Parliamentary Standards Bill

I will try not to detain your Lordships for too long. In speaking to Amendment 21, I shall speak also to Amendment 26. These amendments are important for practical reasons and for clarification of the interlinking between Clause 2, which provides for salaries for Members of Parliament, and Clause 3, which provides for their allowances. I believe that they are of constitutional significance in that the whole system of allowances for MPs, as we all know only too well, has brought the other place into disrepute, which is deeply worrying for all of us, particularly for many of us in this House who spent many years there. At the heart of this problem is the way in which salaries and allowances have been mixed for Members of Parliament for more than 30 to 40 years. The remuneration—in ordinary terms, the pay—of Members of Parliament has been a mixture of a salary and a very broadly based allowance. It started in July 1974 when, at a time of high inflation, Harold Wilson, with the Government between the two elections, was faced with a serious revolt by Labour MPs who were in deep trouble. The average take-home pay was about two hundred and something pounds a month. They were having real difficulties in making ends meet. They had to live in London but did not have living away from home allowances or anything else. MPs were going to revolt against an incomes policy which the Government wanted to introduce for everyone else. It was got around by the device—you could almost say the fudge—which every party has taken up since, of giving a £500 a year allowance to all Members of Parliament. That was equivalent to about 25 per cent of their actual salary or 20 per cent of their total remuneration. That has been going on ever since. It went on for all 22 years that I was in Parliament. It almost came entirely under the heading of the second homes allowance. You could choose which home would be your second home. I chose the home where I brought up my family in Hertfordshire and I lived frugally in London. I believe that many parliamentary colleagues did much the same, although some had small places in their constituency and kept their families in London. It is important to understand that it was, and up to a point very much still is, an essential part of the overall pay and remuneration of a Member of Parliament. Today, where an MP earns £64,000 of salary and has a living away from home allowance, if it can be justified under the present rather complicated rules, of £24,000, when the tax is taken off the £64,000, approximately one-third of the whole pay of a Member of Parliament comes under this shadowy heading of allowance. I recognise that there are objections to this House telling the House of Commons what to do, but this House has a real responsibility for the constitutional effect and good clarification of this legislation. Clauses 21 and 22 require the House of Commons to do away with the current additional costs allowance in respect of second homes and to provide for a salary that would be taxed in the normal way as for all other taxpayers, which amounts to what the Senior Salaries Review Body considers to be a fair level. It should take into account the needs of a Member of Parliament to maintain homes near Westminster and in or near his or her constituency. Put very simply, the aim is to treat Members of Parliament as nearly as possible like all other citizens.