FOR RELEASE: Monday 13 April 00:01
MPs' generous expenses, index-linked pensions and second-home allowances give them a multi-millionaire lifestyle that their constituents could scarcely dream of, shock figures reveal today.
The effective income of the average MP is £319,165 – nearly 18 times the pay of the average voter, according to Bournemouth University tax expert Richard Teather, who has also produced a 'fat-cat ranking' for each of our Westminster representatives.
In his report, for the independent think-tank the Adam Smith Institute, Teather takes MPs' basic salaries – ranging from£64,766 for backbenchers to £194,000 for the Prime Minister – and adds in their pension rights, another £17,357 for backbenchers, up to £52,059 for Gordon Brown.
But what is the value of all those expenses claims – from barbecues to bathplugs – that the rest of us would never have a hope of getting through our employers, never mind Her Majesty's Revenue and Customs? Teather says that to pocket what the average MP claims in expenses, free of tax and National Insurance, the rest of us would have to earn £228,215.
It all amounts to a total pay package worth £319,165 – and that is just the average. Welsh Secretary Paul Murphy tops the league table with a package of pay, pensions, and expenses worth £423,932 a year. That is more than 28 times the average income of his Torfaen constituents.
On the best interest rate currently available – 1.83% from Birmingham Midshires, you would need over £23 million (£23,165,683) to get an income matching Paul Murphy's annual £423,932. You would need over £17 million (£17,440,710) to earn in interest what the average MP earns from Westminster.
The Fattest and Leanest Cats
The top ten fat cats are all Labour MPs, including Hazel Blears, Jack Straw, David Miliband and Geoff Hoon – recently embroiled in the 'three homes' row –their total income boosted by their ministerial salaries.
Eight out of the leanest ten MPs are Conservatives, including Malcolm Rifkind, John Redwood and Sir Nicholas Winterton – perhaps now chastised after taking £66,000 in expenses for 'rent' on a home owned by his family trust.
The MP who cleans up most from expenses is Ann Keen (Labour, Brentford & Isleworth), whose £167,306 expense claims are worth a staggering £283,569 before tax and National Insurance.
The Keen family is remarkable. Ann's husband Alan Keen is also an MP, with a salary and expenses package worth £330,272, and her sister Sylvia Heal is an MP as well, with a package worth £338,294. That is more than £1m (£1,071,617 in fact) between the three of them.
The Regional Fat Cats
Welsh MPs are the fattest regional cats, with earnings equivalent to £323,068 – over 20 times the pay of their constituents.
The leanest are MPs from London, at £308,881 or nearly 15 times the pay of their constituents – but that is because many London MPs live too near to Westminster to claim a second-home allowance.
Along with the £1,000 fireplaces and £550 sinks, MPs' expenses also include the costs of assistants. Teather who is the Adam Smith Institute's Senior Tax Fellow, defends the inclusion of these staff costs in the figures, pointing out that MPs routinely employ family members to boost their household income.
The most blatant was Derek Conway, who claimed for his full-time student son, but the Institute asks whether even Jacqui Smith would pay a non-relation £40,000 a year for the administrative help that her husband provides. The rest of us are challenged by HMRC when we employ relatives, and have to show that their job justifies the pay. But MPs' affairs are dealt with by a special HMRC office in Cardiff, which seems to exempt MPs from this sort of scrutiny.
In addition, much of the work of MPs' assistants involves campaigning for their re-election. Critics of the Parliamentary expenses system see this as corrupt as those MPs who claim their full expenses allowance and then make large donations to their local Party – in effect, a taxpayer subsidy to their political grouping and their general election campaign.
Adam Smith Institute Director, Dr Eamonn Butler, says the figures confirm the claim of his new book, The Rotten State of Britain, that MPs have "conspired in an organized and systematic scam against the public". Richard Teather's figures show just how extensive that scam really is. Dr Butler commented:
"MPs are always embarrassed to raise their salaries, so they decided to take 'stealth salary' instead, as expenses. They organized their affairs to get the maximum benefit – making their sister's spare room their 'main residence' or charging 20p a mile for cycling to Westminster – never imagining for a moment that their expense chits would ever see the light of day.
"How wrong they were. And it is not just the huge range of goods and chattels that they've been claiming for, but the huge scale of the scam that appals their voters. To live like an MP, anyone else would have to be a multi-millionaire."
Parliamentary Fatcats 2009 by Richard Teather, with an introduction by Eamonn Butler: http://www.adamsmith.org/parliamentary-fatcats-2009/