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House of Commons Members’ Fund (No. 2) Bill

Volume 606: debated on Friday 4 March 2016

Bill, as amended in the Public Bill Committee, considered.

Third Reading

I beg to move, That the Bill be now read the Third time.

This is a little Bill—actually, it is a little littler than when it went into Committee—that will amend provisions for the House of Commons Members’ Fund. I extend my thanks to the numerous hon. Members, especially the trustees, and the Minister, who have supported the Bill through its various stages. I also thank the various officials who have supported it, including the actuary who helped my hon. Friend the Member for Christchurch (Mr Chope) and me to enable a distinct change to be made that will free the fund from the Treasury or, to put it another way, free the Treasury from the fund.

I suspect that few Members who are not trustees will be aware of the fund, apart from through the note about a small deduction on their monthly payslip from the Independent Parliamentary Standards Authority. The fund was established before the second world war, when there was no parliamentary pension to help former Members who had fallen into financial difficulties. It was used to top up pensions for the widows of Members who had left the House when widows received a lower entitlement, and has been used for a few isolated cases of hardship among former Members.

As the House will recognise from that description, as time has passed, the demand has dropped. In the last financial year the payments worked out at £137,000, but over the years the fund has grown to a considerable sum of approximately £6.5 million. At present, the fund is drawn from compulsory contributions from Members, earnings from its investments and an annual contribution from the Treasury of £215,000.

Thanks to my hon. Friend the Member for Christchurch, the Treasury contribution will cease. That follows a suggestion that he made to that end. An actuarial estimate of the fund was undertaken, and hence his amendments were accepted in Committee. They will remove the requirement for the Treasury to donate to the fund.

The Bill will remove the requirement under the existing primary legislation for Members to make monthly contributions of £2. In effect, the trustees will be empowered to cease deducting contributions. Given the figures I have just stated, I suspect that they intend to do so immediately following Royal Assent, since the fund has, to put it simply, a considerable surplus. However, the Bill enables the trustees to recommend the resumption of contributions, if it is needed, up to a maximum of 0.2% of pay. The trustees may, if they wish, return any surplus funds to the Treasury. The trustees have requested that discretion.

The Bill will permit the acceptance of bequests and allow the trustees to make arrangements under which a commercial institution would undertake the commitments and/or liabilities of the fund. The Bill will extend the class of beneficiaries to all dependants of former Members who experience severe hardship.

The Bill will also remove the requirement for trustees to be current MPs. I am sure the House will agree that it seems sensible for the trustees to ask, for example, the Association of Former Members of Parliament to nominate one trustee. In addition, this provision will enable the trustees to get over the problem that arises when a number of Members who are trustees lose or vacate their seats at a general election. The Bill will allow such former MPs to remain as trustees temporarily, until they are replaced formally.

As I have said, this is a little Bill that tidies up the arrangements for the trustees in today’s world. I commend it to the House.

I thank my hon. Friend for his generous comments and for accepting the amendments that I tabled in Committee. Often, one can make only modest achievements in this House, but if this Bill has saved £250,000 of Treasury money and will in future enable Members not to have to pay £2 a month, that will put into perspective the contribution made by my hon. Friend in promoting this Bill and including the necessary amendments. I hope that it will continue its passage without further ado.

I know that my hon. Friend the Member for Mole Valley (Sir Paul Beresford) appreciates expediency in these proceedings, so I will keep my comments fairly brief. I congratulate him on promoting this Bill. It was introduced as a 10-minute rule Bill—

Order. I would not wish to misunderstand the Minister. Was “expedition” the word for which he was looking?

No, it was “expediency”. I am used to having my grammar and English corrected, so I will take that as another correction.

This Bill was introduced by a 10-minute rule on 4 November. My hon. Friend the Member for Mole Valley made the point that it is not a Government Bill nor a Government handout Bill; it is a minor House of Commons management Bill. However, I am pleased to support it. The Bill is not new; two similar private Members’ Bills in the last Parliament fell owing to lack of time.

The Bill received its Second Reading on 29 January, and I pay tribute to my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) for the huge amount of work that he put in to get it to a point where it could enjoy majority support in this House and the other place, and for his open approach to dealing with all stakeholders who have an interest in it. His work has been continued in this Parliament by my hon. Friend the Member for Mole Valley. The Bill will modernise the House of Commons Members’ Fund which is governed by legislation dating back to 1939. It will remove unnecessary and outdated costs, and move towards a more efficient system, which we support. Importantly, it will enable us to return approximately £2 million that is not needed as part of the fund to the Treasury.

