BRIEFING PAPER
Number SN06794, 29 February 2016
House of Commons
Members' Fund
By Djuna Thurley and
Richard Kelly
Inside:
1. Background
2. Reform attempts - 2013-15
3. House of Commons
(Members’ Fund) No. 2 Bill
2015-16
www.parliament.uk/commons-library | intranet.parliament.uk/commons-library | [email protected] | @commonslibrary
Number SN06794, 29 February 2016
Contents
Summary
3
1.
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
Background
Establishment in 1939 – helping former Members and their widows
1948 Act – helping widowers and alleviating special hardship
1957 Act – Treasury contributions to the Fund permitted
1962 Act – investment powers extended
1981 Act – “pensions” provided for certain former Members
1984 and 1991 Acts - greater flexibility in alleviating hardship
Rights for civil partners - 2005
The Stoker and Burnett Review
Beneficiaries of and payments from the House of Commons Members’ Fund
4
4
5
5
6
6
7
7
7
9
2.
2.1
2.2
Reform attempts - 2013-15
House of Commons Members’ Fund Bill 2013-14
House of Commons Members’ Fund Bill 2014-15
12
12
13
3.
3.1
House of Commons (Members’ Fund) No. 2 Bill 2015-16
Provisions of the Bill
Purpose of the Fund and restrictions
Trustees
Deductions from Members’ salaries
Contributions from and repayments to the Treasury
Tax
Appropriation
Annual reports and financial position of the Fund
Committee stage amendments
14
15
15
15
15
16
17
17
17
18
3.2
Contributing Authors:
Djuna Thurley and Richard Kelly
Cover page image copyright: Chamber-070 by UK Parliament image. Licensed under
CC BY 2.0 / image cropped.
2
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House of Commons Members' Fund
Summary
The House of Commons Members’ Fund (HCMF) was established in 1939, before a
pension scheme was established in 1964, to help former Members and their dependents
who had financial difficulty. Its original purpose was to provide former Members, their
widows and orphan children with a discretionary grant in lieu of a pension. Subsequent
amendments allowed grants to be made to alleviate hardship, gave Trustees greater
discretion and introduced “as of right” payments to certain Members who left the House
before the Parliamentary Contributory Pension fund was established.
In two successive years - 2013/14 and 2014/15 - chair of the Trustees of the House of
Commons Members Fund, Peter Lilley, attempted to introduce legislation to reform the
HCMF by means of a Private Members’ Bill. The aim was to amend and consolidate
provisions relating to the House of Commons Members’ Fund. A review of the Fund by
John Stoker and Lord Burnett in April 2007 recommended that the Fund be divided into
two functions – to provide a benevolent function; and to meet “as of rights” payments.
The 2013/14 Bill was objected to on 24 January 2014. The 2014/15 Bill was introduced on
10 September 2014, but made no further progress before the Parliamentary Session was
prorogued. 1
On Wednesday 4 November 2015 Sir Paul Beresford presented the House of Commons
(Administration) Bill (HC Bill 91) to Parliament. Similar to the two previous Bills, the aim
was to “consolidate and amend provisions about the House of Commons Members’ Fund;
and to make provision about the House of Commons resources estimates.” He explained
that the Bill would empower Trustees to cease requiring contributions from Members and
to return surplus funds to the Treasury. It would extend the class of beneficiaries to assist
all dependants of former Members who experience severe hardship. It would also allow
one of the Trustees to be a former MP.
The Bill was given its Second Reading on 4 December 2015. At Public Bill Committee on
24 February 2016 amendments included removing from the Treasury any responsibility for
making payments to the fund. The title of the Bill was changed to the House of Commons
(Members’ Fund) No 2 Bill 2015-16.
The Bill is scheduled to have its Report Stage on 4 March 2016.
1
House of Commons: Members Annual Accounts and Audit Committee Annual Report 2014-15, HC 275, July
2015
Number SN06794, 29 February 2016
1. Background
The House of Commons Members’ Fund was established in 1939,
before a pension scheme was established in 1964, to help former
Members and their dependents who had financial difficulty. Its original
purpose was to provide former Members, their widows and orphan
children with a discretionary grant in lieu of a pension. 2 Subsequent
amendments broadened the class of beneficiaries, granted discretion to
the Trustees and allowed periodic payments to specific classes of
beneficiaries.
The most recent annual accounts of the Fund were published in March
2015. 3 The last full valuation – showing the position of the Fund as at
30 September 2011 - found the value of its assets to be £5.1 million.
The total liability of the fund was £2.0 million, giving a surplus of £3.1
million. 4
1.1 Establishment in 1939 – helping former
Members and their widows
The House of Commons Members’ Fund Act 1939 established the Fund
“for the purpose of enabling grants to be paid to persons who have
been members of the House of Commons or to their widows or in
respect of their orphan children”. It limited payments to former
Members to £150, subject to their total income not exceeding £225; it
limited payments to widows to £75, subject to their total income not
exceeding £125; and it limited payments to orphans, under 16 years of
age, to £75, in total, whether there were one or more orphans.
