General Principles

 

 1.1 This section summarises both the changes to the Third Edition of the MPs’ Expenses Scheme and the reasons for them. For full details, see the Report on the Consultation of January – February 2011.

 

 

 

 1.2 This Review has had the benefit of nearly a year’s operation of the Scheme, along with the solid footing of IPSA’s fundamental principles and its overarching objective of a Scheme that is fair, workable and transparent. One of its conclusions is that there should be a greater simplicity in the expenses system. MPs should take greater responsibility for decisions about what is a legitimate use of public funds. This view is reflected throughout the changes to the Scheme. Over the longer term, there may be scope for a further shift in the balance between prescriptive rules and a framework of general principles. IPSA is willing to consider in detail the possibilities surrounding the concept of allowances, amongst other options for simplification. Any move to an element of allowances will need very careful consideration and can only be contemplated when there is sufficient public confidence in the existing arrangements, and when there are sufficiently robust systems to give IPSA and the public assurance about how public funds are being spent. It is therefore a potential direction of travel.

 

Conditions of the Scheme: Making Claims

 

 1.3 The Scheme requires claims to be submitted within 90 days of incurring the cost, and to send the accompanying evidence without any redaction. Neither of these has changed.

 

 

 1.4 Some MPs argued that 90 days is too short a deadline, but without the routine submission of claims there can be no routine publication of claims. The 90 day deadline will remain, with extensions only granted where a genuine emergency prevents the MP from meeting the deadline. Further, IPSA will not accept evidence that has been redacted by the MP prior to being sent to IPSA. Once something is redacted, IPSA has no way of knowing what it said or whether it was relevant to the claim. There would be a risk that in order to comply with its high standards of claims validation, IPSA would need to return claims to MPs to clarify what they have redacted. MPs can be assured that IPSA’s publication processes ensure that no security-related or personal information is published. IPSA is subject to data protection and freedom of information legislation, and will always comply with this legislation as it relates to the limits on the release of personal or sensitive information.

 

 

1.5 One change that has been made is that claims may be submitted by a staff member nominated by the MP, rather than by the MP personally. However, responsibility is vital in the expenses system. The MP will need formally to appoint the staff member as their agent while confirming that the MP remains wholly responsible for all matters relating to their expense claims.

 

 

1.6 IPSA has added a rule to the Scheme which gives it the discretion to consider and reimburse claims which may not be explicitly covered by the Scheme, but which are for any costs which were required by the MP to carry out his or her Parliamentary functions.

 

 

 Working from Two Locations

 

 

 1.7 Working from two locations – the MP’s constituency and Parliament - is a necessary consequence of being an MP. Public funding should support an MP in doing so. In particular, it requires travelling and maintaining between the two locations and maintaining a separate residence away from the MP’s main home, and these should be properly reflected in the Scheme.

 

 

 The London Area

 

 

 1.8 The only exception to the need to maintain a separate residence is that MPs within the London Area can commute between their constituency and Parliament. IPSA has been persuaded that there are sound arguments against continuing to base the London Area on a 60 minute commute: this rule does not accurately reflect an MP’s actual commute, and does not allow for rail timetable changes, differences in transfer times between stations and variations depending on the time of day and whether travel is at peak time. For these reasons, IPSA favours a geographical definition, and has based the new London Area on whether any part of a constituency is within 20 miles of Parliament. This definition has thrown up six anomalies: constituencies where the amount within the 20 mile limit is so small as to render it unfair to treat the whole as being within the London Area. The six constituencies affected are not considered part of the London Area.

 

 

 1.9 The London Area Living Payment (LALP)is a contribution to the cost of living and commuting within the London Area. Given the current economic climate, IPSA is not persuaded that there are grounds for increasing the LALP this year. However, the 24 MPs whose constituencies are outside Greater London but within the London Area (the ‘outer London Area’ MPs) face demonstrably higher commuting costs than those within Greater London. In order to make the contribution that the LALP provides fair across the London Area, IPSA has introduced a new rate for the outer London Area MPs. These MPs may claim a LALP of £5,090, while the 73 MPs within Greater London may continue to claim £3,760.

