MPs are paid to fear inflation and not care about unemployment

Want to know what an MP cares about? Look at their pay packet. has put together highlighted a chart made by IPSA showing MPs pay in real terms over the last hundred years. Since 1911, when it was introduced at a rate of £400 per year, the pay of elected representatives has fluctuated between six times, and one and a half times, the average wage in the UK. It currently sits a little over two-and-a-half times higher:

As a reminder of what we've historically considered a fair wage for MPs, it's useful, especially in the context of the continued debate over IPSA's decision to award a pay rise. We can see, for instance, that the vast majority of MPs, elected in 2001 or later, are earning less than they every have before in real terms. But for the 100 or so oldest MPs, in office since before 1992, they've had the experience of being much poorer.

But there's something else which is worth noticing, which is how badly hit MPs were by the inflation of the 1960s and 1970s. Between 1962 and 1976, MPs pay fell from 4.5 times the average wage to double it; and that despite two pay rises in the interim period.

Everyone earning a salary is hit by inflation to some extent. But MPs are in the category of workers who are hit hardest. They don't have the annual pay rises typical in many industries; they have no ability to negotiate individually in response to changed circumstances; they can't leave for a better paid job without completely switching industry; and so on. And that's even before you take into account the unique peculiarities of their situation: asking for a pay rise due to inflation is a bad idea if the inflation is seen as your fault to start with.

So MPs, as a class, actually have more to fear from inflation than most other people. (To a certain extent, offloading the job of setting their pay to IPSA has made things slightly easier, but as the latest fuss shows, a pay rise is still a PR disaster.) And that explains a lot about the hawkish attitude of most MPs.

Conversely, MPs are also the one group who have no (direct, financial) reason to fear recession or high unemployment. Their pay is set free of market forces, and, while they might not see much of a rise in lean times, they can be pretty certain it won't be cut in nominal terms. That's a comfort few employees have. And they are absolutely certain that, no matter how bad the business environment, they won't be let go because their organisation can't afford to keep them on.

All of which means that the economics of being an MP are directly aligned with a tendency to over-value inflation, and undervalue growth, in setting priorities for the country. In so far as the new Governor of the Bank of England, Mark Carney can fight that consensus, he should; but IPSA could have a role to play as well. In deciding what to do with MPs pay, they could look at a wider economic index of how the country is doing. That way, MPs would know that getting their dinner relies on everyone else getting theirs.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Could Labour lose the Oldham by-election?

Sources warn defeat is not unthinkable but the party's ground campaign believe they will hold on. 

As shadow cabinet members argue in public over Labour's position on Syria and John McDonnell defends his Mao moment, it has been easy to forget that the party next week faces its first election test since Jeremy Corbyn became leader. On paper, Oldham West and Royton should be a straightforward win. Michael Meacher, whose death last month triggered the by-election, held the seat with a majority of 14,738 just seven months ago. The party opted for an early pre-Christmas poll, giving second-placed Ukip less time to gain momentum, and selected the respected Oldham council leader Jim McMahon as its candidate. 

But in recent weeks Labour sources have become ever more anxious. Shadow cabinet members returning from campaigning report that Corbyn has gone down "very badly" with voters, with his original comments on shoot-to-kill particularly toxic. Most MPs expect the party's majority to lie within the 1,000-2,000 range. But one insider told me that the party's majority would likely fall into the hundreds ("I'd be thrilled with 2,000") and warned that defeat was far from unthinkable. The fear is that low turnout and defections to Ukip could allow the Farageists to sneak a win. MPs are further troubled by the likelihood that the contest will take place on the same day as the Syria vote (Thursday), which will badly divide Labour. 

The party's ground campaign, however, "aren't in panic mode", I'm told, with data showing them on course to hold the seat with a sharply reduced majority. As Tim noted in his recent report from the seat, unlike Heywood and Middleton, where Ukip finished just 617 votes behind Labour in a 2014 by-election, Oldham has a significant Asian population (accounting for 26.5 per cent of the total), which is largely hostile to Ukip and likely to remain loyal to Labour. 

Expectations are now so low that a win alone will be celebrated. But expect Corbyn's opponents to point out that working class Ukip voters were among the groups the Labour leader was supposed to attract. They are likely to credit McMahon with the victory and argue that the party held the seat in spite of Corbyn, rather than because of him. Ukip have sought to turn the contest into a referendum on the Labour leader's patriotism but McMahon replied: "My grandfather served in the army, my father and my partner’s fathers were in the Territorial Army. I raised money to restore my local cenotaph. On 18 December I will be going with pride to London to collect my OBE from the Queen and bring it back to Oldham as a local boy done good. If they want to pick a fight on patriotism, bring it on."  "If we had any other candidate we'd have been in enormous trouble," one shadow minister concluded. 

Of Corbyn, who cancelled a visit to the seat today, one source said: "I don't think Jeremy himself spends any time thinking about it, he doesn't think that electoral outcomes at this stage touch him somehow."  

George Eaton is political editor of the New Statesman.