Generally, such payments were only available to former Members who
had served for 10 years. 5 To meet these costs £12 per annum was
deducted from the salary of each Member. 6
The 1939 Act required that accounts were prepared annually and laid
before the House of Commons:
Accounts of the trustees shall be prepared annually in such form
an in such manner as the Comptroller and Auditor-General may
direct, and the Comptroller and Auditor-General shall examine
and certify every such account and shall lay a copy thereof,
together with his report thereon, before the House of Commons. 7
2
3
4
5
6
7
House of Commons Members’ Fund Bill 2013-14, Explanatory Notes, Annex para 1
Account of House of Commons Members’ Fund, HC1133, March 2015
House of Commons: Members, Annual Accounts 2014/15, HC 275, 16 July 2015;
Government Actuary’s Department (GAD), House of Commons Members’ Fund –
Actuarial Assessment as at 30 September 2011, Report by the Government Actuary,
HC 878 2012-13
House of Commons Members’ Fund Act 1939 (chapter 49), section 1(1) and (2) and
Schedule 1
House of Commons Members’ Fund Act 1939 (chapter 49), section 1(3)
House of Commons Members’ Fund Act 1939 (chapter 49), section 3(6)
4
5
House of Commons Members' Fund
The Act also specified the powers that the Trustees had to invest “So
much of the assets of the fund as is available for investment” as they
thought fit. 8
Background to the initial legislation
The HCMF was established following a report from the Departmental
Committee on Pensions for Members of the House of Commons (the Warren
Fisher Committee). 9 The report was debated on 2 February 1939, when the
House resolved that:
That this House approves the recommendations of the
Departmental Committee on Pensions for Members of the
House of Commons and is in favour of the initiation of
legislation to carry out its proposals which impose no charge
upon the taxpayer. 10
However, in outlining the original Bill, in the second reading
debate in July 1939, Neville Chamberlain, the Prime Minister,
stressed that “the Bill is not a pensions Bill”. 11 He explained
that the Bill was necessary to ensure that deductions from
Members’ salaries were not offset against income tax and to
ensure that the contributions were compulsory. 12
1.2 1948 Act – helping widowers and
alleviating special hardship
In 1948, the 1939 Act was amended to allow the “making of grants to
widowers of persons who have been members of the House of
Commons” from the Fund. It limited the payment to widowers to £150
pounds, subject to their total income not exceeding £225. It also
amended the payment limits set in the 1939 Act and provided that the
maximum payments and deductions from Members’ salaries could be
altered by resolution of the House of Commons. The 1948 Act also
made provision for the Trustees to make payments for the purpose of
“alleviating special hardship”. It specified that £3,000 could be
appropriated from the Fund for this purpose. In addition, once the Act
came into force, gifts and donations accepted by the Trustees and up to
one-tenth of the annual deductions from Members’ salaries could be
used for alleviating special hardship. Both the making of and the
amount of any such payment was to be “in the entire discretion of the
trustees”. 13
1.3 1957 Act – Treasury contributions to the
Fund permitted
The House of Commons Members’ Fund Act 1957 allowed the Treasury
to contribute to the Fund (until that point all contributions had come
8
House of Commons Members’ Fund Act 1939 (chapter 49), section 3 and Schedule
9
Report of the Departmental Committee on Pensions for Members of the House of
Commons, December 1937, Cmd 5624
3
10
11
12
13
HC Deb 2 February 1939 cc418-469
HC Deb 13 July 1939 c2512
HC Deb 13 July 1939 cc2510-2511
House of Commons Members’ Fund Act 1948 (chapter 36)
Number SN06794, 29 February 2016
from Members 14) and extended the Trustees’ power of investment. One
tenth of any Treasury contribution could be used to alleviate hardship. 15
1.4 1962 Act – investment powers extended
The House of Commons Members’ Fund Act 1962 made fresh provision
with respect to the Trustees’ power of investment, allowing them
subject to certain conditions to invest “in any investments whatsoever”.
It repealed in its entirety the House of Commons Members’ Fund Act
1960. 16 The 1960 Act had extended the Trustees’ powers of investment
but limited investments in the extended range to half of the value of the
Fund. 17
1.5 1981 Act – “pensions” provided for
certain former Members
In 1981, the scope of the Fund was extended by the House of
Commons Members’ Fund and Parliamentary Pensions Act 1981. This
Act gave rights to pre-October 1964 Members (and their widows or
widowers) to “periodical payments out of the Fund”, effectively a
pension for Members who left the House before the Parliamentary
Contributory Pension Fund was established. The right to such a “as of
right” pension was limited to Members who had served ten years, had
reached 65 and had applied to the Trustees. The Trustees were also
given limited discretion to waive the service requirement. 18 Francis Pym,
the Leader of the House of Commons, described the effect of and
background to the changes, when the Bill was debated in the House:
… the most important [purpose of the Bill] is to provide hon.
