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Count it, don't follow it

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Stephanie Flanders | 16:44 UK time, Thursday, 14 May 2009

Economists have one simple idea to contribute to the MP expenses saga. You never know, it might change the way you think about the whole thing.

Houses of Parliament

The idea is this: money is fungible. Put simply, that means one £50 note is the same as any other. They all have the same value and they will all buy the same amount of stuff.

Put it even more simply, if you give someone £100 to buy a chair, you can't say for sure that he bought a chair with your money - even if he shows you the chair, and a receipt. All you can say for sure is that you made him £100 better off, and he has bought a new chair.

This might sound completely obvious. Or completely stupid. Maybe both. It depends on how much time you spend with economists (or lawyers). But this idea of fungibility gives someone with an economist's frame of mind a slightly different perspective on the revelations of the past week.

Voters are understandably angry at the thought that MPs might have been "playing the system" - and even more angry when they appear to have claimed taxpayers' money on false pretences.

But the focus, at least until recently, has mainly been on who claimed for what, and whether it was an "appropriate use of taxpayers' money" - the moats, the dog food, the fancy furniture.

You can see why those claims would catch the eye. I'm pretty fascinated by them too. But the less prurient, economist, side of my brain is less interested in the details of the MPs' claims than in how much they got.

If, like so many MPs, your MP has claimed the full amount - around £24,000 in the most recent year, then the point to note is that he or she has had £24,000 a year more to spend. Full stop.

The stories tend to focus on what the MPs say the money was spent on - and the receipts. But you might just as well ask what they did with the chunk of their salary that was no longer taken up with everyday bills - or how much of that money they would have spent, even if they weren't MPs.

Of course, all these questions overlap, and people have been interested all of them, even if the iffy expense details have grabbed the headlines.

For example, some have said it was unfair that MPs such as David Cameron have escaped criticism for claiming the maximum allowance each year, because their claims were almost entirely made up of mortgage interest and utility bills. Whereas other MPs, possibly with similar necessary expenses, have made much smaller claims, yet faced criticism for the details.

David Cameron could be spending his allowance on underground swimming pools and platinum cycle helmets. All we know is that he has utility bills and mortgage interest to pay of more than £20,000 a year.

Experts in overseas aid know the problem of old. When the World Bank or an official development agency gives money to a developing country it usually says it wants the money to go to particular priority areas - like women's education or primary healthcare. But, as they've learned to their cost, the recipient government often has other ideas.

"When you give $1bn to a developing country", a World Bank economist once said to me, "you may think you're giving $1bn to your pet project, but the reality is you're giving it to the president's."

Because money is fungible, the $1bn might appear to go into the education budget, but it frees up $1bn of domestic revenue that could just as easily turn into a new presidential jet.

On the basis of the past week, you might say the same about the expense allowance of some MPs.

It's a very old problem in development aid - and, over time, the likes of the World Bank have come up with ever more complex arrangements to solve it. They'll probably come up with an elaborate solution for MPs as well.

But you still have the basic problem that money is fungible. You never really know what people would have spent if the allowance didn't exist - or if they weren't, in fact, MPs. Though in the case of some of them, we may be about to find out.

Comments

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  • Comment number 1.

    So what you are saying is Douglas Hogg might not have had his moat cleaned out if the tax-payer wasn't going to pay for it? Like many other moats it would have been allowed to fill up with detritis,dead dogs and horses and the like!

  • Comment number 2.

    Steff, you have just depressed me more than ever. Mr or Mrs Average MP has got £24K burning a hole in their pocket.

    Your question which one of sex and drugs and rock n' roll did they spent the £24K on.

    Answer, giving we are dealing with Mr. or Mrs Average MP, is all three.

    I just can't wait to return to some good old fashion sex scandals.

  • Comment number 3.

    Also worth noting in the fungiblilty(is that a word?) argument is that this money is tax free - it is the equivalent of £30,000 at 20% tax and £40,000 at the 40% rate, so it is a lot more than it looks at first glance. Many people reading these expenses claims cannot envisage ever earning £40,000 P.A.

