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House of Lords: Financial Support for Members

I do not think that it is just a heavy cold, for which I apologise, that makes me dislike this Motion so much. I wish that we were being asked simply to take note so that our views could be heard before we make commitments that we may regret. When the noble Baroness the Leader of the House comes to speak I hope that she will be able to persuade me that we are not putting our heads in a noose. She has given us definitions of "architecture" and "principles", which I can completely accept. But she did not reassure me that we would be able to change the damaging proposals in this report, which were described by my noble friend Lord Strathclyde as the gargoyles. I will be seeking reassurance from the noble Baroness when she winds up that there will be real scope for the ad hoc group to have sufficient flexibility in preparing the proposals for implementation to ensure that they can be made fair and workable. For a good many of us, such assurances will be important. The Cockburn review and our affairs are linked by an umbilical chord to the Kelly report. For that reason, I will start with a few words about the conduct of MPs and the conclusions of Sir Christopher Kelly. Those of us who were MPs when pay and the allowance system made impossible the kind of abuses that have occurred feel as angry as any member of the public about what has happened. Having said that, I fear that the remedies proposed will damage our system of parliamentary democracy. My fears are exactly the same as those set out so admirably on 23 November by my noble friend Lord MacGregor of Pulham Market during the debate on the Queen’s Speech. Like him and the writer of the Times editorial on 5 November, I regret that the Kelly report failed to make any comment about the need to, ""attract and retain people of high professional standing"." Sir Christopher Kelly, with his denial that salaries would need adjustment if allowances were to be slashed, his view that other employment should be limited in scope and his failure to understand the effect on family life of his rules about the kind of accommodation that will be permitted, seems blind to the consequences of his proposals. We need to consider the wise comments of Sir John Baker, the former chairman of the Senior Salaries Review Body, in his powerful letter to the Times on 6 November. He wrote: ""Once the new expenses regime is in place and the last repayment made … there should be a substantial increase in MPs’ pay no matter what the ‘court of public opinion’ or tabloid headlines may say"." Unfortunately, we are in the middle of a financial crisis and public sector pay freeze, which is the same situation as that which led to the introduction of an allowance scheme to avoid putting up the pay of MPs and inexorably on to the disaster we have witnessed. One way out would be to accept the good sense of Sir John Baker's view, which is: ""We need the best MPs, although ideally a lot fewer of them—450 should do it"." The solution may indeed be far fewer MPs who are properly paid, because, as Sir John went on with words that apply equally to this House, ""we need good-quality people, capable of meeting the policy challenges of our complex society, of producing legislation that is coherent, thought-out and considered with care, and of holding the executive better to account … the policy objective should be fewer but better: that means paying the right price, not settling for shoddy goods in the bargain-basement"." That leads us rather neatly into the needs of the second Chamber. The remit for the review stated that the SSRB should have regard to schemes operated in comparable circumstances by other institutions. Mr Cockburn and his colleagues seem to have gone out of their way to obscure the comparison of remuneration levels here with those in other countries, but they provide enough information to make it possible for us, as my noble friend Lord Strathclyde has done, to calculate the numbers ourselves. It is clear that in the Upper House remuneration league, we are in the relegation zone. The report describes the vital nature and scale of the work we undertake, and states that one of the objectives is to help to ensure that no Members of the House are prevented or deterred from playing their part by their financial circumstances. Having stated the objective, the review body then proposes that the amount paid to a large section of this House should be substantially reduced. The proposal that the day subsistence and office costs allowances should be combined and rounded up to £200, with the 40 days allowable for office costs in the Recess removed, is sensible. But although some Members, mainly those living in or close to London and spending little on office costs will be better off, a great many others who claim the overnight subsistence allowance will be big losers. I shall make two observations at this point. Like my noble friend Lord Strathclyde, I am astonished that not a single woman is included among the 10 members of the review body. Perhaps that is why they believe that MPs and Peers should have no family life and be content with a one-bedroom flat. Like the recommendation that Peers should be allowed to travel first class on the grounds that they need to work but should dispatch their spouses to the crowded standard-class carriages, or worse, to share standard-class sleepers, it is just petty and small-minded, but underestimates the contribution made by spouses and the sacrifice they make all the time so that their partners can contribute to public life. It is the kind of attitude that will discourage many who could contribute from doing so. Secondly, secretaries will still have to be paid and office expenses met. I am in favour of the simplicity of a single allowance, but it will be misrepresented as pay. The report misleads by saying that a Peer attending all sitting days would receive a net income of around £30,000 a year, ignoring travel and overnight accommodation. I would wager that Mr Cockburn does not include his secretary’s pay and office costs in any statement of his own net income. I return to the overnight subsistence allowance where the changes are likely to have devastating consequences for many Peers. It is not just that the upper limit of £176 originally set by the SSRB itself is being reduced to £140, but other changes which mean that most Peers will only be able to claim a