MAKE SALARIES TRANSPARENT IN ELECTED SENATE

This article first appeared on Comment is Free on 13th November 2007

Why are Peers’ allowances treated differently to the remuneration everyone else gets for their jobs?  Good question.  But then, one might more appositely ask why Peers have got their jobs at all, never having had to trouble themselves with a ballot box.

Various of their Lordships are – bluntly – undemocratic dinosaurs.  So, earlier this year when Parliament – both Houses – debated proposals to bring the Lords into the 21^st century, one Peer in particular – Lord Lipsey – attempted to keep the House firmly Jurassic by highlighting the potential costs of an elected Chamber.  His estimates were, of course, wildly tendentious, assuming salaries comparable to those of MPs, similar staffing allowances and so forth.  He ignored the huge difference between untaxed allowances and taxed salaries.

It is true that far from being a bastion of value and transparency for the taxpayer, the present expenses regime is, at best, eccentric.  Peers can claim an overnight expense allowance, subsistence for meals and so on, as well as travel between their home and the House.  For working Peers, there is nothing wrong with their receiving some remuneration since the allowances are allocated daily and can only be claimed if they have attended the House, or one of its committees.  Yet most people are expected to fund their meals – living costs – out of their salary, which is taxed, rather than rely on untaxed expense claims.  And in the private sector – indeed just about anywhere outside the Westminster village – people are expected to provide receipts for actual costs incurred in order that they might claim expenses.  Otherwise, what they are paid is considered taxable income. 

It is time to rationalise the way in which Peers are both chosen and remunerated.  The House of Commons has made clear its view that the second chamber should now be 100% elected; a recent Liberal Democrat policy paper, by a group I chaired, endorses that view and proposes a wholly elected Senate.  Parliament should expect Senators to attend if they are to continue to receive their salary, just as it does Councillors.  With competition for places in the Senate at a premium only those who intended to work there would contest the seats.  With things as they are, the House is all too often a staging post for those attending board meetings in London to nip in, claim their allowance, and nip out again.  That is bad for the reputation of the institution, it’s bad for the taxpayer, and it’s particularly bad for democracy.  It’s time to end the Lords’ status as the best Gentleman’s Club in London.

Far from the petulant cries that a change to the status quo would be financially and legislatively ruinous, proper provision for elected Senators would not need to be extravagant and could be a great deal more transparent than the present arrangements.  First, Senators would spend around three days a week in the House; they would not be expected to take-up casework (if they did they would certainly tread on MPs’ toes), so their work would be approximately half that of MPs, and would no doubt be seen as such by the Senior Salaries Review Board, which sets stipends of this kind.  Senators might – if they were particularly assiduous – rightly claim a need to one assistant.  As MPs typically employ upwards of four people, this would represent about a quarter of an MP’s present staffing allowance.  The allowance could be paid through a payroll system directly to the employee, instead of to the Peer, as presently happens.  If people want Senators from all over the UK – something they do not get from the present House, which is disproportionately dominated by those from London and the South East – they will have to accept the costs incurred travelling back and forth.  But in a new system, they would only pay these for a far smaller number of people, and could be safe in the knowledge that they were paying parliamentary allowances to parliamentarians working in Parliament, not to directors attending board meetings.

Parliament has managed to enshrine in legislation sufficiently rigorous arrangements for the allocation of local government allowances, and for the provision of staff to Council Groups.  Yet Westminster contents itself with far too much opacity – witness the Speaker’s extraordinary rancour over publishing a breakdown of MP's travel expenses.  Alas, as with the core issue of who legislates in Britain’s second chamber, this is a case of “Physician, heal thyself.”

The Commons has had its say on the future of the second chamber; Peers predictably dug themselves into the trench of patronage on which their places depend.  The initiative is now with the Government to act to implement the decision reached by MPs; after all Ministers are usually quick to insist that the Commons is the pre-eminent chamber. 

With democratic reform should come financial reform; I very much doubt either will happen without the other.

The author is former Liberal Democrat Shadow Leader of the House of Commons and MP for North Cornwall.  He now speaks for the Liberal Democrats on Constitutional Affairs in the House of Lords and campaigns for an elected second chamber.