From understanding expenses to starting a limited company, our downloadable business guides can help you.
Last year, our esteemed editor Jon Norris somehow made a pretty convincing case for footballers being worth their ridiculously high wages. Always up for a challenge, I’ve decided to embark on a mission to explore whether the impending MPs’ pay rise is in the slightest bit justified.
Next year, perhaps someone will explain why Piers Morgan or Skeletor deserve their pay as well.
Yes, Members of Parliaments’ salaries are controversially set to increase from £67,060 to £74,000, backdated from May. At a time of brutal austerity cuts and a 1% cap on the pay rises of public sector workers like firefighters and nurses, this has predictably gone down, as one Mumsnet user so eloquently put it, ‘like a fart in a lift’.
MPs are already paid nearly three times the average UK full time salary, despite a long summer break and a lack of fixed hours. It’s hardly surprising that 60% of Brits polled by YouGov in 2012 said MPs were already paid too much.
But there must be at least one reasonable argument for the rise? Even when looking for endorsements of the rise from MPs, it soon became clear the vocal majority were actually on the opposite side of the debate. Nicky Morgan, the current Education Secretary said:
“I think MPs are going to make it very clear that they don’t think this is the right thing to do. Everyone from the Prime Minister downwards has said this is not the right time to have this sort of, or any kind of, pay rise really.”
Even the much-maligned Michael Gove, voted the nation’s least popular MP, gave a firm “stick it” when asked if he would take the money.
So, that settles it, then? If MPs won’t touch the wage increase with a barge pole, surely the proposal can be thrown on the bonfire?
Perhaps it would have been previously, but since 2009 it hasn’t been up to MPs to decide their own pay.
In the wake of the expenses scandal, MPs washed their hands of the responsibility of setting their own pay, and handed the reigns to a new regulatory body, the Independent Parliamentary Standards Authority (IPSA).
Since its inception, IPSA has removed MPs’ ability to claim for some expenses that appear to have an element of personal benefit. Hardly a revolutionary idea; any business owner will tell you that HMRC have long frowned on expenses claimed for personal use. The good news is that this clampdown – it was claimed last year – saved the country £58 million.
Now expenses are fixed the regulator has now shifted its focus to a £7,000 pay rise for MPs. A far more negatively received move, but one IPSA is adamant is sensible.
“All the evidence points towards MPs’ salaries having fallen behind” says Marcial Boo, the body’s chief executive, speaking to the Sunday Telegraph.
“It’s our job to reach the judgement of what the right amount is. There are lots and lots of professionals in public life and in the private sector who earn a lot more than that – so it is not an excessive amount of money at all.”
IPSA illustrate this in their report, showing how MPs’ earnings stand up to other high ranking public sector workers.
It calculated that a two year freeze in MPs’ pay from 2011, followed by a 1 per cent increases in 2013/14 and 2014/15, have led to a real-terms (i.e. inflation sensitive) pay cut of 0.9 per cent. Not a statistic likely to draw a tear from their public sector counterparts, who had far more significant real-terms pay decreases.
Thankfully, Mr Boo assures us that the taxpayer would not pay a penny more for the raise, and it would be balanced out with the already established cuts to MPs’ severance and pension entitlements.
After this is introduced, MPs’ pay will rise and fall automatically in line with average wages, a move which Boo (himself the recipient of a cool £120,000 salary) believes will ultimately “take the heat out” of the debate.
According to a report on the previous Parliament by the Hansard Society, MPs worked an average of a 69 hour week, plus eight hours travelling. Many expressed that their long working hours combined with juggling their constituency and Parliamentary duties have an ‘overwhelming’ and ‘devastating’ effect on their personal and family lives.
The position of an MP is uniquely precarious. After five years, even if they have fulfilled all their duties to a high standard, they still face the possibility of having to find a new career should a more popular candidate take their seat.
Hansard’s report also noted that over half of new MPs (56%) took a salary cut when accepting their position. Some MPs argue that the salary is not high enough to deter politicians from working a second job, and despite an overwhelming public opposition, many continue to receive a paycheque on the side.
Geoffrey Cox, Conservative MP for Torridge and West Devon is one of them. As a high-earning Queen’s Counsel, he defended his extra curricular activities:
“If politics is to attract men and women who, for example, have risen to prominence in the professions, or who have built businesses, it makes no sense to force them to abandon them completely …No surgeon could expect to return to the operating theatre after five or ten years without picking up a scalpel; neither could a barrister plausibly return to the courts after such a gap.”
Just as the short time-frame on a footballer’s career is often used as a justification for their astronomical wages, it can be argued that the uncertainty of what an MP can do as a career once they are relieved of their duties is a factor when considering how much to pay them.
Some, including James Kirkup, the Telegraph’s Political Editor, believe that if an MP’s wage does not keep up with jobs entailing similar levels stress and responsibility, only the wealthiest would be attracted to the role.
“If we don’t address this soon, the only people who can become MPs will be those with private wealth, those with financial backing from organisations like trade unions, and careerists willing to take a hit while in Parliament in the hope of cashing in during their post-political career.”
Former Labour spin doctor Alastair Campbell previously weighed in on this issue, claiming that comparatively low wages may alienate more highly qualified candidates:
“Parliament should attract a wide variety of people, among them the best and brightest in the country … Talented people can earn more and with less pressure and opprobrium elsewhere. If we also decide they should not get a salary that befits a challenging and important job, then I fear we will narrow the field of talent willing to enter Parliament even further.”
IPSA has claimed to have found no evidence that the level of pay had a direct impact on candidates putting themselves forward for election to Parliament, or on MPs continuing to serve:
“We must not set a level of pay that is either so high that it encourages people to stand for Parliament for the money, or so low that people from many professions are unduly deterred from standing.”
Regardless of the opposition of the public and their MPs, the increase will be taking place unless IPSA can find a ‘material reason’ for it not to, or if the government opts to disband the body.
“This is the number that we’ve come up with and we talked both to the public and to MPs about it. But if Parliament wants to change its mind and to change our remit then that’s clearly for them.”
The Taxpayers Alliance called IPSA “hopelessly out of touch and not fit for purpose”. In a textbook example of having your cake and eating it too, a spokesperson for David Cameron said whilst the Prime Minister still opposed the increase in MPs’ pay, it was “a matter for the watchdog to determine”.
As high level public servants, consistently in the public eye and berated by opponents on a daily basis, the argument is convincing for keeping the pay in line with jobs requiring a similar calibre of candidate. Some comfort can be taken in the assurance that the imminent salary increase is only subsidised by cuts to MPs perks.
A 10% MPs pay rise is, however, a particularly tough pill to swallow for an electorate being constantly battered around the head with the mantra “We’re all in this together”.
You're thinking about growing your business - perhaps with new employees, a new office or forming a new limited company? Here's 10 things you need to know.
Looking for the freedom and flexibility to do what you love whilst living life to the full? Pour yourself a cuppa and learn the ropes without the jargon.