Thoughts on politics and life from a liberal perspective

Sunday, 8 December 2013

MPs should have their pay-rise - Oh, and it's 2.2% not 11%

Having seen the almost uniformly negative coverage of this "11% MP pay rise" (even from MPs themselves) I feel that somebody has to stick up for them.

All the commentary I have seen has been along the lines of the rest of the country is suffering from austerity and public sector wage rises have been kept to 1% so WHY ON EARTH SHOULD MPs HAVE AN 11% PAY RISE??!!!

Well firstly the rise would not be 11%. At least not if you measure it fairly and in the same way that pay-rises are measured for everybody else, i.e. annually. The salary is currently £66,396 (since Apr this year). The proposal is to raise it to £74,000 in 2015. So this would be a rise of just under 5.6% per year from that baseline. But that isn't really fair either because between Apr 2009 and Apr 2013 MPs' salaries rose by 0.6% annually (when the historic average of the last decade has been more like 2.2%). And this current rise is at least partly designed to address this. So when you compare the Apr 2009 figure with the proposed 2015 one you get an average pay-rise of 2.2% across the 6 years. Which doesn't even keep pace with inflation.

"AH!" I hear you cry "BUT WHAT ABOUT THE 1%?". But there's more dear irate capitalised fictional reader. IPSA are actually proposing quite radical changes to the structure of MPs' (historically very generous) pensions and also ironing out some expenses anomalies. So the cost to the taxpayer of this latest rise would actually be cost neutral. That's right, it won't cost us anything more. Not that you'd particularly have been aware of that judging by much of the coverage.

It's also worth noting that IPSA is an entirely independent body. Many MPs hate IPSA although most are reluctant to criticise them publicly. This is not a case of MPs with their snouts in the trough trying to diddle the taxpayer. It is an independent group who have scrutinised the current settlement and proposed some changes that will be entirely cost-neutral whilst addressing the fact that MPs' pay has been slipping back in the last few years. It sort of makes me wonder how we are ever going to get to a position where the politics can be taken out of this issue.

Perhaps the proposal to have rises linked to average wage increases is the answer although there are bound to be some sectors that suffer in the future even though the average is much better and hence relatively MPs will appear to be living high on the hog. There is probably no answer to this.

And I have to say that I am not really interested in what cabinet ministers like Phillip Hammond, David Cameron and Danny Alexander have to say on the subject as they all earn well over £100K anyway and in many cases are already very independently wealthy anyway. Just because they can afford to refuse a pay increase does not mean all other MPs should be pressured to do so too. We need to be very careful about this. If this sort of thing carries on and MPs are continually forced through political pressure to refuse successive pay rises we will eventually end up with even higher numbers of MPs from wealthy backgrounds which is not good for politics. We have seen a similar dynamic recently with the whole "expenses saints" phenomenon where MPs who do not claim any expenses at all are lauded. Of course they are all independently wealthy and can afford to pay the expenses themselves. This should not afford them better career prospects but sadly it does seem to be doing so.

In the meantime, can we please stop comparing apples with oranges? Putting the 11% MP figure alongside the 1% public sector figure is completely distorting and unfair. It would be much fairer to compare it to the 2.2% figure for the average rise over the last few years. And it would also only be just to acknowledge that it is cost neutral.

Anything else is simply bullying our MPs and I really do fear where that will ultimately lead.

12 comments:

Anonymous said...

You had to really fudge the numbers to make this look fair didn't you?

It's called an 11% rise because it is an 11% rise - in one year. It's got nothing to do with the entirely separate pay settlements in previous years. Or else why not spread it over 10 years, 50 years, 100 years? Look, it's only a 0.0000001% increase since dinosaurs roamed the earth, what could be fairer?

And the 0.6% average rise for 2009-2013 is entirely in other public sector workers, if not higher. Nice try to compare it to the previous 10 years, but hardly subtle.

"which doesn't even keep pace with inflation" - because that hasn't happened to anyone else's pay, has it?

In case you haven't noticed, the vast majority of public sector workers have had their pay frozen, then limited to 1%, at the same time as having their pensions slashed and pension contributions massively increased for 3 years in succession. Everyone in the public sector is now paid below the going rate - why should MPs be an exception?

Public sector pay settlements have not been cost neutral over the past few years and will not be cost neutral in 2015-2016. They have been slashed to save the government money - I ask again: why should MPs be an exception?

Matthew said...

I agree the pay rise but is it really cost-neutral? If so then by definition the average package cannot be better than before (with the same number of MPs). Furthermore given one area of cutback is expenses, which are to cover incurred costs, it means actually the average MP will be worse off. And as it's more likely rich MPs already funded some of their own expenses, who will do better, it suggests poorer MPs will actually be worse off?

Mark Thompson said...

@Anon - Not really. It's 2.2% historical average and all this rise does is restore that. That is the reality. And even if you want to ignore that you simply cannot say it's 11% in one year. It isn't. At the very worst it's an 11% rise in two years. 2015 - 2013 = 2.

As it happens I think we should have fewer MPs which would "slash" costs overall which is what you seem to be saying and where I would agree with you.

Whichever way you look at it, juxtaposing 11% with 1% is completely misleading and unfair. Even if you think the rise is too much you can surely see that?

Mark Thompson said...

