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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By refusing to stand down, Jeremy Corbyn has betrayed the British working classes

The most successful Labour politicians of the last decades brought to politics not only a burning desire to improve the lot of the working classes but also an understanding of how free market economies work.

Jeremy Corbyn has defended his refusal to resign the leadership of the Labour Party on the grounds that to do so would be betraying all his supporters in the country at large. But by staying on as leader of the party and hence dooming it to heavy defeat in the next general election he would be betraying the interests of the working classes this country. More years of Tory rule means more years of austerity, further cuts in public services, and perpetuation of the gross inequality of incomes. The former Chief Secretary to the Treasury, Seema Malhotra, made the same point when she told Newsnight that “We have an unelectable leader, and if we lose elections then the price of our failure is paid by the working people of this country and their families who do not have a government to stand up for them.”

Of course, in different ways, many leading figures in the Labour movement, particularly in the trade unions, have betrayed the interests of the working classes for several decades. For example, in contrast with their union counterparts in the Scandinavian countries who pressurised governments to help move workers out of declining industries into expanding sectors of the economy, many British trade union leaders adopted the opposite policy. More generally, the trade unions have played a big part in the election of Labour party leaders, like Corbyn, who were unlikely to win a parliamentary election, thereby perpetuating the rule of Tory governments dedicated to promoting the interests of the richer sections of society.

And worse still, even in opposition Corbyn failed to protect the interests of the working classes. He did this by his abysmal failure to understand the significance of Tory economic policies. For example, when the Chancellor of the Exchequer had finished presenting the last budget, in which taxes were reduced for the rich at the expense of public services that benefit everybody, especially the poor, the best John McConnell could do – presumably in agreement with Corbyn – was to stand up and mock the Chancellor for having failed to fulfill his party’s old promise to balance the budget by this year! Obviously neither he nor Corbyn understood that had the government done so the effects on working class standards of living would have been even worse. Neither of them seems to have learnt that the object of fiscal policy is to balance the economy, not the budget.

Instead, they have gone along with Tory myth about the importance of not leaving future generations with the burden of debt. They have never asked “To whom would future generations owe this debt?” To their dead ancestors? To Martians? When Cameron and his accomplices banged on about how important it was to cut public expenditures because the average household in Britain owed about £3,000, they never pointed out that this meant that the average household in Britain was a creditor to the tune of about the same amount (after allowing for net overseas lending). Instead they went along with all this balanced budget nonsense. They did not understand that balancing the budget was just the excuse needed to justify the prime objective of the Tory Party, namely to reduce public expenditures in order to be able to reduce taxes on the rich. For Corbyn and his allies to go along with an overriding objective of balancing the budget is breathtaking economic illiteracy. And the working classes have paid the price.

One left-wing member of the panel on Question Time last week complained that the interests of the working classes were ignored by “the elite”. But it is members of the elite who have been most successful in promoting the interests of the working classes. The most successful pro-working class governments since the war have all been led mainly by politicians who would be castigated for being part of the elite, such as Clement Atlee, Harold Wilson, Tony Crosland, Barbara Castle, Richard Crossman, Roy Jenkins, Denis Healey, Tony Blair, and many others too numerous to list. They brought to politics not only a burning desire to improve the lot of the working classes (from which some of them, like me, had emerged) and reduce inequality in society but also an understanding of how free market economies work and how to deal with its deficiencies. This happens to be more effective than ignorant rhetoric that can only stroke the egos and satisfy the vanity of demagogues

People of stature like those I have singled out above seem to be much more rare in politics these days. But there is surely no need to go to other extreme and persist with leaders like Jeremy Corbyn, a certain election loser, however pure his motives and principled his ambitions.

Wilfred Beckerman is an Emeritus Fellow of Balliol College, Oxford, and was, for several years in the 1970s, the economics correspondent for the New Statesman