Politicians' Pay

Speaker A: 00:00:00

Hello and welcome to the Cognitive Engineering podcast produced by me, Fraser McGruer, for Aleph Insights. In this series of podcasts we take a look at interesting topics and discuss what we think they tell us about analysis and decision making. I'm here with Nick Hare and Chris Wragg of Aleph Insights and this week we're discussing politicians' pay.

Speaker B: 00:00:26

Chris, could you kick us off please? Well yeah, I mean this is sort of partly sparked by a couple of things really. One of the main ones is the fairly recent political furore over Owen Patterson, the British MP who had been I think formerly Secretary of State for Northern Ireland and various other kind of cabinet type roles and since being a backbencher had been involved in I suppose what used to be called lobbying or advocacy on behalf of a Northern Ireland health care company called Randox and this would have been I suspect a bit of a side story, made the back pages of the press had it not been for the fact that... Sorry to interrupt but he was lobbying on their behalf or was he also paid by them? Yes, he was paid by them, exactly. So he was receiving money to work on their behalf, to advocate on their behalf and in its most plain form that's not allowed by the Parliamentary Standards Committees and the rules that they've set but I think it would have all been kind of washed over and been a storm in a teacup had it not been for the fact that Boris Johnson sort of put a lot of political capital into defending him and everybody thought needlessly and it kind of fundamentally undermined the government for a period of time and then a whole series of other catastrophe or crises happened that have you know subsequently been picked up so it became you know a sort of focus of media attention for a period of time but fundamentally and you know subsequently they've also been sort of reviews, recent reviews of MPs pay and so on and what it got me thinking is you know the link between how much we pay our politicians you know and they're not the actual sort of salary for a basic MP is just under 82,000 pounds which is you know well above the kind of national median salary but it's not comparable to you know leadership positions in the private sector and it got me thinking well what's the right amount to pay a politician to ensure that they don't have to go elsewhere to meet their ambitions in terms of you know remuneration and for it to be

Speaker A: 00:03:24

more or less in line with what one would expect of someone in that sort of position within a

Speaker B: 00:03:30

yeah that's that's that's right but but would basically would you get better politicians would you get less you know I wouldn't say corruption but would you get less vested interests and ambiguity about where people's interests lie if you paid more money so that that is what I was essentially thinking what's the right amount to pay a politician you know given their roles and responsibilities to make sure you attract the right people but also to make sure that they don't spend all their time getting money from elsewhere yep good nicely

Speaker C: 00:04:11

UK weren't paid at all until: 1911

Speaker B: 00:06:15

head of state not not Prime Minister well obviously that includes monarchs right

Speaker C: 00:06:21

years I mean in in uh: 2019

Speaker A: 00:09:29

so sorry to interrupt feel similar to the issue more recent of paid internships versus free internships right yeah for the same reasons because when it was when it was unpaid internships exactly it's all you just get a load of you know middle class kids whose parents look after them so I

Speaker C: 00:09:44

think the I think the answer has to be more than zero although it's not as if the 19th century didn't produce some political giants I mean we did have you know Benjamin Disraeli and uh and uh Gladstone and um Pitt the Younger uh when we weren't paying them you know contrast that with the Matt Hancock's and Alistair Darling's and Boris Johnson's of today you know is that an improvement to discuss but the the point is that you know clearly um if we want MPs maybe you want our all our MPs to be uh you know Eaton, Harrow, Oxbridge but if we don't then we have to pay them something and and then it gets more complicated yeah Chris anything to add at this point well