 

 

 Accommodation Expenditure

 

 

 1.10 For those MPs outside the London Area, the Scheme provides a capped budget for accommodation expenditure. IPSA has clarified the list of associated expenditure for accommodation, to state that the cost of cleaning, gardening and the purchase and maintenance of furniture cannot be claimed from IPSA. In addition, MPs who own their own homes may claim for buildings insurance.

 

 

 1.11 For MPs who rent their second residence, IPSA has taken the following decisions: a. For those MPs who rent in the London Area, IPSA provided a budget of £19,900 which included up to £1,450 per month for rent. Some MPs argued this is insufficient to rent suitable accommodation in London, particularly if they want to live in central London. From its research, IPSA has concluded that there are properties available to rent for £1,450 per month or less in over 65% of London postcode areas. The budget is therefore not being increased. Similarly, there is no change to the budgets for MPs renting in their constituencies. b. IPSA has removed the rental limit from within the overall budget, giving MPs one budget to cover all their rental and associated expenditure. c. Where two MPs share a residence, the rules together entitled them to four-thirds of the accommodation budget, reflecting the generally lower costs of sharing accommodation. There is evidence that limiting the expenses available in this way is discouraging MPs from sharing, while saving the taxpayer little money. IPSA will allow MPs who share accommodation to have full access to their accommodation budget. These MPs are still only able to claim for the costs they actually incur, so if two MPs share, each would only be able to claim 50% of the total.

 

 

 1.12 The nightly limit for hotel accommodation in the London Area has been raised to £150. Compared to the UK’s Devolved Assemblies and Parliaments, IPSA had the lowest cap for hotels in the London Area (£130 per night). While this was generally enough for finding a hotel room with advance notice, availability decreases when trying to book for the same day. For similar reasons, the nightly limits for hotels outside the London Area and abroad have been raised to £120 and £150 respectively.

 

 

 1.13 The Review considered the working of the rules for MPs claiming the mortgage interest subsidy. Under a transitional arrangement, MPs previously claiming the mortgage interest subsidy provided by the House of Commons can continue to claim it until 31 August 2012. It remains vital for public confidence in the expenses system that the mortgage interest subsidies come to an end. IPSA has seen no persuasive argument to extend the transitional period prior to ending the subsidy, and to change the policy now risks being unfair to those who have taken early steps to change their accommodation status.

 

 

 Caring Responsibilities

 

 

 1.14 Working from two locations inevitably affects an MP’s family life. There is anecdotal evidence from MPs that IPSA’s view that children above five years old would routinely stay close to their school rather than travel with the MP to and from London or a constituency home assumes a level of uniformity about the way MPs organise their personal life that cannot be sustained. IPSA has therefore extended the eligibility to claim for additional accommodation expenses for caring responsibilities to all children up to the age of 16, or 18 if they are in full-time education. There is no change to the definition of other dependants.

 

 

1.15 IPSA will ask MPs claiming these additional accommodation expenses to declare that those dependants routinely reside at the accommodation. This is to allay any public concern that public funds might be used throughout the year to satisfy an occasional need.

 

 

 

Office Support

 

Office Costs Expenditure

 

 

 1.16 MPs and their staff argued strongly during the consultation that the two budgets for MPs to run and equip their constituency offices - the General Administrative Expenditure (GAE) budget, and the Constituency Office Rental Expenditure (CORE) budget - should be merged to give MPs increased flexibility to manage their offices as they saw fit. IPSA was persuaded by the evidence, and has merged them into the Office Costs Expenditure budget (OCE).

 

 

1.17 The non-exclusive list of items under the former GAE budget has been removed and instead MPs will have discretion to decide how to spend their OCE, provided the costs are for renting, equipping and running an MP’s office or offices and surgeries. IPSA will not reimburse the cost of newsletters, campaign expenditure, any political expenditure, personal accountancy or tax advice, or goods or services from connected parties.

 

 

1.18 The CORE element of the new OCE budget has not changed. There will continue to be a small number of MPs who exceed these limits, and these particular circumstances can best be dealt with on an exceptional basis through the contingency fund.

