John Hemming's Web Log John's Reference Website
Saturday, May 16, 2009
  Expenses and Parliament
There are a number of issues that have been raised over the past week in respect to the expenses charged by Members of Parliament.

These do deserve some form of commentary. It is generally accepted that the system by which MPs charge for the costs of being in London is unacceptable. It was intentionally set up as a cash cow to be milked by MPs in preference to facing up to giving MPs a salary increase. MPs were encouraged to milk the system, but some of the abuses go much beyond this.

There are some really silly criticisms being made about some things which are really not wrong which conceal the fact that other things are wrong.

However, I feel that I should explain some of the points about my own claim for a second home. I took the view on being elected that I would not just try to claim the maximum.

The first point is that my priority in how I structured things was to try to get reasonably good value for the tax payer. I am a director of two companies and responsible for almost 360 employees in that way. Each company has different arrangements for expenses. I took the view that I would only do what is reasonable for one of the employees in one of my companies.

It is important to look at both travel and second home costs. On that basis the figures for Birmingham since 2005 are as follows:
John Hemming 59601
Lynne Jones 60163
Steve McCabe 61803
Gisela Stuart 73079
Clare Short 74500
Liam Byrne 84978
Richard Burden 86324
Roger Godsiff 90956
Andrew Mitchell 92822
Sion Simon 103259
Khalid Mahmood 104676

In being the lowest cost MP in Birmingham (I am not lowest on staff costs, but I will come to that) I think I have achieved the objective of being good value for money for the taxpayer. That really has to be the top priority.

Within that, then, there are questions about how things should be done.

One area I was unsure about was food costs. Food basically refers to subsistance. That is the cost of eating mainly in restaurants in the house of commons because I cannot fit in shopping and cooking into my schedules. There is a story told by Paul Flynn about another Labour MP who had friends visit who swiched on the cooker and set on fire the instructions which had been left inside the cooker which had never been used.

It is not realistic for MPs to go back their flats to cook. You could not imagine TV saying - "well we now have a 2 hour break in the budget debate whilst all the MPs go home and cook before coming back later tonight."

I live in Birmingham. I go to London on Monday and return later in the week. It is OK shopping at the weekend, but there is no time midweek for shopping in London.

The parliamentary authorities told my wife (who fills in the expense claims generally) that she should claim £400 per month for subsistance for every month.

There was some confusion about this recently because this includes August when the house does not sit. I had thought it was right because during the whole year things balanced out and most things operate on a financial year. However, the criticism of other MPs caused some confusion. I spend a lot more than this sum of money on eating during the year simply because of time pressures. I checked it out and I was right. It is the financial year that it is relevant to.

If you assume there are 150 sitting days (there are normally more). Then this works out at £32 per day. One of my companies allows staff £50 a day (Breakfast, Lunch, Dinner) so that seems entirely reasonable to me. It is what I pay other people.

In the interests of saving the taxpayer money I also travel Standard Class to London on the train. This means I need to pay for food on the train (or buy it in or close to the station). That adds to my costs.

Then there is the question of my flat. I own two flats in London. One in Covent Garden and one in Brixton.

The one in Covent Garden is like this in Martlett COurt it is a flat which was built by Westminster City Council and is in a housing co-operative.

Note that the rent on the one bedroom flat is £360 per week. Over the year this would add up to £18,270.

I have a two bedroom flat which would rent potentially for £24,000. The whole of the Additional Costs Allowance.

When flats are rented there are three elements to the rental payment. There is a cost of capital, a maintenance cost and a profit element. I believe it is reasonable for the taxpayer to fund the cost of capital and the maintenance costs, but not the profit element.

When I was elected I had a number of choices. I had a mortgage on another property in Birmingham at the time which needed payment and I knew that I faced a reducing income because of the time I spent on parliamentary business.

I could have rented out my Covent Garden flat (the Brixton one at the time was rented out) getting an income of £24,000 (taxable) and rented a flat for myself via the Additional Costs Allowance. Or I could have rented out my Covent Garden flat and then bought another smaller flat via the ACA. Instead I decided to live in Covent Garden and to put a mortgage on the Covent Garden flat which cost the ACA £9,900 per year as the cost of capital (now much less) and use the cash from that to clear the mortgage in Birmingham (on Osmond House for those people that know it). This has the effect of costing me £24,000 in income. It also allows the taxpayer effective use of my flat (admittedly for me to stay in it) for £5,000 below the market rental for a one bedroom flat.

From 2007 until recently I have had an alternating member of staff on a rota in London. They have stayed in the second bedroom in this flat. In 2008 my now 18 year old daughter moved to London. She now has the flat in Brixton, but from time to time sleeps on the couch in my Covent Garden flat (normally when we meet for dinner).

In the light of the criticism of Andrew George for having his daughter stay I make this clear. I see nothing wrong in allowing my daughter to crash on the sofa. I am saving the taxpayer something like £7,000 a year (in 2008-9) compared to other MPs who rent flats.

As far as the wider issue of expenses are concerned. I spend over £30,000 a year on providing a service to local residents out of my own resources. This includes me taking money from my parliamentary salary to pay extra money to my staff which has happened every year since 2005-6. Hence I spend more than the maximum on the staff/office budget, but it is not obvious because they do not report money taken from the MPs salary and put into expenses.

There are some fuzzy elements to the expenses system, but it is important to look at it in the round as well. There are those that argue because I am particularly wealthy that I should not claim expenses. I disagree. I have a job to do on behalf of the citizens of this country. It is entirely reasonable for me to have the costs of travel paid, for example, or to be paid a salary. I happen to put quite a large sum of money back into the pot from my own resources.

However, I have told the department of resources that I will make no further claims for a second home. That means also no claims for food as they go in as part of the second home claim. I went into politics to help others rather than to help myself to a cash cow. I haven't actually used the expenses system as a cash cow, but it is now tainted. There is no sense muddying the waters as to my motivations for about £10,000 a year (which is the difference between my 2008-9 ACA claim and the London Costs Allowance (the scheme for MPs who don't claim for a second home). My income including my salary from parliament has gone down by over £100,000 a year to have the honour of serving the people of Yardley. I don't mind this. I do mind people imputing the motivation of milking a cash cow.
 
Comments:
It would be better to raise MP's salaries although they do also have other business interests. As most MP's have been to Oxbridge salaries should reflect this,rather than having a dishonest expenses system.

In Scotland they have to give receipts for all expenses.
 
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