Before I invite the Leader of the House to move the first motion relating to Members' salaries, it may help the House if I set out the procedure to be followed. All six motions and related amendments are to be debated together. At the end of the debate, I will ask Members whose amendments are selected to the first motion to move them formally at the appropriate point, and then the first motion will be put. All other motions and amendments selected on Members' salaries will then be put without further debate.
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I beg to move,
That this House
notes Sir John Baker's Review of Parliamentary Pay and Allowances (Cm 7416), and is of the opinion that the recommendations in the Review for the annual salary of a Member of this House to be increased by reference to a linkage to the Public Sector Average Earnings Index combined with regular reviews of the salary and the link should be implemented, such that—
(1) from 1st April 2008 and from 1st April of each subsequent year a Member'ssalary should be increased by the percentage increase in the 3 month average Public Sector Average Earnings Index for January of that year relative to the figure for January of the previous year;
(2) the SSRB should conduct a review of Members' salaries in the first year of each new Parliament unless such a review has taken place within the preceding two years;
(3) at such a review the SSRB should consider either or both of:
(a) an adjustment to the salary
(b) a different formula from that specified in paragraph (1) above to ensure that the level of salary remains adequate for recruitment and retention, appropriate for the responsibilities and reasonable in relation to total reward for jobs of similar weight in the public sector, to take effect from the first 1st April following the first meeting of the new Parliament;
(4) each year the SSRB chair should notify the Speaker of the change in salary
(expressed as a percentage) and, on such notification to the Speaker, that change should have effect, subject to any further notification given following a review under paragraph (2);
(5) the Speaker should lay before the House:
(a) any notification received from the SSRB chair under paragraph (4) above; and
(b) any report from the SSRB following a review under paragraph (2) above;
(6) an additional salary payable to a Member under Resolutions of this House in respect of service as a chairman of select or general committees should be changed by the same percentage and from the same time as the salary of a Member.
I will be as brief as possible in my opening speech, and there will be no Government speech to conclude the debate to allow as many hon. Members as possible to have the opportunity to speak.
We have two debates this afternoon. The first is on Members' pay and the second will deal with two issues: the Members Estimate Committee report on reimbursement of our expenses and a resolution to prohibit the release of information held by the House authorities about Members' addresses and travel patterns.
I suggest that there are three principles for hon. Members' salaries. First, MPs should be properly paid for the work that they do to ensure that anyone can be a Member, not just the wealthy. Secondly, given that MPs are paid from the public purse, we should show the same discipline in our pay increases as we expect from the public sector. Thirdly, for the future, and following today's debate, we, like everyone else, should not determine our own pay or vote on our own pay increases.
In January, the House agreed that Sir John Baker should conduct a review and report on a review mechanism for increasing hon. Members' salaries without Members having to vote on that, and for determining the frequency with which reviews will take place and the appropriate comparator for Members' pay. I am grateful to Sir John Baker, whose report the Government published on
Sir John's report made several recommendations. I shall list the key ones. First, the Senior Salaries Review Body should be the mechanism for periodic reviews of Members' pay. The Government agree with that. Secondly, the SSRB's periodic review should be once per Parliament. The Government agree with that. Thirdly, MPs' pay should be increased each year at the rate of the public sector average earnings index. The Government do not agree with that, and propose an alternative. Fourthly, there should be £650 a year catch-up for each of the three years 2008-09, 2009-10 and 2010-11. The Government do not agree with that and propose that it be rejected.
Are the Government taking a different view of the Baker recommendations on pay because they believe that MPs would be paid too much?
We take the view that the recommendation is not consistent with the Government's pay policy and approach to public sector pay. Later, I will set out our approach to the current position.
I have tabled a series of motions, which will allow the House to vote for Sir John's proposal for a comparator or for the Government's proposal. They will allow hon. Members to vote separately on whether to accept or reject the three £650 catch-ups.
Sir John Baker's comparator proposal is opinion motion No. 1, the Government's proposal is opinion motion No. 2, and Sir John Baker's £650 catch-ups is opinion motion No. 3. Both the opinion motions on Sir John's proposal and the Government's proposal provide for arrangements for future, independent reviews of hon. Members' pay. Both the Baker and the Government motions provide that: the SSRB should remain the independent body, which conducts reviews of hon. Members' pay; those reviews should occur once in each Parliament, and that the outcome of those reviews should be implemented without the need for further debates or votes in the House. In both opinion motions, those arrangements are set out in paragraphs 2 and 3. Whether the House chooses the Baker or the Government proposals, that should be the last time we have such a debate or vote in this House.
The Leader of the House knows that I sit on the Committee on Standards in Public Life. It may be for Members' convenience to know that the Chairman has written to the Speaker—the document is in the public domain—welcoming the decision to have a genuinely independent mechanism for setting Members' pay and also supporting the Members Estimate Committee report.
I thank the hon. Gentleman for that helpful information. That view is shared in all parties. It is the Government's view and that of the public that we should not have to set out own pay and that there should be a proper, independent and fair mechanism to do that. Whether hon. Members vote for the Baker proposals or for the Government proposals, the review mechanism will be established.
I understand where my right hon. and learned Friend is coming from in that, if we accept Baker's recommendations, it could upset or throw a bad light on the Government's pay policy for this year. However, what will be the position in subsequent years? Do we know what the Government's pay policy will be next year and the year after that?
The Government's approach to dealing with the danger of inflation and wanting to ensure that interest rates remain low and that the economy remains on a stable course is reflected in our view that public sector pay increases should be consistent with 2 per cent. We have urged public sector unions and negotiators to accept three-year deals. I will say more about that shortly.
Perhaps it would assist the House if I made some progress. I will take interventions if I have not dealt with points that hon. Members wish to raise. I ask hon. Members to let me simply set out the position and, if I have not answered a question, I will give way. May I do that?
Let me consider the comparator—the index to which MPs' pay should be pegged in future. Sir John's preferred option is the public sector average earnings index, but the Government do not accept that for two reasons. The main reason is that, this year, it would result in an increase of 3.5 per cent., which does not reflect our view that public sector pay settlements should be consistent with the achievement of the consumer prices index inflation target of 2 per cent. Secondly, we believe that our proposal for basing our increase on a basket of public sector employees' salaries is preferable—that is, making the comparator for Members' salaries the median of the increase in the pay settlements of a basket of 15 public sector work forces. They include judges, doctors, teachers and civil servants in Her Majesty's Revenue and Customs, the Home Office and the Ministry of Defence. Our opinion motion No. 2 sets out the 15 public sector work forces who would form the comparator.
