Parliamentary Expenses Woe
July 3, 2008
YET MORE PARLIAMENTARY EXPENSES WOE
How can Parliament credibly regulate and legislate when it so palpably fails to put its own House in order over MPs’ allowances and expenses?
In the aftermath of high-profile revelations about the blatant misuse of public money by MPs, the Speaker set up a Committee in February charged with a “root and branch reform” of allowances. After four months of deliberation this committee of senior MPs has come back with a programme of proposals that is little more than a cosmetic exercise in “business as usual”.
It substitutes the discredited system of an Additional Costs Allowance (ACA) (tolerated only so long as a lack of transparency and public scrutiny could be guaranteed) with a new system that locks in the culture of secrecy.
Almost miraculously, by this sleight of hand, the Speaker’s Committee has contrived to propose a new “Overnight Expenses Allowance” that represents even more of a rip-off to the long-suffering tax payer. The most important thing lacking is transparency. In essence, this Committee of senior MPs has firmly stuck two fingers up to the general public.
It should have been obvious that any step short of abolition of a Second Home Allowance would result in very little confidence being attached to the Speaker’s Committee Report; such is the public dismay and disgust over every new revelation that has been faithfully reported in the press in recent months. The constant refrain in newspaper coverage is that “there is no suggestion any rules have been broken”. This surely is the point – the regulations surrounding payment of allowances and expenses remain far too vague and need transparent tightening.
It is perhaps slightly easier for me as one of the 26 London MPs who cannot claim ACA to take a dispassionate approach. However, it seems to me that most MPs simply fail to understand the level of public disbelief at the stream of revelations over the extensive enrichment of parliamentarians courtesy of the allowances and expenses system. All of this has grown like topsy over the past decade as a result of parliament’s repeated reluctance to bite the bullet and increase the MPs’ headline salary.
Indeed even this week the Prime Minster continues to grandstand, by publicly criticising the proposal from an independent body to raise the MPs’ headline salary and put a mechanism for independent future review in place, yet at the same time turn a blind eye to the continued scandalous abuse of the current system. Instead, a culture of cynicism has grown up with an understanding that some of the burgeoning allowances could be siphoned off as the equivalent of salary. This lies at the heart of today’s problems. The preferred option of an “Overnight Expenses Allowance” signifies just more of the same – a different name but the same rip-off to the tax-payer.
The general public, in my view, fully appreciate that there are expenses properly incurred in living away from home. The electorate understand the need for those MPs representing seats more than a commuting distance from London to have a second home.
In short, the electorate’s understanding (rightly, in my view) is that public money should be properly incurred only in the renting of a furnished apartment in Central London for the purpose of undertaking Parliamentary duties. Hence the dismay at the widespread practice of taking out a mortgage with public funds, re-mortgaging at will to ensure that those payments are taken to the absolute maximum allowable as well as calculating the location of a ‘main home’ in order to maximise financial benefit (even when this means nominating one main home to the tax authorities and another to the House of Commons). Worse still, the new plan for a ‘subsistence allowance’ opens the door to even more abuse – this £4,200 per annum tax free “bung” requires no receipts with no questions asked. The public recognise that these sorts of allowances should be properly designed to cover the additional costs of living in London. No mortgage interest payments. No re-mortgaging at will. No pocketing of capital gains on the sale of a tax-payer funded second home. No payment of additional monthly grocery and food bill. All of the aforementioned are surely the purpose of a basic salary.
Yet the most blatant abuse has not to date received much publicity at all. The planned Overnight Expenses Allowance (like its ACA predecessor) is specifically exempted from tax under the terms of Section 292 of the ITEPA 2003. It can come as little surprise that this self-serving, to the point of fraudulent, provision has remained intact. In essence, it is little more than a tax scam – not least as for poor ordinary tax-paying mortals such expenditure would normally need to be “wholly and exclusively incurred” in order to qualify for any such a generous benefit.
This sorry spectacle conclusively shows that MPs are no longer fit to have any say in any aspect of the process regarding their remuneration. It saddens me to conclude that the sooner the entire system of setting salaries, allowances and expenses is taken out of Parliamentary hands and turned over to an independent body, the better.