Members who left this House before 16 October 1964 with grants
from the Members’ Fund. These former hon. Members had no
opportunity to contribute to a pension scheme, or to benefit from
one. […] In February last year the review body, in its thirteenth
report proposed a way forward based on the House of Commons
Members’ Fund. This is at present primarily a benevolent fund
supported by an annual contribution of £24 by hon. Members
and a £15,000 a year grant from the Exchequer.
The review body suggested that the solution was to establish new
grants to be paid as of right from the Members’ Fund to pre-1965
Members. This was a valuable proposal because it reconciled the
principle of no retrospection with recognition of past services,
regardless of need. 19
The 1981 Act also authorised any increases in Treasury funding to be
ring-fenced for the provision of as of right pensions, preventing the
14
15
16
17
18
19
During the original Bill’s second reading debate, Neville Chamberlain said that, when
the proposal was debated in February 1939, “there was a general feeling that there
should be no charge upon public funds in respect of the provisions contained in this
Bill” and that “it [was] absolutely clear that the provisions of the Bill involve no
charge at all, direct or indirect, upon public funds” [HC Deb 13 July 1939 c2510]
House of Commons Members’ Fund Act 1957 (chapter 24)
House of Commons Members’ Fund Act 1962 (chapter 53)
House of Commons Members’ Fund Act 1960 (chapter 50)
House of Commons Members’ Fund and Parliamentary Pensions Act 1981 (chapter
7)
HC Deb 19 February 1981 c491
6
7
House of Commons Members' Fund
Trustees appropriating such monies for the alleviation of special
hardship. 20 In the debate, Mr Pym indicated that the Government
would make £2 million available to the Fund over the following ten
years. 21
1.6 1984 and 1991 Acts - greater flexibility in
alleviating hardship
The Parliamentary Pensions etc Act 1984 removed the restrictions that
limited funds for alleviating hardship to one-tenth of Members’
contributions and of Treasury contributions made under the 1957 Act.
From then onwards “the whole or any part” of these monies could be
used to alleviate hardship. (The additional Treasury contribution, for as
of right pensions (under the 1981 Act), was not to be used for
alleviating hardship.) 22
The Ministerial and other Salaries and Pensions Act 1991 gave the
Trustees much greater discretion in allocating funds to alleviate
hardship. It replaced the provisions of the 1948 Act, as follows:
Subject to the provisions of this section, the trustees may cause to
be made out of sums appropriated for the purposes of this section
or the income thereof such periodical or other payments to or in
respect of—
(a) persons who have been members of the House of Commons
whether before or after the passing of the principal Act; or
(b) the widows, widowers or orphan children of such persons,
as the trustees think fit having regard to the circumstances of the
persons to or in respect of whom the payments are to be made. 23
1.7 Rights for civil partners - 2005
The Civil Partnership (House of Commons Members’ Fund) Order 2005
was made on 1 December 2005. It extended the definition of widow
and widowers to include surviving civil partners. 24
1.8 The Stoker and Burnett Review
In its Annual Report 2005-06, the Members Estimate Audit Committee
(MEAC) recorded that a review of the HCMF had been initiated. It
reported that it had appointed John Stoker to undertake the review on
its behalf and that John Burnett had been appointed on behalf of the
Trustees. 25 In its following annual report, the Committee reported that
it had been kept updated with the progress of the review. 26
20
21
22
23
24
25
26
House of Commons Members’ Fund and Parliamentary Pensions Act 1981 (chapter
7), section 3
HC Deb 19 February 1981 c492
Parliamentary Pensions etc Act 1984 (chapter 52), section 12
Ministerial and other Salaries and Pensions Act 1991 (chapter 5), section 7
House of Commons Members’ Fund, Account 2011-12, April 2013, HC 1101 201213, para 4; Civil Partnership (House of Commons Members’ Fund) Order 2005, SI
2005/3298
Members Estimate Audit Committee, Annual Report 2005-06, p3
Members Estimate Audit Committee, Annual Report 2006-07, p4
Number SN06794, 29 February 2016
In its Annual Report 2007-08, it restated the background to the review.