 

 

1.19 The level of the OCE budget will be different for London Area and non-London Area MPs, reflecting the fact that the old CORE budget differed between these two. The 2011-12 OCE budgets for London Area MPs will be £24,000, and for non-London Area MPs, £21,500.

 

 

Staffing Expenditure Budget

 

 

 1.20 The Staffing Expenditure budget for 2011-2012 will be £115,000 per MP. This small rise balances the current economic climate and public sector pay freeze with the need to cover an increase in National Insurance Contributions and to allow career progression and the purchase of modest reward and recognition vouchers where appropriate for staff members.

 

 

 1.21 IPSA will undertake further work to establish the implications of the rising volumes of casework in some constituencies.

 

 

 Publication of Staff Salaries

 

 

1.22 MPs’ staff are paid by taxpayers’ money, and MPs must be accountable for how they spend that money. Consequently, there is a powerful argument in favour of publishing an appropriate level of detail about staff salaries. IPSA does not agree that the publication of salaries in £5,000 bands unduly compromises staff security or would be unfair to MPs’ staff. IPSA is persuaded, however, that MPs’ staff should not face additional scrutiny over and above that faced by others who are paid for by taxpayers’ funds. Currently, all central government officers who earn more than £58,200 have their salaries published in £5,000 pay bands. IPSA will adopt the same approach for MPs’ staff, meaning that the following data will be published annually:

 

 

 a. For each MP, the total amount spent on MPs’ staff and the number of staff employed.

 

 

b. Details of all MPs’ staff earning more than £58,200, including their job title, salary (in £5,000 bands) and the MP they work for.

 

 

1.23 The policy concerning connected parties is unchanged, in order to maintain the safeguards on the employment of connected parties.

 

 

Other Staffing Issues

 

 

 1.24 IPSA has taken the following decisions:

 

 

 a. There is no change to the provisions on the employment of connected parties.

 

 

 b. There is no change to the provisions for interns.

 

 

 c. There is no intention at this time to relax the requirement for MPs to adhere to IPSA’s model employment contracts, job descriptions and salary ranges.

 

 

 d. After 11 months of operation, the rule requiring MPs to notify IPSA of exceptions to its pay ranges has served its purpose and has been removed from the Scheme.

 

 

 e. IPSA has separated the provisions for the payment of cover for maternity, paternity, adoptive and long-term sickness leave from the contingency payment arrangements. The costs will continue to be met from a central budget and not by each MP’s staffing budget.

 

 

 Start-Up Costs

 

 

 1.25 The evidence from the expenses system demonstrates that new MPs faced initial start-up costs that could not always be covered by the standard GAE budget. All new MPs from 1 April 2011 onwards will have access to a budget of £6,000 for one calendar year to cover their start-up costs. This is intended to fund the large one-off costs such as office equipment and furniture. As with all expenditure, claims must be submitted and will be published.

 

Winding-Up Costs

 

 1.26 The financial limit for Winding-Up costs for 2010-11 was based on three month’s worth of the office-related budgets (CORE, GAE and Staffing Expenditure). This level appears right and will continue, although the costs relating to staff redundancies will come from the Contingency Fund, mirroring the position if a staff member is made redundant during the year. With this alteration, the Winding-Up budget limit will be: £46,500 for London Area MPs, and £45,500 for non-London Area MPs.

 

 

Resettlement Grants

 

 

 1.27 A resettlement grant was paid under the previous system to an MP in the event that the MP was unsuccessful in a General Election. Given its integral link to MPs’ pay and pensions, IPSA does not believe it can properly consider the issue of whether there should be a resettlement grant or how it should be formulated as a separate issue. IPSA will not introduce an interim measure but will consider the issue as part of its planned review of MPs’ pay and pensions once the legal responsibility for those matters passes to IPSA.

 

 

 Travel and Subsistence

 

 

 1.28 For the avoidance of doubt, IPSA has amended the Scheme to state explicitly that none of the cost of an MP’s daily commute, either between his or her London Area residence and Westminster, or his or her constituency home and office, may be claimed on expenses, reflecting our fundamental principle that an MP should be treated, in the manner of expenses, as far as possible like other citizens.

