MPs’ pay watchdog to give public more of a say on how politicians are funded

The MPs’ pay watchdog is planning to give the public more input into how politicians are funded as it considers changes to the system, its new chief executive has said.

Karen Walker, who took over as head of the Independent Parliamentary Standards Authority last month, said Ipsa had recently brought in a “big change” in the way politicians were allowed to claim funding for running their offices, employing staff, living accommodation, travel and other costs.

She told the Guardian it was now a more flexible and less “mechanistic” system – based upon principles of “value for money, parliamentary purpose, accountability and integrity” – that gave MPs more decision-making over what they claimed.

But Walker said there was still room for more potential changes in how MPs were funded after Ipsa consulted a citizens’ forum of 23 members of the public to find out what they thought about the issue.

She said one of the areas Ipsa was considering changes was whether MPs could claim different funding costs based on the needs of their constituency – with some parliamentarians requiring higher levels of travel expenditure or more staff to help with elevated levels of constituency casework.

Walker also said Ipsa was working towards increasing public understanding about the way MPs were funded, with pay currently set at £93,904 a year, and the annual maximum for costs associated with their works at £250,000.

After setting up an independently run “citizens’ forum” to debate the issue, she said the group changed their views on MPs’ pay. They “mostly believe MPs’ pay is fair, but that it should remain grounded in the context of the wider social and economic realities facing ordinary working people”, Walker said.

After the exercise, Ipsa is proposing that the way it sets MP pay should be “based on the main recommendations made by the citizens’ forum”. Some other findings of the forum were that MPs’ pay could be benchmarked against comparable roles in the public service and similar democracies; be linked in part to national average household income; and reflect the demanding nature of the role.

Ipsa, which was set up in the aftermath of the expenses scandal in 2010, is consulting on MPs’ pay and funding for the next financial year, with the board due to consult on the recommendations of the forum.

The watchdog began a new approach to public engagement over MPs’ pay and expenses, which it prefers to call business costs, after launching a citizens’ forum to debate the issue.

Ipsa has also recently brought in a new “principles-based” approach to regulation. This allows MPs to make more of their their own judgments about whether claims should be made based on a set of principles.

Walker said: “Where we were previously, it was very much mechanistic rules that gave no flexibility and it didn’t accommodate. One size does not fit all. So we’ve moved to principles and they’re very simple: value for money; parliamentary purpose; accountability and integrity.

“What’s happened as a result of that is the responsibility for decision-making on funding is passed to an MP.”

She added: “Of course there are red lines, there are limits on certain budgets. We cap them because we know that actually anything above a certain amount would be an overspend. But we are really keen to make sure they use the funding wisely on the things that are important to them, that help them to do their constituency and parliamentary work. And that is really a kind of principles based approach for us is working. And it’s a big change.”

Walker, who previously worked in private sector roles at First Direct, Centrica and Virgin Media, said the new system had been in place for about six months and was working, with compliance very high.

“When it’s black and white MPs would ring us and say, can I? And we’d say, yes or no. But this [new system] is: how do you feel about that? What will your constituents say when they realise that you’ve funded this or that? And there are some tricky areas. Communications are tricky,” she said.

“We don’t want any political activity. We don’t want any party political activity. They can’t be derogatory about others and the government. And there’s a fine line on some of that. But principles work,” Walker added.

Other regulators are also considering a move to a “principles-based” regulation, with the parliamentary standards commissioner having raised with MPs the possibility of a similar move for their code of conduct.

Walker said her biggest worry about the job was making sure MPs were fairly funded, and that public opinion could “sway how people feel about democracy full stop”.

She added: “The vast majority of MPs do the right thing and want to do the right thing. Actually, where somebody might let themselves down, there’s often a reason for that. And that may be lack of understanding and lack of education. So we’ll always give the benefit of the doubt until we see a repeated pattern.”