Article Human Rights & Press Freedom

The Westminster poverty trap?

Because we’re worth it

“If you are trying to attract people of a business or a professional background to serve in the House of Commons, and if they are not ministers, it is quite unrealistic to believe they will go through their parliamentary career being able to simply accept a salary of £60,000.”

Thus spoke former Foreign Secretary Sir Malcolm Rifkind on Radio 4 in February this year, defending himself against allegations of offering undercover reporters to use his influence to help a fake Chinese company.

Malcolm Rifkind is not alone in reckoning £67,000 as less than a living wage. Several MPs believe they are undervalued and think it is unrealistic to expect them to do their job at a wage that doesn’t reflect their status. They would, they insist, be earning far more working in the private sector.

Shortly after Malcolm Rifkind’s Radio 4 statement, Conservative MP Adam Afriyie told Chat Politics “It is almost impossible to operate on the salary that is given to MPs if you come from a middle income family”. Afriyie suggested that £225,000 was a more realistic figure.

In August 2014 Mark Simmonds, a Conservative Foreign Office minister and MP for Boston and Skegness in Lincolnshire, announced that he was quitting politics because his pay and expenses of nearly £120,000 did not stretch far enough, making his family life “intolerable.”

Fellow Lincolnshire MP Karl McCartney told his local newspaper the Lincolnshire Echo in 2013 “Politics should be open to all and surely you need the best people to run the country. If you pay peanuts you get monkeys. There are altruistic reasons for entering politics but if you have a family and responsibilities, would you negate those to become an MP?”

In the aftermath of the IPSA’s recommendation of a rise to £74,000, a number of MPs raised their heads above the parapet to say that it still wasn’t enough. Dr Philip Lee, MP for Bracknell, complained that he had had to take a £50,000 pay cut to enter parliament, while North West Leicestershire MP Andrew Bridgen told Radio 4 that entering politics might mean empty Christmas stockings for the kids. He said “A man or a woman who’s very capable, doing very well in their profession, whatever that may be, with a family, are they going to be willing to take that pay cut, look their children in the eye when it’s Christmas say you can’t have what you normally have because Mummy or Daddy wants to be an MP?”

In 2011 the Hansard Society conducted a survey of MPs in the new intake of 2010. One the questions they asked was whether the new Member of Parliament had taken a pay cut or a pay rise to enter parliament. Over 50% told the survey that they had taken a pay cut. Two years later the Independent Parliamentary Standards Authority (IPSA), set up to fix MPs’ pay and to police their expenses in the wake of the expenses scandal of 2009, asked 100 MPs what they thought they should be paid. 69% of the anonymous respondents gave IPSA a figure higher than their current earnings. So the majority think they are underpaid and the majority say they took a pay cut to enter parliament. An open and shut case, then?

A cut above the average

According to the Office for National StatisticsAnnual Survey of Hours and Earnings (ASHE), the typical gross earnings of a full-time UK employee in 2010 were £25,882. That’s way below the £67,060 annual salary that backbench MPs now receive or the £81,936 for select committee chairs. It is dwarfed by the £134,565 cabinet ministers pick up and the £142,500 prime ministerial salary.

However, our MPs are high calibre people drawn from many different walks of life, some of which are potentially paid well above the average. So, let’s examine what our MPs earned before they entered the house and see how many have actually taken a pay cut.

According to The British General Election of 2010 by Dennis Kavanagh and Philip Cowley, there are getting on for 40 barristers in the House of Commons, including Malcolm Rifkind and Jack Straw. Barrister is a profession readily associated with high earnings but exactly how much barristers earn is tricky to determine because 80% are self-employed and so don’t figure in the Office for National Statistics ASHE figures. However, according to Graduate Prospects “Qualified barristers can earn anything from £25,000 to £300,000” and “salaries for those with over ten years’ experience can rise to £1,000,000.” It is not unreasonable to suppose, therefore, that some of our MPs are amongst these high-flyers. If they put their legal careers on hold to enter parliament, it would mean a significant loss of income. However, being an MP is not currently a bar on continuing your career as a barrister and although a number of barristers do declare themselves as non-practising, others have gone right on earning while drawing their MPs’ salaries. According to a report in the Daily Telegraph in February this year, it is this group who will be hit hardest by the curb on outside earnings proposed by Ed Miliband with barristers such as Geoffrey Cox, Edward Garnier, Steven Philips and Tony Baldry in the top 10 of 2014 outside earnings.

A high proportion of MPs come from a business background. 115 MPs listed their previous occupation as company director or company executive. One might expect them to face a cut in salary on becoming an MP. However, a glance at the Register of Members’ Interests shows that there is nothing to stop them continuing on the company board, or taking on new directorships, while also sitting as a Member of Parliament. The register for May 2013 shows directorship payments of just under £30,000 to Labour’s Gordon Banks and just over £43,000 to Conservative Steven Baker, two of the 50 MPs who have registered payments for their role as company directors.

