Kelly Report into MP Expenses – Summary of Changes

By Matt Wardman • November 5, 2009

The Kelly Report has been published this week, and like the Legg Report from a few weeks ago, the Kelly Report is a further step in the right direction.

You can download PDF versions of the Full Report, or the Executive Summary. I have included a table summarising the main proposals below.

To my mind the basic principle that must underlie any new system, and which must be pursued relentlessly, is the one for which I argued back in February 2008:

I’d like to see the arrangents for politicians be as close as possible to those experienced by the normal population

The Kelly Report has much that is good in the detail, for example in the limitation of food claims to MPs staying in hotels, and that receipts are now required. But there are a series of areas where The Kelly Report has come down on the wrong side of the line, or which have simply been scoped out of the report.

For example, on many of the measures the Kelly proposal is that changes should not be implemented until the Election after next in 2012 or 2013. The effect of this is that those MPs who were part of a corrupted system get to walk away with the benefits of abuse of, and laxity in, that system. This is simply wrong.

Another mistake is Kelly’s proposal to allow a Resettlement Allowance for “Redundant MPs” of up to 9 months’ salary, which will replace the existing allowance of up to 12 months’ salary. When you consider that staff working for MP’s, who lose their jobs at the same time, get little more than the Statutory Minimum Redundancy pay paid from the Winding-Up allowance, the glaring injustice of the existing and proposed arrangements is clear.

A further scoped out area is Expenses claimed before 2005. The Legg Report only considered receipts during the period from 2005.

In one of his more despotic acts, the disgraced Speaker Michael Martin authorised that Expenses’ records from before 2005 should be shredded. A crucial point is that Martin did this while a High Court Action was in progress about public access to details of MPs Expenses. In my view that was an act of moral (though not legal) contempt of court, and is just one more reason why ex-Speaker Martin is not fit to have any place whatsoever in public life. These must be addressed, and monies misappropriated from the public purse recovered somehow.

We can expect to see MPs and some commentators trying to use this as a lever to “draw a line under the MPs’ Expenses Scandal”, just as happened with Legg. This cannot be allowed to happen.

In reality, there are many, many more questions still to be addressed. And it will fall to the public to make sure that the process of scrutiny continues. The summary of the Kelly Report Findings is below the fold.

Summary of Kelly Report Findings

Hat tip to John Mann MP.

Accommodation
Past arrangements	Interim measures	Proposed future system
MPs were able to claim up to £24,222 towards accommodation costs. Claims could include mortgage interest, rent or hotel costs.	Claims can include mortgage interest, rent or hotel costs up to a maximum of £1,250 per month.	Support will only be provided for rent or hotel costs. MPs will have accommodation directly provided by the new regulator through an agency. Bills will be paid directly by that agency. Under transitional arrangements, MPs with existing mortgages will be able to claim for mortgage interest until the end of the next Parliament.
MPs could claim not only for basic costs such as utilities, council tax, and building and contents insurance but also for services such as cleaning and gardening and for items such as white goods.	MPs can only claim for costs such as utilities, council tax, service charges, and building and contents insurance.	MPs will only be able to claim for basic costs such as utilities, council tax, and contents insurance.
MPs could claim for the cost of maintaining their properties, including any repairs or redecoration. Claims could not in principle be made for anything improving the capital value of a property.	MPs can no longer claim for the costs of furnishing, repairs, or maintenance.	Interim arrangements to be made permanent.
MPs could claim £25 a night for food without needing to provide receipts when staying away from their home.	MPs can claim £25 a night for subsistence without needing to provide receipts when staying away from their home.	Only MPs staying in hotels will be able to claim for the costs of meals up to £25 a night. Receipts will be required.
MPs with constituencies in outer London can claim for the cost of a second home if they so wish.	From April 2010 MPs with constituencies in outer London will no longer be able to claim for the cost of a second home.(Permanent change)	No MP who represents a constituency falling within a reasonable commuting distance of Parliament will be eligible to claim for the cost of a second home.
MPs did not have to pay capital gains tax on the sale of second homes.	MPs should pay capital gains tax on the sale of second homes funded by the accommodation allowance.	Any capital gain made during the transition period and attributable to support from public funds should be surrendered to Parliament.
MPs who do not claim for the cost of accommodation instead receive a £7,500 London costs allowance	No change.	London costs allowance should be reduced to the level recommended by the SSRB (which would currently be £3,760). There should be a higher allowance for those with constituencies outside the Greater London area who do not receive taxpayer funded accommodation. Commuting MPs who work late can claim for cost of travel home or overnight hotel.
In practice though not in principle MPs could allegedly change the designation of their main and second homes to maximise personal benefit.	No further changes to be made to designation of second homes in 2009-10, with a transparent appeal procedure for exceptional cases.	Designation of second homes to be determined in line with rigorously enforced objective rules policed by the new regulator.
Ministers who have the use of grace and favour homes in London can claim the costs for a second home in London as well.	Ministers living in grace and favour homes in London can no longer claim for the costs of a second home in London	Interim measure to be made permanent.
MPs who share accommodation can each claim the full allowance.	MPs who share accommodation as partners are limited to claiming a maximum of one person’s accommodation allowance between them.	MPs who share accommodation as partners should be entitled between them to claim up to a limit of one individual ceiling, plus one-third.

