New standards body could be 'dysfunctional'

Sir Christopher Kelly's report on MPs' expenses is highly critical of the new regime proposed by the government. Skip related content

The chair of the committee on standards in public life has recommended a wide-ranging shake up of the system.

He welcomed the creation of a Independent Parliamentary Standards Authority (Ipsa).

It was established by Parliamentary Standards Act 2009, rushed through before the summer recess as a reaction to public fury about MPs' expenses claims.

Expected to begin work in Spring 2010, Ipsa will create for the first time a system of independent regulation of MPs' salaries, allowances and financial interests.

Kelly said:

"We think it is very important that it should be in operation from the beginning of the next Parliament."

He added: "We believe the new body bears the scars of the haste with which the legislation was pushed through Parliament."

Kelly recommends that responsibility for maintaining the register of financial interests and the associated code of conduct should be removed from the independent regulator and returned to the House of Commons.

"We believe that making MPs' day to day conduct in the House subject to an externally-written code ... will prove unworkable and would give a false sense of security when the power to sanction for breaches of the code remains with the House of Commons," he said.

"It also risks distracting the new body from its core purpose.

"Instead, we think that the independent regulator should be given responsibility for determining the level of MPs' pay and pension arrangements as well as their expenses.

"All financial flows to MPs would then be decided and controlled in one place, whose independence from the House of Commons would be embedded in primary legislation and could only be changed by further primary legislation."

Kelly has also proposed the House of Commons' bodies with responsibilities which bear on the regulation of expenses, the standards and privileges committee and the Speaker's committee on the new independent regulator, should both appoint external members.

The Kelly report recommends Ipsa should be responsible for its own investigations and given a range of enforcement powers analogous to those possessed by HMRC and the Department for Work and Pensions (DWP).

The report concludes the Parliamentary Standards Act falls short in a number of ways.

Ipsa has no power to require an MP either to repay an overpaid or wrongly-claimed sum or to provide it with relevant information it has reasonably requested.

"Instead, the independent regulator must make a report of its findings in cases of non-cooperation to the House's standards and privileges committee.

"This places it in the highly invidious position of relying for its ability to exercise its basic administrative functions on the very institution from which it is meant to be independent.

"It also puts the independent regulator at odds with other organisations charged with paying out (or taking in) public money, such as the DWP and HMRC. "

Kelly said fears about unelected body exercising "what might seem to be disciplinary powers over MPs" are unfounded.

"Repayment is simply a matter of restitution."

The committee recommends Ipsa have powers to:

* Compel MPs to cooperate with the new body, including through the provision of relevant information.

* Require the repayment of wrongly paid or misclaimed sums, with associated costs if

appropriate.

* Impose, subject to the procedural safeguards laid out in the Act, its own non-parliamentary sanctions for breaches of the expenses regime (including where necessary of a financial nature) without the need to report to the Commissioner for Parliamentary Standards.

On Monday the justice secretary rejected criticism from a group of peers about the hasty way Ipsa was created.

The House of Lords constitution committee said that the legislation was rushed through.

"This was no way in which to legislate on matters which raise complex constitutional and legal issues," the committee said.

Because of the timescale there was a "lack of public consultation" and "limited opportunities for parliamentary scrutiny".

Justice secretary Jack Straw, in his response to the committee's report, said he does not "accept the strictures".

"This assessment does not fully take account of the imperatives of the situation we all faced," he said.

"The leaders of all three main parties required urgent action.

"Our constituents were loud in their calls for urgent action."

Straw, who is also Lord Chancellor, said the Commons committee on standards and privileges had said major changes should happen before the next general election.

"All this meant that fast-track legislation was inevitable," he claimed.