 

 

1.29 ‘Extended UK travel’ in the Second Edition of the Scheme covered domestic journeys related to constituency business, but not specifically for other Parliamentary functions. So as to provide better support to MPs, both in their Parliamentary functions and in clarifying which travel expenses are claimable, IPSA has expanded the rules on extended UK travel to include the journeys which relate to a matter currently before the House, and matters currently before a Select Committee, which are not funded through other arrangements.

 

 

1.30 The policy regarding claims for journeys by public transport remains unchanged: MPs may claim for First Class travel only in the circumstances where, due, for example, to booking in advance, it is cheaper than the same journey made in Standard Class. Similarly, there is no change to the specified circumstances in which taxis can be claimed, barring when MPs are working late.

 

 

1.31 IPSA is aware that some MPs, particularly those in the furthest parts of the London Area, have found the late sittings rule problematic. It is neither IPSA’s role, nor within its power to reform the workings of Parliament. Its responsibility is to ensure that, in the matter of expenses, MPs can fulfil their parliamentary functions when working late within Parliament. IPSA will give MPs the discretion to claim for a taxi home or a hotel room if they are required to work late at the House and they deem it necessary to incur such costs. The onus remains on the MP to make a judgement when incurring expenditure that they intend to claim from IPSA, and all claims for such expenses will be published in the normal fashion.

 

 

Staff Travel

 

 

1.32 For journeys between the MP’s constituency and Westminster, IPSA initially allowed up to 24 journeys per staff member to be claimed. However, it is unnecessary for IPSA to put in place a limit that restricts the ability of MPs and their staff to arrange their work as they think best. IPSA has replaced the 24 journey per staff member cap with an overall cap per MP of 96 single journeys for staff members between the MP’s constituency and Westminster.

 

 

Other Costs

 

 

Disability Assistance

 

 

 1.33 IPSA has made clear in the Scheme that Disability Assistance covers necessary additional expenditure (including all ‘reasonable adjustments’ within the meaning of the Equality Act 2010) incurred in the performance of an MP’s parliamentary functions, which are reasonably attributed to the disability of an MP, or a member of their staff. It is for the MP to decide, as the employer, what adjustments are reasonable to make for their staff. Disability assistance will also be made available to reimburse claims for making reasonable adjustments for candidates at interview. Finally, IPSA will accept claims for the travel of a carer both for disabled family members and for MPs’ staff members who are disabled.

 

 

Security Assistance

 

 

 1.34 The Scheme will continue to contain provisions for Security Assistance. The Scheme had included a notional annual cap per MP of £2,000, unless advice from the police or other security agency advised that a higher cost was required. As all claims are subject to this specialist advice, the notional cap is unnecessary. IPSA will instead consider claims on the basis of the security assessment.

 

 

Insurance

 

 

 

1.35 The provisions relating to insurance will remain unchanged. Claims for legal expenses insurance can now be claimed, with the cost coming from the Office Costs Expenditure budget. It will be for individual MPs to arrange their legal expenses insurance, rather than IPSA providing it centrally.

 

Contingency Fund

 

1.36 The Contingency Fund has worked well for the past 11 months to cater for individual MP’s circumstances. IPSA is content that it is providing adequate funds for the vast majority of MPs, such that they should reasonably be able to manage within those budgets. Consequently, it has introduced a new criterion for contingency applications stating that the MP must demonstrate that the expense they intend to claim is the result of ‘exceptional circumstances’. This new test will not apply to certain specified expense types that are funded from the Contingency Fund, such as staff redundancy costs.

 

 

Conclusion

 1.37 IPSA’s job is to provide assurance and transparency to the public while operating a system which, while being robust, is as simple as possible for MPs to use. Along with the changes set out above to the Third Edition of the Scheme, IPSA is focusing on how best to support MPs in their work and minimise the burden on them; ensuring that its controls are proportionate and focused on the relevant risks and that it becomes ever more efficient. All the revisions to the Scheme and to the expenses system that IPSA has brought in are a reaffirmation of IPSA’s commitment to provide a fair, workable, and transparent system while ensuring appropriate assurance that public money is being properly spent.