Thursday, February 11, 2010

Expenses - the final act in a Whitehall farce

The news that the set-up costs for the new Independent Parliamentary Standards Authority (IPSA) will amount to £6.6 million in the first year, and that eighty staff are being recruited to run it, is possibly the final act in the farce that has been MP expenses.

Whilst a few MPs have behaved fraudulently (allegedly), most of the 'offences' highlighted by the Legg Inquiry were retrospective in nature, approved by the Fees Office at the time, and only subsequently decided to be unreasonable. Whilst there is no doubt that the expenses regime in the House of Commons was poorly run, poorly audited and poorly defined, the amounts of money repaid amounted to just over £200,000 each year.

The IPSA will cost at least £3 million per year to run, adding significantly to the costs of running Parliament and providing no tangible benefit other than give us, the public, the warm glow of knowing that such abuses will not occur in future. Well, probably. Actually, make that possibly.

If our current batch of MPs are unusually venal - and I don't accept that they are - spending £15 to save £1 would seem like the economics of the madhouse, and I was looking forward to the Taxpayers' Alliance launching their obligatory attack on waste in government. Except that they didn't...

Mark Wallace does make the entirely fair point that the cost of the Fees Office needs to be factored in to any calculation of value for money, and that this is a piece of information that we don't have at present. The work of the now to be abolished Fees Office will be taken on by IPSA, so that will clearly improve the cost/benefit ratio. I also accept that auditing doesn't come cheap.

It is, however, hard to believe that there are eighty people working in the Fees Office at present, and the £700 per day being paid to the new IPSA Chair, Sir Ian Kennedy, is doubtless more than the most highly paid staffer in the Fees Office. So, I remain convinced that the cure is more expensive than the disease merits in this case.

There is one more factor to be considered. Will the IPSA convince the public that their representatives are behaving in an honest and ethical manner? If it does, that has a value in itself, and would be a good investment if the public felt more willing and motivated to engage in the political process. Unfortunately, the atmosphere is so toxic, and the default position of the media and commentariat so hostile, that it will take more than proper financial risk management to change public perception.

There will be much scrutiny of IPSA in the coming months, and the suspicions of MPs and the public will need to be overcome. But I wouldn't be too surprised if we end up back where we were a year ago, five years from now...


Edward said...

So 80 people to monitor expense claims by c.650 MPs means one person monitors about 8 MP's claims, which presumably means 8 cliams a month. Who approved this empire building nonsense?

Mark Valladares said...


Unfortunately, the answer is us, the public, in a roundabout sort of way.

We demanded that something be done, the Government opted out of taking a decision, referring the matter to an independent advisor, and then accepted the advice without argument. Their argument would be that they felt unable to gainsay the public mood. I disagree.

If the cure costs more than the disease, you have to wonder about its effectiveness. Let's face it, if HM Revenue & Customs took the same approach to compliance, there wouldn't be 75,000 staff, there would be 750,000!