I can deal with all the points as I go along, but it would probably be better for hon. Members to hear the line of argument and the information on the Government's view. However, I will give way to the hon. Gentleman as chair of the pension fund.
I would not say that those proposals have been rejected out of hand. They were not Sir John's preferred option—I make no bones about that. We have tabled Sir John's option and published the report. Everyone can see what Sir John said about his preferred option. Although the Government accept a considerable amount of what Sir John proposed in his review and are grateful for his work, we do not accept the comparator and the catch-up, because we believe that they are not consistent with the approach that we want the public sector to take on pay. If I may, I will develop the argument on that.
Our opinion motion No. 2 sets out the 15 public sector work forces who would form the comparator. That mechanism would be understandable by the public, who would see our pay connected to a group of public servants, and would deliver 2.25 per cent. this year. That is lower than the first year of the current three-year settlement for nurses of 2.75 per cent., but higher than the settlement received by salaried doctors and dentists. For future years, the terms of the motion would ensure that Members' salary increases were consistent with our approach to the rest of the public sector.
Let me turn to the catch-up payments in opinion motion No. 3. The Government do not accept Sir John's recommendation that Members' salaries should be increased by an additional £650 each year for the next three years. MPs do important work, which is the foundation stone of our democracy. We do not hear about this in the media, but over the past five years our pay has fallen behind inflation. The Government do not reject the catch-up because we think that MPs are overpaid—far from it—but only because it would not be consistent with the approach that we are taking to the rest of the public sector. Combined with Sir John's comparator, the annual £650 catch-up would bring our annual pay increase to 4.55 per cent. On that basis, we reject it.
Let me turn to the amendments on the Order Paper. Amendment (d) to opinion motion No.1, which stands in the name of my hon. Friend Tony Lloyd and of other hon. Members, would have the effect of implementing the Baker comparator, but limiting the increase to hon. Members' salaries to no more than 2.75 per cent. this year, 2.3 per cent. next year and 2.25 per cent. in 2010-11. Amendment (d) would then provide for the increases forgone under the Baker comparator to be paid from
Amendment (a) to opinion motion No. 1 stands in the name of my right hon. Friend Mr. Touhig and of many other hon. Members. It would implement the Baker comparator, but limit the increase to hon. Members' salaries for the current year to no more than 2.3 per cent. Amendment (a) would then provide for the 1.2 per cent. forgone from the Baker comparator to be paid from
Finally, amendment (e) to opinion motion No.1, which stands in the name of my hon. Friend the Member for Manchester, Central, would have the effect of ensuring that Members' pensions entitlements would be the same as they would have been if the Baker pay proposal had been implemented in full. The parliamentary pension scheme bases pensions on a Member's salary in their last 12 months of service. A principle of public service pensions is that pensions are based on pay that people have received and contributions that they have made, not the pay that they would have received if circumstances had been different. Accepting amendment (e) would create a precedent. If we allowed that approach for MPs, it would be more difficult for the Government to resist the same approach from elsewhere in the public sector. We therefore ask the House to reject amendment (e).
Let me turn to amendments (b) and (a) to opinion motion No.3. Amendment (b) to that motion, which stands in the name of my hon. Friend the Member for Manchester, Central, would have the effect of delaying until 2010 the three separate £650 catch-up payments proposed by Sir John, although the full amount of £1,950 would be paid in one go in 2010, rather than being spread over the preceding three years. Again for the reasons that I have explained, that is not consistent with the Government's approach and we ask the House to reject amendment (b).
Amendment (a) to opinion motion No. 3, which stands in the name of my right hon. Friend the Member for Islwyn and of many other hon. Members, proposes to accept the Baker catch-up payments of £650, but delay their start date by one year. Even though the catch-up would be delayed, starting next year rather than this year, catch-ups are not consistent with the Government's approach to public sector pay, as I have said. We therefore ask the House to reject amendment (a). The combined effect of the two amendments standing in the name of my right hon. Friend the Member for Islwyn would be an increase of about 5.7 per cent. next year, which would be the combination of the deferred indexation increase and the catch-up of £650.
Although the Government have a clear view on the different elements of the Baker proposals, it is for the House to decide these matters. I hope that the Government position will be supported, for the reasons that I have explained.
The terms of reference that the right hon. and learned Lady gave Sir John Baker were to
"ensure that the independent mechanism takes account of the Government's policy on public sector pay and its target for inflation".—[ Hansard, 23 January 2008; Vol. 470, c. 56WS.]
Is that not exactly what he did? If she is saying that he did not comply with those terms of reference, should she not have referred the report back to him, so that he could comply with them?
I make no criticism of the work that Sir John has done in his review. When a review is commissioned, the Government remain entitled to put forward their response and to tell the House and others whether they agree with its findings, having considered the arguments. We are then able to put forward our view, and that is what we are doing.
I understand the Government's position. They took a similar position when they asked somebody to advise on nurses' pay in England, but then rejected that advice, and when they asked somebody to advise independently on police pay, when they also rejected that advice. What is the right hon. and learned Lady's advice today for those of us who have consistently said that if we ask an external body to recommend, we should follow its recommendation, and who voted accordingly on nurses' pay and police pay?
We are making an alternative proposal to that which Sir John Baker has put forward. We are also proposing to the House that after today, when the SSRB, which we propose as the mechanism for independent review, reviews the issue in the first year of the next Parliament, it will not be for the Government, or indeed any hon. Member, to vote on whatever proposition is put forward, which will instead be notified to the Speaker and implemented. As I have said, this is the last time that the House will be able to vote on propositions that are put forward, before the Government take a view and then seek to win support in the House.