As a GP, Dr Philip Lee comes from another profession where a high-proportion of its members are self-employed, most contracted to the NHS one way or another. Many are also both self-employed and salaried, while others simply draw a salary. Again, this makes is difficult to assess exactly what a typical GP earns, but the NHS Information Centre did manage to compile a set of statistics for GPs’ pay in its 2011 report GP Earnings and Expenses 2009/10. The report shows that the average income for a contracted GP was between £97,000 and £131,000, depending on the type of contract, while the salary of a typical salaried GP was £58,000. The GPs were among nine doctors, dentists and opticians in parliament, whose typical salary in 2010, if not self-employed, would have been around £62,000 according to ASHE.

Company directors and the high-flying self-employed aside, the background of the bulk of the remaining MPs is more workaday. 30 were architects, surveyors and accountants who typically earned between £30k and £40k, and 65 were teachers, who typically could have expected between £34,000 and £45,000 per year if working full-time. Much lower down the professional pay ladder are the 18 MPs with a background in the civil service or local government whose typical gross salary would have been below the average at around £21,000 unless they belonged to the upper grades which would have put them on an even footing with MPs. Historically, MPs’ pay was linked to the pay of higher grade civil servants.

There is one group of MPs in the 2010 to 2015 parliament whose former occupation sticks out like a sore thumb. 90 MPs were political organisers, campaigners or advisors before entering parliament, a higher number than any other occupational group. There are no definitive figures on what this group would have been earning but a TES careers guide published in 2009 gives a figure of between £19,000 and £35,500 per year.

None of the remaining occupations of our MPs have typical earnings that come close to the £67,060 earned as a backbencher. The 25 former manual workers in the Commons including the seven such as Conservative Derbyshire Dales MP Patrick McLoughlin who had worked as coal miners, would have seen their pay advance considerably on entering parliament.

So what about that Hansard Society survey of the new intake in which over 50% said they had taken a pay cut? First of all, consider the 44% of new MPs who said that they had a salary increase on entering parliament. Over a third of these reported an increase of more that £30,000, so they were on something much closer to the typical wage before the job swap. The rest were evenly spread between those who had seen an increase of between £20k and £30k and those who said their salary had remained unchanged. So a sizable chunk of the new 2010 intake, who made up just over a third of the total number of MPs in the 2010 to 2015 parliament, were not earning anything like the £67,000 they went on to receive as an MP. When we consider that compared with the previous 30 years, this 2010 intake saw a big drop in representation of occupations whose pay is closer to the typical salary, such as manual workers, teachers and people who work in the civil service and local government, it is fair to assume that the House of Commons as a whole contained far more than 44% of MPs drawing a salary higher than they received before entering parliament.

For those who reported a rise in salary, it is reasonable to take at face value that what they meant is that before the election they were earning less than a salaried MP and after the election they were taking home the salary of an MP. It is not as clear what is meant by the 56% who said they had taken a cut in salary. On the face of it, it could be understood as meaning that whatever work they were paid for before they were elected they had now given up and were living solely off their salary as a MP. However, it could also mean that as a result of becoming an MP, their other private earnings were no longer as great as they had been. As we have already seen, for a number of previously high-earning MPs, entering parliament did not stop them continuing to earn well from legal work, directorships and consultancy fees and a look at the Register of Members’ Interests at any point over the last five years will show a range of ways in which well-connected MPs can continue to enjoy high earnings when in parliament.

An analysis by the Guardian in October last year showed that 26 MPs declared more earnings from directorships, paid employment or shareholdings higher than their parliamentary salary, with more than 20 of them declaring more than £100,000 in outside earnings in the most recent Register of Members’ Interests.

A step up the ladder

A good proportion of MPs took a step up the pay ladder when they entered parliament. When in the 2013 survey of 100 MPs 69% of them told IPSA they felt they were underpaid, no doubt their feelings were heartfelt – we all feel we are worth a little more than we currently get. However, calls for more pay can also be seen as a symptom of how out of touch and unrepresentative some of our MPs are. They are not to blame. According to a research report Income inequality in the UK by Ipsos MORI, most people who earn a lot of money, not just those who become MPs, genuinely think everyone else is paid more than they actually are and that what they earn is normal. The report concludes, “high earnings feel normal for this group, who assume median incomes are much higher than they are.”

In most of the high publicity cases of MPs claiming they would be earning far more in the private sector, it is the high-earners who make their complaints heard most vociferously: high earning barristers such as Malcolm Rifkind; Mark Simmonds, in receipt of £50,000 fees from Circle Healthcare and payments of £800 a month from his chairmanship of chartered surveyors Mortlock Simmonds; Andrew Bridgen, who received over £7,500 per month from his vegetable company AB Produce; Philip Lee, who quite plausibly took a £50,000 pay cut but who was still able to record earnings of close to £20,000 as a self-employed GP in the 7th May 2013 Register of MPs’ Interests.

The noise and the headlines generated by the high-earners tend to drown out the more grounded MPs who recognise their £67,000 for what it is. In the words of Ian Mearns, Labour MP for Gateshead, when asked by the Daily Telegraph for his reaction to IPSA’s proposal of increasing MP’s pay to £74,000, “I have already had the best pay rise I have ever had - it was the one I got when I was elected to the job in the first place.”

This article is a response to the topic idea; Did your MP really earn a lot before they got in?.

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