MPs should have to earn pay rises

There’s no money, cry our political classes as they hike taxes on family businesses and farms. The so-called £22 billion “black hole” — a product of both reckless Conservative spending and misguided austerity (make it make sense!) — must be plugged immediately, or so we’re told.

While this narrative is questionable at best (even Rachel Reeves’ beloved Office for Budget Responsibility casts doubt on the black hole’s existence), the public has largely been told that another round of belt-tightening, albeit in the form of tax rises, is needed. But there’s one place austerity hasn’t reached: the bank accounts of our MPs.

The Independent Parliamentary Standards Authority (IPSA) has just recommended that MPs receive a 2.8 per cent pay rise. That’s right. While ordinary taxpayers are squeezed ever harder, politicians are due yet another boost to their already above-average salaries. And instead of focusing on, say, record borrowing levels, the persistent failure to address grooming gangs, or how just the pathetic record of successive governments to generate growth in GDP per capita, and therefore living standards, some MPs are indulging in the most ludicrous distractions imaginable.

Take Liberal Democrat MP Helen Maguire. She recently tabled an Early Day Motion (EDM) to express her deep concern that women’s sports are being “undermined” by the lack of birthday cards featuring female footballers. This apparently is a national priority.  Unsurprisingly, the EDM attracted support from 12 other MPs, mostly from the Liberal Democrats and Greens — parties that have turned political virtue-signalling into an art form.

When challenged on whether this was a good use of taxpayers’ money, Maguire insisted MPs had a duty to promote women’s sport and that featuring female footballers on birthday cards would “help teenage girls see sport as a good thing”.

This type of grandstanding leads many to ask the question: should we raise MPs’ salaries to attract a better class of politician? Some argue that increasing their salaries would bring in more competent individuals, discouraging them from seeking second jobs and focusing their efforts on serious issues. The logic goes that higher pay would usher in a new wave of “innovative” and “forward-thinking” politicians.

While this has traction amongst some, a proposal that may engender our MPs to act like genuine national legislators rather than glorified councillors is that of tying their pay to Britain’s economic performance. In particular, the key metric of GDP per capita which actually measures the living standards of ordinary Brits. So to put it bluntly, if Brits get poorer our politicians at the very least shouldn’t get any richer.

And what has happened, and is happening, to those living standards? Well, while the economy may have grown overall (albeit a measly 0.1 per cent), GDP per capita has declined by two consecutive quarters, meaning we are now in what we at the TaxPayers’ Alliance are terming a  “personal recession.”

A personal recession is two successive economic quarters where GDP per capita has declined. This means that while there may be growth in the overall economy, living standards for the average Brit are falling. And as a reflection of living standards, GDP per capita more accurately reflects the changes in individual economic well-being and cannot be glossed over through increases in immigration.

And yet, as ordinary Brits might feel a personal recession thanks to the failures of our political class, the exact same politicians will continue to enjoy yearly pay rises from the very same people they continue to let down — British taxpayers. 

There are a number of policy solutions that should come from this — limits on benefit increases, spending reviews, immigration reforms and public sector pay freezes to name a few. But focusing on MPs for the moment, it is crazy to claim that they deserve to be paid more, just as everyone else is struggling.

Simply increasing MPs’ salaries will not improve governance

We need a far better understanding of what  drives great political leadership. Often the best politicians throughout history weren’t in it for financial perks — they were driven by conviction and a desire to shape the future of their country. What we need to do is to ensure that even for the bad politicians, their economic interests align with the country. As Milton Friedman says, we need to make it politically profitable for wrong people to do the right thing.

Simply increasing MPs’ salaries will not improve governance, and it won’t magically transform today’s crop of politicians into statesmen like Lee Kuan Yew or Javier Milei. What it will do is funnel even more taxpayer money into the pockets of politicians who behave like glorified local councillors and petty authoritarian busybodies.

Instead, we need to link the pay of MPs to the country’s economic performance, crucially measured by GDP per capita, rather than overall GDP. To avoid intense short-term thinking this could be done as an average over a five year period. We could even count years of negative growth as zero, to ensure no decreases in pay. If this had been the case since 2010, MPs’ pay would be £81,945, a good chunk lower than the £93,304 that it will be.

Maybe then, just maybe, our politicians might realise that challenging one another to FIFA matches or calling for more women footballers on birthday cards isn’t what they’re elected to do.