Saturday, 13 July 2013

Pay Up

One of big stories of the past few days has been that of the pay of MPs. IPSA, the independent QANGO that looks after MPs pay and expenses, has recommended that MPs receive an extra £6,000 extra a year, culminating in a 9% increase after the 2015 General Election. I would like to say for clarity that MPs themselves have not recommended that they receive a pay increase and there is also a 1% pay rise, in line with all public servants, next year and the one after.  IPSA has got this one completely wrong however though as there is no particular reason for a change the amount MPs get paid. But redistribution of the total pay of MPs, their salary, expenses and pension, is needed to try boost representation of the public.

Pay rises should always be related to performance and thus, as there is no real fair measure that could be easily done on individual MPs that would not cost the Earth, we should judge MPs as a group of people and their improved performance across the ages. If you have a look at the chart below you can see that the pay of MPs has risen three times since the 1970s. The question thus is are MPs three times as good as they were in the 1970s? I think a good case can be made that they are better but three times is probably too much. on that basis MPs should have their pay frozen because their performance is at best equal to their pay.

One argument for the rise has been to attract members of the public who have a better ability to become MPs. By raising the salary those who a most able will come to the job. Ronald Reagan once said "the best minds are not in government. If any were, business would hire them away." There is no way that MPs salaries could compete monetary wise with the best in business because the best of the best don't get paid £72,000. They get almost double that and for the real best of the best we need to double that again. A rise such as astronomical as this could never be tolerable in relation to performance and even if we were to do it market forces that business responds to would offer a better deal.

But more importantly there is another problem with this argument and this that MPs aren't, or rather shouldn't be in some cases, in the job for the money but public service. People want to be MPs to serve, there are plenty of people willing to do this. People line up across the country to be MPs we are in no short supply of competent and willing people so we have no need to attract those in business.

Another wise quote is "There is No such thing as Public Money. There is only Taxpayers’ Money." Perhaps this should be more respected. 
But there is one issue that has come to light from the problems over MPs pay that does need solving. One of the arguments against a pay rise is that MPs are already millionaires and therefore should not get any more. However, I don't want all my MPs to be millionaires because we want people who in their 2nd life come from all levels of income, not just the super wealthy. The problem is that the less money MPs have in their pockets does effect the attraction of wealth levels as costs in being an MP do generally run over income.

There is however a solution to this situation and that is to pay MPs more but slash the amount that can be claimed in expenses and the amount given as a pension. This does not increase the overall cost of being an MP but allows them to have more money at hand. Consequently we are likely to get less Etonians or Duchesses, like Harriet Harpaerson, into Parliament. The IPSA proposals do contain some of this action but not enough to address this key problem.

Let's make sure that our representative democracy is just that.

IPSA has got their ideas very wrong on increasing MPs pay. If this were a business where everyday logic and reason applied and not the public sector, where there is an unwritten law of smash and grab as much money as you can from the taxpayer, this would not be happening. The greatest injustice of this situation is that IPSA's recommendations are seemingly binding. We'd have to be rid of IPSA to be rid of an increase. But IPSA have somewhat unknowingly stumbled into a situation where they could improve parliamentary representation in the country if only they cut expenses and gold plated pensions more.

Sir Ian Kennedy, head of IPSA, like many other civil servants has the wrong ideas on pay.

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