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Complexity Of MP Pay Process Not Well Understood



17 December 2001
For Immediate Release

Commission Says Complexity Of MP Pay Process Not Well Understood

The Higher Salaries Commission is concerned that the public needs to better understand and appreciate the complexity of fixing MPs pay.

Chairman Hutton Peacock says the Commission is well aware of public concern about pay rises funded by the taxpayer, but it’s important that MPs are given a fair remuneration for the responsibility they carry.

Coverage of salary rises for MPs has tended to perpetuate three common misconceptions.

1. The allowances and other benefits are included as though they are part of the MPs’

Comment: The allowances are basically for reimbursement of expenses incurred by MPs in
carrying out their functions. The allowances should not be included in total as pay.

2. MPs have had 3 rises in 15 months.

Comment: The 2000 determination gave ordinary MPs an annual rise of 4.8%. This was to take effect in 2 stages, the first to take effect from 1 July 2000 and the second from 1 July 2001. In effect, part of the MPs’ annual increase was deferred to their disadvantage.

3. MPs’ pay is linked to private sector rates.

Comment: MPs’ salaries are not directly linked to private sector rates or indeed to any other rates.

Section18 of the Higher Salaries Commission Act 1977 requires the HSC to take into account a number of factors:

- maintain fair relativity with levels of remuneration achieved elsewhere

- the need to be fair to the person and to the taxpayer.

- the need to recruit and retain competent persons, and

- take into account the requirements of the position and the terms and conditions of people in comparable roles.

Mr Peacock says the Commission makes a judgement based on a wide range of information received including the remuneration of comparable roles in the public and private sectors.

“The pay of politicians is still below comparable public sector rates and well below private sector rates. We need to make sure that MPs do not fall further behind.”

“Determining the appropriate level of pay is not easy, and there is never a right time for an increase in politicians’ pay”, says Mr Peacock.


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