Speaker B: 00:10:25

only in as much as within our system you know there there are particular positions so you know an MP represents their constituency and and uh you know um carries on in in parliament but government ministers or um certain positions uh within um parliament like Speaker of the House and so on uh you know that they carry additional uh money so the Prime Minister on top of his MP salary gets an extra um 80,000 effectively to you know taking up to 160,000 uh but the um but if you're a chair on a select committee uh you get an extra 16,000 you know if you're Speaker of the House you get an extra uh 75,000 ish so you're almost as well paid as the Prime Minister for being Speaker of the House um and so on and so forth and you know cabinet ministers um if you are uh you'd get an extra 70,000 and you know and then it trickles down in terms of government responsibility so there are sort of legitimate uh ways within the political system of earning more more money so you know if you're just an MP I say just an MP um you know um that's obviously a responsible position but if you if you don't have other responsibilities beyond that you have a certain salary and then rightly so I think you know if you uh carry additional governmental responsibilities you you um accrue uh uh more money but um but I think and you know that in itself can also be an intro you know that that um attribute the the accumulation of additional money can itself also be an incentive for you know um aspiring to government positions and I I know you know um having worked in private offices previously I know that um you know some some ministers kind of needed to have those positions um to in order to support their you know their outgoings things like school fees and and so on and so forth. So that their privately educated kids could be MPs of the future.

Speaker A: 00:12:38

Yeah I've known it I've known the opposite as well as a being a minister as a disincentive for for because although you get more money you won't get as much money as if you're um advising.

Speaker B: 00:12:50

If you're Jeffrey Cox for example uh who was uh I think over the last year as a as a you know a highly paid lawyer um advocating on behalf of um various um various clients including foreign governments uh but has earned nearly a million pounds doing doing that while being by while being an MP. So so yeah they're they're um that's right being and that's subsequent to his cabinet position which uh obviously got in the way of him earning all that money so yes that's

Speaker C: 00:13:21

right. Look let's cut to the chase let's stop just just a couple of it might just be worth pointing out MPs do work quite long hours right yeah even the the annual salary is probably you know once you once you take into account they're probably working 50 percent longer hours at least you know than the average median worker it probably works out they're really not that highly paid at all it's probably something like sort of 50 or 60 percent higher than the median salary per hour. Sorry I just want to pick up something Chris said though just it's about this question of motivation of are I think and I think Chris is talking about motivation once you're already an MP like obviously do you know a bit of extra money is you're not going to turn it down but I don't I mean just from what I can see it's from some survey evidence and admittedly we're just talking about MPs themselves but also from my own intuition and experience is I don't really think politicians are motivated by money. Now obviously that's not going to be true in every case but I think in general politicians want to do what they want to do for for two things one is probably causes there's the sort of core side of it the substance what you actually want to do you believe you want to make the world a better place but also you know desire for power and I suspect they're a much bigger draw than the cash side of things I mean anyone who's motivated by money is never going to be a politician I mean they're going to be doing something else they're going to be trying to be an entrepreneur or something so I'm not sure I mean I think what I'm saying is that you know we're not anywhere near the level of pay for politicians where we need to worry that people are going into politics for the cash. So if that was a concern that's a concern about a level

Speaker B: 00:15:07

of salary substantially higher than where we are now. Yes and would that necessarily be a concern you know because sort of let's say do you want people who are going into politics for the accumulation of power you know I mean maybe you'd I mean that's you know maybe you do right you want people who are who want to make a difference and you know have effect on the world but equally well I'll ask you this question do you know anybody who wants to be an MP and it's particularly like young people if you sort of you know think when you know graduates are coming to the end of their I've come across one or two people I've known who've wanted to be MPs and they've always been pretty extreme personalities whereas I've known lots of people who've wanted to go into I don't know let's say investment banking right they don't they're not interested in investment banking but you know and these are some of the best kind of people you know most highly qualified most talented people that I know and they're going there purely for the money but that industry is attracting people like that so is it would it necessarily you know if people if you're like oh well these people are only going into politics for the money

Speaker C: 00:16:26

would that necessarily be a bad thing yes I mean this is the thing because you know somehow it seems like it's okay if you're motivated by power it's like okay well that's we expect that of politicians but should we like as you say I mean that is I think the this was Plato's solution wasn't it was you basically get forced to to be a politician you know there's a kind of rotation that you it's your turn this year because the assumption being that anyone who actually wanted to be a politician would be bad at it but for that reason because they'd be motivated by the desire to be powerful and I feel like we can't answer this question I've got a few ways of thinking about it but we can't answer this question unless we decide what we want our politicians to be there for um a couple of basic economic observations though is that um you uh there is no shortage it's not like nurses or something where like oh we're worried about there's a shortage of them so we need to pay them more we're not struggling to find no the opposite of them either there aren't that many but there are still way more than we need I mean there's got to be at least five candidates for every every seat and and so you know that tells you that the supply of willing people who want to be politicians outstrips demand by at least a factor of five and probably