fraction of that amount. In order to illustrate the effect of those changes, I must beg the indulgence of the House by describing my own situation, which is probably not untypical. I spend four and, when the House sits on a Friday, five days a week in the Lords except for a couple of weeks in February when I am on holiday. I serve on two demanding committees that sit on two and sometimes three days a week and involve reading a vast quantity of paper. In recent years, I have served on the joint pre-legislative scrutiny committees on two important Bills, and I have taken part in the proceedings on a number of other Bills. If my party is returned to government, I will be invited to stay long hours to ensure that its majority is maintained. I travel from my home in Wales, which has been my principal home for more than 30 years except for the eight during which I was a Cabinet Minister when all Ministers were deemed to have their main home in London. Last year, in total and after paying office expenses, I received about £32,500 for my contribution to the work of Parliament and to maintain a home in London. I do not believe that the leader writers, journalists and broadcasters who are so free with their criticisms would undertake my workload for less, or—dare I say it—make a more valuable contribution. As I own our home in Wales, our small house in Battersea, which I paid for with the aid of a mortgage which has been paid off, is in my wife’s name. Under the existing rules I have been able to claim up to £174 per night spent away from the main home, ""towards the costs of maintaining a London residence in connection with … parliamentary duties"." Although Parliament sits for an average of only 150 days a year, we have to maintain the London house for a full 12 months. I do not believe that I or others like me should be deprived of family life for five months out of 12 while we lodge in a club, hotel or one-bedroom flat. My wife and I both contribute to the family expenses and I have been paying all the costs that would be recoverable under the rules now proposed. Under those rules—I am not sure that every noble Lord will have taken this on board—I and others are to be denied any overnight subsistence, by the words, ""rented or owned by the Peer (either singly or jointly) and that he or she is personally liable for the running costs"." If my understanding of those words is correct, anyone in my position will get nothing. There must be a strong case to amend the rules to accommodate family situations of this kind. Even if the rules are amended, Peers owning or renting houses as second homes in London will still have their allowances slashed. Allowable running costs are to be confined to council tax, utility bills, ground rent, insurance, service charges and approved security measures. There is nothing for repairs, maintenance, cleaning, duplicate telephone or internet services or the simple fact that running two homes costs more than twice as much as running one. Then if I attend for 123 days, as I did last year, I will get 123-150ths of that heavily confined list of costs, assuming that the ownership rules would allow me anything. Bizarrely, as has already been pointed out, many Peers who rent one-bedroom flats will be able to claim more than those of us who own houses. The review body acknowledged that there would be Peers who had organised their personal affairs on the assumption that they could use the current allowance system to offset the cost of keeping second homes in London, and that the proposed changes would significantly reduce their annual income. It therefore proposes a transitional arrangement ending after five years. If my situation is at all typical, noble Lords in that position will find their night subsistence allowance cut by around a third in year 1 and by well over two-thirds by the sixth year. That will be pretty devastating for Peers who have organised their personal financial affairs under rules established by the same SSRB that now proposes to tear them up. We will face uncomfortable choices, which may well include selling one or other of our homes or giving up our parliamentary work. It may be said that if older Peers such as me are forced out, that would be a good thing. The trouble is that younger Peers will find themselves in the same situation. If the country wants an effective second Chamber it is hugely important that younger Peers are able to serve without hardship or the possession of large personal wealth. The need for accommodation that caters for family life is even more important in the case of that younger generation. We will hear in the debate of other consequences of this review, particularly from those who are not wealthy but have served with distinction both in the Commons and in the Lords who will now face real hardship as a reward for long and continuing years of public service. The need for transitional arrangements is accepted by the review body. I do not believe that five years is long enough; it needs to be quite a lot longer. The conclusions of the review fail to meet the criteria of fairness. The combined consequences of Kelly and Cockburn will be deeply damaging for our system of parliamentary democracy. They will cause some of the most able members of both Houses to withdraw while discouraging others from coming forward, make membership of the Commons impossible for those with outside employment and the knowledge and skills that they used to bring to it, make membership of both Houses far easier for those with money than for those without, and create a Parliament in which talent is discouraged by low pay and the inability to lead a normal family life. I fear that long after the scandal that stimulated these reports has been largely forgotten, the names Kelly and Cockburn will be remembered for the devastation that they will have wrought. The nation will pay a heavy price for the weakened and undervalued Parliament that they will have created. If, as I hope she can, the noble Baroness who is to wind up, and whose leadership has earned the respect of the whole House, will confirm that in accepting the phrase "the architecture and principles" we are not also accepting the gargoyles—the really damaging proposals—and that there will be sufficient flexibility in interpretation to produce a fair and workable set of arrangements, then, although still anxious, I will feel able to accept the Motion. I will then place my trust in the sagacity and skill of the ad hoc committee.