Tuesday 5 August 2008

NEWS RELEASE
                                                                                          
CONSULTATION ON PROPOSALS FOR THE AUDIT AND ASSURANCE OF MPs' ALLOWANCES GETS UNDER WAY
 
Ministers today issued proposals for further action to improve the financial control and audit of the system of allowances claimed by Members of Parliament.

Leader of the House of Commons Rt Hon Harriet Harman QC MP and the deputy Leader Helen Goodman MP published a Command Paper, which poses questions for all MPs following agreement by the House last month to achieve better scrutiny of the £93 million of public money claimed annually. They are seeking the views of MPs on the measures and comments by September 29.

In a foreword, they said: "In order to put into effect these agreed improvements, as well as to achieve our aspiration to build public confidence in the use of public money by MPs, we are consulting on further steps to improve financial control and audit.

"Over the past 6 months, the Members Estimate Committee (MEC) has undertaken a thorough review of the position and published recommendations and evidence. We are most grateful to them for all the work they undertook."

The key elements agreed by MPs on July 3 - and the outcome of a further debate on July 16 - are that:

. The Advisory Panel on Members Allowances (APMA) prepare a redraft of the Green Book, which sets out the rules for claiming the allowances, and that APMA will review the Green Book;

. The so-called "John Lewis List" will be abolished, and that

. The APMA membership should be augmented by two independent external appointees for the duration of the review.

The Ministers propose consultation on the following, which should be subject to views from MPs and the APMA:

. whether the Additional Costs Allowance (ACA) should be changed, as suggested in a Written Ministerial Statement of July 16, so that the reasonable reimbursement of the costs of furniture and other household goods be capped at 10% of the ACA in any one year; and

. The need for the APMA to look at the case for a further reduction of receiptable expenditure to £0 in future for maximum transparency.

They stated: "MPs play a vital role in our democracy - representing their constituents, legislating and scrutinising the executive. To do this, they must have the resources to do their work effectively, and they must command the confidence, respect and trust of the public. We need arrangements which achieve both these aims.

"There is a consensus on the need to raise trust and public confidence in Parliament. We also need to build a consensus on the means to achieve it. Such means must be proportionate to the sums involved, and should build on the existing machinery for audit and compliance."

Notes for editors:

1. It was agreed by amendment on July 3 that a rigorous internal system of audit of the ACA should be introduced, covering 25% of MPs each year and every Member during each Parliament. It was agreed on July 16 that an external financial audit be undertaken by the National Audit Office (NAO) covering all of the allowances in the Green Book.

2. The audit would include application of the rules and guidance on acceptable claims; a review of the management controls and processes used by the House's Department of Resources; checks and testing of the controls to ensure effectiveness, and that the NAO would report to the Members Estimate Audit Committee, which will include three external independent members (it currently has two external members).

3. The new requirement for receipts in support of all claims over £25 (previously £250) will provide evidence needed to check actual amounts claimed by MPs rather than taking them at face value as now.

4. The Comptroller and Auditor General believes that, given the additional evidence to be provided, there is an opportunity to strengthen significantly the assurance that public money has been properly spent.

5. The NAO might undertake an extended audit with the statements for the financial year 2009-10.

6. Since recent instances of MPs employing their children raised public concern, the consultation will also focus on whether such children should be barred from paid employment in their parent's constituency or parliamentary offices, or in any other role relating to the parent's work as an MP.

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