REWIND: MPs' Expenses Overhaul: The Kelly Report & the Future of Allowances

This REWIND episode delves into a significant moment in UK parliamentary history: the House of Commons statement on the Kelly Report, which proposed a new framework for MPs' expenses and allowances. Following public anger over past claims, the report aimed to restore trust and confidence in Parliament.

Listen to the key points as Harriet Harman, the Leader of the House, outlines the government's response, highlighting previous reforms and the crucial role of the newly established Independent Parliamentary Standards Authority (IPSA). Discover the main recommendations of the Kelly Report, including changes to mortgage interest claims and the employment of family members.

We also cover the reactions and questions from MPs, including Sir George Young and Mr. David Heath, who discuss the implementation process, the role of IPSA, and the need for further scrutiny. Understand the debate around a potential parliamentary discussion of the report before IPSA takes it forward.

This episode provides a comprehensive overview of the efforts to establish an independent system for MPs' allowances and move away from self-regulation.

Key Takeaways:

• The Kelly Report presented recommendations for a new framework for parliamentary allowances to rebuild public trust.
• The government fully accepts the Kelly Report and will task the Independent Parliamentary Standards Authority (IPSA) with its implementation.
• IPSA, established by the Parliamentary Standards Act 2009, will independently decide and administer MPs' allowances.
• Key recommendations in the Kelly Report include changes to claims for mortgage interest and the employment of family members.
• The House had already taken interim measures to restrict allowances prior to the Kelly Report.
• MPs discussed the timetable for implementation, the role of IPSA, and the possibility of a parliamentary debate on the report.
• The aim is to create a transparent and independent system to avoid the issues of the past.

Source: MPs’ Expenses and Allowances
Volume 498: debated on We

Chapters

• 1:31 Actions taken prior to the Kelly Report
• 2:33 Independant Parliamentary Standards Authority (IPSA)
• 3:09 The Kelly Report
• 4:02 Jobs for relatives
• 4:42 Harriet Harman statement
• 6:11 The Opposition's position
• 7:54 The Lib Dem position
• 9:06 Pushback
• 10:00 Wife swapping 'banter'
• 10:56 Conclusions

Transcript

ello, benchwarmers, and welcome again to the bench report. You're listening to Amy and Ivan. Hello there. Alright. Let's unpack this.

We're taking a forensic look today. At a moment in time, 11/04/2009, to be precise, Harriet Harmon, then leader of the house, stood up in parliament. And the reason, a big one. The committee on standards in public life had just, dropped its report on MP's expenses and allowances. Which, let's be honest, was causing a massive public outcry at the time.

You probably remember the, well, the collective anger. Absolutely. What's fascinating here is the sheer drop in public faith. It was like, watching trust just drain away. I think moat cleaning claims.

Oh, don't remind me. But parliament, to its credit, perhaps belatedly, seemed to realize they were deep in the dog house. Mhmm. And the statement by Harmon was framed as that first big step towards, you know, trying to fix things. Exactly.

So for you, the listener who wants to get the lowdown quickly without, wading through endless hand side reports, our mission today is simple. We're dissecting the key bits of the Kelly report, understanding the recommendations, and looking at the steps taken to reform that whole allowances system. We wanna give you the inside track on what this meant for the future of how parliament handles expenses. A bit dry maybe, but actually pretty crucial stuff. And it is complex.

You know, the old system was well, it was a maze. Let's put it that way. Understanding the shift is key to understanding where things are now regarding accountability. Or at least the aim for accountability. So before this big Kelly report even landed, things had started moving a little, hadn't they?

Some initial damage control. Yes. That's right. They brought in sir Thomas Legge to, review past claims. He was essentially tasked with clawing back overpayments, dealing with the past first.

Right. The leg review. But there were also some interim rule changes before Kelly, weren't there? Trying to stem the bleeding, so to speak. Indeed.

They brought in caps on mortgage interest and rent claims and stopped MPs changing their main and second home designations quite so, freely. That whole flipping issue Yeah. It felt a bit like property game shenanigans at times. It did. And the second home allowance for MPs representing constituencies just outside London, that was abolished.

And no more claims for, like, sofas, cleaning, getting the garden done? Correct. Those allowances were stopped. It was a sort of piecemeal tightening up before the main event. But the really big structural change even before Kelly published was the legislation setting up IPSA.

Absolutely pivotal. The parliamentary standards act 02/2009, that created the independent parliamentary standards authority, IPSA. And this was the key shift, taking the power away from MPs themselves. Exactly. IPSA would be the independent body responsible for setting the allowances and administering the system, making the rules, paying the claims.

