr Raynsford, it is important to know that I had 24 hours’ notice of all of the questions that were being raised, so the capacity for me to remember every detail is beyond me. Had you come back to me immediately and pointed that out I would have apologised at the time.

Q282 Mr Raynsford: But is it not slightly odd that an organisation that has a role to improve public confidence, and you have emphasised this in response to earlier questions this afternoon, should be highlighting the 23% or 33% saying, "No need for change," and not highlighting the fact that 70% of MPs agreed the previous system needed major change, and that was in the NAO report.

Sir Ian Kennedy: Mr Raynsford, with the very greatest respect, you asked me whether I was surprised by anything and I replied that I was surprised at a significant proportion of those responding, despite the history, which had only been 18 months previously, still thought there was nothing wrong with the old system or it was worth reintroducing. I was surprised by that. That has absolutely nothing to do, with the greatest respect, to the negatives or positives of the NAO report.

Q283 Mr Raynsford: I think it does.

Sir Ian Kennedy: All right, well we will differ.

Q284 Mr Raynsford: You reply expressing surprise based on incorrect reading of the evidence and you fail to have regard to the evidence in that report that says that 70% of Members of Parliament said there was a need for a major change. Do you not think that is slightly odd? Does it not imply a lack of balance?

Sir Ian Kennedy: No, I have already answered the question. I am not going to answer it again, save to say you asked me what surprised me. If I got the figure wrong, I am not surprised by that; I apologise for it, but that was what it was about. If you want to make the larger point of why we were stressing the positives and not the negatives, I do not think that is a fair assessment of what we have done.

Q285 Mr Raynsford: Were you surprised at some of the other points in the NAO report? 85% of MPs saying they had to spend time dealing with expenses that was hindering them from doing their jobs, 90% saying they were having to subsidise their work. Weren’t those causes of surprise?

Sir Ian Kennedy: We had enough information to suggest that that was a widely felt view. We were working to deal with that.

Q286 Mr Raynsford: It was no surprise therefore that a very high proportion of MPs, according to the NAO’s report, were finding it at the very least an obstacle to the efficient discharge of their responsibilities, which is one of your responsibilities, one of your principles, to assist MPs in the proper efficient discharge of their public responsibilities?

Sir Ian Kennedy: Let’s go back and say that that is not our principal obligation, as you describe it, but I will not pursue that for a moment.

Q287 Mr Raynsford: We had a discussion about that earlier-the principal obligation.

Sir Ian Kennedy: Yes. If you ask me was I surprised, I have already said that we had enough understanding of where MPs were as regards the system in its early days, this is some time ago, not to regard that as a matter of surprise, but you should not deduce from that that we were unconcerned by it; quite the opposite, because it was a matter of concern and it remains a matter of concern.

Q288 Mr Raynsford: But it is not covered in your evidence to us.

Sir Ian Kennedy: Sorry?

Mr Raynsford: It is not covered in the submission you have just presented to us. Those issues are not covered.

Sir Ian Kennedy: With the greatest respect, I think the whole tenor of what we are saying is how we are seeking to restore or work towards the restoration of public confidence in MPs, which is in the interest of MPs, while at the same time seeking to devise a system, which is robust, gives assurance, is transparent and within that context allows MPs to do their job.

Andrew McDonald: If I may, the evidence that we were aware of, those views we were acting on, was on the way in which we have tackled the service improvements to MPs, not least the rollout of the changes a fortnight or so ago, making it easier to claim in respect of mileage, equally making it easier to purchase rail tickets. So there is evidence that we are aware of that concern and we are acting on it.

Chair: Thank you very much indeed for coming to see us again. It is very much appreciated. I know you are very busy getting schemes up to date and trying to make improvements, so it is very much appreciated. That is the end of the session.

Prepared 10th November 2011