Opinion: how much is that MP really worth?

Isn’t the free market wonderful? It allows bankers to be paid vast sums of money, yet should never be applied to the public sector. After all, heaven forfend that such people should earn a salary that reflects their market value.

In the midst of the debate about MP’s and their energy bill claims, the general view appeared to be that they earn too much anyway, and that their relative wealth makes them incapable of understanding what real people go through.

But, where is the serious discussion about what represents a realistic salary for a Member of Parliament? The usual cry of, “A lot less than they get now!”, is all pervading, and yet we have, quite reasonably, high expectations of those who seek to represent us.
 
So, what might we reasonably require, and how much is it worth?
 
Let’s start from where we are. A back-bench MP earns £66,396 or, for a standard forty-hour week, with five weeks leave and public holidays, about £37 per hour. That’s not bad, although compared to the hourly rate for, say an emergency plumber, it isn’t that fantastic.
 
But, does an MP work a standard forty hour week, with five weeks holiday? Well, probably some do, but that isn’t my experience. The public don’t, it appears, think that this is enough – they expect their MP to do things at weekends, hold surgeries. And, a good MP is probably doing these things, catching up on correspondence (and MP’s get a lot of correspondence), reading the vast amounts of briefing material that is generated by any particular Bill on its passage through Parliament. I often encounter one regional MP dealing with his inbox on the train, hardly normal behaviour for someone working a forty-hour week.
 
Yes, they have staff, some more than others, but it is the MP who has to cast the votes, lobby Ministers and colleagues, deal with the media. If done to the level we apparently expect, that forty hours can easily become eighty, all of it in the public eye under the sort of scrutiny that would make most of us paranoid.
 
So, on a day when it has been announced that the average GP earned £103,000 under the standard NHS contract, perhaps we need to seriously place a value on the role of an MP. And then, perhaps, we can have the next debate, on the levels of expenses that they should receive…

* Mark Valladares earns a lot less than an MP…

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33 Comments

  • By definition the market value of an MP is zero, as there would be no shortage of candidates even if the job was unpaid. Come to think of it, the market value must be negative, as there would be no shortage of candidates willing to pay for the privilege of doing the job.

  • peter tyzack 15th Nov '13 - 10:18am

    time to have a ‘job description’ and conditions of service for MPs, Councillors in fact anyone working for the public. (Isn’t it a legal requirement anyway?) We will then surely find that they are considerably underpaid, which may be the true reason it never happens. It suits the powers that be who are, arguably the controllers of the press (or vice-versa) to have ‘politicians’ as the whipping-boy, an easy diversion from the evil misinformation that they purvey every day.

  • I don’t understand the idea that the free market doesn’t apply to the public sector.

    People have a choice as to whether to enter the public sector or the private sector. If salaries in the public sector were too low, then the posts would not attract decent candidates, and the offered salaries would have to be increased. This is how the market works, and it applies to the public as much as to the private sector.

    As the post sin the public sector are being filled, then either they are being filled with incompetent candidates (is this your contention?) or the salaries are set at a level which attracts people who are choosing those posts over the posts they could have in the private sector, and therefore (by definition) they are at the correct market value.

    The only reason to increase pay for a post in the public sector, from a free market point of view, would be if the post was remaining unfilled because no one competent to do it was applying, because they could earn more in the private sector. Is there any evidence this is happening?

  • Eddie Sammon 15th Nov '13 - 11:22am

    I’d take away the small dig at emergency plumbers because they often have expenses of around a £1000 per month, which they have to pay themselves, unlike MPs. Yes they get tax relief for this, but around 80% still comes from their own pocket.

    I don’t have any strong opinions on how much MPs should get paid. It is a hard question because we need to consider quality, supply and demand, and getting a diverse parliament.

    You also have to consider the fact that plumbers do many hours work which they don’t get paid for. I come from a family of plumbers and gas engineers and the business expenses run into the thousands each month. The idea that it all goes to them like a salary is ridiculous and I know frustrates them.