Like Harmon pointed out, MPs didn't vote on their own pay rises, so why should they effectively vote on their own expenses rules? It was applying that same principle, a fundamental move towards, independent regulation, removing that conflict of interest. Okay. So the stage is set. IPSA is being born, then bang.

The Kelly report lands. Big document. Oh, yes. A 38 pages. 60 recommendations in total.

A hefty piece of work. We won't go through all 60. Don't worry. But there were a couple of really major ones that, really hit the headlines. Definitely.

The first big one tackled accommodation. Kelly proposed that going forward, MP should only be able to claim for rent or perhaps hotel costs, not mortgage interest. Which had been a huge bone of contention, hadn't it? The idea of taxpayers funding MP's mortgages on second homes. It really was.

It touched our raw nerve. But Kelly did suggest a transition. Okay. What was that? Those MPs who already had mortgages and were claiming interest could continue to do so, but only for the duration of one further parliament, sort of phasing it out.

A pragmatic approach, maybe? Yeah. Softening the blow for some? Perhaps. It avoided a sudden cliff edge.

The second really key recommendation was about employing family members. Ah, yes. The jobs for the relatives issue. Always controversial. Kelly recommended that MPs should not be reimbursed from public funds for employing a family member, a spouse, partner, child, parent, sibling.

Another big change. Was there a transition for that too? Yes. Similar idea. Those MPs currently employing family members could continue for one more parliament, but no new arrangements would be funded.

You can see why that would be sensitive. Some family members probably did crucial work. Undoubtedly. But the perception, you know, the potential for nepotism, the lack of transparency, it was a major public concern. Kelly aimed to address that head on.

So the report's out. How did the government react? Harriet Harmon's statement. Was pretty clear. She stated the government welcomed the report and accepted it as a whole.

That was the key phrase. Meaning, no picking and choosing the bits they like. That was the message. Full acceptance. But crucially, it wouldn't be the government implementing it directly.

This is where IPSA comes back in. Exactly. IPSA was given the job, take the Kelly report, consult as needed, and create the new detailed allowance scheme based on its principles. So the politicians accepted it, but handed the difficult job of actually doing it to the independent body. That's the structure they'd set up.

They even announced the initial leadership for IPSA Andrew McDonald as acting chief exec professor sir Ian Kennedy as the chair designate. Getting the wheels turning. Mhmm. Harmon said IPSA had already started the groundwork aiming to have the new regime ready for the next parliament, whenever that might be called. And in the meantime, before the new rules were fully operational.

The interim rules, the tighter ones already brought in, would stay in place. And importantly, all claims would continue to be published online. Transparency was key. But IPSA couldn't just make rules in a vacuum, could they? They had to talk to people.

Yes. That was legally required. They had a statutory duty to consult with MPs, with parliamentary staff, other stakeholders when drawing up the final scheme. So MPs still had a voice, just not the final say. Okay.

So that's the government position. What about the opposition and other MPs? Must have been quite a debate. Oh, absolutely. Sir George Young, the shadow leader for the conservatives, responded first.

He wasn't happy about the report leaking beforehand. A standard complaint. Quite. But he did say his party accepted the conclusions in full. However, he had questions.

Lots of practical questions about implementation. Like what? Speed was one. He urged the government to get on with it. He also worried about, coordinating Kelly's findings with IPSA's own consultations, given IPSA hadn't existed when Kelly started.

Making sure everyone was singing from the same hymn sheet, basically. Pretty much. He also raised concerns about the staff currently managing expenses and asked if new primary legislation might be needed for some recommendations. Fair points. Did he mention the family employment issue?

He did. He declared his own interest, presumably employing a relative. He acknowledged family members often provided valuable service, but What? But he conceded that the current arrangements just didn't have public confidence anymore, acknowledging the reality. He did caution about potential employment law issues, though.

Sensible. Yeah. What else? Did he like any of Kelly's ideas? He welcomed scrapping the separate communications allowance, another area prone to, shall we say, controversy.

And he liked the idea of IPSA looking at the whole package pay, pensions, allowances together. A more holistic approach. Any criticisms? He voiced concerns about the accommodation proposals, the move to rent only, worried about MPs needing to get back to constituencies quickly, and also whether renting might actually end up costing more than the old mortgage interest system. Keeping an eye on the purse strings even amidst reform.

