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

John Bercow Excerpts

Friday 4th March 2016 Commons Chamber

[The Minister for Civil Society (Mr Rob Wilson)]

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—

[Mr Speaker]

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

[Mr Wilson]

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 It will remove unnecessary and outdated costs, and move towards a more efficient system, which we support.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The existing legislation is outdated, incomprehensible and rigid, and it imposes unnecessary costs.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.