Charles Clarke

Charles Clarke MP ~ Letter to my constituents in Norwich South

PAY AND ALLOWANCES FOR MEMBERS OF PARLIAMENT

Introduction

The current controversy and coverage about the Pay and Allowances of Members of Parliament is embarrassing, shameful and exceptionally destructive for confidence in politics and politicians.

The purpose of this letter to my constituents, which I am publishing on my website and giving to the local media, is to set out my own view of how this situation developed and what now needs to be done. Towards the end I explain my own arrangements.

General

The basic reason why all of these matters are now in the public domain is because the Labour Government passed the Freedom of Information Act in 2000. There have been plenty of times when I have regretted some or other aspect of the passage of this legislation but the fundamental truth is that, despite the discomfort of particular revelations, the Act has improved and will continue to improve the conduct of government business and public life in general. As a result of this process the system of paying MPs in this country will be reformed. That is good for politics despite the current pain.

As many commentators have observed, the conduct which has most shocked people is not usually a result of MPs breaking the rules - the rules have almost always been observed. It is a result of the rules themselves. The system has been too lax and not rigorously enforced - not least by MPs themselves.

Overall responsibility for these matters lies with the Speaker When Betty Boothroyd was Speaker, she secured agreement for a number of rule changes and that process of improvement should have been continued by her successor.

Over the years, most MPs, including myself, have not involved themselves in discussions about pay and allowances. My approach, rightly or wrongly, has been not to vote on these matters and then to abide by whatever rules are agreed.

And the fact is that most MPs don't go into politics to look at the practices and procedures of the House of Commons.

But my attitude, and that of many of my parliamentary colleagues, was wrong. We bore (and bear) responsibility for the system and we should have pressed for a robust scheme to be put in place much earlier.

Now MPs, and politics in general, are paying the price for failing to act when we should have done and we need to put that right.

There are a number of models which could be followed from comparable Parliaments. Other European countries have had to address this and a summary of what happens in Germany, Sweden, France and Italy can be found on the BBC website at http://news.bbc.co.uk/1/hi/uk_politics/7961849.stm

In the German parliament, for example, MPs receive a monthly salary of 7,339 Euros as well as 3,782 Euros per month to cover living costs and a further 13,660 Euros a month to run their offices and pay staff.

The Way Forwards Now

After the Prime Minister launched his 'You Tube' proposals on Tuesday April 21st I wrote to him setting out my view that an agreement that was fair to both MPs and the taxpayer could quite easily be achieved. I stressed that it need to be done on a cross-party basis without any attempts to score party political points, that it had to include pay and that it must be completed quickly enough for the new arrangements to be agreed by Parliament in July. My letter to the PM is at Appendix 2.

I continue to believe, after informal conversations with senior opposition politicians, that this was (and remains) entirely possible and that the basic elements are fairly straightforward.

A. Pay

MPs' pay is pretty high by comparison with the population as a whole. The current rate is £64,766 which I receive in common with all other MPs. I am certainly amongst the best paid people in Norwich.

That said, there are many people working in the public sector in Norfolk who get paid more than an MP. This includes trained professionals such as doctors, senior teachers and senior administrators for all the public services. Senior employees in the private sector are also often paid more than MPs. So are the national lobby journalists and commentators!

I do not believe that MPs are underpaid by the State for what they do. The best way to set their pay is to link it to a civil service or other appropriate professional grade, and then MPs' pay would automatically change as the pay for the grade changed. This was done in the past and then successive governments refused to honour changes for politically cosmetic reasons, which undermined the logic of the settlement.

A new comparator grade needs to be agreed and MPs' pay fixed rigorously to that, possibly even in statute.

B. Second Incomes

MPs are currently entitled to earn second incomes for work they do other than simply as a Member of Parliament.

The most important example of this second job is to be a Government Minister, for which an additional salary is received (just under £80,000 per year for example for a Cabinet Minister or the Leader of the Opposition). There are also payments for other roles such as Speaker, Select Committee Chair etc. Ministers are not permitted to have any other source of income.