It reported that the review and papers from the MEAC and the Fund’s
Trustees had been presented to the Members Estimate Committee
(MEC – the Committee that provides oversight of the House of
Commons Members Estimate which funds, in part, Members’ pensions
and the HCMF). The MEC endorsed the Stoker and Burnett report, 27
and sought legislation to make changes to the Fund:
In 2005/06 the Committee agreed to the Leader of the House’s
invitation that it should undertake a review of the governance of
the Members’ Fund jointly with the Trustees of the Fund, and
appointed John Stoker to undertake the review on its behalf. Lord
Burnett was appointed on behalf of the Trustees. In November
2007 the final report, together with papers from the MEAC and
the Trustees, was presented to the Members Estimate Committee,
who decided that Members’ contributions should be raised at the
next General Election, that surplus funds of £1m be returned to
HM Treasury and that the Fund should continue on a statutory
basis with the MEC asking the Government to bring forward
legislation to enact the changes agreed at the earliest possible
opportunity. 28
The conclusions of the Stoker and Burnett review are summarised in the
Explanatory Notes that accompanied the 2013/14 Bill:
12. The main recommendations were that the Fund be divided
into two distinct functions:(a) to provide a benevolent function (the payment of one-off
hardship grants). This function would be overseen by the Trustees,
with assets sufficient to meet likely future hardship payments;
and,
(b) to meet the 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 £215K would no
longer be paid into the Fund. 29
The MEC endorsed the Stoker and Burnett review, and discussions took
place with officials in the Office of the Leader of the House of
Commons. The Explanatory Notes reported that:
… there were problems identifying a suitable Government
department to take on the annual regular grants to enable the
Fund’s two functions to be separated, take no further Treasury
contributions and 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 the issue of restructuring the Fund
through new primary legislation but it has been difficult to find
Government time for a standalone Bill. There has not until now
been an opportunity to change the legislation. 30
However, although the House of Commons Members’ Fund Bill 201415 would allow the Trustees to stop Treasury contributions and to
27
28
29
30
House of Commons Members’ Fund Bill 2013-14, Explanatory Notes, Annex para 13
Members Estimate Audit Committee, Annual Report 2007-08, para 18
House of Commons Members’ Fund Bill 2013-14, Explanatory Notes, Annex para 12
House of Commons Members’ Fund Bill 2013-14, Explanatory Notes, Annex para 14
8
9
House of Commons Members' Fund
return excess funds to the Treasury, it does not separate the two
functions identified by the Stoker and Burnett review.
1.9 Beneficiaries of and payments from the
House of Commons Members’ Fund
The fund has three types of beneficiary:
•
"As of Right Grant" recipients There were no pensions
for Members or their widow/ers until the Parliamentary
Contributory Pension Fund (PCPF) was set up in 1964.
Thereafter those who left the House from October 1964
onwards, and had served ten years or more, were entitled
to a pension for themselves or their widow/ers. The Fund
pays those who left the House earlier or without the
necessary ten years service, and their widowers, an ‘as of
right grant’, currently set at approx £6,132 p.a. for exMembers and approx £3,835 p.a. for their widow/ers.
•
Widows receiving top up pensions In 1991, the PCPF
pension to the widow or widower was increased from one
half of the Member’s pension to five-eighths but this
applied only to Members who left after 6 April 1988. The
Trustees decided to make good the apparent oversight of
widow(er)s of Members who had left before this date by
making a discretionary payment from the Fund to top up
their PCPF pension already in payment from half to 5/8ths
of the Member’s pension.
•
Hardship/discretionary grant recipients Recipients
receive payments (one-off or periodical), which are paid
entirely at the discretion of the Trustees where the Trustees
consider that an individual satisfies the requirements of the
legislation. Legislation allows the Trustees to make
periodical or other payments to the widows, widowers or
orphaned children of former Members, as the Trustees
think fit, having regard to the circumstances of the person
to or in respect of whom the payments are made.
Essentially, these payments are made on the grounds of
financial hardship. 31
Over time, demands have reduced over time because of the “dwindling
number of dependants of Members who left the House before MPs’
pensions were introduced”. 32 The chart and table below illustrate the
reduction in the monies allocated by the Fund and the decline in the
number of beneficiaries of the Fund over years to 2013/14.
31
32
House of Commons Members’ Fund Bill 2013-14, Explanatory Notes, para 10
House of Commons Members’ Fund Bill 2013-14, Explanatory Notes, para 4
Number SN06794, 29 February 2016 10
Benefits paid 2003-04 to 2013-14 (£'000)
1939 Act payments
140
1981 Act payments
120
Discretionary grants
100
Lump sum payments
80
60
40
20
-
Source: House of Commons Members' Fund, Account, various years
Notes:
1939 Act payments: These were the original hardship payments made
under the 1939 Act. However, there are no longer any annual grants paid
under this Act as the last few remaining beneficiaries are now deceased
and the Trustees use their discretionary powers under the 1948 Act , as
amended by the 1991 Act, to make all discretionary payments now.