    That sort of amount would see most of us living quite contentedly, imagining a 60,000+ salary in ADDITION to this amount would see a lot of us queuing up to be an M.P. Late hours and a few nights away or not! Adding these two amounts together (before tax) giving 100,000 a year puts the M.P.s into the top 3-4% of earners in the country.

    That is where the outrage originates - a great number of M.P.s are simply out of touch with average pay, and the number of hours / amount of work needed to get it in mainstream society.

  • Comment number 4.

    Couldn't we just build a huge hall of residence for all the MPs, in some part of London needing regeneration. The MPs would then live there rent free. We could even run a special bus to collect them up and take them to Westminster each morning; kind of a school run.

    We'd have to build a brick wall to separate the political parties, as we wouldn't want any fighting in the dorms.
    They'd also need separate swimming pools, but I imagine each party would have fun trying to contaminate each other's pools......

    We could build it in Greenwich and then name it "Greenwich Village", to tie in with the "Westminster Village" we already have.

    We could have a big competition between prospective architects, with the Prince of Wales' champion up against one of those glass and steel post-modernist types with the unruly hair but interesting suit of clothes.....

  • Comment number 5.

    Interesting piece of sophestry, Stephanie. You'd make a great Jesuit if they ever let women in. The difference here is that the items were the justifier of the spending. If the MPs who cleaned their pool and bought spectacular TVs could have "done a Cameron" and laid it all on interest payments they would have. Instead they were able to buy anything posssible once it went down to "good faith". The problem for them is we taxpayers are not singing from the same hymnbook. We have to follow the cathechism of HMRC and they burn heretics for expense infringements. The Hon Members just didn't expect the Telegraph Inquisition and the laiety do enjoy a nice Auto da Fe.

  • Comment number 6.

    I propose MPs are given salaries equating to 5 times the national average income, and get rid of allowances altogether. Their pension scheme should be contributions based. This way, we all know what they are being paid, they are being paid a good wage for a senior job, and their income is dependent on what they do to the economy.

  • Comment number 7.

    For most people, expenses are an exception to the fungibility of money. When I was in a senior public sector role, I could if I chose travel first class by train, and did so when I needed space to work; but we were encouraged to travel second class where practical - to save public money - and commonly did so. No-one queried my judgment in relation to particular journeys. But if I'd travelled second and claimed for first, that would have been a sacking offence - even though the taxpayer would be no worse off than if I'd actually travelled first. We need a system for MPs such that the benefit pays only the marginal cost. Most obviously, no subsidising a potentially appreciating capital asset, i.e. pay only rent not mortgage interest.

  • Comment number 8.

    OPERANT ACTS

    Good article.

    It's a wider problem than economics and law, and it comes down to an innapropriate faith in rationality and what many in GOFAI mistakenly struggled with as the so-called 'Credit Assignment Problem' and 'Frame Problem'.

    Now we know better... don't we ;-)?

  • Comment number 9.

    'No exact matches for fungibility, but the following may be helpful.

    fungibles plural noun, Scots law perishable goods which may be estimated by weight, number and measure and which are consumed in use.
    ETYMOLOGY: 18c: from Latin fungi to perform'
    I do not think fungibility is a word. But you can not say the BBC does not educate the people of Great Britain
    Thanks

  • Comment number 10.

    Toad of Toad Hall, MP. Parp. Parp.

  • Comment number 11.

    HEARD THE NEWS:WHAT A STRANGE DAY!!

    IT'S TIME THE WHOLE LOT STOOD FOR SELECTION AS CANDIDATES & AN ELECTION

    TO FOLLOW VERY SOON.

  • Comment number 12.

    7 Ex-mandarin

    Well difficult to disagree, expenses are that expenses, not fun-ability, sorry, fungibility. I am curious though, do mandarins ever eat mandarin oranges.