The existing legislation is outdated, incomprehensible and rigid, and it imposes unnecessary costs. Reform will simplify and clarify the legislation, streamline administration, reduce costs, and allow the fund to be self-sufficient. The new legislation will reflect the changed and smaller demands on the fund given the dwindling number of dependants of Members who left the House before MPs’ pensions were introduced. It will also permit trustees to suspend compulsory deductions from Members’ pay that are no longer needed. It is the trustees’ intention to do that immediately, and the Bill’s changes to legislation allow them to so.

The Bill will remove the need for an annual contribution from the Exchequer while leaving sufficient funds to finance help to former Members and their dependants in future years. The fund was established under the House of Commons Members’ Fund Act 1939, predating the pension scheme for MPs that was established in 1964. Its original purpose was to provide former Members, their widows or widowers and orphan children, with a discretionary grant in lieu of a pension. Further Acts were passed in 1948, 1981 and 1991 to allow former Members and their dependants to apply for assistance, particularly in financial hardship. Those amendments also broadened the class of beneficiaries, granted wide powers of discretion to trustees, and established periodic payments to specific classes of beneficiaries. As a consequence, provision was made in 1981 for the fund to be supplemented by a higher annual Exchequer contribution.

The House of Commons Members’ Fund was established when there was no parliamentary pension, to help former Members and their dependants who had financial difficulties. Only 12 of those beneficiaries remain. In addition, the fund makes payments to top-up pensions for widows of Members up to five-eighths of their spouse’s pension for those who left the House when widows received a lower pension entitlement. There are 27 people in that category today. Numbers of beneficiaries in those two categories are decreasing.

The largest category of former Members and their dependants for whom there is likely to remain an ongoing need are those who left the House more recently and have fallen into need because of sickness, disability, or inability to return to work after losing their seat. A small number of such cases occur each year. The fund is able to award one-off grants or ongoing help on a discretionary basis. A report on the fund was sponsored jointly by the Members Estimate Audit Committee and the trustees in 2006-07. Both bodies shared a concern about the complexity of the fund’s governing legislation and consequential financial arrangements. A final report was produced by John Stoker and Lord Burnett in April 2007, outlining their recommendations for the fund.

The main recommendations were that the fund be divided into two distinct functions: first to provide a benevolent function—the payment of one-off hardship grants—and that function would be overseen by the trustees, with assets sufficient to meet likely future hardship payments; and, secondly to meet annual “as of rights” payments. The balance of the fund not required to finance the benevolent function would be repatriated. In practice, the Treasury, the House, or some other body would have to take responsibility for the payment function. In addition, the annual Exchequer grant of £215,000 would no longer be paid into the fund.

Following the review, the Members Estimate Committee considered the recommendations at its meeting in November 2007 and endorsed the report. During discussions that took place after the MEC meeting with the officials of the Leader of the House, a number of obstacles were identified. In particular, there were problems identifying a suitable Department to take on the annual regular grants to enable the fund’s two functions to be separated, to ensure that no further Treasury contributions would be taken and to return excess funds to the Treasury. Legislation is required to split the fund’s functions. The Leader of the House and the trustees have explored restructuring the fund through new primary legislation, but it has been difficult to find Government time for a stand-alone Bill. Until now there has been no opportunity to change the legislation.

Despite general agreement by all parties that the fund should be restructured, in the absence of new legislation the trustees have continued to administer the fund in its existing form. However, the trustees agreed that they would draw a lower annual Treasury contribution to cover the regular annual grants only. From 1 October 2011, £148,000 was drawn, rather than the maximum of £215,000, and from 1 January 2015 the trustees ceased the draw-down altogether. Once the legislation governing the fund has been reformed, the trustees intend to return £2 million to the Treasury, and there will be no provision for an annual Exchequer contribution to the fund.

Since the review in 2007, the trustees have explored a number of avenues to change the fund’s governing legislation. That has included attempts to obtain time on the Floor of the House for a stand-alone Bill, and using other legislative vehicles to make changes, such as the Public Service Pensions Bill and the Finance Bill. The trustees have decided to pursue a private Member’s Bill, with Government support.

The changes proposed are largely technical and will simplify the fund and the associated administrative burden. Those changes will make the fund easier to administer, and allow trustees to spend time on the main thrust of the fund, which is to assist former Members and their dependants in financial need. There is nothing more for me to say, other than that I wish this short and effective Bill swift progress through the Lords.

