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MPs' Expenses and Allowances

With permission, Mr. Speaker, I would like to make a statement. Today the Committee on Standards in Public Life, under its chair Sir Christopher Kelly, has published its report setting out recommendations for a new framework for parliamentary allowances. People in this country need to be able to have full trust and confidence in their Parliament. What happened under the old allowance system has knocked that confidence. We come into Parliament not to serve our own self-interest but to serve the public interest, but that is not the impression that the public have. We have all acknowledged that and have recognised that to ensure that we have a system in which everyone can have confidence, we need to take action. We have already made changes and the Kelly report is another important step on that path to restoring public confidence. Before I turn to the Kelly report, I would like to remind the House of the action that we have already taken. To deal with the past, we are ensuring that any overpayments, including those which were simply a mistake, are paid back. That is the work that the Members Estimate Committee, which is chaired by you, Mr. Speaker, commissioned from Sir Thomas Legg. We have already taken action to change the current allowance system. In order to allow for the period while wholesale reform of our allowances is being considered, we introduced interim measures last May to pare back allowances as a result of a meeting of the party leaders and the Members Estimate Committee. Amid the enormous attention paid to past problems, no one should overlook the fact that we have already decided to cap the monthly amount that can be claimed on mortgage or rent; to prevent a Member from changing the designation of their main or second home; to abolish the second home allowance for outer-London Members; and to stop claims for furniture, stop claims for cleaning and stop claims for gardening. Parliament has not sat back waiting for Kelly. The current allowance system is already very different from the one which allowed for the claims that have angered both the public and the House. We have also recognised that for the future, it is no longer appropriate for us to set or administer our own allowance system. That is why in July we passed the Parliamentary Standards Act 2009, which sets up the new Independent Parliamentary Standards Authority, which will decide on our allowances and run the system, so just as we no longer vote on our own pay increases, we will not play a part in deciding or administering our allowances. My right hon. Friend the Prime Minister in March asked Sir Christopher Kelly, the chair of the Committee on Standards in Public Life, to review the system of MPs allowances. I would like to thank Sir Christopher and his committee for the important work they have undertaken, and also to thank all those, including many hon. Members, who gave evidence to his committee. His report was published only this morning, but it is obviously right for the House to hear an early statement and to have the chance to air initial views. MPs representing constituencies outside London need to be able to live in both their constituency and in Westminster because they need to work in both places. We do not want a Parliament where the only people who can come to Westminster as MPs are those who are wealthy enough to afford to pay for second homes out of their own pocket. Nor do we want to undermine the importance of MPs working in two places—the constituency and Westminster. Both are important. Nor do we want to have a situation where you cannot have your family with you if you are an MP. The Kelly report recognises that the allowances are there so that Parliament works properly on behalf of people in this country; the constituency link is sustained; Parliament is not barred to people on modest incomes; and so that Parliament is not barred to people with a young family. The Kelly report acknowledges this. The Kelly report covers 138 pages and puts forward 60 recommendations. Among the key recommendations are two that I would like to draw to the attention of the House. First, on the recommendation that Members should not be able to claim for mortgage interest but only for rent or hotels, the committee recommends that those with existing mortgages should be able to continue to claim for one further Parliament. It recommends that Members should not be reimbursed for the employment of family members. Those who currently employ family members will be able to continue to do so for one further Parliament. Turning to the Independent Parliamentary Standards Authority, the acting chief executive, Andrew MacDonald, has been appointed and has begun work, and you, Mr. Speaker, have just announced that Professor Sir Ian Kennedy has been selected as the new chair-designate of IPSA. I will put the motion to confirm his appointment to the House in the next few days. The other members of the authority will be appointed shortly. The Independent Parliamentary Standards Authority has already started the work of setting up the new allowance regime for MPs. A new allowance regime will be in place to come into effect in the new Parliament, as recommended by Sir Christopher Kelly. In the light of this, the Government welcome and fully accept the Kelly report, which should be taken as a whole. It will be for IPSA to take it forward. This is the approach Kelly's report itself recommends. Until such time as IPSA takes the Kelly report forward, we will retain the current restricted allowance rules and every claim will of course be published and available for the public to see. Because we decided in July that in future we would play no part in deciding our allowance system and that it would be done independently, it does not make sense for us now to vote on the future shape of our allowance system. Instead that is the job of IPSA. After all, that is what we set it up to do. The Parliamentary Standards Act lays down that IPSA must consult MPs and others when drawing up the allowances regime. IPSA will set to work immediately and we expect, following such consultations, it to proceed as quickly as possible to put into effect the Kelly recommendations on allowances. The events that lie behind the recommendations in the Kelly report have caused anger and dismay both in the public and among hon. Members. Our responsibility is to continue to take the action needed to sort the situation out and to make the changes that are necessary. The payback system is under way. The new restrictive allowance system will remain in place. Sir Christopher Kelly has recommended a new framework for our allowances, and IPSA is up and running and will set up the new allowance system and administer it. Sir Christopher Kelly's report is another important step on the road to the public knowing that the allowance system has been put on to a proper independent footing and that we are getting on with our important task of serving our constituents and this country. This House of Commons has yet to fully resolve this damaging episode. But with clear acknowledgement of the public anger, with the firm action already taken, with the Kelly report and the establishment of the Independent Parliamentary Standards Authority, this will be resolved. I commend this statement to the House.