What about the Lib Dems, mister David Heath? He took a very firm line. He said Kelly was a package, not a menu of options. Take it or leave it. Blunt.

Very. His view was if MPs didn't like the new terms, they didn't have to stand for parliament again. Simple as that. Wow. Strong stuff.

He also quoted Kelly's criticism of past reform as being just piecemeal attempts without coherence. And he called for a proper debate in the house, though not necessarily a vote. Interesting. Any other perspectives from the backbenches? Sir Stuart Bell, labor, kind of tried to shift focus slightly saying, look.

This is important, but the house has bigger fish to fry. Like the economy, presumably. Exactly. But he did hope IPSA and the senior salaries review body could eventually merge pay and allowances properly to finally kill off the dreadful allowances system. A long term ambition.

Who else? Mister Peter Robinson from the DUP welcomed the report, pledged support. He nailed the fundamental issue. MPs setting their own terms and conditions just doesn't work. Hard to argue with that.

Tony Lloyd, labor, made a point about recognizing the work family members do, but also stressing their employment rights needed protecting during any transition, the human side. Yes. Important not to forget that. Any human side. Yes.

Important not to forget that. Any dissenters, people pushing back. Sir Patrick Cormack, a conservative grandee, suggested IPSA should treat Kelly as its agenda, not its prescription. A bit more flexibility perhaps. Suggesting IPSA shouldn't just rubber stamp Kelly.

That seemed to be the implication. He also pushed for a take note debate, a discussion without a binding vote just to air views. Which others supported later, didn't they? But not everyone agreed with Cormac's agenda, not prescription idea. No.

Doctor Tony Wright from labor strongly disagreed. He argued the whole point of an independent body was that the house had to accept its findings. Otherwise, what's the point? A fair counterargument. What about the SNP?

Angus Robertson welcomed the report, said it brought Westminster closer to standards in the Scottish Parliament. He stressed IPSA must take it forward without MPs cherry picking. Similar line to the Lib Dems then. Take the package. Yes.

Then there was, a slightly surreal moment from Peter Bone, conservative. Go on. He made a joke linking the ban on employing spouses to, well, encouraging wife swapping among MPs. Oh, dear. Moving swiftly on.

Any other serious concerns raised? Mark Durkin, SDLP, worried Kelly wasn't quite comprehensive might create new anomalies. He was particularly concerned about the five year transition for some things creating a parliament of double standards. That's an interesting point. Mhmm.

Different rules applying to different MPs simultaneously. John Barrett, Lib Dem, flagged that the issue wouldn't be fully resolved until the separate issue of flipping homes to avoid capital gains tax was tackled. That was still bubbling away Another related scandal. Yeah. Peter Bottomley.

Conservative. He echoed the call for a take note debate and raised practical points like allowances being fixed for a whole parliament and the specific needs of MPs with young kids. So a real mix of reactions then. Broad acceptance of the need for change, but lots of caveats and concerns about the practicalities. Absolutely.

But the central theme running through everything was the desperate need to restore public trust in parliament. That was non negotiable. And the main mechanism for doing that was this shift to independent regulation via IPSA, taking the power and the blame perhaps away from MPs themselves. It was a huge structural change, but it involved this constant tension, didn't it? How do you fix past wrongs and prevent future ones without making it impossible for ordinary people, people without personal wealth or specific family circumstances to become MPs?

Maintaining that vital link between constituencies in Westminster, ensuring parliament reflects the country. It's a tricky balance. And you have to wonder about the long term impact. Did these changes ultimately encourage a different type of person to stand for parliament? Did it professionalize politics more?

Or did it put some potentially good people off? Questions we're probably still grappling with today. Very possibly. So wrapping up our deep dive. The Kelly report laid out major reforms, especially on housing and family employment.

IPS Day was created to implement these independently. The government backed it fully, but MPs voiced a whole range of practical concerns and philosophical points during the debate. It really was a watershed moment, a direct, perhaps unavoidable response to public fury, aiming for a system that was and crucially appeared more transparent and independent. And here's where it gets really interesting. Given this move towards independent oversight in the realm of MP's expenses, it prompts a broader question.

Could this model be successfully applied to other areas of public life where public trust has been eroded? Interesting thought. What might be the potential upsides and downsides of establishing independent bodies to oversee areas such as, say, lobbying activities or even media standards? Something to chew on. Definitely food for thought.

The benefits versus the potential loss of direct accountability complex. Find us on social media at bench report UK. Remember to download the bench report wherever you get your podcasts. Take care. Take care.