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How money for losing MPs can skew elections

4 December 2019

7:09 PM

4 December 2019

7:09 PM

With just over a week to go till polling day, tis the season for endorsements from publications and public figures. We’ve published our leader in tomorrow’s Spectator setting out why this election is too important to not take sides. There’s been plenty of debate about the New Statesman’s unusual refusal to endorse Labour, arguing that Jeremy Corbyn is not fit to be Prime Minister. But the most bizarre endorsement of the day comes from Ivan Lewis, who is re-standing in Bury South.

He may have his name on the ballot paper, but Lewis has taken the odd step of asking voters not to back him. Lewis was a Labour MP but resigned the whip following allegations of sexual harassment, and is re-standing as an independent. Today he apologised to those who had already sent in their postal votes, but said he thought the best thing to prevent a Corbyn government would be for his constituents to vote Tory.

As well as being a bit of a messy thing for a candidate to do with so few days left until polls close, Lewis’ endorsement also points to another fine mess in politics, which is what happens to MPs who fail to win their seat back.

Under the current rules, any MP standing again in an election who loses is entitled to a ‘loss of office payment’, which is calculated on the basis of time served and is double the statutory redundancy payment. You may or may not think this is fair enough for the individual MPs who lose, particularly unexpectedly, but the loss of office payment does skew elections. You see, an MP only gets it if they leave parliament having lost an election. They don’t get it if they decide voluntarily to stand down before the election. At first glance, this too might seem fair enough as it means that those who are heading off to other, often far more lucrative careers, aren’t raking in the taxpayer cash as they walk out the door. But in practice what it means is that MPs who either know they are going to lose or who want to lose and still have a good new job lined up after parliament decide to stand again, just to get the not inconsiderable loss of office payment.


I am not suggesting that Lewis in particular went into this election with this intention, though I have spoken privately to many candidates over the years who would admit to doing this. Not only is it highly unlikely that any candidate would admit publicly to standing again merely for the payoff, it can also be the case that MPs think it’s worth their while giving it a go in a dicey election because the worst that can happen is they walk away with £26,800 (which is what you’d be entitled to if you’d been in parliament for 22 years, for instance) if they lose. The point is that the incentives are stacked in favour of someone standing again because most people, if offered it, would rather have an extra £10,000 or more to play with. And this means that there are candidates on the ballot paper in narrow contests that they don’t particularly want to win. An incumbent name can still attract voters, and they don’t need to attract that many to make a difference to the overall outcome in the seat, hence Lewis asking people not to vote for him if they haven’t already.

The five figure incentive caught out Angela Smith, an ex-Labour MP who this year defected to the Liberal Democrats and decided to stand in a different seat. She hadn’t been warned that if she left her Penistone and Stockbridge seat behind to contest the Altrincham and Sale West constituency, she wouldn’t be entitled to £22,000 in loss of office money. Her letter of complaint to the Independent Parliament Standards Authority was leaked, and Smith was roundly mocked for appearing more interested in the cash than the battle.

Once again, it’s unfair to suggest that Smith was only standing so she could lose and get a payout: it’s hardly unusual for people to work out what their financial situation might be if they suddenly lose their job, and her main regret will be not checking this more thoroughly. But once again, all the incentives are in favour of standing again in the same seat, regardless of whether a candidate actually wants to end up in Parliament and make all the personal sacrifices that go with being an MP for another five years or so.

Of course, it is highly unusually for someone who is voluntarily leaving a job to receive compensation for doing so. The most high-profile example of this is Ian Lavery, who received not only a redundancy payment of £89,887 when he resigned from the National Union of Mineworkers to become an MP (he later volunteered to repay £15,000 of that) but also took a loan from its benevolent fund of £72,500 so he could buy a house. That loan was written off. There was some consternation when this week Lavery fronted a video accusing the Tories of stealing money from sick mineworkers.

So there are a number of solutions to this perverse incentive. The first is to go down the Lavery route, and give MPs redundancy payments if they stand down, as well as if they lose. The second is to scrap all loss of office payments, arguing that MPs are on fixed-term contracts which expire at each election. Their staff can still take redundancy as it’s not their fault if their boss leaves or loses, but the MP just needs to make the most of their above-average salary, pension and good contacts in the wider world as a result of their job. Ipsa could also meet MPs in the middle and offer only the statutory redundancy package – rather than the current double – to those standing down or losing.

None of these options will be particularly popular: the first and last won’t go down well with voters because it’s a reminder that MPs get paid at all, which enrages a lot of people; while the second will infuriate MPs themselves. But after this election, there needs to be a proper debate about payouts, and how they are skewing elections, which is also, presumably, something voters won’t particularly like either.


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