1981 Act payments: The annual grants paid under the 1981 Act are paid
to former MPs who left the House before the MPs pension scheme was
introduced in 1964. However, upon death of the former MP, spouses are
eligible to receive a payment. The majority of annual grants paid under
this Act are now paid to the widows of former members.
Discretionary grants: The Trustees have the power to make discretionary
grant payments under 1948 and 1991 Acts. This category consists of the
top up pensions to widows but also includes any discretionary annual
grants approved for payment to former members and their dependents.
Most requests for discretionary assistance are requests for one off
assistance, but occasionally the Trustees do offer annual grants to those
most in need following means testing. These are usually ageing former
members or their spouses who require regular ongoing assistance and are
not in receipt of a grant under the 1981 Act or from the MPs pension
scheme.
Lump sum payments: The Trustees of the HCMF consider applications
from former members and their dependants who experience financial
hardship and require a one off lump sum grants. These are often paid to
ageing former MPs who require necessary home improvements that they
could otherwise have not afforded, for example, to replace a broken boiler.
These payments are means tested and considered on a case by case
basis. Demand for assistance varies year by year.
11 House of Commons Members' Fund
House of Commons Members' Fund Beneficiaries
Fund Year
Start of year
Beneficiaries
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
Source:
105
100
87
78
69
67
58
56
50
End of year
Grants
Beneficiaries
Grants
70
68
59
57
51
100
87
78
69
67
58
56
50
48
101
88
79
73
68
59
57
51
49
House of Commons Members' Fund Account,
various years
Number SN06794, 29 February 2016 12
2. Reform attempts - 2013-15
In 2013/14 and 2014/15, Chair of the Trustees of the House of
Commons Members’ Fund attempted to introduce Private Members’
Bills. 33
2.1 House of Commons Members’ Fund Bill
2013-14
On 16 December 2013 Chair of the Trustees of the House of Commons
Members Fund, Peter Lilley introduced a Private Member’s Bill to
Parliament.
The purpose of the House of Commons Members’ Fund Bill 2013-14
[Bill 145 of 2013-14] was to:
[…] reform the archaic and costly legislation that governs the
benevolent fund that exists to help former Members of Parliament
and their dependants who fall on hard times. It will reduce costs
and reflect changing circumstances, thereby enabling us to forgo
a Treasury grant, to suspend the £2 monthly payment that each
Member makes to the fund and to return £1 million to the
Treasury, while also ensuring that the fund remains capable of
meeting ongoing needs given that, sadly, hardship continues to
occur among former Members. 34
For a summary of the legislative changes proposed by the Bill is in the
Explanatory Notes. 35
At Business Questions on 16 January 2014, Peter Lilley set out the
effects of the Bill:
The Bill will reform the archaic and costly legislation that governs
the benevolent fund that exists to help former Members of
Parliament and their dependants who fall on hard times. It will
reduce costs and reflect changing circumstances, thereby enabling
us to forgo a Treasury grant, to suspend the £2 monthly payment
that each Member makes to the fund and to return £1 million to
the Treasury, while also ensuring that the fund remains capable of
meeting ongoing needs given that, sadly, hardship continues to
occur among former Members.
He also asked whether the Bill could be expedited if it received a second
reading. In response, Andrew Lansley, the Leader of the House of
Commons, confirmed that “if the Bill receives its second reading
tomorrow, the Government will table a money motion in support of it
...that that would be our intention”. 36
On both 17 and 24 January 2014, the Bill was objected to, when the
remaining orders of the day were read. 37 The Bill was listed for debate
on Friday 28 February 2014 – the final allotted day for consideration of
33
34
35
36
37
Private Members’ Bills are Public Bills introduced by MPs and Lords who are not
government ministers. For more information, see the Parliament website
HC Deb 16 January 2014 c1005-1006
House of Commons (Administration) Bill – Explanatory Notes
HC Deb 16 January 2014 c1005-1006
HC Deb 17 January 2014 c1176; HC Deb 24 January 2014 c627
13 House of Commons Members' Fund
Private Members’ Bills in the House of Commons in the 2013-14
Session. However, it did not take place. 38
2.2 House of Commons Members’ Fund Bill
2014-15
Mr Lilley introduced a further Private Members’ Bill to Parliament on 10
September 2014. It was scheduled to have a second reading on Friday
17 October 2014, but this did not take place. 39 The House of Commons
Members’ Fund Bill 2014-15 [Bill 91 of 2014-15] replicated the
provisions in the 2013/14 Bill.