Staffing
Current arrangements	Proposed future system
MPs may currently claim up to £103,812 to employ staff to support their parliamentary duties.	No change.
Staff are appointed and employed by MPs.	Staff will continue to be recruited by MPs, but must be appointed through an open and transparent process.
MPs may employ members of their own families using public funds.	MPs will no longer be allowed to use the staffing allowance to fund the employment of family members. Transitional arrangements will allow existing family members to remain in their posts for one more Parliament.
It is a breach of the House of Commons Code of Conduct for MPs’ staff to be used in support of party political activities.	It remains a breach of the House of Commons Code of Conduct for MPs’ staff to be used in support of party political activities. But there should be a code of conduct for staff, and MPs should sign an annual declaration confirming that they have abided by the code and used parliamentary resources appropriately.
Pay ranges are set centrally, though MPs have discretion as to where to place staff within the pay scale. MPs have discretion to award bonuses up to a certain limit.	MPs should continue to set their staff’s pay in accordance with central pay scales. Guidance on good employment practice should be issued by the new regulator.
Staff receive their redundancy pay from the winding-up allowance.	Staff redundancy pay should be provided centrally by the new regulator and the size of the winding-up allowance reduced pro rata. Redundancy pay for MPs’ staff should be paid centrally by the new regulator.

Administrative and office expenditure
Current arrangements	Proposed future system
MPs can claim up to £22,293 to meet office running costs and pay for additional services.	No change.
MPs can rent offices and pay for services from party political organisations, provided that the political party does not benefit. An independent valuation is required prior to renting from a party political organisation.	New audit arrangements should ensure that parliamentary funds are not used either intentionally or inadvertently to give rise to material benefits for political parties. An independent valuation should still be required prior to renting from a party political organisation.
On leaving Parliament MPs retain ownership of office equipment purchased with public funds.	Equipment purchased using public funds should remain the property of Parliament.

Communications
Current arrangements	Proposed future system
MPs may claim a £10,400 a year communications allowance to communicate proactively with constituents.	No communications allowance. Proactive communication must be paid for out of the existing administrative and office expenditure budget. Current policing arrangements should continue to apply.

Travel
Current arrangements	Proposed future system
MPs may currently claim for all costs of travel for parliamentary duties between home, constituency, and office.	MPs will no longer be able to claim for reasonable commuting costs and must pay for these in the same way as their constituents. No MPs can claim for the cost of journeys to a home outside the constituency or London.
MPs may travel first class.	MPs should always consider value for money in purchasing tickets. They may still be able to claim for first class rail travel where they can justify it, but can only claim for economy class travel on flights within the UK or Europe.
MPs may claim for the cost of family travel up to a set limit.	MPs may continue to claim for the cost of family travel up to the limits currently in place. However, they may no longer claim for first class travel for family members, and may only claim for family travel during recess in exceptional circumstances.
MPs do not have to submit supporting evidence for journeys below a certain de minimis level, depending upon constituency size.	MPs should submit receipts and details of all journeys, to be published online. Where appropriate, class of travel should also be published.
MPs may claim up to three return visits a year to national parliaments of Council of Europe member states, and EU institutions and agencies. For each visit the Member may claim for two nights’ subsistence.	No change.
MPs may claim for the cost of staff travel up to a set limit.	No change.