Speaker A: 00:17:40

substantially higher that's without even talking about nomination from within the party right yeah

Speaker C: 00:17:44

and if you dropped um the pay to zero I suspect you would still find that so we whatever this is about it is not about a demand for numbers of people it's not there is no shortage of people willing to do it this is must be about the kinds of people that we're going to get right I think the idea being that the more the the more you ratchet up the salary the bigger the range of people you're going to attract right you're not going to turn people away by paying people right you're not you're not at zero you're going to get all right you're going to get wealthy people but primarily you know you're not going to get people whose salaries are higher outside and that includes all kinds of people like teachers and lawyers and you know street sweepers so at zero there'll be an over supply but it'll be a very select group of people as you raise that that pay up and up and up you know you're sucking in more potential people who might think about it you know but so I suppose what I mean is you're not going to get a CEO leaving his job to become an MP if he's on 10 million pounds a year right that just isn't going to happen but if we paid them 10 million pounds a year maybe we would so so the point is that the higher you set that that salary the bigger the pool of potential people we have and and the question is how big do we want that pool to be who do we want to exclude and and if this is the only lever we have we're basically saying what's the what's the sort of minimum level of income of people that we want to exclude because that's what we'll be doing you know eighty thousand pounds you've already got that you've already got people who are whose alternatives are teaching or social work right you've already got those if you're paying them eighty thousand pounds a year the question is do we want people who are currently paid even more than that do we want to get more senior level executives into into parliament you know do we want to get CEOs do we want to get you know big shot lawyers and footballers that that's that's the question we're asking now what's the answer yeah look should we actually try and have

Speaker A: 00:19:50

a crack at this do we want to what do we i mean do we just want to talk about this theoretically

Speaker B: 00:19:54

or do we want to we could we could potentially conclude with what we think the the right amount to pay MPs is but um and come up with an actual figure but i think i think there's more theoretical space to sort of to sort of go in because um well the other the other side of the coin so Nick's talking about attracting people in and you know i'm sort of more focused i suppose on once you've got people in what does their salary do to their behavior because i think most of the cases of um of corruption uh or or you know what might be classified as as corruption within government don't come from brand new MPs they usually come from MPs getting towards the end of of their time where they're taking you know their their sort of place for for granted so you know they're obviously still working out exactly what happened with Owen Patterson but but taking him as an example you know he's not a brand new MP and in fact you know they talked a lot about um within the Conservative Party itself this big division between the new influx of MPs from northern constituencies and different backgrounds for whom 82 000 pounds was i mean they phrased it in the there was some quote from a unnamed MP saying you know for them it's all the money in the world and you've got this um you know these shire Tories from from southern uh rural um constituencies for for whom it's nowhere near enough money you know and so they're having to to um so you had this tension between people saying don't be so greedy you're going to lose us our seats and these people saying well we've got to do this because you know we've got school fees to pay or or whatever it is so i'm sort of more focused on when you've got you know when you've got them in place are are you um so they might have been attracted by the power but somebody basically somebody who's been a minister and is coming down back down through their career and is a backbencher somewhere those are the ones you want to worry about i think they're the you know the corruption danger and at that point you know the question is would giving them more money uh reduce the the risk of of corruption assuming corruption something you want to avoid right

Speaker A: 00:22:19

and also something you alluded to there a little bit chris is the other thing we've not really discussed is what's so let's say we all agree everyone we we work out formula and we all discover that actually the best amount of pay that every MP should receive is 1.2 million pounds a year right that's what's that's yeah and then suddenly you've got to present that to the electorate yeah um so there's you know what's politically acceptable as well which is always

