Salaries of Members of the United Kingdom Parliament

The basic annual salary for an MP was increased from £67,060 to £74,000 on 31 July 2015, backdated to 8 May 2015.^[1] In addition, MPs are able to claim allowances to cover the costs of running an office and employing staff, and maintaining a constituency residence and a residence in London.^[2] Additional salary is paid for appointments or additional duties, such as ministerial appointments, being a whip, chairing a select committee or chairing a Public Bill committee.

Current permitted salary and benefits: Commons

Basic salary

The basic annual salary of an MP in the House of Commons was increased to £74,000 as of 31 July 2015.^[2] Many MPs (ministers, the Speaker, senior opposition leaders, opposition chief whip, etc.) receive a supplementary salary for their specific responsibilities. As of 1 April 2015 these additional entitlements range from £15,025 for Select Committee Chairs^[3] to £74,990 for the Prime Minister.^[4] On 24 May 2015 David Cameron announced that he intended to freeze ministerial pay for the next five years.^[5] However, on 2 June 2015 the Daily Mail reported that ministerial pay was to increase at the same time as MP's basic pay was increased to £74,000. The Prime Minister's total salary would therefore increase from £142,500 to £149,440. The total salary for Cabinet Ministers would increase from £134,565 to £141,505. The total salary for ministers would increase from £89,740 to £96,375. And the total salary for parliamentary under secretaries would increase from £89,435 to £96,375.^[6] Full details of current ministerial pay at all levels have yet to be published on either the UK Parliament website or that of the Independent Parliamentary Standards Authority.

MPs also receive extensive allowances and expenses. These expenses and allowances are listed below;

Office expenses

• Office running costs
• Staffing costs
• Travel: staff
• Centrally purchased stationery
• Postage costs
• Central IT costs
• Communications Allowance

Expense outside IPSA

MPs are entitled to claim £9,000 a year for postage and stationery (financial year 2015-16). This amount is in addition to any stationery and postage costs which Members may have reimbursed under the Independent Parliamentary Standards Authority's expenses Scheme.^[7]

Housing, second home, and travel

MPs receive allowances towards having somewhere to live in London and in their constituency, and travelling between Parliament and their constituency.

• Cost of staying away from main home
• Travel: car
• Travel: rail
• Travel: bike
• Travel: European

Pension arrangements

MPs will normally receive a pension of either 1/40th or 1/50th of their final pensionable salary for each year of pensionable service depending on the contribution rate they will have chosen. Members who made contributions of 13.75% of their salary gain an accrual rate of 1/40th.^[8] According to a 2009 report in the Daily Mail, state contributions for MPs are more than four times higher than the average paid out by companies for final-salary schemes, but they are not significantly more generous than most public-sector pensions.^[9]

If an MP stands down during the course of a Parliament for ill health reasons, an ill health retirement grant is payable, calculated in the same way as the Resettlement Grant (as well as an immediate pension based on the service the MP would have accrued if he or she had continued to serve until age 65).^[10]

Resettlement Grant and Winding-up Allowance

On leaving the House of Commons, an MP will be entitled to what is essentially severance pay.

Resettlement Grant

The Resettlement Grant is the name given to the MPs' severance pay package. It may be claimed to help former MPs with the costs of adjusting to life outside parliament. It is payable to any Member who ceases to be an MP at a General Election. The amount is based on age and length of service, and varies between 50% and 100% of the annual salary payable to a Member of Parliament at the time of the Dissolution.^[11]

In the UK the first £30,000 of severance pay is tax free. As stated above, the amount retiring MPs, or those who lose their seats receive, depends on how old they are and how long they have served in the House. For example, an MP who stays in office for one term (say 5 years) and then leaves office will currently receive tax-free severance pay of 50% of his current salary, or £32,383 at current rates – equivalent to an annual salary increment of over £12,000 at current tax rates and pay scales.^[12]

For the 2010–15 Parliament, only MPs defeated in their attempt to be re-elected will get one month’s salary for each year served, up to a maximum of six months or over £33,000. From the start of the 2015 Parliament, it will be replaced by a "Loss of Office Payment", at double the statutory redundancy payment. "For the 'average' MP, who leaves office with 11 years' service, this may lead to a payment of around £14,850."^[13]

Winding-up Allowance

There is also up to £42,000 on offer to pay for winding up staff contracts and office rent.^[14] An allowance of up to one third of the annual Office Costs Allowance was paid for the reimbursement of the cost of any work on Parliamentary business undertaken on behalf of a deceased, defeated or retiring Member after the date of cessation of Membership. On 5 July 2001 the House agreed to change the allowance to one third of the sum of the staffing provision and Incidental Expenses Allowance in force at the time of cessation of Membership.^[15]

Summer Recess

Parliament takes a break of around 45 days for the summer. This is not only for holiday, but so that MPs can spend more time away from Parliament in their constituencies to do work there.

Current permitted salary and benefits: House of Lords

Members of the House of Lords can opt to receive a £300 per day attendance allowance, plus travel expenses and subsidised restaurant facilities. Peers may also choose to receive a reduced attendance allowance of £150 per day instead.^[16]

History of changes to salary and expenses rules

Before the twentieth century, members of parliament were unpaid as it was assumed they would have another income.^[11]

The first regular salary was £400 per year, introduced in 1911. Some subsequent salary levels were £1,000 in 1946, £3,250 in 1964, £11,750 in 1980, and £26,701 in 1990.^[11] The increases in MPs' basic salaries since 1996 have been:^[17][18]

In December 2013, the Independent Parliamentary Standards Authority recommended that pay be increased to £74,000 per annum, linked "to the pay of the people they represent". At the same time, pensions benefits would be reduced, resettlement payments scrapped and expenses tightened. In July 2015, this was implemented (backdated to 8 May 2015, the day after the general election), with annual changes now "linked to changes in average earnings in the public sector".^[19]

Scrutiny and audit process of claims

In 2010, the payment of MPs' salaries and allowances, and many staff, was moved from the Fees Office, which was effectively self-policing by MPs of their expenses, to a more autonomous body, the Independent Parliamentary Standards Authority.^[20] In 2010 the IPSA was also given the responsibility of setting MPs' salary levels. It is accountable to the Speaker's Committee for the IPSA, comprising the Speaker, the Leader of the House, the Chair of the Standards and Privileges Committee and five MPs selected by the Speaker (one of whom is the Shadow Leader of the House).

The National Audit Office, another independent parliamentary body, has some audit authority.

See also

• The Green Book (UK Parliament)
• Disclosure of expenses of Members of the United Kingdom Parliament

References