The purpose was to amend and consolidate provisions relating to the
House of Commons Members’ Fund. A review of the Fund by John
Stoke and Lord Burnett in April 2007 recommended that the Fund be
divided into two functions – to provide a benevolent function; and to
meet “as of rights” payments. The Bill did not do this as it was not
possible to identify another body to take on the responsibility for paying
annual grants. However, it would have allowed more flexibility to the
Trustees in managing the Fund, including extending the class of
beneficiary; removing the requirement for an annual appropriation
resolution; removing the requirement that all current Members make a
monthly contribution of £2; allowing the Fund to return surplus funds
to the Treasury. The Bill would also have repealed a number of previous
Acts relating to the Fund and amalgamated them to create a new and
comprehensible set of governing Regulations.
38
39
House of Commons Votes and Proceedings Friday 28 February 2014
HC Deb 10 September 2014 c909
Number SN06794, 29 February 2016 14
3. House of Commons (Members’
Fund) No. 2 Bill 2015-16
On 4 November 2015, Sir Paul Beresford MP presented the House of
Commons (Administration) Bill to Parliament. He explained that the Bill
was not new – many of the provisions had been in the Private Members’
Bills brought forward in the last two Parliamentary sessions. As before,
the aim was to reform the Fund to reflect changes in demand since it
was established:
That leave be given to bring in a Bill to consolidate and amend
provisions about the House of Commons Members’ Fund; and to
make provision about the House of Commons resources
estimates.
This is not a Government Bill or a Government hand-out Bill; it is a
minor House of Commons management Bill. The Bill is not new:
there were at least two similar private Members’ Bills in the last
Parliament, which fell due to lack of time.
I suspect few Members will be aware of the fund, apart from
through the note of a small monthly deduction to be seen on
their monthly Independent Parliamentary Standards Authority pay
slip. The fund was established before the Second World War,
when there was no parliamentary pension to help former
Members who had fallen into financial difficulties. It has been
used to top up pensions for widows of Members who left the
House when widows received a lower entitlement, and for a few
isolated cases of hardship of former Members.
As the House will recognise from that description, as time has
passed the demand has dropped. In the last financial year,
payments worked out at £137,000, but the fund has grown to a
considerable £7 million. At present, the fund is drawn from
compulsory contributions from Members, earnings from its
investments and an annual contribution from the Treasury of
£215,000. That compares with Members’ contributions of
£15,000 per year.
The Bill will remove the requirement under existing primary
legislation for Members to make monthly contributions of £2. In
effect, the trustees will be empowered to cease deducting
contributions. Given the figures I have just stated, they intend to
do so immediately, since the fund has, to put it simply, a
considerable surplus. However, the Bill enables the trustees to
recommend resumption of contributions, if needed, up to a
maximum of 0.2% of pay. The trustees can, if they agree, return
any surplus funds to the Treasury. The trustees have requested
this particular discretion.
The Bill will extend the class of beneficiaries to assist all
dependants of former Members who experience severe hardships.
It will also remove the requirement for trustees to be current MPs.
I am sure the House would agree that it seems sensible for the
trustees to ask, for example, the Association of Former Members
of Parliament to nominate one trustee. In addition, that will
enable the trustees to get over the problem that arises when, at a
general election, a number of Members who are trustees lose
their seats. The Bill will allow such former MPs to remain as
trustees temporarily, until they are formally replaced.
15 House of Commons Members' Fund
For efficiency reasons, the Bill will amalgamate various Acts
governing the fund to create a comprehensive set of governing
legislation. That will remove unnecessary or outdated costs,
procedures and restrictions, and provide a streamlined service
with reduced costs.
Finally, clause 10 will amend the description of the House of
Commons administration estimates set out in the House of
Commons (Administration) Act 1978.
This amendment will enable the House to merge the
administration and Members estimates into one at some future
date, if that is deemed desirable. That decision would be taken by
the House of Commons Commission, subject to discussions with
the Treasury. There is cross-party and trustee support for this small
tiding-up Bill. 40
The Bill and Explanatory Notes are on the Parliament website.
3.1 Provisions of the Bill
Purpose of the Fund and restrictions
The purpose of Clause 1 of the Bill is to confirm that the Fund would
continue and to specify that its purpose is to make grants to:
(a) former Members of the House of Commons, and
(b) people who appear to the Fund’s trustees to be or to have
been dependants of former Members.
The intention was not to restrict the reasons for which a ground could
be made. However, Clause 3 requires the Trustees to take into account
the financial circumstances of the recipient and the state of the Fund in
determining whether to make payments. (At present, grants are made
to alleviate hardship or in lieu of pensions to former Members and their
dependants who did not qualify for a pension).
Trustees
At present, the 1939 Act provides for there to be a maximum of seven
Trustees, one of whom is to be Custodian Trustee. The remaining
trustees are Managing Trustees and have to be Members of the House
of Commons. They are appointed by resolution of the House in
accordance with Section 2 of the 1939 Act.
