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(Except clauses 7, 8, 9, 11, 14, 16, 20 and 92) - Clause 56

Part of Finance Bill – in a Public Bill Committee at 10:45 am on 16th June 2009.

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Photo of Greg Hands Greg Hands Shadow Minister (Treasury) 10:45 am, 16th June 2009

It would be dangerous for me to give an opinion on my hon. Friend’s intervention. He has made his point and perhaps it might be more appropriate for others to respond in due course when considering any reforms of the allowance structure in this place. Nevertheless, the UK office of the European Parliament misleadingly claims that MEPs’ pension rights are the same as for a Westminster MP when in fact, under the new rules coming into force following the European elections and giving rise to clause 56, MEPs will be entitled to a far more generous pension scheme than MPs. My understanding of the MPs’ pension scheme is that if we contribute the standard 10 per cent. of our salary over a 10-year period—that is, a whole year’s salary of £63,291, although I am not sure that is the latest figure—we will have access to a pension of £15,822 per annum.

By contrast, under the new rules to come into force after the election, MEPs will receive an annual pension of £27,954 which is almost twice as much, after paying in nothing from their own salaries over the same 10-year period. This is what Open Europe has said about the whole package:

The European Parliament has introduced some reforms to come into force after tomorrow. However, under the new rules, UK MEPs will get a huge payrise, and while receipts will for the first time have to be produced for travel expenses, the vast majority of expenses will continue to be available without a receipt. On top of that, the pension becomes even more generous than before—dwarfing the pension that national MPs are entitled to.”

When we debate the tax treatment of MEPs, we need to be aware of what we are paying for, previously directly and now to be indirectly.

Another aspect on which the Government will need to provide reassurance is what happens to MEPs and whether they need to pay any tax to the Belgian or French national authorities if they declare themselves to be resident in Belgium or France—the two locations of the Parliament. With the new tax for the benefit of the Communities, are MEPs now exempted from Belgian taxation if they are mainly resident in Brussels? I do not know the answer. That question has probably cropped up on a number of occasions over the decades but I am not sure of the situation.

One of my London MEPs wanted me to raise a question relating to the tax treatment of those who are or might be deemed non-domiciled MEPs. Independent of any questions relating to MEPS, it would appear that HMRC is increasingly taking the view that EU citizens working in the UK are generally to be treated as non-domiciled. There is a very important issue in London. My constituency has the second highest proportion of non-UK EU citizens in the country. Kensington and Chelsea is the first and the two Cities is probably the third or fourth along with Camden. That means that over 9 per cent. of my constituency are non-UK EU nationals. There is an important point about whether they will normally be deemed non-domiciled, which I believe is the view increasingly taken by HMRC.

Interesting questions arise with MEPs who were not previously UK residents. Let me try to explain by using a specific example. This question to date has been more  theoretical than practical. I recall that either in the 1984 or 1989 European Parliamentary elections, David—now Lord—Steel stood in Italy to become an Italian MEP, if my schoolboy memory is correct.