MPs are currently required to declare publicly in the Register of Interests all external income. In the case of former Ministers, such as myself, there is a painstaking process - run by the independent Advisory Council on Business Appointments - to ensure that conflicts of interest or any other inappropriate arrangements cannot arise. I have followed these requirements rigorously.

I believe that we need greater transparency, for example by stating the range of payment for all sources of income, in the same way that the Germans do. It looks like Parliament will establish such a system, perhaps in even more detail.

In my own case when I left Government in 2006 I decided that I was ready to take on other roles which were offered to me, both to broaden my experience and to earn roughly the same total income as I had had whilst in Government.

This is what has happened and I have received fees for a range of additional activities, including writing, broadcasting and making speeches and films, a non-executive directorship in Norwich and some consultancies for specific projects. The total amount of time which I have spent on these activities has been vastly less than I spent as a Minister, totalling on average about 20 to 30 hours a month. I have declared my activities in the Register of Members' Interest and (of course) paid tax on all income. A brief summary of the specifics is attached as Appendix 1 of this letter.

C. Additional Costs Allowance

Most of the recent public controversy has focused on the expenditure and claims which relate to the costs that MPs outside London have to incur if this country is to continue to have a constituency-based system of parliamentary representation.

I have always believed (and my experience since 1997 has reinforced this belief) that the constituency system is a huge strength of British democracy. It entitles every citizen to a direct relationship with a Member of Parliament and it means that all MPs have roots in a local community outside the London metropolitan lifestyle which dominates so much civil service and media experience.

But this necessarily means MPs live in two places, and so incur costs which need to be recognised, above and beyond any salary payment. MPs soon discover that they need two of most things and most importantly they need somewhere stable to stay in both London and their constituency.

Solving the so-called second home allowance is not as easy at it sounds. There are 646 MPs with 646 different personal circumstances. As the debate has gone on the public has come forwards with a number of creative solutions from a prison ship anchored in the Thames to a tower block near Westminster. Someone even wrote to the Evening News suggesting I should commute daily from Norwich!

Sir Christopher Kelly's Committee is deliberating on the problem at the moment and will make proposals later in the year. My own view, however, is that the best way to proceed now would be to add an allowance to the MPs salaries so that each MP can make a decision about what is most appropriate for their own personal and family conditions and working practices..

The new allowance should be taxable and subject to full taxation rules like everyone else, so that the Inland Revenue would determine which expenses were allowable against tax. I would also suggest a substantially reduced outer London rate and a strengthened system of spot-check audit to reinforce controls. This would eliminate abuse and lead to savings for the Government.

Travel expenses between the constituency and London should continue to be paid. I normally travel by train but sometimes by car. And House of Commons rules entitle my staff and my wife to a certain number of journeys a year between London and Norwich. Living in separate places and not seeing your family except at weekends is one of the least attractive aspects of being an MP and one that has been ignored in the current furore.

D. Office Costs and Communication Allowances

The days are long gone when MPs paid a visit to their constituencies every couple of months or so as happened in the 1950s and 60s. Over the last 30 years the workload and responsibility has steadily increased and there has been greater accountability to constituents. This is a welcome trend.

But it does mean MPs need an allowance to enable them to run offices so they can undertake casework and pursue local issues of concern to constituents. As with other MPs, most of my office costs allowance goes to fund and support the excellent and committed staff who work for me.

In my case all staff are paid directly by the House of Commons on salary scales agreed after consultation with the trade unions. So, although the office allowance is sometimes added to my other costs by the press to make the grand total appear even more alarming, it is not in fact money that passes through my hands.

And, by the way, I have never myself employed any members of my family though many MPs do. This is usually perfectly proper though they will, of course, have to account for their own individual positions.

Under the heading of Office Costs there is also an amount for rent, computers, paperclips and so on. This sum is taxable and all receipts and expenditure are therefore subject to review by the Inland Revenue.

Finally, there is a relatively new allowance for Communications introduced by Parliament a couple of years ago. This pays for better communications between MPs and their constituents, for example through regular newsletters or direct mail. I have used this and believe that it has been generally beneficial to the constituency. Like the spending on office costs it is not allowed to be Party political in nature and the authorities of the House of Commons are rigorous in enforcing this.