Speaker B: 00:22:45

the stumbling block which is why MPs pay is very difficult to um to increase and when they when they rejigged it all i don't know about a decade or so ago when they had the expenses scandal they basically took expenses away and gave more salary and it went up like 10 or 11 percent or something but actually in real terms they they probably lost money um but there was you know that caused kind of public public outcry um yeah but what one of the things i looked at i'm not i'm not sure how um uh insightful or illustrative it was but i i sort of had a look at um the the national corruption index right uh for for different countries and i looked at the pay um of uh heads of states of governments um as expressed as a a percentage of um gdp per capita okay um and uh just looked at the relationship between it and it was actually i i it was actually quite weak um but the relationship that there was essentially showed that um in countries where you're paying more money to the head of state there is more corruption right so but but of course there you're looking at which way around is the relationship going right are you in a country that's that's got more corruption and therefore you can trouser more money because you know that's the way things things go yeah um so so you know i think it's actually difficult to get an insight into whether or not paying more leads to less less but presumably that's meant to be their salary right yeah yeah so yeah and and plus or whatever else

Speaker C: 00:24:30

they're getting well that's yeah i mean so there's i think there's two there's a tension here uh between you know corruption different places i'd say sort of ad officium versus in officio which is that you know if you're if you pay them loads then you know once they're there there's less i mean they'll let's say they'll need money less i mean that's very contentious the idea that you suddenly stop needing money above a certain amount but let's just assume that's part of it that they you know they're less motivated to be corrupt because you know that money is worth a bit less to them but also mainly because they're you know especially in britain where we've got pretty hardcore about corruption um that you're very likely to lose your office so you know if you um that then provides quite a big incentive to stay on the level right if you're getting huge amounts of money and you stand to lose it by being caught then that's a good deterrence but of course the more money you pay people in office the more incentive there is to corruptly find your way there um you know and and and you then start thinking well you know if you were going to get paid 10 million pounds a year as an MP yeah vote rigging suddenly becomes it's suddenly much much more uh worthwhile to try and pay people to vote for you and all those kinds of things so yeah i i mean you know the the idea of well let's pay them absolutely let's just pay them loads and and you know it's not going to cost the exchequer very much even that if that number is really high um because there's only 650 of them you know so let's let's just crank that pay right up well then i think you will get you would start to see you know all of these problems about people trying you know using underhand corrupt methods to get into power um but yeah as you say i don't think the evidence suggests there's really a strong correlation between the wages of MPs and corruption and you know italy dare i say which has one of the some of the highest paid uh MPs in europe uh and is not does not have a reputation for you know being famously uncorrupt so um yeah the guy i think corruption is one of those things which feels like it's important but actually is not very much evidence that it really makes that much of a difference so so i think it does come down you know the question is come does come down to well how much you know how much do we want to

Speaker A: 00:26:39

yeah what who do we want in parliament yeah yeah but but also yeah the issue of corruption and maybe this is what you were saying as well it just ties into so much other stuff to do with you know

Speaker B: 00:26:48

cultural norms history etc etc yeah and i i yeah well i feel i feel like um at the moment what you've what you've got is a situation where um you know a lot of uh a lot of MPs um particularly in the conservative party um have not not a lot but a significant number um and certainly in previous governments have made their money already right so so they they are the you know they are the equivalent of you know in years gone by the sort of landed gentry who turn up and do that it's not quite that's not quite fair but um but effectively they're not this their income as an MP is is not important uh as important to them um and you get you know people coming quite a lot of um cabinet ministers at the moment you know with backgrounds in um finance you know for for example uh where you know they they have made that transfer so so even you know they might have had a much higher salary elsewhere but effectively the fact that they had that for a number of years uh and the fact that they've got that background now they've come into this position you know they they know whether they're calculating this or not they have the the reassurance that in uh you know 10 years time when their political career might have finished and they've you know retired from parliament they can go back into that world presumably and earn substantially more because they were chancellor of the exchequer so you know there's a there's a hidden value of being um of of being a politician uh that affects future future earnings potentially for those younger ones for the older ones they're not worried they've got their money and they've they've come out but what i think you're missing with with 80 000 is you're missing sort of people who are on the way up you know who've got big aspirations um and don't want to sacrifice uh their earning potential by you know by spending 20 years in in parliament effectively so so i think there's a tranche of sort of um people who aren't in the public sector already you know and perhaps you know um working in uh teaching and and so on um but who are you know ambitious maybe the kind of people you would want in parliament but you're missing them out because all they see is high levels of hassle with low levels not low levels of pay but not not high level commensurate high