  • Comment number 13.

    ONCE AGAIN NICK ROBINSON HAS CLOSED HIS BLOG TO COMMENTS!!

    WAS IT AN ORDER FROM GORDY NICK??

    ONE WONDERS HOW MANY MP'S WILL GO BANKRUPT OR INTO ARRANGEMENTS?

    A SPECIAL DEAL BY DEBT BUSTERS DIRECT OR WHATEVER?

  • Comment number 14.

    #4 MrTweedy,

    In Sweden they do! MPs are allocated an officila flat to use for the period that they are serving as MPs - not such a silly suggestion.

  • Comment number 15.

    9 grignard

    Perhaps gulibility is the word. Expenses should be unavoidable costs, ie no benefit to the claimant.

    As an aside - I presume that the taxpayer also has had to cover directly or indirectly the cost of the MPs trying to challenge the FOI release in court. Further with respect, is that really the right word I ask, but never mind, with respect to the grizzle on tv by some MP or Lord about how little they get in comparison to the tv presenter asking awkward questions - Funny thing is you applied for the job knowing the salary didnt you mate. If you don't like it get another job, with a bit of luck you may have to anyway.

  • Comment number 16.

    the economist side of my brain what an oxymoron ! Despite all the advances of modern science most of the 3rd World live in dire poverty and the West is flat broke all ably advised by economists brains ! Cavemen got to retire before 70 thats because they didnt use economists brains ! We have the technical capacity to be living the life on 3 day weeks all round but thanks to economists brains half of us dont get to see our children due to overwork and ... oh you know the rest (I recommend using NEFS instead of Economics then we can live the life). As for this money fungi I get a salary of £20K. Which I am free to spend on anything or nothing. I also occasionally get business expenses for business trips whatever my train fare is. If I put an expense in for a new hat I get sacked, If I find a 1st class ticket and I put this in instead of the 2nd class ticket I actually bought I go to Jail. Introducing the word Fungus into the debate and trying to make it technical in some sort of attempt to legitimise fraudulent expense claims just shows what bad training people get when they train to be economists.

  • Comment number 17.

    This seems to support the position that a block of housing should be bought within distance to Westminster - and that it should be state owned. They would then only be able to claim for travel expenses - as most ordinary people do, as their is no need for them to claim for food (they'd be buying it anyway!). The housing would then be loaned for nothing to the MP for the duration of his elected peroid, after which it would revert to the tax payer. If they chose to decorate their flat beyond basic furnishing, they could do so, but at their expense.

  • Comment number 18.

    16 GlenisD

    I am no supporter of the pseudo-science of economics either, but if that was meant to be satire you need to be a bit wittier than that, othwerwise you just come across as wilfully ignornant. No one mentioned fungus except you.

    There's not mush room (PARP!) for debate that this is wrong, Stephanie is just pointing out another and interesting perspective on it.

  • Comment number 19.

    "Put it even more simply, if you give someone £100 to buy a chair, you can't say for sure that he bought a chair with your money - even if he shows you the chair, and a receipt. All you can say for sure is that you made him £100 better off, and he has bought a new chair."

    If this is an analogy of what actually happens, then I would say that it is a stupid one.

    We do not GIVE politicians money; they coercively TAKE (steal) it from us. We have no choice because they make the laws. Therefore, how much and what they spend our stolen money on is not the point. What we should be more interested in, is why we are being robbed in the first place.

  • Comment number 20.

    This is really about attitude. The ruling class was living very well during the housing bubble and along with their financial industry buddies they felt entitled to the high-life. I mean if you are lunching with the bankers you need some expensive wine and posh meals, afterall you are representing the citizens. When you elect empty suits this is what you get. People get the government they deserve. Funny how people are up in arms about this while they seek no explaination for the trillion or so that disappeared last year. Maybe these are just numbers they can grasp and connect to a face and a name. We don't know who stole the real money.

  • Comment number 21.

    Some of the Honourable Members obviously enjoyed what they saw as extra tax-free income and enjoyed it to the full.

