The short statement on MPs' allowances made yesterday by Michael Martin, the Commons Speaker, reflects an acceptance at Westminster that something must be done to restore confidence in parliamentary expenses. Finding agreement on how to proceed, however, will be challenging. It will also be bitterly resented by many MPs who feel that they make a financial sacrifice in order to enter public service but are portrayed as leaching from the taxpayer. Greater openness is inevitable. It will not, though, be the end of the matter. The balance between salaries and allowances has evolved in a manner that is profoundly unsatisfactory and that almost encourages ethically suspicious behaviour. The best solution would be a root-and-branch reform.
Last year the typical backbench MP earned a salary of £60,675. This is more than double the national average wage but modest when compared with professional men and women based in London. That payslip was, nonetheless, augmented by an incidental expenses provision of £21,339, a staffing allowance of £90,505, an additional costs allowance of £23,083, a communications allowance of £10,000 a year, a substantial motor mileage allowance and the right to claim unlimited sums for travel taken on parliamentary business. While it would be inaccurate to assert that these expenses are self-policed, they can serve as recompense for the absence of a notably higher salary. These allowances can also be useful for generating local publicity and thus are a covert public subsidy for re-election campaigns.
A more honest approach is required. It would be better if MPs were paid more and a number of these allowances were to be either scaled back, changed or scrapped. Such a bargain would not increase the overall cost of MPs to the taxpayer but it would eliminate the need and the temptation to treat allowances as a device for supplementing incomes. A new compact should be combined with a regime of total transparency about expenses, a more inquisitive auditing process for receipts, and tough rules on outside earnings, so that these would still be permitted as long as they did not give rise to a conflict of interest.
There will never be a consensus on the right salary for a parliamentarian. International comparisons do not help much here either. The most intriguing system of political payment is found in Singapore, where it is based on a basket of salaries of top performers in other sectors, with a bonus linked to the level of economic growth (which may explain why this has averaged 8 per cent in the past two years). This means that the Prime Minister of Singapore is paid almost five times what is offered to the US president (the humble MP there is on £77,000 a year). British MPs might also look enviously at counterparts in Japan (£128,000) and Italy (£106,000).
An alternative would be to peg an MP's salary to that of a public servant who works at least 40 hours and is required to be based in London. A person in that grade earns £99,960 a year. Higher pay for MPs would make it harder for them to justify nepotism in the workplace and obscure commercial arrangements. It would mean that the political classes stop bleeding talent to the professions, as sensible people choose a life with a better salary and less personal intrusion. There might be an irrational outcry at first but once the new structure settled in, it would lead to less conflict and scandal than the current formula. It would provide MPs with an honourable wage - in both sense of that term.