MPs Pay

Lets backtrack a bit before we talk about MPs pay. in the olden days MPs came from the aristocracy and wealthy elite. They ruled the country. They didn't get paid and didn't need to be. However, if the poor were allowed to participate in this system, its easy to see that it would be impossible for them due to lack of pay.

So its right that MPs get paid to ensure that those people without the independent means of financial support can become MPs, support their families and travel to work. The pay of MPs shouldn't be so low that it excludes people who earn low salaries or have no form of income.

However, MPs pay has become perverted by MPs greed and self importance and it needs to change to re-link them to the job they are doing and the people they serve.

The culture in Westminster, the culture that remains amongst MPs, reached the point where they stole without even believing it wrong. But this was just part of a system where they failed to apply the law they passed, the law that applies to normal employees and companies, where they failed to provide proof of what they claimed, and where they believed that claiming 3p for a journey https://www.theguardian.com/politics/2013/oct/06/tory-liam-fox-expenses-car-journey or a duck house is acceptable. Theft, for which most of them merely apologised.

And now we have a position with MPs where most MPs talk about the market being the best way to make decisions yet refuse to apply the free market principles to their own pay.

So this is how I think this situation needs to be corrected:

Firstly - Abolish IPSA

Following the criminal theft by many MPs during the expenses scandal MPs had to pretend to do something about it. So they set up IPSA an apparently independent body who would manage MPs pay and expenses. This would include setting MPs pay.

It was claimed that with IPSA being independent, it would look at what MPs are worth and pay them accordingly.

Here are the pay rises received by MPs since 2009, so after a banking crisis and into the Coronavirus crisis while many other public sector workers have been subject to pay freezes.

Source: Wikipedia

So if you think that Westminster is an old boys club, IPSA is a sub committee of that club. IPSA is an insider and isn’t about to shaft other insiders. Using the free market rules, if IPSA said that MPs consumer (the electorate) think that MPs do a poor job in most areas and therefore their pay should be cut, there seems no doubt that MPs would abolish IPSA. Instead IPSA praise MPs and awards them pay rises annually and IPSA, staffed by the MPs mates, isn't aboloshed.

Secondly - MPs Pension

The ultimate performance related pay, for MPs would be to link their pension to the stock market, just like it is for most people paying into a pension in the UK.

MPs sometimes claim that they have a generous pension (typically similar to a person working 40 years after 10 years - 2 terms in office) because they have no job security, because they can be voted out in the short term. An MPs job is more secure than many jobs MPs themselves have created in the UK. In fact, if you're a good MP in a good party, you will be in the job for 40 years. More secure than most UK workers! Just do a good job. If you are voted out after 5 years, that’s less insecure than being an Uber driver.

So shut the MPs final salary pension scheme using the average buy out of other final salary schemes in the private sector. Convert it into a money purchase scheme i.e. One that is invested in the Stock Market - after all, its the measure of the free market, right? The deductions and contributions should be based on an average from private sector employer schemes across the UK. If MPs think that their deductions are too high, or the contributions too low, when calculated using this measure, then they know how the average private sector worker feels, but unlike the private sector, they can do something to change it, by passing laws telling private sector companies to increase their contributions.

In terms of the generosity of their pension, it will in fact be generous as long as the stock market performs well, something over which MPs policies have a direct impact via their laws and policies. So they do a good job, their pension increases, win win. The only reason you wouldn’t want to make this change is if you are greedy and have your snout in the trough and don’t want to be exposed to the effect of your own incompetence like most other U.K. workers are.

Thirdly - MPs Pay

MPs are paid by the taxpayer. This is the same as people working in the public sector, or those who receive state benefits, or the Queen, all receive money from the taxpayer and are all in the same group. None is better than the other.

MPs should feel the link to other people working for the state. Key workers like policemen, nurses, teachers and soldiers. The starting pay of these 4 occupations should be taken to get an average public sector pay. Then a factor can be applied, if unemployment is low, happiness rating is high and growth is high the factor might be 4 times. If it’s not, perhaps the factor is 2.

