Saturday, May 29, 2010

David Laws, expenses and public service

I'm not going to get into the debate over David Law's sexuality because in the context of the controversy over his expenses claims, it's irrelevant.

Unless I've misunderstood something - it seems his "offence" is that having shacked up with his partner in London, he then claimed (substantially below) the second homes allowance for this over a period of four to five years - a total of about £40,000.

£40,000 may sound like a lot of money, but that's actually not a lot to be paying in rental over a period of 5 years (when I first moved to Brentwood in 2004, I rented a one bed place at 550 a month - that would have come to a total of about £33,000 over five years. That was about as cheap as I could get, and was for a small one bed flat).

The ridiculous thing about this does appear to be that had Laws -having claimed well below the allowance in the first place - simply "flipped" his second home to his constituency and claimed the full whack, wouldn't be under fire this morning.

The actual breech of the rules is that apparently it's not okay for an MP to pay his expenses to a family member or partner. So far, so good, and Laws has moved to pay the money back to the Commons authorities - it probably helps that he is "independently wealthy" as a result of his investment banking background.

But why precisely is it not acceptable for MPs to not claim expenses for staying with friends or family. One can essentially two approaches to expenses as expenses - one, that they should actually cover the costs to the MP of doing his job, or second, that they should be used by MPs who could not otherwise afford the costs of being an MP.

If we take the latter approach, then Laws shouldn't have claimed the expenses - the fact he can repay such a large sum of money indicates he was well able to pay them in the first place without claiming the money. This is not an unreasonable approach - it emphasises the public service element of being in politics, but doesn't prevent the less financially well off from entering parliament on affordability grounds. In effect, you means test the second homes allowance.

That's not what the rule book says though. What it says is that the costs are there to cover the expenses of being an MP. There is a category of MP that clearly needs a second home - either in London or in their own constituency (Laws almost certainly falls into this category). If an MP owns a house in their constituency, and then owns a flat in London - there is still a cost to them of using that flat in London - if they weren't using it for their duties as an MP, they might have the option to rent the flat out. So the cost to that MP, of using a flat in London, is that they lose the rental income on the flat they would otherwise have. Under the current rules though - they can't claim that. In fact I even recall one MP being criticised because they did rent out their London flat and then claimed second home expenses on a "third" property they used as their London base.

This is how it works in the real world by the way - if I stay with a friend instead of using a hotel on a business trip, I can claim a nightly allowance (under HMRC guidelines, there is a set amount which isn't taxed and doesn't require receipts). Most managers and finance departments if they see an expenses claim that comes well under the allowance tend not to question the details too much, as they are simply pleased that the employee has saved them money (a manager who is expecting to sign a claim for 3000 pounds and might look at the details will simply just sign a claim for the trip if it comes in at 2300 - and that's my own recent experience).

It's really quite simple - either we pay MPs expenses on a what it costs them basis, or we means test them. David Laws seems to have fallen into that gap where despite saving us money by his own lifestyle choices he is being condemned for... well what precisely?