Paying for politics

I would not normally consider starting a debate on this issue but Eric Pickles has recently announced an intention to abolish the right of councillors to join their council’s pension scheme.

Eric Pickles

Eric Pickles

He justified this in the following words:  We have also announced proposals to end the Labour Government’s policy of taxpayer-funded pensions for councillors. This policy was announced in September 2001 in controversial circumstances and never received proper public scrutiny.  Fundamentally, we believe that councillors are civic volunteers undertaking public service. They are not, and should not be, state employees of the council dependent on the municipal payroll. Our reforms will strengthen the integrity and independence of councillors, so that these local champions of the people are seen to stand up for the best interests of taxpayers, not the town hall state.

I take quite strong issue with this and I need to declare my personal interest first and to say why I think Eric has got this wrong.  I will then move from the local to the national and express some views on what we pay our MPs.

I have been a county councillor since 1989.  I was fortunate enough to have a successful business career and to be able to sell my interests in 1990 to enter public service.  Since then, my principal earned income has been as a county councillor, supplemented by income from the proceeds of selling my businesses.  I admit that I have been very lucky and this and this alone has enabled me to devote a large part of my waking hours to public service.  Had I continued to work as a Chartered Accountant, I would probably be earning something between £150k and £250k per annum.  However, I chose a different career path and did so with open eyes and an understanding of the sacrifice it would entail.

Between 1989 and 1999, I probably earned approx £7k per annum as a county councillor, working for a third to a half of a week on county issues.  In 2001, I became Leader of the Council and was then paid a three-part salary – as councillor, as cabinet member and as leader – and totalling something like £24k per annum.  Now I hear people telling me this is more than the minimum wage but this is a nonsensical argument given that I am a chartered accountant with a successful career behind me.  When legislation was changed to enable councillors to join the pension scheme, I signed on – surely something to be encouraged?  Enough of my background. Here are my issues with Eric:

Firstly, if he justifies abolishing councillors’ pension entitlements because “they are civic volunteers undertaking public service [and] are not, and should not be, state employees of the council dependent on the municipal payroll, I have to ask him why any councillor should be drawing a penny in allowances?  Why not make being a councillor wholly unpaid?  I will tell you why.  Because there are huge differences between different councils and different roles within councils.  My county council delivers 80% of the local government services in Oxfordshire; the five district councils deliver the other 20 % between them.  My council employs more than 20,000 people and spends a billion pounds per annum.  A county council leader needs to take a strategic view of issues well beyond his county boundaries.  For most county council leaders this is a full time job.  There are very few who could afford to do this for nothing.  If there is not a reasonable scheme of remuneration, the supply of competent leaders will largely dry up.  By contrast, back bench members in smaller councils can easily hold down a full time job and/or housewife or house-husband duties as well as being a councillor.  To deny a very modest pension entitlement to councillors who are putting in something close to a full time commitment is plain mean.  It is worse than mean; it is stupid because paying peanuts will attract monkeys.

Let me turn from the local to the national.  What do we pay our MPs, including Eric Pickles?  Is it enough?  Do we end up with the politicians we deserve?  A Member of Parliament is currently paid a salary of £65,738 pa.  In addition, an MP is entitled to a range of other non-taxable allowances, including:

  • Incidental expenses of local office/surgery accommodation, equipment and office supplies; travel and communications up to £24,803 pa (2010/11);
  • Staff costs up to £105,265 pa (2010/11);
  • Travel costs including staff and family;
  • Communications allowance of £10,400 pa (2010/11);
  •  A generous contributory pension scheme, based on final salary and pensionable years of service.

MPs, like councillors, vary greatly both in the impact on their finances of becoming MPs and how they perform their duties.

For some MPs, being elected to the House of Commons will bring an improvement in their finances, not just in terms of an increase in their basic salary but in the generous support costs that come with the job.  Against this is the uncertainty of re-election, particulalry those who sit in marginal seats although those losing a seat are paid redundancy!  For others, taking on the role of MP will involve giving up a lucrative career in the real world with earnings of two, three or four times that of an MP.

Rather like councillors, the workload of an MP may be handled in many different ways.  A lot of backbenchers will readily admit that they are little better than glorified social workers with a huge casework load (benefits, housing, immigration, health to mention but a few) but many are adapt at passing most of this to their support team to handle.  Some MPs continue their day job to a greater or lesser extent.  Barristers are particulalry well placed to do this and the working hours of the House used to be set largely to accommodate them but this is less true today.

A particular difficulty for many MPs is having a base in Westminster, another one in their constituency and, in some cases, a home that is located in neither place.  I have some sympathy for those living a long way away: Cornwall; Wales; Manchester; Tyneside and all of Scotland come to mind.  However, it is clear that the Parliamentary homes allowance had been turned into a complete racket, enabling MPs to finance a second home out of public funds but to take the capital gain on eventual disposal.  Given they rarely had to spend more than three or four nights per week in Westminster, I never understood why they could not have been reimbursed for a reasonable hotel or London club room during the weeks when the House sits.  I am afraid the homes allowance was a means of sliding a valuable perk to MPs without too much public visibility until The Daily Telegraph shone a much needed spotlight on duck houses and moat clearances.

Returning to the role of a strategic council leader or cabinet member, I don’t think there is much difference between this and the role of a backbencher MP.  Many of the pressures and stresses are there.  If a senior strategic councillor’s case load is less than an MPs, he has no support team provided and has to get on with it alongside his other roles.  For all of these reasons, Eric Pickles’ attack on those councillors doing close to full time jobs  and to whom he would deny the right to a very modest pension is unreasonable and I say he needs to think again.  If he or others might argue that councillors should not be and do not need to be full time, I would say he is wrong.  A councillor might be able to lead a small district council like Cherwell with a couple of hundred staff and a turnover of a few million on the basis of a couple of half days and a few evenings per month.  However, the leader of a county or metropolitan council with 20,000 staff and a turnover of a billion or more has a full time task if he is to provide good political leadership both within and beyond his council.  The alternative is to leave officers to run the council and that is not what good political leadership is about.

When Eric Pickles puts his wallet where his mouth is and gives up his parliamentary and ministerial pension, I might be persuaded he is right but I suspect I will have a long wait.

About Keith R Mitchell CBE

Qualified as a Chartered Accountant in 1967. Pursued a successful career in financial training and publishing until selling his interests in 1990. Elected a County Councillor for the Bloxham Division in 1989. Leader of Oxfordshire County Council 5 November 2001 to 15 May 2012. Chairman of the South East England Regional Planning Committee July 2002 to July 2005. Chairman of the South East England Regional Assembly July 2005 to July 2008. In HM the Queen’s 2007 Birthday Honours, appointed a Commander of the Most Excellent Order of the British Empire in recognition of services to local government.
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