I join this debate as parliamentary private secretary to the shadow Leader of the House. I am less familiar with the history of the fund than the hon. Member for Mole Valley (Sir Paul Beresford), who has done so much to promote this Bill. The shadow Leader of the House is in his constituency in Wales, and the shadow Deputy Leader of the House is in Great Grimsby, and they are working hard for their constituents. They have provided me with the opportunity and pleasure to speak for my party from the Front Bench for the first time, in what has been an exciting parliamentary week for me and included my first question to the Prime Minister. For a relative newbie, it has been a busy week. I hope it is not too long before I get the chance to speak for my party from the Government Front Bench.

In Committee, my shadow Front-Bench colleagues made it clear that Her Majesty’s Opposition have no objections to the aims and principles behind the Bill. The contributory nature of the fund is very welcome, as is the desire to enhance the scheme’s flexibility. I would like to take this opportunity to echo the thanks of the shadow Deputy Leader of the House, my hon. Friend the Member for Great Grimsby (Melanie Onn), and the thanks of other Members, to the trustees for their administration and management of the fund. I welcome the chance to expand the pool of expertise the trust can call on, including from former Members or another representative of potential beneficiaries.

The shadow Deputy Leader of the House and other colleagues raised several concerns and sought clarification on a number of issues that went unanswered or have been left unaddressed. The issues raised included the fund’s future accountability and the potential to amalgamate the administration of Members’ funds. Given the constituency of the shadow Deputy Leader of the House—the world’s largest fishing port no less—I promised to do my best to weave in a fish or seafood pun or two, so here goes nothing.

Despite my hon. Friend’s best efforts to “winkle” information out of the hon. Member for Mole Valley and Ministers, the Government appeared to “clam” up in Committee and were prepared to “skate” over some the issues involved. We will not stand for it. We have had enough of Ministers who refuse to answer questions in this “plaice”. [Interruption.] The money involved here is not tiny. The “tuna several million squid”—I do apologise—is involved; according to the House of Commons Library briefing, some £7 million. Members deserve appropriate answers, given the sum of money involved.

Our role in opposition is to hold the Government to account and to scrutinise them as effectively as possible however much they try to undermine our ability to do so, for example through the plans to reduce Short money. Some improvements have been made, as Members have had time to “mullet” over further. However, no answer has yet been provided on the amalgamation issue, which has now simply been removed from the face of the Bill. This is a “red herring” to distract those who recognised the benefit of a potential merger and were willing to explore the option at a later stage. I hope answers will be provided today in respect of the dogged pursuit of the issue in Committee by my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) and my hon. Friend the Member for Sheffield South East (Mr Betts). The latter has expressed concern that the Bill could represent a missed opportunity if the issue is now lost or ignored. The Deputy Leader of the House of Commons would not explain the Government’s position or thinking on this issue in Committee. Perhaps the Cabinet Office Minister will be more forthcoming.

There are three remaining areas of concern, focused on the accountability of the fund as it moves forward: on transparency, it would be useful to know more about how accessible information will be on the fund’s more flexible use and investments; on monitoring, it would be helpful to indicate how the fund’s use, especially any new uses, will be able to be scrutinised and inspected, and who by; and, on reporting, a little more information on how often reports will be provided, how they will be lodged and whether there will be any ability for Members to query reports, would be very welcome. I hope the hon. Member for Mole Valley and Ministers will throw some light on these issues, but I conclude by stating that Opposition Members do recognise the length of time it has taken to get to this point and the potential of the Bill to move things forward. I hope we see progress today.

I, too, want to congratulate my hon. Friend the Member for Mole Valley (Sir Paul Beresford) on bringing the Bill before the House. Conscious as I am of the fact that driving instructors all over the country will be waiting for us to move on to the next business, I just want to make one short point that I am sure will be entirely pun-free.

It occurs to me that the setting up and establishment of the fund was an early example of what may be described in modern parlance as the big society: people taking care of their own without being forced to do so. Members have the privilege of being able to pass legislation, but it was essentially a voluntary act by Members to look after their own. As has been said, the fund has been taken over by events. With the advent of parliamentary pensions, it has largely fallen into disuse. Nevertheless, I am sure Members on both sides of the House will be glad of the extra £24 a year and I am sure the Chancellor of the Exchequer will be glad of the extra couple of million pounds being returned to the Treasury coffers.

I wish the Bill well this morning and in the other place.

Question put and agreed to.

Bill accordingly read the Third time and passed.