I hope that the Government position will be supported, but whatever the House decides, I should like to take this opportunity to say that the overwhelming majority of hon. Members carry out their duties with probity, energy, dedication and commitment. The media reporting that includes expenditure on the salaries of our staff and on our office costs and which says that they are part of our salary is misleading and often malicious. After today, when we have, as I hope, established the independent review mechanism and reformed our system of allowances, I hope that we will be able to get on with our work in the interests of our constituents, of this country and of our democracy, free from the innuendo and misrepresentations about pay that have hung over this House for too long.
Like the Government, the official Opposition will not be offering a wind-up speech today, in order to give more hon. Members the opportunity to speak. Also, I will speak only briefly on the motions and amendments before the House.
The House has an opportunity today to take an important and historic decision on the way in which it is run and the way in which Members of Parliament are remunerated. This decision could start to restore the broken trust between the people and their politicians. Sadly, too many people have felt for too long that MPs have their snouts in the trough. I will not go into the way in which the media have encouraged that view, but I have said in previous debates on this issue that they need to look at the way in which they report expenditure on our members of staff, for example, as being part of our own salaries. That gives most people a totally distorted picture of the situation of Members of Parliament.
It is true, however, that people are concerned about what they see in relation to our expenses and allowances—which we will be debating later—and about the fact that we decide on our own levels of pay. Notwithstanding the fact that, over the years, Governments of various colours have urged and exercised restraint on pay—indeed, the Leader of the House has urged us to exercise restraint again today—there is still a feeling that MPs should not be able to set their own levels of financial reward. I share that feeling, as does the Conservative party. Indeed, more than a year ago, we proposed that MPs should stop voting on their own pay and start looking into ways in which that could be undertaken.
We welcome the principle of the proposal put forward by Sir John Baker for a mechanism to determine the level of pay at the start of a Parliament, and for decisions on annual pay changes thereafter to be made by the same outside body, the Senior Salaries Review Body, rather than by this House. As I have said, I welcome the principle of the Baker review, but I also agree with the Government that we should adopt a different index for determining those annual pay increases. The measure proposed by the Government would give a lower increase than that proposed by Sir John Baker, based on the current known figures, but I support it because it is preferable as a measure for determining annual pay increases to that proposed by Sir John.
Did we not get into this difficulty in the first place by being linked to pay rates rather than to earnings? Modern management often looks at lower basic rates, but then looks at performance-related payments to determine the overall package of earnings. Will this proposal not lead us straight back to the problem that we have had before, which led to the big disparity that the Baker review has rightly identified?
One of the important things that we shall be able to do today is to take this whole issue away from the House, which is crucial. If I understand the right hon. Gentleman correctly, he is suggesting that the Government's proposal relates to earnings rather than to increases in earnings. In fact, it relates to annual increases in earnings, albeit for a different and very particular group of workers, as identified in the proposal.
If the right hon. Lady is basing her policy on that, I am afraid that she is basing it on a misapprehension. The Government's proposal relates to settlements, and settlements are rates rather than earnings. This has been a consistent problem with public sector pay—first with increments and subsequently even more with the senior civil service—because so much emphasis is now placed on performance-related pay. Indeed, the SSRB's latest report on senior salaries adds another 1 per cent.—up to 8 per cent. of total salaries—to the performance pot. Settlements and earnings are quite different things. This is how we got into this problem, with our link to the senior civil service; the rates have stuck, but the earnings have gone up. [ Interruption.]
Hon. Members are suggesting that I should just accept that, because the right hon. Gentleman, who chairs the Speaker's advisory panel on these matters, knows what he is talking about. However, I am going to continue to disagree with him on this matter. The Government have brought forward a proposal that relates to increases. I acknowledge that it does not include bonuses—it excludes that opportunity—but it is entirely reasonable. The House should be willing to recognise that we need to set an example and to send out the signal that MPs are willing to look at their pay and put into place a different structure for the future. I therefore support the Government's proposal for a different index.
Has my right hon. Friend not studied in detail Sir John Baker's recommendations? In particular, paragraph 39 of his report states:
"I conclude that an approach to uprating based on a basket of comparators cannot satisfy the criteria set out in paragraph 32 above."
That is the whole principle behind the proposals. On that basis, does my right hon. Friend totally disagree with Sir John Baker's recommendations?
I hoped that I had made it clear that I do not totally disagree with Sir John's proposals. I agree with the principles behind his proposals, and with the mechanism that he has proposed—namely, the review that should take place in the first year of a Parliament, followed by automatic annual increases in pay on the basis of some measure. I disagree with two aspects of his proposals. The first is the index that should be adopted. The second is the issue of the catch-up payments over the next three years. That is why I do not agree with those hon. Members who have tabled amendments seeking to delay the implementation of the principle of the Baker review while ensuring that we receive the full proposed increase, albeit at a later date. I believe that we should now take the decision to accept that it would not be right for the House of Commons to continue to vote on our pay, and I hope that that view is shared across the House. We should also accept that a sensible mechanism has been proposed, and I hope that that view is shared across the whole House as well.
In recognition not only of the Government's present public sector pay stance but of our responsibility as Members of Parliament to send the right signals to our constituents about the approach that we are willing to take in recognition of the concerns that they have expressed about our pay and costs, it is right that we should not take the uprating that Sir John Baker has proposed through the catch-up payments over the next three years. When restraint is being encouraged for others by the Government, it is right that Members of Parliament should be willing to accept such restraint for ourselves and to say that we will not vote on our own pay in future.
We should start that process off by showing, in this final vote, that we are willing to stand up and be counted and to exercise the restraint that we are encouraging in others. That is why I do not support the amendments that have been tabled today, and why I support the motion that sets out the Government's proposals on the index and the mechanism that are to be used.
We are now having the debate that we all knew we had to have, and I take a very simple view on this matter. I expressed that view to the Leader of the House in an earlier question. We have had this nonsense year after year for all the time that I have been in this place—25 years, the same length of time as the Leader of the House. We are now rightly saying, "Let's stop this annual game of trying to work out what we think we can get away with in our pay increase. Let's have an independent system." That has been agreed, which is a blessed relief.
We have asked two lots of people—the Senior Salaries Review Body and Sir John Baker—to give us a comparator and a starting point. Effectively, they have both come back with the same answer, saying, "Here is a comparator that we have worked out, having looked at lots of alternatives and rejected them, and here is a starting point."
