The graph that persuaded me Ipsa may have a point on MPs’ pay

by Stephen Tall on July 11, 2013

I was all set to argue against the report of the Independent Parliamentary Standards Authority (Ipsa), which has today recommended MPs’ salaries should increase to £74,000 by 2015 in return for cuts to perks and pensions. But then I thought: perhaps I should read it first.

So I did. You can too: it’s here. It’s actually a pretty impressive piece of work.

For a start, it dismisses pretty comprehensively a couple of arguments often used in favour of MPs getting higher salaries.

Example one:

it is argued an MP should be treated like a GP or a local authority chief executive or a chief constable. We are not persuaded by such simplistic comparisons with jobs that require extensive qualification and long training and have responsibility for performance. Moreover, there is much that is self-serving in recourse to comparators. This or that job is favoured because the salary is roughly what is thought right: the judgement comes first, the most convenient comparator afterwards.

Example two:

Nor have we been persuaded by the claim – and it is no more than the claim – that the quality of those offering themselves as prospective candidates has been adversely affected by the level of pay available. We have found no evidence to support this claim and, indeed, there is plenty of reason to suspect that the selection policies and procedures of the political parties are far more important determinants of the quality and character of prospective candidates. Moreover, many informed observers seem to judge the 2010 cohort of MPs to be of a particularly high calibre. And, of course, they put themselves forward for election with a salary of £65,738 in view.

So given this (justified) scepticism that MPs should be treated like GPs and that paying people more automatically increases the quality of those paid, why have they gone ahead with recommending a pay rise?

The answer is contained within this graph:

mp pay

Over the past hundred years, MPs’ pay has been, on average, just over three times that of national average earnings. It is currently at a multiple of 2.7 and therefore below the long term average. The multiple for the period
between 1911 – when MPs first received a salary – and 1980 was 3.16. It is after this period that some commentators believe that pay and expenses began to blur, as basic salaries were held down and the value of allowances was increased.

Ipsa therefore recommends that salaries be re-set to this historical trend

and that its level should be in the range £73,365 – £83,430. In recognition of the current difficult economic circumstances and the potential pension liabilities for the taxpayer, we recommend that the salary be set at the lower end of this range: £74,000, indexed to national average earnings thereafter.

Ipsa’s timing couldn’t be much worse. And they’re never going to win the public argument. But — as someone who reckons politics is a vocation not a profession, and that at least as many MPs are over-paid as are under-paid — they’ve done a pretty good job of persuading me.