MPs Expenses and the Budget

Posted by Thomas on April 21st, 2009 — 8:18pm

After a horrible Easter, dominated by the ‘smeargate’ revelations concerning Damien McBride, Derek Draper, and others close to the Prime Minister in Downing Street, the Government has been looking forward to Parliament’s return. This Government has won three elections helped by announcement fever and it hates nothing more than a news cycle it cannot control. The Easter recess was one such news cycle. You can imagine the hundred or so special advisers encamped in the No 10 bunker thanking God (they’ve long lost faith in Gordon) that the Budget was due.

Bad leaks

The Government is trying to regain some control of events. Their new initiative began on Sunday, with the first leaks of the Budget. The Government has slowly leaked almost every conceivable measure included in the 2009 Budget. If the Government were a ship she would no longer be judged seaworthy. The most unpopular measures and announcements were delivered early. First came the Government’s predicted £50 billion write-off of money provided to prop up the banking sector. Then followed the rumours about pensions, with higher-rate taxpayers most likely to feel the pinch as the Government quietly but effectively raises tax on the rich.

Most importantly for the Government and for the future finances of the UK, a further round of leaks suggested that the Government would make £5 billion worth of efficiency savings. This cut in public spending is nothing next to the tax rises that the country can expect in the future, some of which the Government has already announced. But it is a sign of the deterioration in the UK’s finances that a Labour Government has admitted that reigning in public spending is necessary. Though the Government can still not bring itself to talk of cuts but would rather deal in efficiency savings. You can imagine Sir Humphrey chuckling as Darling tells the House tomorrow that the Opposition’s cuts are dangerous for the nation but that the Government’s efficiency gains benefit every citizen.

Good leaks?

The second batch of leaks were not nearly so foul as the initial bundle. The Government intends to extend the stamp duty holiday for properties up to £175,000, in an attempt to stimulate the housing market. The stamp duty holiday should of course be made permanent for sustainable housing projects but a tax holiday is rare for the Treasury to grant so we should be thankful for small mercies. The Budget will also introduce a £1 billion building stimulus, to help the housing sector build sustainable homes by providing credit and financial support. How much of the £1 billion had previously been announced will emerge in the Budget.

The Budget speculation and the subsequent leaks were to be expected. What came as a surprise was the Prime Minister’s announcement on MP expenses.

A Week is a Long Time in Politics

Suddenly, the speculation over the Budget has been sidelines after the Prime Minister made his surprise intervention into the MPs’ expenses row. The Prime Minister was apparently furious that the Government’s efforts to combat the recession and the apparent success of the G20 summit were overshadowed by the expenses row that has engulfed senior ministers like Jacqui Smith and Tony McNulty. After promising to meet the leaders of the main opposition parties to consult, there was an expectation that the affair would rumble along until the Committee on Standards in Public Life delivered its report. Now the Prime Minister has pre-empted that discussion and the Committee’s Report.

What is the Prime Minister proposing?

The main headlines will focus on the replacement of the second-home allowance with a flat-rate allowance based on attendance in the House of Commons. This is a similar system to that used in the European Parliament, and was rejected by a committee of MPs last year. The Liberal Democrats have already come out against the proposal, arguing that it amounts to paying MPs for turning up to work, as well as discriminating against those who are genuinely ill or have heavy constituency duties.

For campaigners like the Taxpayers Alliance, the most welco
me sentence in the Government’s statement is that, “there will now be no second home allowance or claims for food, furniture and fittings, fuel, mortgage interest, rent or council tax.” In the coming weeks, the newspapers and new media may well use this phrase as a direct indictment of Jacqui Smith’s conduct and purchasing choices. Opposition parties are less likely to do so because the publication of expenses in the summer will almost certainly bring further disrepute to all members.

Other measures introduced should receive cross-party support. Denying those who live near London the new allowance but allowing them to claim the London supplement will be popular. Taxpayers have been horrified that the rules allow those who live within 10 miles of Westminster to claim a second-home allowance which is much harder to justify than for those who live a number of hours away. The big question mark to be clarified is the Government’s definition of “within reasonable distance of Westminster”.

As with all Government announcements, the devil is in the detail. The Prime Minister’s proposals are reported to include a measure to deny any new allowance to ministers who live in grace and favour homes. Yet the text suggests that this will only apply to those who take up grace and favour homes. One minor improvement on the current situation is that ministers will be expected to pay council tax on grace and favour homes.

Another measure that is likely to find popular support is the idea that MPs staff will be employed directly by the House of Commons. Employment by the House will include control of contracts and salaries, though MPs will retain control of hiring personnel. After the disgraceful actions of Derek Conway MP the public will be glad to see that the House will have the right to make an independent assessment of any contracts.

The proposed changes will have some strong supporters in Northern Ireland. The flat-rate allowance will presumably have a direct effect on Sinn Fein, who refuse to take their seats in Parliament because they refuse to swear an oath of allegiance to the Crown. The Government will review the application of the allowance to Northern Ireland parties.

A Trap?

The Government has laid a couple of traps for the Opposition. The most prominent is for the Conservatives. The headline proposal to introduce a flat-rate attendance allowance may be controversial and may well be completely unworkable. But if the Conservatives reject the plan, or call for substantial revision, as they are entitled to do, the Government will try to suggest that the Opposition is opposed to reform and that, by extension, they have something to hide. The Government is probably hoping that the Conservatives oppose the plans – Brown appears wedded to painting the Conservatives as the ‘do nothing party’.

The second trap is even more blatant. The Government wants all MPs to publish any secondary sources of income, irrespective of whether this income stems from work carried out as an MP. The proposal includes an attempt to introduce a declaration of the hours worked for the payment received. This is clearly designed to embarrass the Conservatives, many of whom have directorships and non-executive roles which may only require attendance at weekly board meetings. While some former Labour ministers have taken on highly-paid consultancy roles, many of these ex-ministers are retiring at the next election and so can argue that they are preparing for life after Parliament.

Second jobs often have a positive effect on MPs knowledge of the country and makes them less likely to unthinkingly tow the party line. An independent source of income reduces the fear of being deselected b y the party and helps MPs to use their judgement. The Government looks like it is trying to taint those with second jobs in an attempt to tarnish MPs of all parties. Perhaps if more Labour ministers had experience outside of journalism, teaching, and unions, the current economic mess could have been avoided.

Reducing trust in elected politicians will only go so far for Labour. And with the threat posed by anti-establishment parties such as the BNP and the far left, the Government should think twice before condemning all MPs to accusations of being on the take. Let’s hope that the Government has thought through its Budget more careful than its plan on MPs expenses.

Category: Politics One comment »

One Response to “MPs Expenses and the Budget”

  1. Philip

    … tl; dr. Maybe after my exams.

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