W4MP's Guide to Expenses and Allowances
Updated (first paragraph only): 31 May
For many MP's staffers, the current debate over expenses might seem a little out of hand. After all, MPs' staff know better than anybody how hard MPs work, and the resources they need on hand to do the job properly. In fact, it can be frustrating for staffers to hear members of the public denounce 'second homes' - as if their MP swanned off on holiday to their Cornish second home every two minutes - when in fact we know the difficulties of having a job in which you're expected to be in two places at once. But while we might have more sympathy than the average Joe, it's only fair that a line should be drawn – at the end of the day, expenses are taxpayers money.
This brief Guide to Expenses is your introduction to the hard and fast rules of MPs' expenses – and your own. The recommended read for further information and detail is The Green Book, the latest version of which was published in March 2009 and can be found here http://www.parliament.uk/documents/upload/GreenBook.pdf. The debate about reforming expenses may, of course, change everything, but for the moment the current rules apply.
At the time of writing, April 2009, MPs' expenses seem to be at the top of the news agenda, with new stories and developments every day, reflecting the high level of public interest in the matter. While some MPs are currently the subject of investigation and may or may not have done anything wrong, others have come under media scrutiny and criticism without actually having broken the rules. The Leader of the House has published proposals for radical change to the expenses system, and these proposals are currently being discussed.
The detailed expenses claims of Members of Parliament were made public for the first time on 21st October 2004, shortly before the Freedom of Information Act came into force. This significant increase in transparency elicited a slew of press coverage, many reports casting MPs in an unfavourable light, focusing on both total amounts and the number of claims the papers felt to be unjust.
Stories about MPs' expenses have been a media favourite ever since, receiving coverage year on year. In early 2008, the expenses scandal that most directly involves staffers broke when it was discovered that Derek Conway employed his underqualified son Freddie as a Researcher between 2004 and 2007, paying him £45,000 of wages for work which the lucky Freddie never actually did. Part of this sum was made up of bonus payments, paid over the maximum level allowed.
Conway was suspended for 10 days and had the Conservative whip withdrawn. He was also ordered to pay back just over £13,000. Almost a year later, Conway agreed to repay a further £3,757 after a second criticism by the Parliamentary Commissioner for Standards, this time for paying his other son (the again underqualified) Henry, over the odds for his employment between 2001 and 2004.
In February 2009, an investigation was started by the Parliamentary Commissioner for Standards into Home Secretary Jacqui Smith's living arrangements. She had been claiming Additional Costs Allowance (now called the Personal Accommodation Allowance Expenditure) for her constituency home in Worcestershire while designating her sister's home in London as her 'main home'. The Commissioner decided to look into the situation after neighbours claimed that she did not spend enough time at the house to qualify it being her 'main' residence, while the rules state that the residence where the MP spends most of their time should be classified the 'main' home). The investigation has not yet been concluded.
The following month, Conservative MP Greg Hands lodged a complaint with the Parliamentary Commissioner for Standards against Welfare Reform Minister Tony McNulty as the Minister has claimed £60,000 in ACA since 2001 for his constituency home in Harrow, although he now lives in Hammersmith, which only three miles from Westminster. Under the Green Book rules this is permissible as his Harrow constituency is far enough from Westminster to qualify for additional costs, regardless of how much the constituency house is used. This complaint is also still being investigated.
Later in March the Sunday Express broke the news that two pornographic films were charged to the ACA of Jacqui Smith by her husband (and Research Assistant) Richard Timney. She apologised for the error, apparently made when claiming for an internet package, and has made it clear she will pay back the money.
The following month saw further housing related news coverage, as a series of Ministers and former Ministers were criticised in the press for living in government accommodation while still claiming the housing allowance, it wasn't well received by the press and public when it transpired that Geoff Hoon had been claiming the ACA and renting out a London home, whilst receiving government accommodation during his time as Defence Secretary. Margaret Beckett was also revealed to have been receiving the ACA while living in a 'grace and favour' apartment during her time in the Cabinet. The press further reported that Chancellor Alistair Darling has been renting out a London property and yet still claiming the ACA , ever since moving in to Downing Street, which is of course rent-free.
These rows over expenses matter, if only because they affect the way the public perceives politics and politicians. A poll conducted by Populus in early April 2009 and reported in The Times found that two thirds of voters think that all, or the majority of, MPs abuse the system of expenses and allowances. Only 8% felt that 'very few' MPs did so. More than half of the public think that the 'second homes allowance' should be scrapped, but with no compensatory rise in MP's pay.
The Committee on Standards in Public Life has brought forward its already-planned review of Members' Allowances in the light of the recent controversy. It will start to take evidence this summer (2009) and will publish the results of its inquiry before the end of the year, rather than after the next election, as originally planned. Meanwhile the Prime Minister has outlined proposals for more immediate and radical reform, which are currently being debated.
This is the current situation.
The revised Green Book, published in March 2009, made a number of changes to the system and notably to the names of each type of allowance. Read up as soon as possible to avoid confusion, even if they may all change in the next few months! It's here: http://www.parliament.uk/documents/upload/GreenBook.pdf.
