Holyrood Property Ladder

Part I

GRAND DESIGNS

Kenneth Roy on an MSPs' allowance which
makes a profit – at the taxpayer's expense

At the height of the expenses scandal, on or around the day of the speaker's resignation, Scotland's first minister gave several television interviews in which he lamented the allowances system which had brought the House of Commons into disrepute and recommended that, while the necessary review took its course, Westminster should adopt the Scottish Parliament's model. (Yesterday he returned to the theme, suggesting in a speech to the General Assembly of the Church of Scotland that the Scottish system could be an example 'for others to follow'). Mr Salmond's proposal, delivered in an ever so slightly smug manner, was more or less tantamount to an invitation to any inquiring journalist to have a close look at MSPs' expenses.     
     Mr Salmond and others have made much of the 'transparency' of the system. We have been assured that it is the most transparent of its kind in the world. That may be true. As I have been discovering, it is possible to check each expenses claim on the parliament's website. However, the amount of raw data is truly staggering. You would have to be an obsessively inquiring journalist, with unlimited time at your disposal and a generous allowance, to analyse and compare the vast quantity of information. There is a logistical problem too – after you have been on the site for a while, it starts to tell you every 15 minutes or so that your time is up and you are returned to the starting block. The frustration of the diligent researcher may be imagined. In the end I decided to be environmentally unfriendly and spewed the pages – a tiny proportion of what is available – out of a printer.
     So much for transparency. What of the results?

I will start with some pertinent context from recent history. On 29 March 2007, before he stepped down as presiding officer of the parliament and as an MSP, George Reid made a farewell pronouncement. It was not much noted at the time, but in the light of subsequent events Mr Reid's statement has the ring of prophecy. He was highly critical of the expenses system at Holyrood and called for its radical overhaul. In particular he condemned the accommodation allowance which entitled MSPs living some distance from the capital to buy private property in Edinburgh, claim for mortgage interest and related costs at the taxpayer's expense, and then sell the property at a profit to themselves.
     Mr Reid said that, although he had been one of the MSPs eligible for this allowance, he had never taken advantage of it, preferring to stay in a hotel at a saving to the public purse because, as he put it, 'in politics, perception is everything'. With every hour that passes, Mr Reid is proved correct. But at the time there was perhaps a feeling that the retiring presiding officer was being a little prudish and self-righteous. The media reported his statement pretty straight and at no great length, no parallel was drawn with the then unchallenged Westminster system, and several MSPs defended the allowance, the Labour lawyer Gordon Jackson disputing the assertion that it was cheaper for MSPs to stay in hotels. Mr Jackson insisted on the contrary that hotels were more expensive. No one bothered to find out whether this was true or false. We did not live in a climate in which the expenses of parliamentarians, in Scotland or London, were daily scrutinised. A certain complacency prevailed.
     Nevertheless, you might have expected the presiding officer's admonition to have had some impact on those members or prospective members – we were close to an election – who had bought flats in Edinburgh, or were thinking about buying flats in Edinburgh, leaving the taxpayer to foot a substantial part of the bill. It was for this reason that I chose the financial year 2007-08, and the Edinburgh accommodation allowance, as my initial narrow focus. In May of that year, Labour was swept from office – although swept may be too grand a word for the result – and the SNP formed a minority government. A historic moment. But it seems that, in the matter of MSPs' expenses, nothing much changed.
     By the greatest irony, indeed, a new presiding officer was appointed and Mr Reid's successor turned out to be an Ayrshire farmer, Alex Fergusson, who himself, in the first year of the SNP administration, claimed mortgage interest of £8,111.38 on a property in Edinburgh. He was fully entitled to do so. He acted with complete propriety within the rules. Perhaps – who knows? – Mr Fergusson did not share his predecessor's distaste for the system or the public perception, in so far as the public had a perception.
     In the same year, a new member, Nigel Don of the Scottish National Party, whose constituency office was situated in Dundee, having spent £3,281.85 on hotel bills in the pursuit of his parliamentary duties, evidently decided to acquire a property in Edinburgh. He charged to the taxpayer £3,479 in legal fees, £1,057 in conveyancing fees, and £223.25 in survey fees. He then billed the taxpayer £329 for the costs of removal, his goods being transported by the Shore Porters Society. I know such detail because the transparent system tells me so, just as it tells me that Mr Don charged 65p for the cost of a newspaper. By the end of the financial year, his monthly mortgage interest was also being paid by the state. All this was – and remains – in order.
     Meanwhile, the leader of the Scottish Liberal Democrats (as he now is, but then wasn't), Tavish Scott, was billing £950 a month in mortgage interest on his Edinburgh property. The total charged – £11,400 – was the joint highest of that year, but only by three pence, for coming up the rear was none other than the cabinet secretary for finance, John Swinney, with his Edinburgh accommodation allowance of £11,399.97.
     In both cases, it could have been very much worse. Mr Scott charged mortgage interest only, while Mr Swinney added a council tax bill of £1,918.56. But there were other items of household expenditure for which they could legitimately have billed the public, but chose not to do so. For example, if I were to ask you what Andy Kerr (Labour: East Kilbride), Murdo Fraser (Conservative: Mid Scotland and Fife), Linda Fabiani (SNP: Central Scotland), Fergus Ewing (SNP: Inverness East, Nairn and Lochaber), Stewart Maxwell (SNP: West of Scotland), John Scott (Conservative: Ayr), Hugh Henry (Labour: Paisley South), Alex Neil (SNP: Central Scotland), Rob Gibson (SNP: Highlands and Islands), Jamie Stone (Liberal Democrat: Caithness, Sutherland and Easter Ross), Adam Ingram (SNP: South of Scotland), Ross Finnie (Liberal Democrat: West of Scotland), Brian Adam (SNP: Aberdeen North) and Mary Scanlon (Conservative: Highlands and Islands) had in common – I suspect that you might well be stumped for an answer. Setting aside their political differences, they are bound together in a footnote of history by one remarkable fact. In the Scottish parliamentary financial year 2007-08, each of them charged the taxpayer £135.50 for a TV licence. What's more, they were within the rules to do so.
     Between April 2007 and March 2008, 30 MSPs claimed mortgage interest as part or the whole of their claim for the Edinburgh accommodation allowance. The 30 included not only the cabinet secretary for finance, but the present convener and deputy convener of the parliament's finance committee and the present convener and deputy convener of the public audit committee. They also included, as I have said, the present presiding officer and the current leader of the Scottish Liberal Democrats as well as a former deputy first minister and several other ministers, present and past. The political composition is as follows: no party affiliation (the presiding officer), 1; Conservative, 4; Liberal Democrat, 5; Labour, 8; SNP, 12.