A case could be made for reducing the limits on expenditure on the office and communications allowances though I don't think that there's much room for cutting costs without reducing the quality of MPs' service to constituents.

Personally, I have never signed up to the idea that MPs who use less of their office allowances are doing a better job for their constituents and I do spend almost all of these allowances.  The House of Commons pays the bills directly or on the basis of receipts and retains any unclaimed elements of the different budget heads. As I said above, these allowances are not additional personal income for MPs although they do appear as part of the overall amount claimed and I do take full responsibility for the way in which the money is spent.

My Own Situation

Finally, since the Additional Costs Allowance (ACA) has been particularly highlighted over the past weeks I thought it would be helpful to spell out my own position. Parallel to this letter, I am publishing on my website the full details of my own Additional Cost Allowance claims for the 2004-2008 financial years. This is almost the same as Parliament will publish later this year. However I am also including the material which will be removed when Parliament publishes my details. In my case this is 3 or 4 letters from which I have blacked the personal data. As far as other allowances are concerned the technical problems of redaction and data protection are too complicated in relation to details of staff, suppliers etc. These figures will be published in June or July by the House of Commons along with those for all other MPs.

I was elected to Parliament in 1997. We sold our London home the following year and my family moved from London to Norwich in July 1998. My children went to school in Norwich. For a few months I stayed in hotels near Westminster and although this is a solution that works well for short spells it cannot, in my view, be sustained week after week or year after year.

So, in 1999 I bought a one-bedroom flat within walking distance of Parliament. I live there during the week. 

As it turned out the mortgage interest and other costs of the flat were significantly less than the cost of renting a flat or staying in hotels. I note that MPs who pay rental for a one bed roomed flat near Westminster are now reporting weekly rents of between £350 and £400. This means an annual accommodation cost of at least £18,000 before other costs such as utilities or council tax are added.

Since buying the London flat in early 1999 I have kept both our Norwich house and the London flat. I haven't sold either property so capital gains tax has never arisen. Neither I nor my family own other properties either in the UK or abroad.

I see it as an important part of my job representing Norwich South to be in London from Monday to Thursday and to concentrate my constituency work into Fridays and weekends. Therefore I am usually in Norwich on Friday and Saturday nights and in London on Monday, Tuesday and Wednesday nights. While I tried to stay in Norwich on Sunday and Thursday nights, this became increasingly difficult after I became a member of the Cabinet. At this time I usually lived in London during Parliamentary recesses too and though this is still the case it is less true than it was.

From 1999 to October 2005 I nominated my London flat as my 'second home'. When I became Home Secretary I turned down the offer/request that I should move into 'grace and favour' accommodation and continued to live in my own London flat. I believe that the government has subsequently put the Home Secretary's residence on the market.

After the 2005 General Election, when I was reappointed as Home Secretary, I decided to change the designation of my 'second home' and in August 2005 I wrote to the Fees Office stating that I had decided that it would be correct to change the address of my main home to my London flat since that was where I was then spending the majority of nights (the requirement of the rules).

For routine costs I have claimed on the basis of what the Fees Office calls a 'one-twelfth' system. On the basis of an annual statement of my outgoings on relevant costs such as mortgage interest, utilities and council tax I claim one-twelfth of this amount every month. I have provided verification of costs as required by the Fees Office. This now means submitting copies of bills and bank statements though this level of verification was not required during 2004-2008, which is why no receipts appear for the that period though they will appear for later years.

I have also made a handful of other claims over the last six years to cover, for example, repainting the flat, the repair of a toilet, replacing a non-functioning fridge-freezer and one or two other items.

On the basis of these details I hope that constituents will judge that my approach was appropriate but I am confident that all the decisions I made were taken within both the letter and the spirit of the rules and with integrity.

Conclusion

In this letter I have attempted to set out both my own position and my overall approach as clearly as I can.

The anger that very many people feel about what has happened is entirely understandable. Some of the claims made by MPs have been frankly unreasonable and inexplicable. Some may even be fraudulent and illegal. Others have been quite acceptable but reported out of context or with misleading commentary that seeks to sow suspicion. For my part I believe that I can defend and explain my own conduct to my constituents. This letter is part of that process.

