Response from the Parliamentary Labour Party to IPSA's Consultation on MPs' Pay and Pensions

Response from the Parliamentary Labour Party to IPSA’s
            Consultation on MPs’ Pay and Pensions
We are grateful for the opportunity to respond to this consultation
on behalf of the Parliamentary Labour Party. We have consulted
with colleagues in preparing this response.

This review comes at a difficult time considering both the economic
climate and the continued distrust of the political process. But as
part of IPSA’s statute they must carry out a consultation on MPs’ pay
and pensions and this is the right time to do so. We support and
welcome this consultation.

When taking a decision on MPs’ Pay and Pensions IPSA should seek
to enhance our democracy by attracting members from a range of
backgrounds and retain them in, politics.           Involvement in
representative politics should never be solely the preserve of those
who have a private income, our nation is increasingly diverse and
Parliament should reflect that.

Once IPSA have taken a decision on this review IPSA should be
prepared to communicate and explain the decision it makes with the
public.

Question 1: Do you agree that MPs’ annual pay should be increased
to £74,000 in the new Parliament as part of the new remuneration
package? What are your reasons? If you do not agree, what do you
propose and what are your reasons?

The last Labour government, when it established IPSA, gave it power
to determine when to carry out a consultation on MPs’ pay and
pensions and to make decisions about changes. This was a sensible
and necessary measure to restore public confidence. Therefore we
do not believe it is right to comment on specific proposals, IPSA must
take this decision independently of both Government and MPs. We
are supportive of the four reference points for setting MPs’ pay
which IPSA set out on pages 12 and 13 of the consultation document.

In addition to these guiding principles we believe that it is vital that
IPSA take account of the wider economic climate and of the current
stagnation in public sector pay when making their decision. We
would want to re-emphasise three additional factors we highlighted
in our previous submission. Firstly, maintaining the health of our
democracy. Secondly, the importance of attracting people from a
range of backgrounds into Parliament. It should not be the preserve
of the wealthy as Parliament once was. Thirdly, the public must have
confidence in the system. Therefore the system must be clearly and
self-evidently independent of both MPs and Government. IPSA must

therefore be willing to explain and justify any decisions it takes to the
country.

Question 2: Do you agree that we should index MPs’ pay to an
economic indicator? Do you agree with the choice of indicator? If
not, what are your reasons?

We are broadly supportive of IPSA’s aim to create a mechanism
which will allow MPs’ pay to be decided for the life of a parliament
and be maintained without annual reviews. The prospect of an
annual pay review led by IPSA would both be extremely time
consuming and expensive.

We recognise the work of IPSA in exploring a number of different
models and as IPSA itself noted in their previous review criticism can
be made of any of them. IPSA’s chosen index of average earnings
seems suitable and makes MPs’ pay yet more independent from
Parliament and Government. However the potential for MPs’ pay to
fall over the life of a parliament, though unlikely would be
anomalous as there are no reasonable professional equivalents
where the same could take place.

Question 3: Do you agree with the proposed pension arrangements
for MPs in our preferred option? If so, please give your reasons. If
not, what do you think they should be; and why?

While we broadly support the changes, it is our view that IPSA need
to take greater consideration of the unique role of an MP in relation
to their pension arrangements. For example, length of service varies
hugely; some MPs represent ‘safe’ seats and can expect a long
parliamentary career.     Others can find their political career
terminated unexpectedly by the electorate. It is important that MPs’
pension arrangements are sufficiently flexible to reflect this unique
aspect of the role.

When consulting with members of the Parliamentary Labour Party
we heard a wide range of views from colleagues and it is therefore
not possible to offer one absolute view.

Question 4: Do you think there are merits in considering the
introduction of a defined contribution scheme for MPs. If so, what
are your reasons?

The MPs’ Pension scheme should be brought in line with changes to
the wider Public Sector, but there is no argument to take changes
further , especially considering the funded nature of the scheme and
the fact that Government costs are capped.

