Will MPs reclaim the power to vote against a pay rise?

Parliament's decision to give up the right to set MPs' pay looks unwise as IPSA prepares to recommend an increase of £10,000.

After George Osborne announced last week that the 1 per cent cap on public sector pay rises would be extended until 2015-16, there could hardly be a worse time for MPs to receive an inflation-busting increase of £10,000. But it is a move that David Cameron is powerless to prevent. When MPs founded the Independent Parliamentary Standards Authority (IPSA) and gave up control over their pay and conditions it was the intention of restoring public trust after the stain of the expenses scandal. But with IPSA likely to recommend a significant increase in their pay when it reports on Friday, that decision is about to return to haunt them. 

The independent body is expected to propose that MPs' salaries rise from their current level of £65,738 to around £75,000, with IPSA head Ian Kennedy thought to favour an even greater increase to £85,000. If there is anything that could diminish the reputation of parliament even further, this is it. But ministers long abandoned the power to prevent such a PR debacle. As Francis Maude, the Cabinet Office minister, explained on Sky News, "It's not in my control, it's in the control of the Independent Parliamentary Standards Authority. It isn't even in the control of MPs themselves."

For this reason, while David Cameron declared yesterday in Islamabad that it would be "unthinkable" for "the cost of politics or Westminster" to go up, he was ultimately unable to rule out a rise. The hope is that an increase in basic pay could be offset by cuts to MPs' pensions and other benefits. But this compromise is hardly likely to placate an austerity-scarred public. 

Labour, meanwhile, has already signalled that it will oppose any increase above 1 per cent, bringing MPs into line with other public sector workers, and that Ed Miliband will pledge to scrap the rise if he becomes prime minister. As for Nick Clegg he declared in January, "I think it’s potty. It’s not going to happen, certainly if I’ve got anything to do with it."

The ultimate result of the row could be MPs reclaiming control over their pay. The often prescient David Davis (who commented, "I don't see how we could ever again even think of uttering the words 'all in it together' if we accepted this") recently suggested "that is what may end up happening". 

It's worth remembering that a private survey of 100 MPs conducted by YouGov on IPSA's behalf found that 69 per cent thought they were underpaid, with an average salary of £86,250 recommended. On average, Tory MPs proposed a salary of £96,740, the Lib Dems £78,361 and Labour £77,322. A fifth suggested that they should be paid £95,000 or more. But would they have the chutzpah to vote accordingly in parliament? That seems unlikely. 

Nick Clegg, David Cameron and Ed Miliband during a reception to mark the inaugural Queen Elizabeth Prize for Engineering at Buckingham Palace. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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What type of Brexit did we vote for? 150,000 Conservative members will decide

As Michael Gove launches his leadership bid, what Leave looks like will be decided by Conservative activists.

Why did 17 million people vote to the leave the European Union, and what did they want? That’s the question that will shape the direction of British politics and economics for the next half-century, perhaps longer.

Vote Leave triumphed in part because they fought a campaign that combined ruthless precision about what the European Union would do – the illusory £350m a week that could be clawed back with a Brexit vote, the imagined 75 million Turks who would rock up to Britain in the days after a Remain vote – with calculated ambiguity about what exit would look like.

Now that ambiguity will be clarified – by just 150,000 people.

 That’s part of why the initial Brexit losses on the stock market have been clawed back – there is still some expectation that we may end up with a more diluted version of a Leave vote than the version offered by Vote Leave. Within the Treasury, the expectation is that the initial “Brexit shock” has been pushed back until the last quarter of the year, when the election of a new Conservative leader will give markets an idea of what to expect.  

Michael Gove, who kicked off his surprise bid today, is running as the “full-fat” version offered by Vote Leave: exit from not just the European Union but from the single market, a cash bounty for Britain’s public services, more investment in science and education. Make Britain great again!

Although my reading of the Conservative parliamentary party is that Gove’s chances of getting to the top two are receding, with Andrea Leadsom the likely beneficiary. She, too, will offer something close to the unadulterated version of exit that Gove is running on. That is the version that is making officials in Whitehall and the Bank of England most nervous, as they expect it means exit on World Trade Organisation terms, followed by lengthy and severe recession.

Elsewhere, both Stephen Crabb and Theresa May, who supported a Remain vote, have kicked off their campaigns with a promise that “Brexit means Brexit” in the words of May, while Crabb has conceded that, in his view, the Leave vote means that Britain will have to take more control of its borders as part of any exit deal. May has made retaining Britain’s single market access a priority, Crabb has not.

On the Labour side, John McDonnell has set out his red lines in a Brexit negotiation, and again remaining in the single market is a red line, alongside access to the European Investment Bank, and the maintenance of “social Europe”. But he, too, has stated that Brexit means the “end of free movement”.

My reading – and indeed the reading within McDonnell’s circle – is that it is the loyalists who are likely to emerge victorious in Labour’s power struggle, although it could yet be under a different leader. (Serious figures in that camp are thinking about whether Clive Lewis might be the solution to the party’s woes.) Even if they don’t, the rebels’ alternate is likely either to be drawn from the party’s Brownite tendency or to have that faction acting as its guarantors, making an end to free movement a near-certainty on the Labour side.

Why does that matter? Well, the emerging consensus on Whitehall is that, provided you were willing to sacrifice the bulk of Britain’s financial services to Frankfurt and Paris, there is a deal to be struck in which Britain remains subject to only three of the four freedoms – free movement of goods, services, capital and people – but retains access to the single market. 

That means that what Brexit actually looks like remains a matter of conjecture, a subject of considerable consternation for British officials. For staff at the Bank of England,  who have to make a judgement call in their August inflation report as to what the impact of an out vote will be. The Office of Budget Responsibility expects that it will be heavily led by the Bank. Britain's short-term economic future will be driven not by elected politicians but by polls of the Conservative membership. A tense few months await. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.