How to Control the Parliamentary Pay Pantomime
It is the time of year for MPs to decide how much money we are going to pay them again. The recommendation is made by the Senior Salaries Review body, based partly on comparisons with allegedly “comparable” professions - but it is authorised by MPs themselves.
I remain highly sceptical about claims that MPs are underpaid. I think that all “we must have as much money as them” comparisons (where “them” usually turns out to be a group earning just about the amount that this group aspire to be paid) are more or less a game of charades. It is reasonable to look at salary levels of competitor (not comparator) occupations when a market is operating; not so when there is no direct market.
As it is, the current £60k or so basic salary that MPs earn places them in the top 7-8% of the household (never mind individual) income distribution. I find it hard to see how that level can be justified, given that the vast majority of MPs also receive a sum of up to £22,000 to pay for accommodation in London each year (and a very good final salary-based pension scheme to boot).
Since MPs get to keep the accommodation that has been bought by the taxpayer when they leave office, I see that income as part of their salary package - when it should not be so.
Pied-a-Terre Allowance is more than Median UK Salary
The exact Housing Allowance for MPs - which just pays for accommodation related to the job - was £22,110 in 2006. This is tax-free.
That is perilously close to exceeding the median UK salary - which is around £23,800 in 2007. This is subject to tax, and is therefore less than the above allowance after deduction of tax - which ironically may be used to provide tax-free accommodation for MPs.
When we have MPs who live within an hour’s travel of Westminster receiving significantly more money from the taxpayer each year to pay for a pied-a-terre (which they get to keep) than half of the salaried employees in the country earn for a whole year’s work, there is a really major problem somewhere.
Comparator Occupations
“Comparator occupations” that MPs look to include General Practitioners - and apparently some MPs think that because more money is being paid to Dr Foster down the road, it means that their own status has magically fallen. Baloney.
Meanwhile, English GPs have seen their incomes rise in recent years to levels that make American Doctors jealous. And all as a result of Patricia Hewitt - an MP (and incompetent dolt) - making a dog’s breakfast of GP contract negotiations in England. English GPs now earn between 10-25% a year more than their colleagues in Wales, Northern Ireland and Scotland, for a job that is not very different. As an aside, in my opinion one of the first steps of the next government should be to restore GP incomes in England to a more appropriate level.
I would be far happier if MPs’ salaries were linked to - for example - the 90th percentile of the individual salary profile of the population, which would mean that only 10% of the population earned more.
Time to End the Annual Pantomime
Meanwhile, Dave Cole (and Winchester Whisperer in his comments) has a (to my mind) brilliant idea to dispense with the annual bunfight by setting MP salaries at election time, and then increasing them in line with the consumer price index (or average earnings index) in between.
I like the first of these ideas, and would accept the second as a better solution than the current arrangements.
Dave highlights an interesting precedent from Enoch Powell:
I find the Enoch Powell brand of politics somewhat distasteful, but there is at least one area where he may have been onto a good idea. Whenever a pay rise came round, he turned it down until he was re-elected, apparently on the basis that he had been elected to do a certain job at a certain price.
and also North America:
The Twenty-Seventh Amendment to the US Constitution provides that
No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened.
What a good idea.
My Take
I’d favour ending the annual pillorying of MPs, but I would want to see a “spring cleaning” of the system first.
That would specifically require:
- A full stop to the activity of MPs profiteering (*) from accommodation provided “for work” paid for by the taxpayer. If there is any profit, it is ours - not theirs. There are several ways to achieve this, such as handing over any increase in value of the pied-a-terre to the Treasury, or for MPs to have use of publicly provided flats.
- An end to the “competitive bidding” for salary increases by a link to the national income distribution. That is still not perfect - but it would be an improvement.
- Disclosure requirements on expenses to align with those typically used elsewhere in the economy.
And I’d like to see specific policies on salaries published in party manifestos every election.
(*) Profiteering may seem to be harsh word, but I use it because that is what the current arrangements amount to: profits being made off the back of an “accommodation allowance”.
The 90th percentile, according to Snow pere et fils last night, would give MPs a salary of £46K. I don’t think they’re going to vote for that big a pay cut.
I saw the program - brilliant. I thought that it was about £50k before he quoted the number.
My opinion is that we all imagine other people earning far more than they actually do, and that we need to see a lot more realism, and when that is combined with a culture of lavish public expenditure - and politicians judging their success on spending not achievement - we have a problem.
Personally, I think that £46k (or even £50k) would not be unreasonable, when it is combined with paid acommodation in London and other elements of the package.
I’m really not sure of the best way to handle differentials between professions, apart from a strong preference
And I’ll continue blogging about GPs because the situation is crazy - any average GP is on a level with the Chief Executives of Local Councils for medium sized cities who have 1000s of employees under their management.
A very interesting and thought provoking piece, Matt. So much so, I have given my pennies worth in my late lucnh briefing at the poliblogs. I have to say, I don’t entirely agree with you on this one…
I’m having an interesting debate
over on Dave Cole’s blog.
I’m not absolutely sure where I stand on the comparator thing - beyond being sure that it can make things easy to manipulate.
My outrage with English GPs and the BMA continues unabated, however.
Matt
I’m having an interesting debate
over on Dave Cole’s blog.
I’m not absolutely sure where I stand on the comparator thing - beyond being sure that it can make things easy to manipulate. Also, I think I was a little harsh on MPs’ good consciences. I wondered about re-editing, but decided that a distinctive line made for better debate in this case.
My outrage with English GPs and the BMA continues unabated, however - and particularly with any MPs who used that particular comparator in argument.
Matt
I have sympathy for you view on the GP issue - but who wouldn’t have said yes had they been offered such a massive pay rise?! To take it away now would be very damaging indeed and I wouldn’t like to guess what the fall out would… one for Dr Crippen maybe?
On the GPs I’d propose taking at least part of it away, because not to do so will create even more damage - not least from the “we want as much as them” effect, never mind what this is doing to the Scottish, Welsh and NI GP markets who make 10-25% less, and the loss of services where the extra money could have been spent (currently headed for £2bn since the contract came in).
I think the fallout would be worth taking, even if it resulted in a salaried service.
I would probably advocate that GP incomes in England should be aligned with those in the other countrys of the UK - and it needs to be a decisive action not a 6 or 7 year income freeze.
We probably need to talk about “incomes” not “pay”, as GPs are self-employed.
Personally I think a whole lot more needs to go into the melting pot - and we need a significant rebalancing of the NHS away from domination by the medical side. And we need to see a reform of the centralisation.
>who wouldn’t have said yes had they been offered such a massive pay rise?!
Hmmm. Those who looked realistically in the longer term.
If I do a consultancy job at a rate of £800 a day when the market rate is £400 (say), and the customer manager changes to one who knows what they are doing, I have lost out in the longer term.
That is where I think we are with GPs.
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