  • For a job that requires absolutely no formal qualifications, £68,000 is very generous. An the half baked decisions coming daily out of Parliament, prove that paying for the best talent, does not get the best.

  • Eddie Sammon 15th Nov '13 - 12:11pm

    On top of the £66K salary we’ve also got the defined benefit pension, which must cost around £10,000 per year in contributions per backbench MP. I’m not saying this is too much, but the total remuneration package must be around 80K per year, so comparisons with plumbers who earn a lot less are not going to go down well.

    People should probably look at reducing their workload and possibly increasing pay too, although the workload thing is going to go down better.

    Thanks for the article and stepping in after Andy’s resignation!

  • Mark, I know from 9 years experience that you are correct in what you say about the very long hours most MP’s work -but then I never worked anything as little as a 40 hour week when I was a teacher either.

    However the basic flaw in your argument about applying free market principles to MP’s pay is that at the moment MP’s have stated categorically that such principles must not be applied to public sector pay, due to the ongoing consequences of the 2008 financial crash. If public sector pay has been variously frozen or capped at 1% increases then there is absolutely no way that MP’s can justify accepting a ‘ large catch up’ pay boost, however good their case is and however independent IPSA may be in making its recommendations.

  • Unlike emergency plumbers or any public servant, MPs who so often claim how arduous their work is, can supplement their income with directorships, membership of well paying professions or “consultancy” work, not to mention media appearances or journalism.

    And let’s also not forget that becoming an MP , under our current rotten borough system, required the ability to sweet talk a selection committee, but needs no qualifications, training or even intelligence, as evidenced by MPs on all parties benches.

    After they leave parliament, they can still trade off their contacts to get jobs out of parliament – your average teacher, plumber or GP can’t wangle that.

  • Mark Valladares Mark Valladares 15th Nov '13 - 1:12pm

    Jim,

    Actually, there is an increasing body of evidence that suggests, in some parts of the public sector, that pay levels are making recruitment and retention very difficult already. The National Audit office, in a report published in June, noted that restrictions on pay and conditions may be restricting the pool of people willing to join the Senior Civil Service in mid-career, and that there “were still significant skills shortages… particularly in areas such as commerce, project management, digital delivery and change leadership”. The Senior Salaries Review Board reports signs of difficulties in attracting high quality candidates for vacancies at High Court and equivalent levels.

    Like it or not, these people are responsible for the delivery of critical national services, and when the field of potential applicants shrinks, it is probably reasonable to assume that other options are more attractive.

  • Although the comments regarding pay of other professionals are quite valid, surely there is one thing missing from the discussion, that being the “trust” word. For quite some time a number of politicians took the electorate for idiots, the result was that the electorate lost trust and respect for politicians. Wouldn’t the answer be for politicians to find a way to rebuild the trust, restore the tarnished reputation and then the public may not feel so annoyed when pay review time comes around? (in case people start going on about manifesto promises etc, I’m not really talking about that as most people realise that these are aspirations (although vote gathering pledges may be another matter). To give an example of how things used to be, we would often hear MPs saying they needed more pay as they could easily earn more outside politics, but come election time they would then say they needed to keep the big payoffs as MPs had a hard time finding employment when they left).

    On the point of ” After all, heaven forfend that such people should earn a salary that reflects their market value.”, one should be careful about what one wishes for. One of the key deciders in market value is the amount of available resource. Now consider that most of the parties have a long list/short list of candidates, this means that there is no shortages of people wanting to be an MP (in fact, there is an oversupply). With such a large pool of resources available, should we even be paying the amount that is given now?

  • Strange, isn’t it, that GPs salaries are always cherry-picked for comparison. Try comparing MPs pay to, for example, a teacher at what used to be the top of the salary scale (before they were abolished by this government) – they earn twice as much as such a teacher. How is that fair or just? GPs pay is also a disgrace – they earn twice as much as their counterparts in France, mostly due to Labour’s incompetent handling of the 2004 contract negotiations.