Question 5: Should MPs be able to maintain the current level of
ancillary benefits by making higher pension contributions, even if it
requires all of them to do so?

It is vital that any changes which are made protect accrued rights as
these are guaranteed in all other schemes.        There are serious
concerns about the changes being made to death in service benefit.
I would urge IPSA to do further work with colleagues and the
trustees of the MPs’ Pension scheme to ensure that these changes,
in line with other public sector schemes, are fair and widely
understood.

IPSA should consider an option whereby Members could make
higher contribution rates in return for higher ancillary benefits,
including death in service benefit.

Question 6: Do you agree with our proposal to end the current
arrangements for resettlement payments after the 2015 general
election, replacing them with a payment of twice the statutory
minimum for redundancy, to be paid only to MPs who lose their
seats?

We agree that MPs who lose their seats at an election should be
entitled to redundancy. We have heard no argument against this and
note that across the public and private sector arrangements exist for
loss of employment.

It is crucial that IPSA does more work to consider the issue of MPs
who are deselected. Furthermore IPSA must consider the unique
nature of Members of Parliament and consider whether MP’s
standing down in the election before they reach retirement age
should also be considered. MPs cannot just choose to retire at 65
without triggering a by-election (a costly process for the taxpayer).
We are concerned that the decision to abolish resettlement grants
for MPs standing down has created a perverse incentive for people
not to stand down and to instead seek another term. We believe the
issue of resettlement grants for MPs who chose to stand down is
something IPSA should look at again. With some urgency as the
discussed indivudal MPs must make as to whether intend to contest

the 2015 elections are pending now.        It is only right that such
decisions are taken when the indivudal concered is in full possession
of the facts of the resettlement payments which will be available in
2015.

Question 7: Do you agree that the additional salary for Committee
Chairs and members of the Panel of Chairs should be uprated by 1%
in 2015, pending a full review of these pay arrangements in the first
year of the next Parliament?

IPSA is independently responsible for setting pay so is a matter solely
for IPSA.

Question 8: Do you agree with the proposal that members of the
Panel of Chairs should receive the full rate of pay after a
probationary period of one year? Or do you think the current four-
tiered arrangements should continue until after the review in 2015?

We heard a variety of views for colleagues and there was not a clear
consensus behind either option.

We do fully recognise the importance of select committees in
holding the government to account. The chairs of committees have
additional responsibilities and it is legitimate to reflect that in the
pay they receive.

Question 9: Do you agree that some elements of the current
business costs and expenses regime should not be reimbursed after
May 2015, on the grounds that other professionals would expect to
fund them themselves?

We believe that IPSA should reconsider this proposal. Many of the
items IPSA references in the consultation would be claimed back by
professionals working away from home. IPSA must remember that
for the majority of MPs’ the week in Westminster is away from their
home and should be considered as such. Furthermore IPSA fails to
take into account the many other costs that Members’ of Parliament
are unable to claim back and are forced to pay themselves. IPSA will
already have received a letter from the Chair of the Parliamentary
Labour Party setting out a number of business costs which MPs are
forced to pay out of their own pocket. Any extension of this would
be unacceptable.

Question 10: Do you agree that MPs should produce an annual
report on their activities? Are there particular practical issues which
would need to be addressed in the development of these reports?

Numerous colleagues raised concerns about this proposal with some
pointing out that IPSA abolished the communications allowance
which was used for this purpose. The prevailing view was that it is a
matter for MPs to decide how they communicate with their
constituents and not a matter for IPSA. This proposal seems to be far
outside IPSA’s statutory remit.

Question 11: Do you have any comments on the draft rules relating
to payments for Specified Committee Chairs, as set out in Annex B?

These changes are sensible.

Question 12: Do you agree that the Great Officers of State should
be able to participate in the MPs’ Pension Scheme in the same way
as other MPs?

Subsequent to the Constitutional Reform and Governance Act 2010 it
seems fair that holders of the Great Officers of State should e able to

participate fully in the normal pension schemes for MPs and
Ministers should they wish to.