Leaving office
Current arrangements	Proposed future system
MPs who lose their seats or stand down at a general election receive a resettlement grant of between 50 and 100 per cent of annual salary.	MPs who lose their seats at a general election should receive one month’s pay for every year served up to a maximum of nine months salary. MPs who stand down at a general election should receive eight weeks’ pay from the date of the general election in lieu of notice to cover time spent winding-up offices, dealing with staff, and transferring casework. Loss of resettlement grant should be one of the sanctions considered as a penalty for MPs found guilty of breaching the Code of Conduct.
MPs may claim for the costs of a winding-up allowance to meet necessary expenditure incurred after leaving office – e.g. to settle outstanding bills or pay staff who have been given notice.	No change to claims for the winding-up allowance. The amount claimable should be reduced to reflect the fact that redundancy pay for staff should in future be paid out of a central budget.

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Categories: All WW, Comment, News - Current Affairs, Parliaments, Politics
Tags: john mann mp, kelly report, legg report, mp expenses

About the Author

Matt Wardman

Matt is an internet consultant, commentator, freelance writer and Project Manager based in the UK. He is available for hire. Matt edits the Wardman Wire, and writes at Poligeeks, Total Politics, and occasionally in several other places.

2 Responses to “Kelly Report into MP Expenses – Summary of Changes”

Bernard Keeffe
Fri, November 6, 2009 at 12:09 am | Permalink | Reply

MPs’ pay is an absurd anomaly compared with local authority salaries and maintenance expenses.
The head of the children’s’ department of the social services in a London Borough (Sharon Shoesmith) received a basic salary of £133k, more than double the salary of the MP for the co-terminal constituency. Add the following maintenance costs that automatically go with the job:

A fully equipped office – rent, equipment, furnishings, separately established would cost in excess of 20k
Staff – secretary with office, equipment and salary in excess of 35k
Other supporting staff costs ?
Provision of a car with expenses – in excess of 10k
Provision of a mobile phone as well as landline phone costs – 1k
Other expenses – 1k

Total support costs in excess of 67k
Add to salary of 133K
£200k with perhaps London Weighting of £4k
Add pension contributions and SS payments

Here’s another in Sunderland
Sunderland City Council

“Sunderland’s place-shaping is gaining momentum like never before. One of only 13 councils to have been awarded 4 stars for seven years running, we are constantly striving to build on our successes and are committed to shaping places and improving the lives of all our residents.

To achieve our ambitions, we have created six new opportunities as we put the fresh thinking that comes with regeneration – not just of the physical landscape but of communities too – top of our agenda. So come and live our bold vision as you inspire it in others.”

Head of Street Scene £71-85K

It is a secure position not subject to the vagaries of elections. Presumably there is aformula for severance pay.

That position of a local authority official is replicated across the country – it is beyond reason that this situation is not subject to the same scrutiny as that of the MPs.
Matt Wardman
Fri, November 6, 2009 at 12:20 am | Permalink | Reply

I’m not sure what your point is here? In my experience local authority officers are subject to pretty extreme levels of scrutiny compared to MPs.

Sharon Shoesmith ran a budget of £100m and 1000 staff, which is more akin to a job one below Cabinet Level than a backbench MP.

MPs by comparison run about 5 staff, and a budget of £300-400k or so.

She did not have the opportunity to divert her support budget to pay excessive wags to her recently graduated daughter (cf Nadine Dorries etc), and she was subject to the full enchilada of regulations preventing local authority staff using their budgets for personal benefit.

Nor was she able to claim 20k for the repair of the roof on her parent’s house (cf Margaret Moran).

What are you saying?