  • Eddie Sammon 15th Nov '13 - 3:26pm

    Just done some research. The exchequer cost of most non-ministerial MP pensions is around £13,545 per year, or 20.4%. The exchequer is also paying a further £5708, or 8.6%, to fund the pension deficit, but I don’t think it is fair to include that when comparing remuneration because that relates to past mistakes.

    The Telegraph are reporting some wild headline figure of £45,000, but we shouldn’t manipulate figures for desired effect.

  • Peter, the job description of an MP is “the person who was elected to that position”. And that’s it – there should be no more requirments beyond that. It is for the voters decide what their MP should be doing, not the state.

    Chris is correct – there is loads of demand to be an MP, so the free market would suggest they are overpaid. Anyone who has spent hours arm-wringing members to become council candidates will know there isn’t enough demand to be a councillor, which suggests they are underpaid. We should pay MPs less and councillors more. (And yes, councillors get an allowance rather than a salary – this should change).

  • The purpose of MP’s being salaried and expensed is so that it’s possible for people of ordinary means to enter parliament. That’s the basis on which the salary should be set not any comparison to private sector jobs. I think the current level is about right, it’s more than 95% of people earn. All we need now is an electoral system that stops the rich effectively buying a seat for life.

  • @Eddie Sammon 15th Nov ’13 – 11:22am
    “I’d take away the small dig at emergency plumbers because they often have expenses of around a £1000 per month, which they have to pay themselves, unlike MPs. Yes they get tax relief for this, but around 80% still comes from their own pocket.”

    No the money doesn’t come out of their own pocket, it comes out of their customer’s pockets… But yes the ‘labour’ component of the customer’s bill does include all the overheads and the non-itemised ‘sundries’ used on a job.

    But yes Mark’s comparison is totally invalid, MP’s are paid an annual salary and effectively can enjoy 5 years of job security plus pension and other benefits, whereas an emergency plumber is in business and only gets paid as and when they complete (and invoice !) a piece of work for a customer and the customer generously decides to pay…

    This security of tenure also mitigates against MP’s remuneration being compared to consultants or to practically anyone in the private sector, although I do feel that MP’s remuneration should broadly be aligned to the typical salary of a Principle Consultant in one of the big consulting companies. The only real challenge would setting suitable objectives for the performance related and revenue target components of the pay package.

  • @Chris_sh
    “Now consider that most of the parties have a long list/short list of candidates, this means that there is no shortages of people wanting to be an MP”

    I’ve no problem with there being lots of people wanting to be an MP and yes this should be taken to be a good sign. However, given the various comments concerning the quality and capabilities of our MP’s it would seem that the various selection committee’s are failing in their duty to select high quality candidates and to not reselect those MP’s who prove to be less able …

    I think if any one seriously believes that MP’s are overpaid then there is nothing stopping them from standing and proving their point by donating their excess salary to charity…

  • “Chris is correct – there is loads of demand to be an MP, so the free market would suggest they are overpaid.”

    Thank you, but I hasten to add that my point was partly that the free market is not a good mechanism for determining MPs’ pay. Taken to an extreme, the free market might suggest that seats in parliament should be sold to the highest bidders …

  • Eddie Sammon 15th Nov '13 - 10:54pm

    Roland, yes you are right – plumbers’ expenses come out of their customers’ pockets – my point was that there are expenses that come out of their hourly rate and I’m not talking about materials, which are usually priced separately.

    I’m really not a public sector or servant basher, my point was just to highlight that MPs get more than £37 an hour and plumbers usually profit much less.

  • Eddie Sammon 15th Nov '13 - 11:05pm

    I mean to say that MPs earn quite a bit more than £66K – it is hard to talk about hourly rates because they all work different hours.

  • Mark Valladares Mark Valladares 15th Nov '13 - 11:58pm

    It’s interesting that people think that I’m having a dig at emergency plumbers and perhaps reflects the low esteem that politicians are held in generally that simply using them as a marker leads to such a presumption.

