Mark Stuart: If you pay peanuts, you get monkeys as MPs

THIS month marks the 100th anniversary of the introduction of MPs’ pay. I doubt very much whether any readers will be celebrating the fact, but perhaps it is a timely moment to ponder how the system of MPs’ remuneration ended up in the sorry mess it is in today, how much we should pay our elected representatives and whether they represent value for money.

It was a Liberal Government that introduced MPs’ pay back in August 1911. Up until that point, the long-held view, shared by one of Labour’s founding members, Keir Hardie no less, was that the political independence of MPs would be compromised were they to receive a salary.

However, the Chancellor of the Exchequer, Lloyd George, introducing the measure as part of his Budget statement, knew at first hand just how difficult it was for Members from ordinary backgrounds to survive without a steady income.

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MPs’ pay was set at the modest sum of £400 per annum, and remained at that meagre level until 1937, although it was temporarily reduced during the economic crisis of the early 1930s.

It wasn’t really until the establishment of the Top Salaries Review Body (TSRB) in the early 1970s that a proper review of MPs’ remuneration was undertaken.

At this time, such was the paucity of an MP’s income that several Labour Members used to share accommodation, some sleeping on sofas in order to cut costs. Trade union funding, always problematic, was required to support such cash-strapped MPs.

But when the TSRB recommended a major salary increase in 1975 from £4,500 to £8,000, the Labour Government failed to implement it in full.

It was at this point that MPs’ pay began to fall out of line with average earnings, but to sugar the pill, their pensions were calculated at the £8,000 level (beginning a trend of generous pension provision which carries on to this day).

Meanwhile, the main form of MPs’ allowances – the Additional Cost Allowance (ACA) – sky-rocketed from just £187 in 1972 to more than £5,000 by the end of the 1970s.

The pattern was set. Successive Governments refused to implement in full independent pay recommendations, while compensating MPs by beefing up their pensions and allowances. MPs began to regard their allowances as part of their salary, and abuses of the system became inevitable.

During the 1980s and 1990s, the nature of MPs’ work began to change. More and more time was spent in the constituencies at the expense of scrutinising the work of government at Westminster. It became the priority for an MP to be photographed in his or her newspaper with the local bowling club, rather than questioning the government on matters of policy. We now have to seriously question the role of our MPs as overpaid social workers, helping those who complain the loudest to jump the queue.

Moreover, a veritable cottage industry system of allowances grew up to reflect this new emphasis on the constituency. In 2006, MPs were even given a £10,000-a year Communications Allowance to keep in touch with their constituents. In Tony Blair’s decade in power, the Additional Cost Allowance nearly doubled from £12,000 to £23,000. MPs in marginal seats were actively encouraged to spend more time in their constituencies in order to seek re-election.

But what really irked the public (then oblivious to the abuse of expenses) was that MPs were allowed to vote on their own pay. This sorry state of affairs appeared to come to an end in 2008 when the re-named Senior Salaries Review Body (SSRB) constructed a fresh formula, uprating MPs’ pay in line with the average earnings of a basket of senior civil servants.

However, in March this year, the coalition, fearing a public outcry, chickened out of awarding MPs a salary increase, announcing a pay freeze instead. A jolly good thing, I hear you cry. Why should MPs get a pay rise when most people are having their own pay cut? However, an important principle was broken here. Either an independent body should determine MPs’ pay or MPs will be once again put into the invidious position of deciding their own salary levels.

This episode is also a good illustration of the need to set aside our understandable emotions and natural hostility to politicians when thinking about how much we should pay them. It’s always better to focus on the facts.

According to a recent survey conducted by Matt Korris for the Hansard Society, over half of the MPs first elected in 2010 took a salary cut on becoming an MP. While that statistic might cheer a prurient general public post-expenses, there is now a very real danger that low levels of pay and expenses will discourage quality people from becoming parliamentary candidates. Membership of the House of Commons could once again become the preserve of the independently wealthy, as it was in Lloyd George’s day 100 years ago.

While I fully accept that there is no public appetite whatsoever for paying MPs more, we need to do just that to improve the calibre of our politicians. There’s an old saying that if you pay peanuts you get monkeys. Perhaps that should read, if you pay peanuts, you get MPs.

Mark Stuart is a political researcher from York who has written the biographies of Douglas Hurd and John Smith.