I should like to remind colleagues of what Sir John Baker said on the uprating mechanism. He said that it should meet certain criteria, including that
"it must be easy to understand, independent and authoritative, transparent and not capable of manipulation; it should be sustainable over a number of Parliaments...it should be based on pay comparators and not price comparators...It should reflect movements in earnings and not settlements."
He rejected linking us to the civil service, for very good reasons, and rejected an approach based on another suggested basket of comparators. He came to a view that he recommends indexation. He could not have been clearer about that. He drew on the work of the Senior Salaries Review Body and suggested that the public sector average earnings index was the right comparator. He says:
"I am sure, having considered and discussed the options extensively, that this is the best solution. It meets all the criteria in paragraph 32 above and I believe that, if implemented, it would be likely to last for many years... Other public sector workers may argue that it is unfair if MPs' pay is automatically indexed to earnings while they have to negotiate", but he concludes that it will provide the safest, most secure and most appropriate long-term comparison. Otherwise, he says, we will be in the same debate again, because we will either go ahead or fall behind the average public sector wage and we will not have what we want, which is the break between this debate and an annual recurrent questioning of the issue. I am clear that—for myself no more than anyone else—we really must get into a system that has an objectively assessed basis from the beginning and an objectively assessed comparison thereafter.
Let me put this point directly to the Government, as there is no other way of putting it. Of course, Governments have a pay policy and will always have a pay policy, but we cannot predict what it is going to be. Some of us have taken the consistent position that if we ask for independent advice about public sector pay, we should follow it—whether it be for nurses, the police or whatever. There is no logic in taking one view and then not adopting the same view for ourselves.
Somewhat more personally, let me say that it is easy for the Government to say, "Hold back, everybody", because everyone in the Government is paid significantly more than anyone else here. I make that as a practical household point. Nobody in the Government will be affected in the same way as people who are not in the Government. That is obvious. I think there are only two other people in the House who get top-up salaries other than the Back-Bench MP salary.
As to the amendments, I can see the attractiveness of saying, "Hang on a minute, people; let us be careful; let us not implement this now", but a proposal that says, "Not now, but catch up next year", or "Not now, but catch up later" is, bluntly, a bit of a deception and not as honest and straightforward as going straight for the proposal before us now. Obviously, it is a less bad option than not linking into the independent system. Moving slowly towards that remains preferable to not moving to the independent system at all. I accept that and I understand that that is why Tony Lloyd and Mr. Touhig are proposing amendments. I hope that colleagues will have the straightforward common sense to say, "Let's grasp the nettle, accept the independent report, accept the overwhelmingly strong argument that Sir John Baker gives and solve the problem", rather than have it coming back just before and just after a general election or at any time in the future.
The House certainly owes Sir John Baker a considerable measure of gratitude for setting out, as he intended to do, an "independent, objective and robust" process, which removes MPs for ever from it. What we have to do today is ensure that we remove ourselves indefinitely from that process by whatever mechanism.
Public confidence in Members of Parliament relies on our grasping the nettle—of taking this House by our own hands—but it also depends and MPs' confidence depends on the Government taking themselves out of the process. As Sir John says in paragraph 10,
"if MPs are prepared to relinquish their control over their salaries, then the Government also has to forgo any possibility of directly seeking to intervene in the process".
The problem with the Government's position today is that their motion will not achieve that.
Sir John is clear that any settlement should reflect movements in earnings rather than settlements. He goes into that at great length in paragraph 32 and he later makes it very clear that the problem with the SCS—senior civil service—index is that it is open to manipulation by the Government, which is one reason why he rejects the validity of that index for the short or longer term. Wherever we get to today, we must get back on to the Baker track.
Other Members may disagree with my proposals. Frankly, it is a matter of individual judgment on what is effectively a free vote for Opposition Members and Back Benchers. People will disagree over the rate at which we should adopt the Baker review proposals, but we should all certainly accept the Baker index and the Baker reference point as the starting point for our salary.
I have very cordial relations with my opposite number, but may I ask him what is so special about the next Parliament? Sir John makes the point on the first page of his report that there is no right time for MPs to have their pay altered, so why is the next Parliament likely to be any better than this one?
The hon. Gentleman anticipates exactly what I was coming on to say, so let me continue with my explanation of why I tabled the amendment. One justification may be regarded as a nuance, but before the Baker proposals come into operation, there will have been a general election. That gives every Member the opportunity to face their own electorates in the light of the offer by Sir John Baker. There will be an electoral test, which is not a trivial point and represents a specific advantage.
Let me explain another reason. If Members look at the figures that I have chosen for the uprating of pay this year, next year and in the first half of 2010, they will find that they are identical to the figures applied to nurses and other public health workers. This is a time of restraint in public pay; whether or not Members agree with that, it is a reality. It is also a reality that people up and down this land are feeling the impact of the belt-tightening that is inevitable when energy and food prices increase. In that context, there is an expectation that MPs should look at their own role, which is exactly what my right hon. Friend Mr. Touhig has tried to reflect in his amendment—the need to recognise that now is not the right time to rush straight into the full Baker proposals. What we are discussing is the extent to which we need to operate through restraint and in the light of the test of a general election.
Does not my hon. Friend's amendment basically push payments into the next Parliament? In one case, for example, a payment of £1,950 is pushed into the next Parliament, along with the main implications of the Baker review. New Members will be elected, having had no say in this whatever, and my hon. Friend's crazy suggestions for pensions would give retiring Members a cash bung that they had not earned.
Under any independent system, MPs will have no say over their salaries, irrespective of whether they are new or old Members. That is the whole point of what we are trying to achieve today. My hon. Friend thinks that my proposals on pensions are crazy, but the one group of people who will lose out in any period of restraint are those who either choose to retire or who are forcibly retired at the next election. The second part of my amendment is designed to protect those who will leave at the end of this Parliament.
I am a little puzzled by the hon. Gentleman's proposals on pensions. I am not at all sure—I have not yet had the opportunity of taking legal advice—but I doubt whether his amendment would work legally. It might well require an amendment to the parliamentary pensions legislation, but it would certainly need an order to be made. As it stands, it cannot work. As currently presented, it is incompetent.