It is enormously important that the House of Commons publishes the details of all current claims, including office costs and attendant receipts, as quickly as possible. Two weeks ago I wrote to the Speaker (the letter is attached at Appendix 3) urging him to make the information available immediately. I haven't yet received a response.

So, to clarify: I am attaching three Appendices. These are: -

1. a slightly fuller account of my own other interests as set out in the Register of Members' Interests;
 
2. a copy of the letter which I sent to the Prime Minister after his 'You Tube' appearance;

3. a copy of the letter which I sent to the Speaker asking for the immediate release of all information.
 
Whatever the merits and demerits of the approach I suggest, and whatever judgements constituents make of my own conduct, I hope that everyone will agree that we urgently need a new system of paying MPs which is fair to both MPs and taxpayers and commands public confidence.

I strongly believe that such a system can be established within weeks and needs to be, and I am doing all I can to press for that to happen. I hope that the Prime Minister and Speaker of the House will respond.

Yours sincerely,

Charles Clarke
Member of Parliament for Norwich South

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APPENDIX 1 - OTHER INCOME

My declarations in the Register of Members' Interests can be found at:-

http://www.publications.parliament.uk/pa/cm/cmregmem/090506/memi06.htm.

By chance the entries of Vincent Cable, David Cameron and Ken Clarke are on the same page, if the comparisons are of interest!!

The following further detail elaborates some of those entries:-

Journalistic, speaking, writing & media commitments

I have been paid for a range of articles, speeches, film-making and similar commitments, including some abroad. I have listed these in the Register and they are generally self-explanatory.

LJ Create

I am a Non-Executive Director of LJ Create, a Norwich-based company which manufactures high quality engineering, scientific and mathematics educational informational technology and sells it in the UK and around the world.

This post carries a general responsibility for the affairs of the company including regular meetings of the Board.

From my point of view I have been delighted to support an important and progressive Norwich company and I have learned a great deal about trading in the current economic situation.

Beachcroft LLP

I have been a consultant to Beachcroft LLP which is a national firm of solicitors, based in London.

My advice has mainly been related to insurance and health matters, including the evolution of policy in these areas.

I have found discussion of these matters extremely valuable and closely related to many concerns in Norwich.

KPMG

This project was a one-off, which ended in December last year, to prepare a publication on 'copayment' - the partnership between public and private sources of finance - to improve public services. This covers difficult issues like road-tolling and payment for cancer drugs. Copies of the report can be obtained from my office.

The project was extremely interesting and also involved attending a number of events where the publication was discussed.

Charles Street Securities

This consultancy offers an outside view of a number of investments which this small investment house is considering. These include interesting environmental and scientific developments which are seeking finance to develop.
 
APPENDIX 2 -
LETTER TO PRIME MINISTER

Thursday, 23 April 2009

Dear Gordon,

In response to questions in the House yesterday you invited those who thought they had 'better proposals' on MPs' expenses to put them forward and I am writing in that spirit.

As I argued publicly last week you are right to take an initiative now and not to leave the matter until the autumn. It has become essential for senior politicians such as yourself to become involved in finding solutions to this and so I welcome the fact that you came forward with proposals on Tuesday. I also very much agree with your video comments that "we need future generations of committed young people to come into politics" and the way to do that is to stand up for politics and for respect for politics.

However I believe that your proposals have three serious structural weaknesses:-

- It is absolutely essential that the proposals have all-party support and are treated on that basis and not on the basis of seeking politically sectarian advantage. That requires an open discussion with the Opposition parties around an agreed agenda and not a 'take-it-or-leave-it' document of the type you published on Tuesday. In the same way there needs to be a process through which backbenchers of all parties can be involved. I believe that agreement is possible and could be achieved rapidly, but not with the approach you are taking.

- MPs' pay has to be one element of the discussion. It was not mentioned in your proposals but it has to be considered, perhaps in relation to practice in other European countries. As you know our practice in Britain on both pay and allowances is not dissimilar from what happens in other countries and can be defended on that basis.