Speaker A: 00:29:22

levels of pay um and also one thing we've not talked about i mean this exists everywhere but is the issue of job insecurity as well uh we haven't talked about that um look we need to sort of move move towards finishing um i was hoping we would get on to lobbying a little bit i wanted to talk about lobbying in in the uk versus the us for example but i don't feel we've got time to discuss that properly um to finish off i mean do we want to answer this question i mean do you think it's the system is is as good as it is now is that is that fine that works or i mean first of all this question should we pay them more or not or less um second is this issue what do we think about outside interests um invested in so let's talk or even put a figure on some of this stuff so did you say it's 82 grand a year that's like your your bog standard mp that's what they get at the moment is that the right amount and so one is that the right amount should it be different and if so what and two should we allow um lobbying or pay you know paid for

Speaker B: 00:30:22

second jobbing do we allow second jobs uh chris well as i as i think i've indicated i i think we're we're probably not in the right place at the moment um i mean it's sort of basically what you're what you're talking about is um you know medium pay in london for example which is obviously where the mps are are based uh is um or salary is is about 40 000 and this is about twice that and i feel like being an mp uh is more than twice the level of responsibility and difficulty of of a an average job um and so so i feel like it's not it's not the right amount um and i've i've heard lots and lots of people say and you know um you can sort of talk about uh um privilege but i've heard a lot a lot of people say uh when when discussed i'd never be an mp because why why would i do all of why would i take all of that potential hassle for that amount of money so so i think in a lot of people's you know minds they're sort of thinking there are a lot easier ways to earn eight eighty two thousand pounds even though that's a a very you know respectable salary if you wanted that money there are a lot easier ways to do that and um so yeah how much would you pay them uh well i i think you sort of want to be um i think you want to be really um put setting people into the top percentages of of um of earnings so i would say an mp salary um would be you know whatever the let's say the the top fifth percentile of sales you know something like 180 or 200 000 pounds um would would be a good amount to incentivize people getting in there without setting it so high that people are then going to be buying off the vote you know it's not giving you enough money to make it worth vote rigging and second jobbing uh i think if you're paying people that money you can then justifiably say you know you're contracted to to do this in this say you know and that any second jobbing that i mean if people write a newspaper article and they get paid you know 200 pounds to write their newspaper article i i sort of feel like that's that's okay so you know there'd probably be a threshold of because i don't think there are any rules there aren't any rules about how much time you can spend and how much money you can earn from um from outside interest so i feel like you would set some sort of bar that says you know you can do things up to say 10 000 pounds or something and also setting a time limit

Speaker A: 00:33:18

as well okay okay that's clear nick okay here's my system

Speaker C: 00:33:25

new first time mps get paid a hundred thousand quid a year yeah yeah every subsequent re-election that you get in you get an extra hundred thousand oh wow and and so you know if you were there for say 40 years you might be on a million quid uh if you're the father of the house now well the point here is that you is that it it solves some of the problems we've talked about like let's assume 100 000 pounds is the right amount to attract people but um it then uh it means that there's the same incentive for corruption every time you're standing for election because you're always standing to get an extra hundred thousand pounds a year um and it also solves this problem of sort of the later stages of someone's career um you know suddenly needing a top up because you're getting the top up through your salary and it also means it becomes a viable career for those uh you know for people early on who might think well okay a hundred thousand pounds is quite a lot of money but it won't seem like a lot of money in you know 30 years time but it but actually in 30 years time it'll be closer to a million um so i there you go that's that's my proposition i think it's a disastrous idea it's a brilliant idea what