I am grateful to the hon. Gentleman, who probably knows more about parliamentary pensions than anyone else, but may I tell him that I have sought advice? He is absolutely right that this would require an order. In fact, any expression of opinion in the House today will need translating into action by way of a money order, for example. The fact that a proposal will need subsequent Executive action is not of itself a barrier to the necessary action being taken. The hon. Gentleman may disagree with how the pension scheme will operate, but I can assure him that the proposals in the amendment are both legally and technically do-able.
Does my hon. Friend agree that the combination of catch-up that we would forgo and two and a half years of further wage restraint, which he suggests we undertake, would mean that when the catch-up came in the new Parliament it would be a significant increase? That would make life difficult for all the Members of that new Parliament in terms of wages.
Except, of course, that the level that Members would be at would not differ from what it would be if we brought in Baker now. It may be a big increase at the time, but that would be precisely because Members had forgone some element of it.
My hon. Friend Mr. Love may want to urge me not to give away that amount of money in the meantime—that is a perfectly sustainable argument to make, and I understand it because it is a matter of judgment as to what we face the public with—but it is not legitimate to say that because we would end up at the same point the public ought to judge us harshly. The public ought to judge us well for having shown some restraint in the meantime. I do not necessarily believe that that would be the case, but it ought to be. We would not be getting more; we would be getting less. The catch-up would be all the steeper because it would be catch-up at that point.
The central point that I want to put before the House is the fact that we need to get on to the Baker mechanism, although it is a matter of judgment when. We must ensure that the Baker mechanism is what Baker described—the average index of public sector earnings—because anything other than that would see MPs continue to fall behind in the long-term future. We have to recognise the fact that Baker said that we were sufficiently far behind that we needed the catch-up. The judgment for the House today is at what speed we should reach that Baker trajectory.
When this matter was last discussed, I was one of those Members who argued strongly that some of us on the Members Estimate Committee should have the right to submit our own report, or at least a memorandum, to Sir John Baker. The Leader of the House kindly assented to that and three of us on the MEC—the hon. Members for North Devon (Nick Harvey) and for Middlesbrough (Sir Stuart Bell), and me—submitted a memorandum to Sir John on what pay and salary should be.
I have been a Member of the House for 25 years. I have been privileged to be a Minister under Prime Minister Thatcher and under Prime Minister Major. I have taken pay freezes, pay standstills, pay cuts and pay deferments, and a fat lot of good it did for the respect in which Parliament or Ministers at the time were held. Whether or not Prime Minister Thatcher had a pay policy—I am certain she never did—we took a pay standstill when I was a Minister to set an example to everyone else. A fat lot of good it did us as well.
In our submission to Sir John, we said:
"have advised that average base salaries for each of the comparators groups lay between £70,000 and £80,000pa. Some comparators have bonus opportunities, and other incentive packages which can increase average total cash by £2-3,000pa."
I refer to page 17 of volume 2 of the original SSRB report, which Sir John Baker chaired. He compared our salary to that of a head teacher. Our salary was £60,000 and the head teacher was on £71,000. The police superintendent was on £68,000. The senior civil servant, grade 1, was on £69,000. The county council second tier person was on £72,000. The colonel was on £69,000, as was the health human resources director and similar. The comparators in the SSRB report put those people way ahead of us.
There is therefore no doubt that we have fallen considerably behind those whom the SSRB considered our comparators. And, of course, none of those people—except a colonel in Afghanistan—is working long hours. Most of them are not doing 70 or 80 hours a week. Apart from those on the very front-line who are making tactical decisions involving life or death, most of them do not have the responsibility that we have of voting on issues that do include life or death, whether it be embryos, abortion, 42 days or whatever. We have a responsibility to make mega-decisions. For that, we get the pay of a second tier officer in a district council. I look forward to replacing my district planning officer, if the motion is not passed today.
Further in our evidence, we said to Sir John Baker's review:
"Taking these together we, therefore, consider a salary point around the comparator average is justified by the facts. As a spot rate, it might, arguably, over-reward newcomers and under-reward experienced backbench Members, many of whom are former senior ministers who contribute substantially to the work of Parliament. But this is inherent in a system which has as a principle that the basic salary should be the same for all MPs."
Some will get paid more, some will get paid less. We continued:
"In our judgement a base salary of £75,000pa is very well-supported by the objective evidence available."
I repeat that our evidence, which was based on the facts, the SSRB's original report and Sir John's report, shows that compared with every other public sector comparator—it would not be right to compare ourselves to executives in private enterprise; we are not—a basic salary of £75,000 is about right.
I am making that point for colleagues so that I can collect most of the hate mail— I have rather a perverse incentive for getting that—and so that when they go back to their constituencies they can point out that they asked not for £75,000, which is correct, but for considerably less. If we vote for the Government motion, we will get considerably less. We will be able to point it out to our constituents that we are still not getting the pay that every independent comparator has asked for. Today, however, we have a chance to go slightly towards it.
The Government's motion No. 1 is much more sensible than their motion No. 3. I can understand their pay policy. They are trying to invent some complex formula of indexing themselves to a group of civil servants who do not have pay formula indexation. That is nonsense and the Government have to try to square that circle. Government motion No. 1 is sensible and we should support it.
There is, however, a better alternative, which is amendment (a) to Government motion No. 1, tabled by Mr. Touhig. It is sensible and deserving of support. I will probably fundamentally disagree with him on expenses, where I think he is misguided, but that is another matter. On pay, I urge my hon. Friends and Labour Members to support his amendment (a). It would take us slightly along the route to where we need to be, although that may be a matter for another Parliament.
Some of us might seriously think that we have laid this matter to rest once and for all and that we will never again have to vote on it, but I have heard that so many times. I have probably voted on the last time we will ever decide our pay on about a dozen occasions in the past 25 years. Unfortunately, I do not think that that can be the case. If we have to decide our pay, let it be based on the facts. Let it be based on the independent comparators. Then let us have the guts to do it and hold our heads up, saying to our constituents, "Yes, it was 2.3, 4.5 or 6.7 per cent., or whatever it was, but if we set up an independent pay review body, for goodness' sake let us pay attention to it." I said the same about police pay. I will happily meet my chief superintendent, who is going to be paid a lot more than me, and tell him that I argued that the recommendation of his pay review board should have been implemented as well.
