Thursday, 24 October 2013

MPs' pay - a benefit expert's point of view...

You might think I would have good reason for objecting to the proposal to increase MPs’ pay by a cool 11%, to around £74,000 a year. 

But I don’t. The arguments for increasing MPs’ salaries are fairly compelling. Comparable jobs in the private sector, and indeed in the public sector, are better remunerated: if we want to attract high calibre people to represent us we need to pay more. Additionally, and crucially, a number of current MPs are supported by reliance on private wealth or business interests: it would be regrettable if potential candidates without independent means were deterred from becoming Members of Parliament.

What does rankle with me, though, is the thought of paying that increase to those members who do have income from elsewhere. At a time when normal people are seeing their real-terms income decrease, when public services are being cut-back, and foodbanks are struggling to cope with demand, the thought of paying thousands of pounds more to the already wealthy sticks in my craw.

However, as an expert in social security law, I have identified a solution to this conundrum. In the benefits world, we are well accustomed to adjusting payments when claimants have additional income: we call it means-testing.

We could use the approach applied to income support, and other similar means-tested benefits. For every pound an MP earns, a pound would be deducted from his or her salary. But there is some good news for them: not all their earnings would be taken into account. Under benefit rules, £5 per week is normally disregarded if the claimant is single, or £10 per week if they have a partner.

Our representatives may now come to regret not having uprated these disregards (at all) since the relevant benefits were introduced in 1988: if they had been increased in line with the RPI the figures would now be about £12.50 and £25.00 per week respectively.

Under my proposals, and assuming that a backbench MP’s pay is increased £80,000, a single, childless, MP earning a relatively modest £30,000 from outside interests would see their annual salary reduced by £29,740 to £44,260.

But I foresee an objection: it might be argued that we should be keeping up to date, and that it would be fairer to apply the principles of the shiny new benefit kid on the block, Universal Credit. It’s a bit harder to explain how this new and, er, simpler benefit works, but suffice it to say that our specimen MP will see their annual salary reduced by 65% of the difference between his earned income and a fixed work allowance of £1332 per year (other work allowance figures are available). I estimate that this would reduce their pay by about £18,634 to £55,366.

At a stroke, the dilemmas about MP’s wages are solved. Members with no other income, and who devote their working lives to the House, and to their constituents, get a pay rise that fairly reflects the responsibilities of the job. Those who treat their parliamentary duties as a sideline to making money elsewhere will have a nasty shock.

And we, the voters, can be reassured that they are in it with us. 

1 comment:

  1. If you had read "23 Things They Don't Tell You About Capitalism", you would have discovered the quite plausible argument that most people in the developed world are paid far more than they are worth. Presumably this applies to MPs as much as to everybody else!