Speaker A: 00:34:34

because some seats will be way more valuable than others why um because some seats are safer than um so if you're a tory mp sorry if you're an mp or the or or the constituency of uh south kensington or whatever or chelsea then that's going to be a really valuable seat because no because it's

Speaker C: 00:34:52

no different to now is it like that's true now and and there's no shortage yeah but you're standing

Speaker A: 00:34:57

at standing for no unheard of if you're in a margin but you're getting rewarded for you're

Speaker B: 00:35:02

not necessarily if you're in a marginal you're you're you're gonna have to work much harder for your hundred thousand each time than somebody who's sat in a safe safe seat somewhere who knows right from the beginning wait a minute if i land this gig you know set for life yeah i'm set for

Speaker C: 00:35:19

bear in mind that then you're not necessarily i mean mps do get shunted around don't they so

Speaker A: 00:35:23

they're not they're that's still a thing i think i think with a bit of creativity your idea could work though nick so what you could do for example yeah you could have is you can have if we so first of all we just define what safe safe seats are now i know there are issues around i think you're over complicating it no no no no you're going to like this um so you define what safe seat is but percentage majority at the last election or something so you boom that's done and then what you do if you actually are in a safe seat and you want to continue in that safe seat you have to do something like a russian roulette test um at the end for every election okay and so you can be in that seat but each time yeah you have to or something similar well a better

Speaker C: 00:36:03

more economic way of doing it would be to auction those seats off so you know that mps effectively auction bid for using their salary and future salary they bid for being having the right to stand uh at certain seats so you know a safe seat would you get paid less

Speaker B: 00:36:22

yes trading going on this as well i think so yeah i think my system has the virtue of simplicity

Speaker A: 00:36:29

yeah it doesn't sound it sounds less simple than the system we've got now well it is but it's

Speaker C: 00:36:35

better because it solves some of the problems we've talked about i mean if you if you think the system we've got now is perfect and yeah i don't what i'm saying is thinking about the level of salary i think misses the point you know it's actually we've got to be thinking about um the incentives in office and this is incentives coming to office and the kinds of people you attract they're not attracted by level of salary it's just not how it works you know people are attracted to the idea of some kind of career career progression which this sort of reflects plus the fact that actually you know a 20 an mp who's been there for 20 years is

Speaker A: 00:37:07

likely to be just a better mp um but it's not i mean just say that mps or people who go into politics not interested in money they're interested in power and doing good it's not devoid it's not completely detached from uh issues around money though is it because otherwise we wouldn't have some of the issues that we've been having where people you know yeah there's always

Speaker C: 00:37:27

going to be corrupt scumbags i don't think yeah i think i think it's when their power comes to an

Speaker B: 00:37:32

end that's when they're now they're sat there pretty impotent as a as a back a backbench mp who's never going to have another cabinet position you know and he's on on the margins and that's when they're looking to feather their nest other other ways i think yeah um

Speaker A: 00:37:49

i mean i mean i say this with hesitation because you guys will have known far more politicians than me but um i've known a few politicians like established politicians they've always seen quite you know okay people to me i've only ever known one or two people who were aspiring politicians and certainly one of them who was at school was just an utter scumbag um and and just and actually quite a nothingy kind of person and um and thankfully he didn't you know he was not elected um but he does seem to run a very successful company but yeah um i think we're out of time it's been quite long um i've got no question i want to ask um i mean i was thinking about asking if you thought about being an mp or something like that but i don't know yeah no i wouldn't i just i think i would hate it chris would you hate it

Speaker B: 00:38:38

yeah i think it would be one of the worst jobs you could do

Speaker A: 00:38:42

yeah i think i agree okay we'll stop there uh thank you as always for listening to the Cognitive Engineering Podcast i'm Fraser McGruer we've been here with Chris Wragg and Nick Hare of Aleph Insights thanks as always until next time goodbye