General election 2019: Defeated MPs set for £2m ‘golden goodbye’

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UK Parliament

MPs who lost their seats in last Thursday’s general election have begun clearing out their offices and handing back their Parliamentary passes.

But there is one consolation prize for those who have been defeated at the ballot box.

BBC research shows former MPs made redundant by voters at the general election – or those who stepped down just before it – will be entitled to more than £2m in taxpayers’ money.

Under Independent Parliamentary Standards Authority (IPSA) rules, 71 defeated MPs can claim a “loss of office payment” equal to double the existing statutory redundancy pay rate – taking into account years of service, weekly pay and age – for non-MPs.

Statutory redundancy pay – the legal minimum a company must pay to employees who have worked there for two years or more – is capped at £15,750 (£16,410 in Northern Ireland).

• What happens when you lose your job as an MP?
• MPs’ basic pay to increase to £79,468

Despite being rejected by the electorate, the longest-serving MPs, such as Frank Field, Dennis Skinner and Dominic Grieve, are entitled to a single payment of more than £31,000, of which £30,000 is tax free (redundancy pay for non-MPs is also tax free up to £30,000).

On top of this, MPs can also claim for an additional two months’ salary – around £8,400 according to IPSA – if they continue working to close down their office.

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It means 10 former members of Parliament could be awarded nearly £40,000 each, with the average amount defeated MPs eligible to claim totalling over £18,000.

Golden goodbye?

Ivan Lewis, former MP for Bury South, will be entitled to a £26,000 loss of office payment because he contested the seat during the 2019 general election. The former Labour minister, who quit the party in 2018 after being suspended by it, stood as an independent, but urged voters to support the Conservative candidate, Christian Wakeford, who defeated Labour’s Lucy Brake by just 402 votes (Mr Lewis got 1,366 votes and lost his £500 deposit).

Including Mr Lewis, 11 ex MPs who defected or were kicked out of the party they were originally elected under will be eligible for substantial loss of office payments.

Roger Godsiff, former MP for Birmingham Hall Green, was deselected as the Labour candidate ahead of the election so ran as an independent where he was defeated heavily; he’s owed £31,500.

Chris Williamson was elected in 2017 as a Labour MP but stood as an independent in Derby North this time receiving fewer than 5% of the vote and losing his £500 deposit. He is eligible for a loss of office payment of around £3,000.

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According to the IPSA rulebook, MPs are technically eligible for the loss of office payment providing they contest the same seat they held when Parliament closed and they have been an MP for more than two years. It is paid once the MP completes certain tasks such as submitting any expense claims.

Ineligible MPs

This criteria excludes former Labour MP for Peterborough Lisa Forbes and ex Liberal Democrat MP for Brecon and Radnorshire Jane Dodds who were elected for 2019 in by-elections before losing their seats.

Also ineligible were MPs who defected to the Lib Dems, such as former Tory ministers Sam Gyimah and Phillip Lee, and former Labour MPs Luciana Berger, Angela Smith and Chuka Umunna because they attempted, unsuccessfully, to win different seats to the ones for which they were originally elected.

Before the election, BuzzFeed reported that Angela Smith had written to IPSA to express her “horror” at not being eligible for her £22,000 loss of office pay if she did not win in Altrincham and Sale West, the constituency she contested for the Lib Dems (she came third with 11% of the vote).

MPs who decide to stand down cannot claim for the loss of office payment but are entitled to a winding-up payment equal to two months’ salary after tax.

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MPs currently earn £79,468 a year, which will rise with inflation in April and there are 76 ex MPs who stood down before the 2019 general election.

Not included in the figures is the £53,950 (£57,150 for MPs in London) winding-up budget available to MPs because this covers staff salary and pension contributions as well as practical costs such as furniture removal from offices.

Rent on any second home during the two months MPs continue to work, as well as staff redundancy payments, is covered by a separate pot policed by IPSA.

The new rules were brought in after the 2015 election replacing a system where defeated MPs earned one month salary for each year of service with no payment exceeding more than the equivalent of six months’ salary. Overall, the changes reduced the amount given to MPs after leaving office.

What about pensions?

Most MPs will qualify for a pension but how much they receive depends on a number of factors including their age, the contributions they have made and how many years they were in office. Former ministers get a more generous pension than backbenchers.

Their pension are now calculated on a career-average, rather than their final salary at retirement, in line with other public sector workers, although very few MPs spend their entire working lives in Parliament.

MPs, and former MPs, have to wait until they are pension age before they can receive their pension. The main groups of MPs who might not get a pension are those who had opted out of the MPs’ pension scheme or MPs with fewer than two years’ service who choose to “cash in” their pension contributions.

Fixed-term contracts?

During a Parliamentary inquiry into MPs’ expenses in 2016 it was suggested they serve under the equivalent of a fixed-term contract so should not be entitled to redundancy payments but overall the committee agreed with the premise of a loss of office payment to avoid MPs experiencing financial hardship.

The Electoral Reform Society, whilst supportive of MPs’ right receive remuneration if they lose their job, are sceptical about the amounts received.

“At a time when distrust in politics is running high, it seems odd that defeated MPs can get double the maximum redundancy available to ordinary voters. There are many reasons people feel disenchanted, including a feeling of ‘one rule for us, another for them,'” said Senior Director Willie Sullivan.

An IPSA spokesperson said: “”An incumbent MP who was a candidate for re-election in the same seat is eligible to receive a Winding-up Payment of two month’s salary and Loss of Office Payment equal to twice their statutory redundancy entitlement. The Loss of Office Payment will be paid to the MP once they have completed all business with IPSA.”