Today we have a chance to move slightly along the route towards securing a proper, sensible salary for ourselves. I support the amendment tabled by the right hon. Member for Islwyn to motion No. 1—it has not yet been moved, but I hope it will be—and I urge Members not to back any other proposal.
The amount that Members of Parliament should be paid is always a awkward subject for debate. The Members Estimate Committee described the issue well in its memorandum to Sir John Baker, referred to by the right hon. Member for Penrith and The Border:
"Instead of being subject to objective analysis and sensible decision-making, Members' pay has become a serious distraction in public sector pay rounds, far beyond its real significance to the public purse."
Time after time we are faced with the same row about Members' deciding their own pay, and time after time we come up with an arrangement that frustrates many and does not satisfy anyone—least of all the media and the public, who are always looking for some story to report. I therefore give a strong welcome to the mechanism outlined in Sir John Baker's review. It is fair, it is transparent, and it prevents Members from being put in the invidious position of having to vote on their own pay; although, given the experience of the right hon. Member for Penrith and The Border, we may not be dealing with the issue for the last time today.
For as long as we vote on this issue, we are trapped between a rock and a hard place. We see the vital need to increase public confidence in Members of Parliament—especially after some recently reported lapses which have, perhaps, done much to damage the reputation of Parliament—but we are sometimes extremely cautious about voting ourselves even the most modest pay increase, and whenever we do we can be sure that we will be portrayed as greedy and avaricious.
I love my country, and I think that the British people are the finest, but I have no illusions about their views on MPs pay: they would not give us a penny if they had their way, and that is the truth of it. However, if we allow Members' pay to fall behind other public sector pay, we will face a time—in my view, a time long past—when only those who can afford it, only those with private means, can enter the House. I am the son of a miner and my mother was a home help. I am a working-class boy from the mining valleys of south Wales. I would never have got here on the basis of independent means. I say that with strong feeling. If the British people want Members of Parliament to be those who have plenty of wherewithal and do not need salaries, let them not vote for me at the next election, because I am the wrong guy to support.
We currently earn less than a primary head teacher in central London, less than a secondary head teacher in many parts of Britain, less than a chief superintendent of police, and less than the head of IT in the Commons. It is only common sense for Members' pay to be determined completely independently of Parliament, and removed from any future political debate. That view was echoed by Sir John in his report. He wrote
"if MPs are prepared to relinquish their control over their salaries, then the Government also has to forgo any possibility of directly seeking to intervene in the process".
Would that my right hon. and hon. Friends on the Treasury Bench took heed of that advice.
It was the Government who set up the Baker review, and it was the Government who gave Sir John Baker his terms of reference. Now that he has delivered, however, the Government are actively seeking to trash his report. Indeed, they have tabled a motion proposing a pay formula which, at best, Sir John considered inferior. To de-politicise this hot potato once and for all, we should ensure that it is not a matter for Government policy in future. In that spirit, it makes much more sense for the House to accept the recommendations of an independent reviewer than to accept the views of the Government, who are not independent.
Sir John's proposals offer a much-needed way in which to solve the problem, and I hope that the motion as amended will be approved. However, my hon. Friends and I, who have tabled amendments to motions Nos. 1 and 3, understand the Government's concern about the need for pay restraint. If the Baker recommendations were adopted, Members' pay would be uprated annually by about 3. 5 per cent. this year. In a year in which others are being asked to show pay restraint, Members want to set an example.
The right hon. Gentleman may wish to know that every member of the 18-man executive committee of the 1922 committee—bar two who were absent last night—has signed his amendment.
I am grateful for that. It shows that the House is united in wishing to resolve the matter.
The amendment to motion No. 1 accepts the formula set out by Baker, but proposes a increase of just 2.3 per cent. from
I appreciate that some will say our amendment allows for pay restraint this year but, depending on the outcome of the next independent review, could breach Government pay guidelines next year. That is perfectly true, but I have no crystal ball. I do not know what the Government's pay policy will be next year, or what the review might produce next year. The amendment tabled by my hon. Friend Tony Lloyd seems to rely on a crystal ball. If it is accepted, on
It is often argued that Members are in a no-win situation when voting on their pay, and I am sure that we will be criticised whatever we do. However, if we do not take these decisions now, we run the risk of falling further behind other public sector workers. The only outcome of this eventuality is that in future we will be faced with voting for an even bigger increase in order to catch up, and where will we be then?
The Government have tabled motion No. 2 as an alternative to Sir John's recommendation. I put it to colleagues that, however impressive it may look now to put on hair shirts and support proposals which would have the effect of reducing Members' pay increases for the short term, that will be storing up trouble in the long term. We might look good to the public at present, but in the long term we will be storing up a big pay increase. We are celebrating the 60th anniversary of the health service. Aneurin Bevan, the man who founded the NHS, summed up that sort of approach when he said that in life we cannot have both the crown of thorns and the 30 pieces of silver.
The Government have to be seen to be doing something about pay, but although their position is understandable, it is not objective. Sir John Baker's independent review is genuinely objective. If our aim is to take Members' pay out of the domain of politics and put it in the hands of those who have no political axe to grind, let us support these recommendations. By supporting the two amendments in my name, the House would ensure that Members' pay would be, as much as is possible, de-politicised and would in future become part of the normal public sector pay system, while at the same time demonstrating the type of restraint that we have asked others to follow this year.
I hope Members will support my amendment.
In all my years in the House, I have very rarely voted on pay, because I have always found doing so extremely embarrassing. I do not think I have ever spoken on the subject before, but I feel moved to do so this afternoon because I am appalled by the attitude of the Government and of those on my own Front Bench.
We have the independent review. Sir John has produced a report to which no one in their right mind can take exception, and I believe that we do ourselves and the public we serve a disservice if we slap Sir John in the face and do not accept his recommendation. I agree with the amendment tabled by the right hon. Member for Islwyn, because it shows a degree of restraint.
I want to talk this afternoon about the comparisons, however. Professional and business people come to my advice sessions for help and assistance. I correspond with them daily, and I always try, as I am sure colleagues do, to do my very best to assist them. Yet I am sure I am not the only Member who has observed that it has reached the stage where virtually every single one of them is earning significantly more than we are.
