Wednesday 16 July 2008

WRITTEN MINISTERIAL STATEMENT

Leader of the House of Commons

MPs' ALLOWANCES

Leader of the House of Commons (Rt. Hon Harriet Harman QC MP):  As Leader of the House of Commons, it is my responsibility to consider how we put the will of the House into effect.  That means both implementing the resolutions of 3 July 2008, and also considering how we can build on the clearly expressed view of the House that we need to do more to ensure that the rules are clear and properly enforced so that:

• We protect public money
• We protect the reputation of the House

To that end, since the vote on 3 July, I have had a number of positive discussions, both with many hon. Members, but also with the Chair of the Committee on Standards in Public Life, Sir Christopher Kelly KCB and the Comptroller and Auditor General, Tim Burr CB.
 
The House of Commons agreed important measures to improve the control and audit of public money spent in respect of Members carrying out their duties as Members of the House.

The House agreed:

• that no payment will be made in respect of those employed by Members unless the Member has deposited the relevant  contract of employment and job description with the Department of Resources;
• on the need to strengthen the existing system of external scrutiny and that a rigorous internal system of financial audit of the Additional Costs Allowance be introduced covering 25 per cent. of Members each year, and every Member each Parliament.

In order to put into effect these changes and to build on the determination of the House to protect public money from abuse and to justify public confidence in expenditure on MPs allowances, I intend to consult on further steps to improve financial control and audit.

The key elements will be:-

a) that the Green Book setting out rules on entitlements to allowances be re-written by the Advisory Panel on Members Allowances in the light of decisions taken by the House on 3 July and to abolish the so-called John Lewis list.  The Advisory Panel on Members' Allowances will keep the Green Book under review and advise on any further modifications to the rules that may be required, including the reimbursement of reasonable costs of mortgage interest for a second residence.  We will consult on my proposal to change the ACA, so that the reasonable reimbursement of the costs of furniture and other household goods be capped at 10% of the ACA in any one year.  The membership of the Advisory Panel on Members Allowances will be increased to  include  two independent external appointees; and

b) An external financial audit by the NAO covering all the allowances in the Green Book, not just the Additional Costs Allowance, but also:-

• Travel
• Staffing costs
• Incidental Expenses provision for other office costs and
• The Communications Allowance

will include:

• the rules and guidance as to what is and what is not acceptable under the rules;
• the management controls and processes used by the Department of Resources to ensure compliance with the rules; and
• checks and testing of the controls, to ensure that they are adequate and effective.

I propose that the NAO report to the Members' Estimate Audit Committee, which will include 3 external independent members.

The Comptroller and Auditor General believes that given the additional evidence to be provided in support of all claims there is an opportunity to strengthen significantly  the assurance that public money has been properly spent.