    But it is astonishingly blase to assume that there would be people queuing up to be MP’s even if it was unpaid. Really, and on what evidence is that statement made? Furthermore, exactly who would you get as Parliamentarians on that basis? The independently wealthy, part-timers and the very naive? And you think that they’re out of touch now?

    But Roland is partly right, in that an MP does now have five years of security. However, they then have to go through ‘trial by electorate’ where most of the voters aren’t voting on the job that the MP has done, but on national issues, and often without reference to the work done over the preceding period. In safe seats, that probably doesn’t matter, but in marginal ones?

    I tend to the view that the current package of remuneration for MP’s is a mess, and the solution is to impose some transparency. You could impose some formal requirements, but given that some of the most egregious offenders in the last Parliament were re-elected by their constituents, and that some of the most hardworking, effective MP’s lost their seats, the normal rules for setting pay rates don’t seem to apply here anyway.

  • @Roland
    “However, given the various comments concerning the quality and capabilities of our MP’s it would seem that the various selection committee’s are failing in their duty to select high quality candidates and to not reselect those MP’s who prove to be less able …”

    Well yes, but there is the ever present tension of constituents v party. Politics (at this level) is mainly about contacts and picking the right people to schmooze (see Hopi Sen @ http://hopisen.com/2013/tony-blair-is-a-terrible-career-adviser/). A lot of the people being selected will have been through the party process and are probably selected more for loyalty than intelligence. Having said that, most will have entered the race with the belief that they can make a difference for the people they represent, it’s only when they get there that they realise that they are whip fodder.

    Of course it’s very easy to say abolish the party system, but without such a system would Parliament become chaotic? Also, without the access to the resources the big parties provide, would people of limited means be able to run a campaign (unless it was as a single issue big news item)?

    “I think if any one seriously believes that MP’s are overpaid then there is nothing stopping them from standing and proving their point by donating their excess salary to charity…”

    Umm, I should point out I was referring to the point about market rates being reflected, however it is highly unlikely that some one will get elected without support from one of the major parties (which means you’d have to go through all off the hoops refered to by Hopi). I would also query why you phrase it that way, surely if MPs feel they could get more outside, then they are free to resign in order to take up one of these lucrative jobs (I’ve not seen a more recent study, but perhaps this may deter some http://www.leeds.ac.uk/news/article/285/life_after_westminster__what_mps_do_after_leaving_office).

    I would also guess that implying any Tom, Dick or Harry can get your job is probably not the best strategy for getting a pay rise 😉 .

    @Mark Valladares
    “… the current package of remuneration for MP’s is a mess, and the solution is to impose some transparency …”

    Wouldn’t it be better to start with a decision on what exactly an MP should do? Then follow up with a decision on the most effective and efficient way of doing it, then once all of that is decided, decide what the pay should be.

  • “But it is astonishingly blase to assume that there would be people queuing up to be MP’s even if it was unpaid. Really, and on what evidence is that statement made?”

    Frankly, I’m very surprised that anyone would doubt it, human nature being what it is. If you want a concrete bit of evidence, recall that members of the House of Lords don’t receive a salary, and there seems to be no difficulty recruiting them – quite the opposite.

    And I repeat that I’m not saying the market mechanism is a good one for fixing MPs’ pay, just pointing out what a pure market argument would indicate.

  • Mark Valladares Mark Valladares 16th Nov '13 - 10:43am

    Chris,

    I’ll take it then that you have no evidence to support your assertion then, other than a generalisation. For if the ratio of applicants to vacancies was the key driver for salaries, then people would work for most employers for free. They don’t, so there must be a point below which a job isn’t worth taking.

    As Paul Holmes notes, the hours are long, certainly so compared to most people in full-time employment. That certainly pulls down the hourly rate. And, armed with my awareness of life as a Parliamentarian, I’d certainly not want the life of an MP, because whilst the money is better, the general abuse that they get, much of it unjust or simply inaccurate, makes life as a bureaucrat much more appealing.