When I entered the House in 1970, being an MP was regarded as a way of life rather than a job, and I still tend to look upon it in that light. The salary then was £3,250 a year, and there was no trough to get one's snout into because the only allowance we had back then was £500 towards the employment of a secretary. Indeed, only two years before I entered the House—when my hon. Friend Sir Peter Tapsell, who sits in front of me in this Chamber and who is present now, was already a Member—MPs were given postage costs for the first time.
We have moved a long way since then. Some might say we have moved too far. There is no doubt that allowances were brought in because the Government of the day were not prepared to bite the bullet on salaries, or to acknowledge that this way of life had, indeed, become in a sense a job, and because it would be very wrong to exclude people such as the right hon. Member for Islwyn.
I do not mind saying that when I came into this House as a fairly impoverished schoolmaster, I looked for outside earnings to subsidise my work here, and my wife worked for me for more than five years without receiving a penny piece—it was the only way we could do it. We have perhaps over-compensated on some of the allowances—some of which I do not particularly approve of, although I do approve of the ones that we are mainly talking about this afternoon—but I believe that we ought to have some pride in ourselves and what we seek to do for others.
Also, it is not unfair to have some regard to what those who work in this place with us and for us earn. I took the opportunity to consult our admirable Library, and in 1970, when a Member of Parliament's salary was £3,250, the Clerk of the House got £8,600. Today, we have what we have and the Clerk of the House gets £160,000—and God bless him, but there are very few senior people in the Clerks Department who are not earning significantly more than Members of Parliament. There are quite a significant number in our Library who earn more than Members of Parliament. There are people in the catering department who earn more.
I do not begrudge any of those people a ha'penny of what they earn, but I do know that most of them do not work the 70 or 80 hours a week to which my right hon. Friend David Maclean referred, and which we have to do if we are to do our jobs remotely properly. So this afternoon, which is another compulsory exercise in navel-gazing which none of us likes, let us grasp the nettle once and for all—I hope that it will be once and for all, although I do take the points made by my right hon. Friend. I hope that a future Parliament does not have to debate this again, and that Sir John's wishes can be fulfilled. I hope that from now onwards, whatever is earned by Members of Parliament will be determined elsewhere, but we are not going to assist that process if we follow the Government and the Opposition Front Benchers' line this afternoon.
I endorse the points made by the right hon. Member for Islwyn when he talked about the amendment tabled by Tony Lloyd. If that amount of money is piled up—if we have another two or three years of some degree of austerity—we will put the next Parliament in the position where it would have to reject that £6,000 or £8,000 pile-up; it could not accept it. What Sir John Baker has given us is the opportunity to have a modest increase on a modest salary, and to give the determination of future salaries to another body, so that we can get on with what we are sent here to do and not have to bother with it.
I strongly support the amendment tabled by the right hon. Member for Islwyn. I hope that colleagues in all parts of the House will do likewise, and I trust that this will indeed be the last occasion on which we shall have to debate these matters.
I fear that where we are now is not where we expected to be when we last had a debate on this subject, on
That is not, sadly, the position that we find ourselves in today, and I have to say that I do not think that the Government have acted fairly in any way in relation to the undertakings given on
The other problem is that the Government have changed their position on a lot of the aspects of the Baker report during the course of its evolution. It is worth examining those aspects. When the Government made their recommendation to Sir John about the correct work force comparator for Members of Parliament, they said in paragraph 17 of their submission that
"the correct workforce comparator for determining MPs pay uplifts" was senior civil service pay. They claimed that that had been supported by the Senior Salaries Review Body. It is true that the SSRB supported it at one time, but as Sir John Baker made clear in his report, he no longer supports it. It is worth quoting what he said on that subject. In paragraphs 32 to 36—Simon Hughes commented on the criteria contained in paragraph 32— Sir John states that for various reasons, which he sets out in great detail, he no longer thinks that SCS pay is the appropriate comparator. Paragraph 37 states that
"I no longer believe that any linkage to the SCS would be a sound, independent mechanism", and goes on to give his reasons for that. In summarising, he states:
"Thus it is clear that linkage to the SCS does not satisfy the criteria of independence, transparency, simplicity or freedom from risk of manipulation and would be unsuitable as an automatic uprating mechanism."
He clearly repudiates the proposal put to him by the Government in their initial paper.
Sir John goes on to examine details of the other proposals and the basket of comparators, which he restricts to public sector pay. Of course, many Members have said that they should be restricted to public sector pay, because we are public sector workers. However, the SSRB has said in the past that we ought to be compared with people in the private sector, because our Members are not drawn exclusively from people who have been working in the public sector. Probably the overwhelming majority of right hon. and hon. Members are drawn from the private sector.
We must have some reason for people to want to come here, considering the amount of income that they are likely to give up—even those from the public sector. We run a risk of our recruitment being of interest only to public sector employees or, as has been said, those who are so well off that it does not matter, for whom this is a hobby. We hope that there are not too many of them.
Sir John deals in great detail with comparators in the public sector, particularly in paragraph 39. He states:
"There are practical obstacles to the use of such a basket for an automatic uprating system."
I shall not bore the House with all the reasons that he gives for that, but everybody can read the paragraph. He goes on to state:
"Again I conclude that an approach to uprating based on a basket of comparators cannot satisfy the criteria set out in paragraph 32 above."
One reason is that he believes that if they are exclusively public sector comparators, they are capable of being manipulated by the Government from time to time. He wants to avoid that, because he does not think that it would be a robust way of going forward. He points out that in 2007, PricewaterhouseCoopers, which was then advising the SSRB,
"recommended that the PSAEI"— the public sector average earnings index—
"be used to uprate MPs' pay and pointed to some of the problems that would be caused by an attempt to link MPs' pay to settlements" rather than to what was actually being paid. He says:
"At that time the SSRB was reluctant to follow PwC's advice, but on reflection I believe PwC were right and, as I explain above, a new linkage to the SCS as previously proposed by the SSRB would not satisfy the test of independence".
Nor does he believe that a basket of comparators would be appropriate. The basket now proposed by the Government is so huge, complex, opaque and open to different interpretations that it would be impossible to implement. The Government are asking us to accept smoke and mirrors today.