The intention of Clause 2 is to provide that Trustees would continue to
be appointed by resolution of the House, for there to be no more than
seven Trustees and for one of them to be a former Member. The Bill
makes no provision for the appointment of a Custodian Trustee. The Bill
would also make provision for the Trustees to be indemnified out of the
Fund. 41
Deductions from Members’ salaries
Section 1(3) of the House of Commons Members Fund Act 1939
provided that the sum of £12 per annum should be deducted from
Members’ salaries and paid into the Fund. The amount was increased to
40
41
HC Deb 4 November 2015 c996
HC Bill 91, Schedule
Number SN06794, 29 February 2016 16
£18 per annum by resolution of the House on 18 July 1957; 42 and to
£24 per annum by resolution of the House on 17 May 1961, 43 and has
remained at that level since then.
Clause 4 provides for amounts to be deducted from Members’ salaries
and paid into the Fund, with the amount set by resolution of the House,
not to exceed 0.2 per cent of annual salary.
Clause 5 gives Trustees the power to vary the amounts deducted from
Members’ salaries “by direction”, and to:
•
•
Increase the amounts “in respect of a specified financial year by
the percentage applied for the purposes of Part I of the Pensions
(Increase) Act 1971 in respect of that financial year”; and
Suspend deductions “while they believe that the Fund has
sufficient assets to meet demands on it”.
Clause 6 makes various provisions about resolutions and directions.
Resolutions relating to the Fund must be made on motions moved by a
Trustee of the Fund. Resolutions can relate to the year in which it is
passed, one or more future financial years, future financial years in
general, or a combination. It would have required: resolutions relating
the HCMF to be numbered and printed as statutory instruments; and
the Trustees to publish any directions “as soon as reasonably
practicable”.
Contributions from and repayments to the Treasury
In December 2014, the Trustees decided that given the value of the
fund, from 1 January 2015 and for the foreseeable future, they would
no longer draw down a Treasury contribution. 44
The intention of Clause 7(2) is to limit annual payments from the
Treasury to the Fund to £215,000.
Clause 7(7) would give the Treasury the power to amend by order,
subject to the negative resolution procedure, the maximum amount of
its contribution.
Clause 7 (4) would allow the Trustees to surrender amounts to the
Treasury which in their opinion:
(a) are attributable to sums paid to the Fund under subsection (1),
and
(b) are not required in order to allow the Fund to meet present or
expected future demands.
This would mean that:
Given the decline in demands upon the Fund and the reductions
in unnecessary costs made possible by the Bill it will be possible to
forego the annual taxpayer contribution from the Treasury. In
addition it will be possible to return excess funds of around £1m
to the Treasury while still retaining sufficient investments to
finance likely ongoing demands on the Fund. 45
42
43
44
45
HC Deb 18 July 1957 c1512
HC Deb 17 May 1961 cc1508-1511
House of Commons Members’ Fund Account 2013-14, HC 1133, March 2015, p3
House of Commons Members’ Fund Bill 2013-14, Explanatory Notes, para 8
17 House of Commons Members' Fund
Tax
Clause 8 would confirm that individuals receiving annual grants made
from the Fund will be liable to tax on these payments and provide for
contributions to the Fund by current Members not to count as taxable
income.
Appropriation
Under section 4(4) of the House of Commons Members’ Fund Act 1948
and under section 1(4) of the House of Commons Members’ Fund Act
1957 any part of the sums deducted from Members’ salaries or any part
of the Treasury contribution to the Fund can be appropriated to make
grants in cases of special hardship. However, before this can be done,
the House has to agree by resolution each year. Section 4(4) of the
1948 Act specifies:
The House of Commons may in any year by resolution direct that
there shall be appropriated for the purposes of this section out of
the said fund the whole or any part of the sums deducted or set
aside in that year from the salaries of members of the House of
Commons under subsection (3) of section one of the principal
Act.
The Bill does not include any requirement for the Trustees to obtain a
resolution of the House before using monies in the Fund for any
purpose.
Annual reports and financial position of the Fund
Section 3(6) of the 1939 Act requires accounts of the Trustees to be
prepared annually by the Comptroller and Auditor General and laid
before the House of Commons. The Bill was much less prescriptive:
The trustees shall make such arrangement for the maintenance
and publication of accounts as they think proper (which may
include examination by the Comptroller and Auditor-General and
laying before the House of Commons). 46
Section 3(5) of the 1939 Act requires the Government Actuary to report
on the general financial position of the Fund at intervals of not more
than five years. 47 The Bill would have removed the statutory requirement
for regular actuarial assessments. It provides that:
The trustees shall make arrangements for the maintenance and
publication of accounts in accordance with generally accepted
accounting practice; and the arrangements must include—
46
47
48
a.
examination and certification of the accounts by the
Comptroller and Auditor-General or another external
auditor, and
b.