Those listed here are the main types of expenditures used on a day to day basis by Members. For those less common, such as the Winding Up Allowance and London Costs Allowance (for inner London Members only), check the Green Book if necessary. Until April 2008, MPs did not need to provide receipts for items under £250. This has now been reduced significantly to £25.
Personal Additional Accommodation Expenditure (PAAE) – known until 1st April 2009 as the Additional Costs Allowance and known to the press and public (arguably inaccurately) as the 'Second Homes Allowance'. This allowance covers the cost of a mortgage or rent on an additional home (or hotel costs). The point is to cover the costs of a having to attend Parliament while also seeing to the needs of constituents, and most MPs use it to pay the cost of their London homes. The limit this year (08/09) is £24,006 and it needs to cover council tax, utility bills and so on. It also covers claims made for furnishings using the so-called 'John Lewis List' (named after the list of this department store's prices, used by officials in the Resources Department to decide whether a claim is reasonable). The PAAE also covers the £400 per month that MPs can claim to cover the cost of food bought while away from home. However, it can't be claimed by MPs representing the 24 inner London constituencies, as of course they're considered to close enough to Westminster to require only one home.
Administrative and Office Expenditure (AOE) – formerly known as the Incidental Expenses Provision, this covers most often the rent of surgery space and general office equipment, including computers and stationery.
Salary – MPs receive £64,766 in salary and a final salary pension scheme.
Communications Expenditure, formerly the Communications Allowance, is fairly new, introduced in 2007 to clear up the confusion that surrounded the use of the Incidental Expenses Provision for communicating with constituents. So, for example, it covers the cost of websites, annual reports and newsletters, surveys and petitions as well as the postal costs for all of this mailing.
Staffing Expenditure – formerly the Staffing Allowance, this covers staff salaries and employer's National Insurance Contributions, bonuses (if you're very lucky), redundancy payments, additional staff costs and payments for bought-in services, for example one-off research or training costs. To be eligible for your salary paid from the Staffing Expenditure, you need to be a) genuinely needed to do the job, b) qualified and able to do the job and c) actually doing the job.
Travel Expenditure – formerly the Travel Allowance, this covers the cost of all travel on parliamentary business in the UK and Europe. There's no limit on the amount of travel costs MPs can claim for. MP's spouses, civil partners and children up to the age of 18 are each entitled up to 30 single journeys each year between London and the constituency. For vehicle travel, costs are reimbursed according to mileage, with differential rates for car, bicycle and motorbike mileage, though we're not sure here at W4MP which MPs the latter might apply to!
The expenses tables for MPs differ greatly depending on whether travel costs are included. As most MPs travel to and from the constituency weekly, such costs are a huge expense and so MPs with the more remote constituencies of course shoot further up the expenses table when travel costs are included. Take, for example, Alistair Carmichael, whose overall expenses are usually near the top of the table and might seem extravagant, unless you're aware his constituency is Orkney and Shetland, and it's a 1400-mile round trip every week – not to mention getting around the 34 islands which scatter his patch.
It might be difficult and unrealistic for you to be expected to be involved in your MPs expenses and our advice would be to steer well clear of their personal spending decisions. However, you do need to be aware of how the system applies to staffers, as you need to register your interests in a similar way that they do. For how and when to do this, see the W4MP Guide 'Register of Interests – Guide for Members' Staff' here http://www.w4mp.org/html/library/guides/0807_registering_interests.asp.
The Register of Interests of Members Secretaries and Research Assistants can be found here: http://www.publications.parliament.uk/pa/cm/cmsecret/memi01.htm – this is the document your interests will be listed on and it's updated very 4-6 weeks.
Basically, you need to declare any payment or gift of over £300, which you've received from a single source within a calendar year, if it has arisen from your work in Parliament. If you have any doubts, call the Office of the Parliamentary Commissioner for Standards on extension 0401.
Also, remember your MP can claim for up to 24 single trips to/from the constituency for yourself and other staff members. You do need to give a viable 'on parliamentary business' reason, but Westminster-based staff can perhaps use this allowance for an initial visit to the constituency for a meeting with your new colleagues, or those of you located in constituency offices can use it to travel to London for one of the Westminster Open Days which are periodically offered by the House authorities for constituency staff.
When the year's expenses are published, the local papers in your MP's constituency will be on the lookout for a story, probably hoping there will be some juicy unjustified expenditure or at least a whopping overall expenses bill. If there's anything worth reporting on, you can be sure they'll find it. Weather the storm as best you can by being open and honest – get the expenses information up on your MP's website as soon as possible and send out a press release to the local paper, reiterating your party's recent comments on expenses reform and the need for accountability and transparency, etc. If there's a large expense you can explain and justify, such as the costs of setting up a new office or taking on a new member of staff, include a quote to do so – but try to appear eager to explain rather than defensive!
Here is the Allowances expenditure table for 07/08 http://www.parliament.uk/documents/upload/HoCallowances0708.pdf
And the travel table for 07/08
For an in-depth, academic view of the expenses system, try Working or Shirking? A Closer Look at MPs' Expenses and Parliamentary Attendance published in 2005 by Professor Timothy Besley and Dr Valentino Larcinese from LSE - http://eprints.lse.ac.uk/3609/1/Working_or_shrinking.pdf
CD April 2009
If you want to comment on this guide, or any of our other guides, please click on the FEEDBACK link below.
You can also