My own view is that a fixed comparator should be selected, such as a civil service grade, and that this should then be honoured and not breached. The failure to do this in recent years has kept MPs' pay as a recurring political issue and reduced respect for Parliament.

- There is an ambiguity about the relationship between the process you have initiated and Sir Christopher Kelly's review. In my opinion it was a mistake for you to write to him before Easter and the ambiguity now needs urgently to be resolved. My own opinion is that the whole subject should be determined once and for all by the time the House rises in July and Sir Christopher Kelly's review has no useful role to play thereafter. However it may well be that both the Committee on Standards in Public Life and the Senior Salaries Review Body could contribute on the shorter, pre-July, timetable.

On your particular proposals my own response is:-

A/B (ACA/PAAE) The 'flat-rate-allowance' has instant appeal but fails the tests of transparency and fairness. It will be very difficult to operate with many ambiguities about how MPs decide to spend their time. It will be ridiculed as on certain days people sign on but do nothing more. It would be better to add a taxable allowance to salaries. The allowance would be similar to the current PAAE but taxable and there would be a substantially reduced outer London rate.

C (Grace and Favour homes) This is right, except I don't think that the Committee on Standards in Public Life has any contribution to make here.

D (MPs' Staff) This is a bureaucratic response where there is not a great problem now, and there will be serious unintended consequences. It is right for the Committee on Standards in Public Life to examine the situation regarding employment of relatives etc and other staff issues such as contracts. They can do this at their own pace.

E (Receipts) Independent audit is right. Requiring receipts below £25 is bureaucratic and the audit process will pick up excessive petty cash claims.

F (MPs' Second Incomes) It is right for the Committee on Standards in Public Life to look at this matter, and to promote greater transparency, for example by requiring declaration of the range of payment for all sources of income. For example German MPs declare second roles and income in bands. I suspect that declaration of further detail will prove impractical.
 
G (Pensions) This is right.

H (Northern Ireland) Fine

My only further comment is that the current timetable of over 3 months between MPs being able to see their receipts and their wider publication is unnecessarily long. It would be better for all concerned if publication was far earlier, say in early June.

I believe that, through the process of consensus which I believe is possible, full agreement on everything can be achieved by the middle of July with no need for any further consideration in the autumn by the Committee on Standards in Public Life. This would mean that all the agreed changes could be implemented when Parliament returns in the autumn or, by the very latest, at the beginning of the new Parliament when it is elected.

I hope that these comments are helpful.

Yours sincerely,

Rt Hon Charles Clarke MP

Rt Hon Gordon Brown MP
Prime Minister
APPENDIX 3 - LETTER TO SPEAKER

Friday, 8 May 2009

Mr Speaker,

It is essential that Parliament responds immediately to the venal intention of the Daily Telegraph to hold Parliament to ransom.

It seems that the Daily Telegraph now possesses unredacted and uncorrected details of every MPs' expenses. Apparently that newspaper intends to publish these details in a manner deliberately intended to discredit Parliament and to give them a competitive advantage over other media.

I believe that Parliament should defend itself against this attack, and that the best way to do this is immediately to publish all these details, to ALL media. These should be published as 'uncorrected' with the explanation that some errors have been made and that a process to make corrections is in place. The fully corrected and authorized publication will take place in due course.

In order to respect the Resolutions of the House the redacted version should be published. It may be that Parliament should seek a legal judgement that the Telegraph cannot publish the unredacted version.

In my opinion it would be best to do this today, to minimize the Daily Telegraph's advantage. If that is not possible it should be done at the earliest opportunity.

If you felt that individual Members should have the right to decide on early publication in their own case, or to veto it, you could e-mail every Member giving them 24 hours to give authority for publication of their own expenses.

I urge you to take this action today. It is simply not acceptable for the Daily Telegraph to use their stolen information to attack and discredit Parliament in the way in which they are.

I am copying this to the Leader and Shadow Leader of the House.

Yours sincerely,

Rt Hon Charles Clarke MP
Member of Parliament for Norwich South

Rt Hon Michael Martin MP
Speaker
House of Commons

END