MPs face losing their tax-free resettlement grants and instead having to take out insurance against losing their job.
Currently, MPs defeated at elections get a lump sum payment equal to one month’s salary for each year of service up to a maximum of six months.
In line with redundancy payments, the first £30,000 is not taxable.
The “parachute” grants cost taxpayers more than £5 million an election.
The new Independent Parliamentary Standards Authority is considering axing the payments as part of its review of MPs’ pay and pensions.
“In the context of a system of fixed-term Parliaments, where MPs know they are likely to be subject to an election every five years, it could be argued that resettlement payments are
inappropriate as MPs should be planning for the possibility of defeat,” says a consultation paper published today.
IPSA board member Sir Scott Baker added in a blog: “Is one option that MPs should be left to make their own arrangements by some form of insurance or by savings but that something should be built into the salary to reflect the need to do this?”
The consultation exercise aims to get the public’s view on MPs’ pay.
Surveys for IPSA have already found strong opposition to increasing it from £65,748 — even though it is lower than that of members of parliament in other countries and of doctors, town hall chiefs executives and many business bosses.
Ideas floated today by the watchdog include ending Westminster’s generous final salary pensions, which cost taxpayers £13.6 million a year.
