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Britain’s business secretary has called for MPs’ pay to be directly linked to GDP, to incentivise Westminster into prioritising economic growth.
Peter Kyle suggested a change in remit for the Independent Parliamentary Standards Authority — the body that oversees MPs’ salaries — as he called for more government departments to focus on boosting growth.
He told the FT: “I would really love for IPSA to peg MPs and ministerial pay to our growth rates as a country, as opposed to what it is at the moment, which is a slightly byzantine formula. I’m serious. I would love them to.”
Asked whether Labour MPs would appreciate the suggestion, Kyle said: “They’re not as enthusiastic as I am but . . . if we get the economy growing at, for example, 5 per cent we would be fulfilling our potential.”
Businesses have often expressed frustration over the years at local MPs trying to block or modify potentially growth-boosting projects, from housing developments to energy and transport infrastructure.
At present the salary of MPs, which is currently £93,904 a year, rises in line with various metrics including changes to average earnings in the public sector.
Kyle complained about a lack of focus on growth inside government departments. “Sometimes, I’m not always convinced [growth] is the number one mission of every government department . . . I’ve not had the impression it is the number one target of our body politic.”
Darren Jones, Cabinet Office secretary, set out plans this week to introduce higher bonuses for high-performing civil servants, as well as making it easier to sack those who fail to deliver.
James Meadway, a former Labour economics adviser, questioned the wisdom of Kyle’s suggestion on MPs’ pay.
“This is a daft gimmick that might flatter some MPs’ self importance but the hard truth is little they do has much direct impact on GDP,” said Meadway.
“And mostly it shouldn’t — government is about more than just economic growth. Sometimes, like lockdowns or Brexit, it may even be about measures that reduce growth. It’s hard to take the suggestion seriously.”
But Chris Curtis, co-chair of the Labour Growth Group caucus of MPs, welcomed the move: “It’s the right thing to restore trust in politics for the public to see MPs linking their pay to the improvements in the economy we are aiming to deliver.”
Dame Harriett Baldwin, shadow business minister, said: “Rather than opining on things he can’t control, the business secretary should be applying pressure on the chancellor to come up with a plan to prevent her sharp hikes in business rates on retail and hospitality, which are causing unemployment, weak growth and business failures.”
Joanna Marchong, head of communications and external affairs at the Adam Smith Institute, said: “Linking MPs’ pay to GDP growth sounds appealing, but it’s largely wishful thinking.
“Labour’s newest line on prioritising growth is a mere step in the right direction . . . Britain desperately needs a genuinely pro-growth agenda, including lower taxes, lighter regulation and planning reform.
“Unless ministers tackle the structural barriers holding the economy back, tying their pay to GDP will change very little.”
The IPSA said the body carried out regular consultations with the public on how to set pay for MPs. “In general, any change to MPs’ pay is based on a number of metrics, including national and international statistics on pay and reward, our own principles and the wider economic context,” it added.