The feeling against MPs’ exorbitant and/or unjustified allowances has reached boiling point, and some of it in the light of recent revelations is certainly warranted. There is no question that the whole matter of MPs’ expenses needs to be drastically reformed if public confidence is to be restored. There has to be agreement, with public consent, about what MPs need in order to do their job properly, and the system then has to be tightly and rigorously supervised to ensure that these minimum costs are made available, but no opening is left for claims beyond what is strictly necessary. The whole issue also needs to be cleared up urgently – within 3-6 months at most, after taking evidence and all due deliberation – but the rather nonchalant way in which the Committee on Standards in Public Life seems to be approaching its mandate from the Prime Minister to carry out this investigation certainly isn’t helping. What in my view does not need to be done, though Gordon Brown’s initial knee-jerk reaction appeared to favour this, is to abolish the allowances and give MPs instead a hefty increase in pay, maybe through a daily attendance allowance in the Commons. I just don’t believe the public will in their current mood will wear any significant increase in MPs’ pay, let alone one sufficient to cover accommodation in their constituency. But there are several reforms which can and should be brought in quickly.

First, it should be made absolutely clear what MPs are not getting. People are incensed when they read that MPs receive up to £180,000 in allowances (the highest figure claimed by any of the 645 MPs, and well reported). What they are not told is that £95,000 of this covers payments to staff, not a penny of which goes through MPs’ accounts. The remainder covers travel costs (which is necessary), office rent and business rates, office equipment and utilities costs for staff, postage and stationery, plus the Additional Costs Allowance (ACA) which covers the second home costs. It is the latter, and the latter alone, which has produced such an enormous furore because of the way it has been outrageiously abused by a very small minority of MPs.
The ACA, which covers rent or mortgage interest costs or alternatively hotel costs, plus utilities, Council Tax, telephone and telecommunications, cleaning, repairs, and insurance costs, can be claimed against these items on the basis of receipts or paid invoices up to a maximum total of £24,000. It is this arrangement which needs to be radically reconstructed. First, there need to be clear rules for determining what is the MP’s main home and what is the second home, so that these cannot be switched round for the MP’s financial gain. Second, rent or hotel costs should be covered up to a reasonable level, but where accommodation is provided through house purchase, the mortgage interest would only be paid through the public purse if the house reverted back to the State at the end of the MP’s tenure of the constituency. Third, only other absoloutely essential costs would be covered (subject of course to supply of receipts) such as Council Tax, utilities, cleaning, insurance and repairs, and all these expenses would have an overall cap. Furnishings however would not be covered out of the public purse.
All these new rules would collectively draw the sting from the outrage over Parliamentary expenses. But there would still be a need for an external body (not a committee of MPs themselves) to police the system by settling any disputes that might arise and by quickly blocking any new irregularity or extravagance (e.g. the loophole that apparently allows MPs to claim rent on their own property by setting up a trust). In the most egregious examples of abuse it should be within the remit of this external body to recommend that an MP had forfeited the trust placed in him or her on election and should be expelled. That would a penalty in only the most extreme case, but I believe it is necessary that it should be available since the public have understandably completely lost confidence in self-regulation by MPs themselves (and probably in self-regulation too in the case of any other public occupation).

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