laying of the accounts and the auditor’s report before the
House of Commons. 48
HC Bill 91, Schedule, para 9
The most recent report by the Government Actuary was published in March 2013:
Government Actuary’s Department, House of Commons Members’ Fund Actuarial
Assessment as at 30 September 2011 – Report by the Government Actuary, 25
March 2013, HC 878 2012-13
HC Bill 91, Schedule, para 8
Number SN06794, 29 February 2016 18
3.2 Committee stage amendments
The House of Commons (Administration) Bill received a Second Reading
on 29 January 2016. 49 It was referred to a Public Bill Committee, which
considered the Bill on Wednesday 29 February 2016. 50
Opening proceedings, the Bill’s sponsor, Sir Paul Beresford explained
that demands for the Fund had dropped, meaning it was now in
surplus:
The fund was established before the second world war, when
there was no parliamentary pension to help former Members who
had fallen into financial difficulties. The fund has been used to top
up pensions for the widows of Members who left the House
when widows received a lower entitlement—that is an interesting
statement, because of course it should be “spouses” nowadays,
but this was before the second world war—and for a few isolated
cases of hardship of former Members.
As the Committee will recognise from that description, demands
on the fund have dropped as time has passed. In the last financial
year, payments worked out at £137,000. As a consequence, the
fund has grown over the years to a considerable £7 million. At
present, the fund draws from compulsory contributions from
Members, earnings from its investments and an annual
contribution from the Treasury of approximately £215,000. 51
The Bill would enable contributions to the Fund to cease and the class
of beneficiaries to be widened:
If the Committee agrees to the amendments tabled by my hon.
Friend the Member for Christchurch, that last contribution will
cease. The Bill will also remove the requirement under existing
primary legislation for Members to make monthly contributions of
£2. In effect, the trustees will be empowered to cease deducting
contributions. Given the figures that I have just stated, I suspect
that they intend to do so immediately following Royal Assent, as
the fund has, to put it simply, a considerable surplus. However,
the Bill will also enable them to recommend resumption of
contributions, if needed, up to a maximum of 0.2% of pay. The
trustees can, if they agree, return any surplus funds to the
Treasury, and they have requested that discretion.
The Bill will extend the class of beneficiaries to assist all
dependants of former Members who experience severe
hardship. 52
It would also remove the requirement for trustees to be current
Members:
It will also remove the requirement for trustees to be current
Members. I am sure the Committee agrees that it is sensible for
the trustees to ask, for example, the Association of Former
Members of Parliament to nominate one trustee. In addition, the
Bill will enable the trustees to get over the problem that arises
when, at a general election, a number of trustees lose or vacate
HC Deb 29 January 2016 c611
Public Bill Committee, House of Commons Commission (Administration) Bill, 24
February 2016
51
Ibid c3
52
Ibid
49
50
19 House of Commons Members' Fund
their seat. The Bill will allow such former MPs to remain as
trustees temporarily until they are formally replaced. 53
Christopher Chope moved amendments to clause 7 to remove from the
Treasury any responsibility for making payments into the Members’
Fund and to make it clear that any future contributions would need to
come from Members. He explained, this would enable it to be a “
truly benevolent fund.” Advice from the Government Actuary was that
the fund could be self-sufficient:
[…] we got from advice from the Government Actuary that shows
current liabilities of about £4 million and assets in excess of £6
million. It is the responsibility of the trustees to ensure that, at any
one time, assets are sufficient to cover liabilities, and from the
information given in the Government Actuary’s report, I see no
reason why that would not be possible in future. The fund will be
self-standing, self-sufficient and independent of the Treasury. 54
Sir Paul Beresford supported the amendments and they were made to
the Bill.
Deputy Leader of the House, Dr Therese Coffey moved amendments
relating to expenditure estimates. She explained:
It is currently the responsibility of the Government to lay the
Members estimate before the House and of the Speaker to lay the
Administration estimate before the House. The current division of
responsibilities is appropriate and should remain. 55
To enable this, the title of the Bill would need to change.
Nick Brown commented that the Members estimate was “effectively
residual following the setting up of IPSA” and now covered Short
money which was wholly conditioned by a resolution of the House and
some administrative costs. Ideally, these should be merged with the
main functions of IPSA. Such a merger could not happen without
Treasury approval. He suggested an amendment should be made at
Report Stage to clarify that this was the case. 56
Sir Paul Beresford supported the Minister’s amendments. The Minister
explained that merging the two estimates would reduce the
Government’s ability to scrutinise costs of the House of Commons. 57
Her amendments were made to the Bill. 58
The Bill is due to have its Report Stage on 4 March.
Ibid
Ibid c6
55
Ibid c8
56
Ibid c8
57
Ibid c9
58
Ibid c11
53
54
Number SN06794, 29 February 2016 20
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