Make it easier for MPs to demand severance pay after losing their committee seat

Rules on MEPs’ severance pay should be relaxed and the body that sets members’ salaries should examine how the current package compares to cheaper international systems, MEPs have suggested.

The Commons Administration Committee said payments for the loss of office should not be “contingent” on an MP closing their office and should instead be treated more like a severance package.

In its report, entitled Smoothing The Cliff Edge: Supporting MPs At Their Point Of Departure From Elected Office, the committee said: “Payment for loss of office should be treated as a layoff package to help MPs in their transition from the House of Representatives to a other vocation.

“The payment should not be made conditional on the completion of the settlement tasks, as this is contrary to the spirit of the payment and its intended function.”

During its investigation, the committee found that some MPs experienced “financial challenges and difficulties” after losing their seats and waited a few months for their money to lose office.

The 37-page report released on Wednesday says the average loss of office payment for MPs defeated in the 2019 general election was £5,250 – less than a month of their £84,144 salary.

The committee found that Westminster’s payouts compared poorly with comparable international democracies, with a ousted German MP who had served 18 years entitled to £162,360 in compensation.

In Great Britain, official allowances are only paid out if the Independent Parliamentary Standards Authority (IPSA), the body created after the expenses scandal to determine MPs’ salaries, deems certain “dissolution criteria” to have been met.

This includes issuing redundancy notices to employees, filing all business expense reports related to the operation of their MP offices and paying all outstanding debts to IPSA.

If the IPSA is satisfied, members who lose their seat in a general election after a period of two years of continuous service are entitled to a loss of office indemnity equal to twice the statutory entitlement to eligibility.

For MPs, the statutory maximum wage of £571 per week is used for calculation.

Support for those leaving is much more generous internationally, the study finds.

In Germany, members of the Bundestag with at least one year
Members receive a ‘transitional pay’ to support them in their next step into employment, with pay equivalent to one month’s salary – £9,020 – for each year of service, up to a maximum of eighteen months.

Outgoing Australian MPs can expect either £31,455 or £62,909 depending on length of service, while those leaving Canada’s House of Commons will receive a severance pay of almost £70,000.

In comparison, any MP who won their seat in the 2019 election but is ousted in the next election, due to be held by January 2025, can face a loss of office payment of £5,139.

The Management Committee said IPSA should look at how Westminster’s system compares internationally to inform a possible future review.

Long-time retiring members of the Bundestag can earn a six-figure severance pay (Markus Schreiber/AP)

MPs said: “IPSA should provide the Committee with examples of comparable severance schemes in other sectors and organizations against which to test the payment system for MPs losing office.

“This should serve as a benchmark for a future review of the system.”

The committee’s other recommendations included holding a farewell ceremony for former MPs, at which Speaker Lindsay Hoyle and family and friends attended a presentation of a “medal of service.”

Security should also be maintained for those believed to be at high risk of an ongoing threat, the committee recommended.

Sir Charles Walker, chairman of the committee, said: “Parliament matters. The role of a Member of Parliament – in debating and passing legislation, considering draft policies, and representing and serving voters – is a noble enterprise that should be defended, encouraged and recognized.

“However, it is clear that without proper support for Members when they leave Parliament, we may deter talented candidates from running for election to the House of Commons.”

He added: “We must recognize that if the public wants the best people to represent them in the House of Commons, it is vital that MPs are given the support they need to do their jobs well – and to leave.”

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