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Members' Salaries, Pensions and Allowances

Although the issue of MPs' pay, pension and allowances is a thorny one, I hope that there will be agreement across the House on at least four things: that MPs should be properly paid for the important work that they do; that MPs should be reimbursed for what they spend doing their job, as are people in any other line of work; that as MPs are paid from the public purse, we should show the same discipline in our pay increases as other public sector workers; and that, like everyone else, we should not decide on our own pay and should not vote on our pay increases. I am grateful to Sir John Baker and the Senior Salaries Review Body, whose report the Government published last Wednesday. With its 34 recommendations, it provides the context for today's debate. Let me deal first with the issue of allowances or, as the SSRB rightly calls it, parliamentary expenditure. The report makes a number of recommendations about parliamentary expenditure. They include proposals on expenditure on offices, communications expenditure and expenditure on travel. Many of the proposals raise complex issues, including the proposal for a central system for funding constituency offices and a corresponding reduction in the incidental expenses provision. We therefore propose that they should be referred for further detailed consideration to the Members Estimate Committee, which is chaired by Mr. Speaker and includes Members drawn from across the House. The Committee will have the advice of the advisory panel on members allowances. I am sure that the Members Estimate Committee will be interested to hear hon. Members' views on the SSRB's recommendations. There is one SSRB recommendation on Members' expenditure that I hope that the House can accept today: it suggests that given the big increase in casework that many hon. Members have experienced, staffing expenditure should be increased to allow for the payment of the equivalent of three and a half members of staff, up from three. On pensions, the SSRB proposes that the pension for future Prime Ministers and Lord Chancellors be no greater than the pension provision for Secretaries of State. The Government agree. Furthermore, the Prime Minister and the Lord Chancellor both agree that that should apply not only to future holders of their office but to them personally. On the SSRB proposals on pensions for future Speakers, as retired Speakers are not in the same position as retired Secretaries of State, we do not propose that the House change the pension arrangements for future Speakers. On severance pay, the SSRB makes recommendations to change severance pay for Ministers, so that if they are re-appointed to a salaried Government or parliamentary post within three months of leaving office—the period that is covered by severance pay provisions—they will be entitled to keep only a pro rata severance payment, and should return the rest. We accept that recommendation. I next turn to the question of MPs' pensions. The SSRB has proposed the introduction of a new optional one-sixtieth accrual rate. The Government accept that proposal in principle and are prepared to introduce it, if and when the change can be made as part of a cost-neutral package. The SSRB makes a number of recommendations on parliamentary pensions. They include a 50:50 sharing between Members and the Exchequer of future increases or decreases in pension cost pressures, and restricting the underlying Exchequer contribution to the scheme to a maximum of 20 per cent. of payroll. The SSRB also recommends that there be a review of parliamentary pension provision if the costs rise significantly, such that the 20 per cent. cap on the Exchequer contribution is likely to be breached. The recommendations are consistent with the approach being taken in public sector pension schemes generally. The Government propose that the detail of the arrangements be worked up in consultation with the trustees of the parliamentary pension scheme, chaired by the hon. Member for Bournemouth, West (Sir John Butterfill), to whom we all owe a debt of gratitude. Chairing the parliamentary pension scheme on behalf of all hon. Members and the House is unsung but important work. Once the detail has been worked up, any changes on pensions will have to be brought back to the House for decision. On MPs' pay, there are three issues that the Government have put before the House. First, this year—April 2007 to April 2008—we should not vote ourselves a pay increase that is higher than that for the rest of the public sector. Secondly, we should rescind the 1996 measure that instituted the mechanism for increasing MPs' pay in line with the average increase in pay bands in the senior civil service. Thirdly, in future we should not vote on our own pay increases at all; that should be decided on independently.