@Matthew I agree that cutting expenses is probably not a very sensible thing to do but as you can see from the reaction to this change, anything other than cuts to expenses is not going to be politically viable. This is what I mean when I say that the political atmosphere on this is so bad. It's actually toxic and if we're not careful will eventually lead to a bunch of independently wealthy MPs not taking any expenses and not properly reflecting the make-up of the country.

Quinn said...

If you're going to revise the MP's raise from 11% to 2.2%, shouldn't you do the same for other public sector pay rises? I'm getting 1% after a three year pay freeze. That's not atypical. So if you think 11% v 1% is an unfair comparison, does 2.2% v 0.25% sound better?

Anonymous said...

@Mark

I'm not arguing for spending on politicians to be slashed at all (and certainly not to reduce the number of MPs, which in my opinion is a populist gimmick). What I am saying is that public sector workers as a whole are suffering huge cuts to their standards of living, and why should MPs not suffer the same while this goes on? We are supposedly all in this together, after all.

I also never said it was fair to juxtapose 11% with 1%. To compare like with like, we should compare 2 years for the public sector, i.e. 2 lots of 1%, compounded. That is 2.01%. Do you accept that 11% vs 2.01% is a fair comparison? How would you argue that MPs deserve such a massive increase compared to the rest of the public sector?

If you want to spread the rise back to the entirely arbitrary date of 2009 to make it look smaller, fine (completely illogical, but whatever). But then as Quinn rightly says, you have to admit that MPs salaries rise 2.2% while the rest of the public sector rises 0.25%, year after year after year after year after year after year after year. How toxic is that?

I actually have quite a lot of sympathy with the view that MPs should be well paid to ensure that people from all walks of life will stand for election. But the fact is they are already well paid compared to the most people in this country, and it is entirely inappropriate for them to be awarded such a huge pay increase when the rest of the public sector has had their pay and pensions squeezed for years and will have it squeezed still further at the same time as this rise goes through. Where is the 11% rise for doctors, teachers, policemen, civil servants and everyone else who has had to suffer in this way? Your idea that MPs pay should go up by the same as the average of everyone else's is actually quite a good one, but the 11% rise solely for MPs flouts that idea entirely.

Ed W
(Anon above)

SimonF said...

As it happens I think we should have fewer MPs which would "slash" costs overall which is what you seem to be saying and where I would agree with you.

What MPs cost is in direct wages and offices costs etc = SQRT(bugger all) in the grand scheme of things and not worth worrying about.

What MPs cost us indirectly through bad policies and even good policies implemented badly is the problem. Most of this is because they are party hacks who couldn't hold a job down anywhere, certainly not one that commands >£70k.

When MPs start showing some independence and ability then there won't be this outcry, which is much deserved.

Malcolm Redfellow said...

"2.2% not 11%"

Oh, do — please do — convince us that all public-sector worker have done that well.

Anonymous said...

For goodness' sake (I'm being polite here!) £66,300 plus expenses is more than enough for MPs. The average wage is £22k - how can MPs possibly justify a payrise. If they don't like the pay, then they shouldn't stand for election.

Rich said...

Words which not be popular. £75K per year is not a large salary. Yes, it's much higher than the average UK worker, but is the lower end of standard when you remove the potential for further income and judge against most upper management in the public and private sector (Don't believe me? Look at the roles that come up in the £75-£100K bracket on any of the broadsheet jobs pages).

I'd rather MPs were paid much more, and were unable to take second jobs so that we were guaranteed a better cross section of society engaging in politics... (don't get me started on career politicians though!)

Rich

Duncan Stott said...

I agree that we must ensure people from all backgrounds can become MPs. Raising MPs' pay won't make the faintest difference.

Wealth inequality is entrenched in the way people get into Parliament in the first place. You need to be independently wealthy to get yourself into a Labour or Conservative safe seat, or to finance a winning campaign in a marginal seat.

In the past I've suggest paying candidates who lose narrowly. The deposit system means we already fine candidates who lose badly, so it's a natural extension of that concept. If we paid £20,000 to candidates who get within a 5% swing of victory (for example), then it would be a financial safety net that could encourage people from less wealthy means to have a go. You'd also incentivise parties to widen their pool of target seats, which should make our democracy more competitive.

We can't do democracy on the cheap and we need to pay politicians. However their pay needs to be justifiable compared to other ways we could spend money to enhance our democracy. It's right that IPSA is independent, but their choices need to be scrutinised and criticised when they show a lack of judgement.

This is a wasted opportunity.

Matt Wardman said...

Followed a link from your later article, Mark.

I'm still baffled why this is so difficult.

MPs are currently - on their basic salary - in the top 5% or so of the population. And 150 MPs get topups of 10s of thousands, and all of them get £30k tax free after 5 years if they leave.

Why do you think that MPs should be paid in the top 3% or 4%?

It simply isn't necessary.

The pensions points are red herrings. People moving from a gold-plated scheme almost wholly at public expense, to a slightly less gold-plated scheme still almost wholly at public expense, don't need compensation.

That's leaving aside that half of MPs will not be affected since they keep the current crazy scheme because they are over ~50.

For the record, in the non-public sector, the MP pension scheme would need contributions totalling nearly 100% of salary to fund.

Set the salary to the 90th percentile of the national profle, and have done with it.