    The rate of pay for any job is related not only to competition, but skills. What skills do you want an MP to have, and why, and what are those skills worth? I ask the question, yet nobody seems to want to answer it…

  • Nick Tregoning 16th Nov '13 - 11:45am

    At least one comment on here suggests that MPs should not be paid as there are would still be plenty wanting to do the job. That’s true of course, but do we want to be ruled by the independently wealthy any more than we are at present? We get the MPs we are prepared to pay for. That’s why so many of them are so poor.

  • “I’ll take it then that you have no evidence to support your assertion then, other than a generalisation.”

    On the contrary, if you don’t think people would be willing to do the job unpaid, you need to explain why that’s not the case for the Lords. Rather than simply ignoring what I wrote.

  • “At least one comment on here suggests that MPs should not be paid as there are would still be plenty wanting to do the job.”

    Please see my comments at 7.42pm yesterday and 9.04am today.

  • Andrew Colman 16th Nov '13 - 1:19pm

    Interesting article, but the logic goes beyond MPs to public servants in general.

    How often have we heard the phrase “If you pay peanuts you get monkeys” used by the right wing media and economists to defend obscene pay rises in the board room, but they never apply it to public services.

    Yet without good teachers to develop skills, researchers to develop world leading science and technology, doctors to cure use when we get ill, the police and military to defend us from evil, then where would we be? Whilst the public sector pay freeze was justified for a while under the “were all in it together” logo, it is getting rather tiresome. It is encouraging our best people to become bankers, lawyers and accountants, rather than teachers, researchers and doctors. Is this what we really want? Lets remind our selves, who were the professions most responsible for the credit crunch and the consequent economic problems ? (Doctors, researchers teachers or Lawyers, bankers and accountants)

    Time to bin the pay freeze and make sure the best people are developing the world leading technology, and teaching us the skills which will make the UK a leading economy. In contrast, we need to retire of the hordes of neo-con economists who failed to predict the credit crunch and are still leading us in the wrong direction.

  • @Mark Valladares
    “The rate of pay for any job is related not only to competition, but skills. What skills do you want an MP to have, and why, and what are those skills worth? I ask the question, yet nobody seems to want to answer it…”

    For the first part you’re wrong (in Market Terms), it still boils down to supply and demand – hence both I and Chris (I’m guessing) think it is wrong to use the market approach to determine the pay rates for MPs. For the second part, I would state that there is no point in trying to decide on a skill set until you decide what an MP should really be doing.

    As an example of what I mean by that, do we want our MPs to be primarily concerned with scrutinising legislation, or do we want them to be pseudo social workers who spend most of their time sorting out problems with the public services/councils etc. If you want the former, then a good MP might be some one with a highly logical mind who can follow chains to see the adverse effects any proposed laws may have (you may end up with lots of dry humoured people though). However, if you want the latter then some one with more of an arts type background may be better (more touchy feely).

    So what do you think an MP should do? Personally I’d prefer that they spent more time scutinizing proposed laws, so I’d prefer people with a background in logic solving (e.g. maths based).

  • We need to pay enough for ordinary people to afford to become MPs , but not so much that people only do it for the money. I think the pension point is interesting. MPs have forced hefty adverse changes into public sector pension schemes (even those where the notional fund – the actuarial value of contributions relative to liabilities was in significant surplus) yet they are as I understand it yet to reform their own, exceptional generous pension scheme.

  • “We need to pay enough for ordinary people to afford to become MPs , but not so much that people only do it for the money.”

    That sounds reasonable enough to me. Would there be anything wrong with MPs being paid the median salary, plus any genuine expenses?

  • I have 2 suggestions to make MPs both more accountable and more in touch with the people they serve.

    1) An MPs wage should be twice the median salary in the area they represent – see how Tory MPs like regional pay variations after that! Obviously all the second home expenses etc remain common

    2) Given that so many seats are one party states, the MPs pay should be reduced where their majority is effectively impregnable to reflect the additional job security that such rotten borough seats represent.

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