Sir John concludes, in paragraph 46:
"I am sure, having considered and discussed the options extensively, that this"— the PSAEI option—
"is the best solution. It meets all the criteria in paragraph 32 above and I believe that, if implemented, it would be likely to last for many years. However, I also recognise that it has presentational difficulties for both the Government and MPs themselves."
If the Government were to act in good faith, they should accept those presentational difficulties and the House should also accept them. Having said that, I also accept that there is a problem in the present climate with accepting Baker in full. Although Baker probably should be accepted in full, we need to continue to try to set an example, even though that has been ignored in the past. By the way, our pay has increased—
Order. I dare say that the House could listen to some speeches for a considerable length of time this afternoon because of their informed and reasoned content, but we are operating under a time limit.
Although it would not be proper to vote against the motion, I think that the House has set off on the wrong course. Ministers and Members of Parliament have to take tough decisions, and the idea that we are too weak or feeble to set our own pay every now and again is wrong. However, the general consensus seems to have moved on, so perhaps we will have to come back to that in the next Parliament.
I also believe strongly that we should not have pay increases from one general election to another. Pay should not be set at the beginning of a Parliament: it should be set in advance to come into effect at the beginning of a Parliament, so everyone knows the rate of pay for a bog-standard Member of Parliament after the election. Perhaps as well as putting our party and address on our ballot paper, we should suggest the level of pay we would be willing to accept. If I decided that I wanted to be paid more than the Liberal Democrat and less than the Labour candidate, people could judge whether we were worth it—[ Interruption.] That may be going a step too far.
If we assume that the standard rate of pay will apply to each of us, the question is what that rate should be. When I first spoke on this subject, Enoch Powell intervened and asked whether I was aware that there were more candidates than places, and did not that suggest a certain superfluity—he probably used a much better word. The point was then put back to him that instead of being paid, we could have a nominal tax of, say, £2,000 a year, so there would then be exactly the right number of candidates to match the number of constituencies, and then he might be satisfied with the calibre of his colleagues.
The truth is that in the past it was the poor and well-off who became Members of Parliament, not those on middle incomes, and that would happen again under these proposals. When I first got elected, I had been running a small neon lighting business putting bright lights outside theatres and cinemas in the west end. I worked with 25 people. When I became a Member of Parliament in 1975 my pay dropped from £5,000 a year to the £3,200 that my hon. Friend Sir Patrick Cormack mentioned. When we had these debates, I then found that if, at that election, I had been a number three ranking person in the London borough of Lambeth, where we then had a home, I would have earned about 20 per cent. more.
I take the view that the right level of pay for a general practitioner in politics is about the same as for a general practitioner in medicine, but that does not work any more because GPs are getting significantly more than I thought they were. It would be quite easy to pick a rate of pay that would sound about right and we could then say to the public that we would not take the increases between elections and that we would keep the Government out of it.
It is perfectly understandable why the Leader of the House and my right hon. Friend Mrs. May made the speeches that they did, but they were not the sort of speeches to which a Member of this House should pay attention. We should either support the amendment or reject the increases and say that we will determine that we will set our rate of pay with advice from Baker or some equivalent. It could then come into effect at the next election when both we and the public know what the terms of trade will be.
I have taken a close interest in this subject since being, in a former existence, the shadow Leader of the House. At that time, I made recommendations on behalf of the Conservatives to the SSRB and proposed that Members' pay should be linked to that of a chief executive of a small local authority, given that they deal with approximately the same population as us and deal with chief constables and others in public positions on the same basis as MPs. However, I do not think that even the recommendations in the Baker report are anywhere near what the chief executive of a small local authority earns.
It is a great shame that today the House will be unable to accept the Baker recommendations for the reasons that many colleagues on both sides have given, especially when we want to depart from the practice of having to keep voting on our pay. I do not think that the public understand how much we object to it. It is almost as if their perception is that we want to make that decision because we will get more out of it, yet MPs' pay increases over the past five years have been extremely modest. Not only have they been modest in comparison with other public sector pay increases but they have been staged, too, which means that they have been worth less.
I have no axe to grind, as I will leave the House at the next election, but I am well aware of the need for incentives to attract future generations to apply to become a MP and to consider representing a constituency. Although I know that we all do it for the best reasons, we, too, have to live. One great sadness, which the Leader of the House mentioned, is that we find ourselves in a great mishmash of misinformation. There are genuine problems with MPs' allowances that will need to be sorted out—they are the subject of the next debate—but the public perception is that our salary and our allowances are one and the same. That makes it particularly difficult to debate the salary alone and to accept something like the Baker report.
I think that today's proposal is more to do with the public perception than with the Government's public sector pay policy. The Leader of the House is shaking her head, but we all know that out there the public have been led to believe—mainly by the tabloid press—that somehow secretaries' salaries and the range of allowances are rolled into one and that we as MPs receive them through our private bank accounts. We all know that is not true, but the fact remains that that is how the water has been muddied and why today we find the Government and Opposition Front Benchers seeking to make some sort of gesture that will convince the public that we are not greedy and so on.
I speak as a Member who will be leaving the House. Incidentally, from what I have heard today, on retirement, a job in the House of Commons catering department looks extremely attractive, if only to keep me out of the house for a bit. I am sure that my husband would be delighted.
Seriously, we are where we are, for all the reasons that every Member of the House knows. I will support amendment (a), which is in the name of Mr. Touhig, because he has struck a good compromise. I say to Members who will be here long after I have departed: take courage in your hands. There will never be a good time to play catch-up with MPs' salaries. No matter what gestures we make today or in the future, there will always be a reason not to increase that salary. That is why I shall support the right hon. Gentleman this afternoon.
Amendment proposed: (a), in line 9, after the word 'year', to insert the words
'provided that, without prejudice to the calculations based on the agreed formula, from 1st April 2008 the annual salary is increased by no more than 2.3 per cent. and that the balance of any increase due at 1st April 2008 should be payable from 1st April 2009 in addition to any increase payable at that date.'.— [Mr. Touhig.]
Question accordingly negatived.
It being more than one and half hours after the commencement of proceedings, Mr. Speaker put the remaining Question s necessary to dispose of proceedings on the motions relating to Members' salaries , pursuant to Order [
Main Question put:—
The House divided: Ayes 141, Noes 216.