Do you disapprove of any of this? As I have repeatedly stated, none of the 30 did anything wrong. All acted within the rules. But, in 14 cases out of the 30, even if for some reason you did disapprove, you would have no opportunity to demonstrate your disapproval in the only way that matters. You would be debarred by the undemocratic system of election in Scotland from voting them out. These 14 are 'List' members, beneficiaries of Scotland's flawed scheme of proportional representation. They are there on a party slate: put there by the party, kept there by the party. So even if you dislike anything they have done, only the party has the power to remove them. In that vital respect, the Scottish electorate is at a profound disadvantage. The ultimate sanction of electors in England and Wales is rejection of individual named candidates at the ballot box. In Scotland, we must depend on the party to do that job for us. Do we trust the party? Should we trust the party?
     Last week, and again yesterday, Alex Salmond invited Westminster to adopt the Scottish model. Yet it would be difficult to look at the Scottish Review's in-depth analysis without concluding that the Scottish model is as intrinsically flawed as the Westminster one. There are, however, two distinctive factors in Scotland's favour. First, the system in Scotland has not been criminally abused; and for that, we must thank transparency, for all its defects. Second, the accommodation allowance is coming to an end. In 2011, it will no longer be possible for MSPs to claim mortgage interest against the public purse. We can expect a number of properties in Edinburgh to come on the market in the spring of that year. What happens then? It is a reasonable assumption that many of the properties in question – largely paid for by us – will have increased in value and that capital gains will be an issue; it is more than possible that by the spring of 2011, with the recession over, the house market may have entered another of its cyclical booms. Will any of those who benefit from the sale of their property feel a moral responsibility to the people of Scotland to repay part of the profit – or, at the very least, return the fees we have incurred on their behalf for the services of lawyers and surveyors?
     Finally, it is worth re-visiting the prophetic words of George Reid in March 2007. He said that the Holyrood allowances system had been imported 'lock, stock and barrel' from Westminster. It is extraordinary that two years and two months later, the first minister, a fellow nationalist, should be so keen to export this discredited system – lock, stock and barrel, so to speak – back to London.
     In a later edition, I will examine the claim that it would have been more expensive for the 30 property owners to stay in hotels. That is an important question, since it is where we are inevitably leading once the present system is belatedly dismantled.

[click here] for an in-depth analysis of the 30 claimants