This may seem strange because if MPs are voted in following the country being run badly, their pay factor is low And this may seem to be a disincentive to attracting good people to run the country, but I don’t think this is how it would work. I think people are driven to do things to help run the country for reasons other than money. But this pay method is market based. If MPs do a good job, then nurse and teachers get paid more, then MPs get paid more, the factor over these occupations increases, so their pay increases, and will they probably get re-elected - job security, perfect for the MP.... as long as they are doing a good job. The only reason you wouldn’t want this change is if you know you’ll mess things up.

Fourthly - Expenses

For employees in the U.K. the tax law relating to their business expenses was re-written in 1999. Prior to that it was over 100 years old. In 1999 tax law still made mention of getting tax relief for keeping a horse for getting to work, it was that archaic. The rules are covered by English law so the legislation is supported by precedent and case law (Judge made law). So for the average employee, they need to have read the legislation and the various Court cases involved if they are to understand the rules that allow them to claim tax relief on their business expenses. Obviously this doesn't happen, people instead follow their employers expenses policies, policies which also try to restrict the money employees can claim when they are doing their job so that employers can control costs. A normal feature in a free market economy.

This is the system that all employees in the U.K. have to abide by. It isn’t easy. The law says that business expenses for employees are only tax deductible if they are incurred wholly, exclusively, and necessarily in the performance of your duties. People may think this is clear but case law means it’s been subject to detailed interpretation by clever judges. This has led to rules like not being able to claim tax deduction on travel costs for getting to work. This is because it is to put you in the place to perform your duties, rather than in the performance of your duties. Subtle differences in the meaning of words that have been considered by highly intelligent legal people But really opaque for the rest of us. Certainly the system is difficult. It’s also bureaucratic. Large employees spend a lot of time and money on lawyers, accountants, policies, systems and employee training to ensure they follow the law. They still get it wrong and suffer investigations and penalties from HMRC. All of this adds to the cost of doing business in the U.K. and for what? We are talking here about claiming 40 pence per mile travelling on work. This is the detail that global multi billion dollar companies have to pay attention to when it comes to paying pence to employees.

However, our MPs could simplify this system making it easier for U.K. business. But they don’t. You would think then that this is because MPs say that these large corporations should apply the law passed by MPs because MPs themselves also have to follow these rules. But you’d be wrong. When it comes to applying the rules themselves, they said it was too difficult and too bureaucratic. So they didn’t keep receipts to prove their costs were incurred, instead preferring to steal from taxpayers as it was just easier.

This needs to change. When any law is passed by MPs the first people it should apply to it them. If they find it too difficult to apply, then they should change the law to make it easier. They should not expect to be exempt from any law on the basis that it’s too bureaucratic.

Finally, all cash or non cash benefits or expenses paid to MPs should be disclosed. Benefits include subsidised restaurants, fine wines and whatever other perks get hidden in the general shit show at Westminster that the public doesn’t see.

Fifthly - Second Homes

Following on from the above, MPs expect taxpayers to fund second homes for them because they work in London and elsewhere in the UK However, this is same as many UK employees. What employees do in these circumstances is stay in a hotel and claim the costs back from their employers, many whom have a policy to keep a lid on the costs limiting the accommodation to business class hotels and not the most expensive ones. There is no reason that MPs should purchase second homes at the expense of taxpayers. They should use Airbnb or hotels or stay with friends Just like the vast majority of UK employees who work in multiple locations have to.

In Summary

If MPs think that free market capitalism is the best thing for the country, then they should have no fear in facing the free market when it comes to their own pay and pension. If they are the best, then the rewards will flow to them as the pay for nurses and policemen rise, growth increases and unemployment falls, they will reap the rewards. After all, the current political consensus says the individual is responsible for their circumstances, so if the MPs pay fails to rise, then they have already identified the problem.