Consultation on the mechanism used for periodic updates to MPs' salaries

Date published: September 2, 2021

IPSA has today published a report on our recent consultation on the mechanism used for the periodic updating of MPs’ salaries, following on from the statutory consultation we undertook last year.

In July and August this year, we consulted on an adjustment to the mechanism that should be used to determine future annual adjustments, rather than on what the amount of any such adjustment should be.

We proposed a temporary variation to our usual approach which links the annual adjustment of MPs’ salaries to the Office for National Statistics’ (ONS) Average Weekly Earnings KAC9 series. As the ONS and other economic commentators have made clear, this series is currently subject to compositional effects and base effects arising from the pandemic which mean it is a less reliable guide than usual to the underlying rate of wage growth. While the differential is likely to reduce eventually, the gap may persist for some time.

In the light of the consultation responses and continuing impact of the above technical effects of the data, we have decided that IPSA should have discretion to adjust the percentage by which MPs’ salaries are updated from the AWE KAC9 data point for the financial years beginning in April 2022, 2023 and 2024. We will use this discretion where this is warranted with reference to the available economic information and in line with our pay principles, which seek to ensure fairness for both MPs and taxpayers.

We expect that from 2024 we will be able to revert to the practice of using KAC9 alone to determine pay adjustments, but will have an opportunity to consider this further, if needed, in our next statutory review.

ENDS

For more details contact IPSA's Press Office.

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Notes to Editors

1. IPSA was created in 2009 by the Parliamentary Standards Act. The Act was amended in 2010 by the Constitutional Reform and Governance Act. Together they gave IPSA three main responsibilities:

  • to regulate MPs’ business costs and expenses

  • to determine MPs’ pay and pension arrangements

  • to provide financial support to MPs in carrying out their parliamentary functions

2. IPSA is independent of Parliament and the Government. This allows us to make decisions about the rules on business costs and expenses and on MPs’ pay ourselves, without interference.

3. The Scheme of MPs' Business Costs and Expenses governs what MPs can and cannot claim. We review our rules regularly and consult the public when we do so.

4. Every two months we publish around 25,000 claims for costs and expenses by MPs and their staff. Once a year we publish aggregate data for MPs’ spending and other aspects of their activity.

5. The consultation document from July and today’s report can both be viewed here.