    Why doesn't one of the genuinely Honourable Members (one whose snout is not in the trough) do the decent thing and resign on principle thereby forcing a byelection, the issue can then be brought out into the open and fought over.
    A section of the electorate can make the decision and we can move on to fixing the economy (which if no-one noticed, is still broke)

    Or am I mistaken and the all of them have been fungibly occupied.

  • Comment number 22.

    Cannot normal labour market ecoonmics be usefully be applied to MPs' pay? Why not cut their pay until the number of candidates is reduced to a more sensible level.

    Oh, and by the way Steff, congratulations on making it into the current issue of Viz magazine!

  • Comment number 23.

    20 @ghostofsichuan
    You just stole my words, but better than I'd have put it.

    Also, this does bring home that the people who make our laws and decide our taxes have absolutely no idea about the true value of money, and the actual, real cost of living for many UK citizens. I bet all those thousands of poor workers on or just above the minimum wage would love to get bath plugs and dog tins on expenses, let alone have a moat to clear out.

  • Comment number 24.

    I'll make two points

    The first one will give a couple of examples to clarify what 'fungible' is.

    The second point will look at Steph's claim that it is the bottom line that counts and essentially it doesn't matter what the money is spent on - which it does of course.

    Ok, first point.

    Some 'things' are fungible which means they can be replaced by things which are of the same definition.

    For example, you stick a Fiver in the Bank today and tomorrow you go to the Bank and say 'Give me my fiver back'. The counter clark gives you a Fiver so you are happy.
    But you haven't got the same Fiver back, because money is fungible - it doesn't have to be the same fiver, just a bit of paper which looks the same as your original fiver and has the same characteristics and interchangebility. But it still isn't the same individual item as your original Fiver.
    And it doesn't matter because of the quality of fungibility of all Fivers.

    next example

    You borrow a bucket of water off your neighbour and put it in your water tank. Next day your neighbour comes round and says 'Give me my bucket of water back'.
    So you go to the water tank and dip your bucket in and collect a bucket of water and give it to your neighbour - who is happy.
    But you haven't given your neighbour the exact same molecules of water back - just a compensatory bucket of water which is the 'same' as the original bucket of water.

    Thus, water (and money) can be considered as fungible items in that they can be replaced by something answering the same definition.

    And 'Fungibility' means an item can serve in place of an original item, providing it is of the same thing as the original item.
    Electricity paid for in advance, Stocks in a Nominee Account, spot dollars are other examples.

    second point

    So whilst Steph talks about 'fungible' items - the money is fungible but what the spend is on, is not fungible, it is a fixed.

    And Steph didn't say the spend was fungible, but it might have been implied as if the 'spend item' doesn't matter but the 'spend quantity' is the sole consideration. Because (erroneously) money is an item that can be exchanged for anything so it doesn't matter what it is spent on.

    Which of course is incorrect in that items purporting to be 'wholly necessary and essential' might very well not be necessary and essential - and therefore should not be allowed. eg

    Is a Trouser Press essential ?
    If yes - why hasn't everyone got one ?
    (sensibly, that trouser press money was repaid)

    Is a place to live within a relatively sensible reach of Parliament essential ?
    I would think 'yes' so everyone has a need for one -providing they don't enter into a rent scam with their buddies, or a husband and wife claim twice for the same property etc.

    So what the spend is on has to be scrutinised as essential and appropriate to avoid fraud, rip-off, scamsters, crooks and criminality.

    Because surprisingly enough for a number of Politicians, life isn't just about bottom lines and 'overall spend'. It is also about wise spending and value for money to those footing the bill.

    The Public doesn't want any system which allows the fraudsters to escape with their self appointed 'rewards' which are justified by
    'well it is all ok as our (bad) system allows it'

    The Public are disgusted and an economic perspective isn't going to change the Public's view.

    Fungibility is not the central issue. Rip-off is.

  • Comment number 25.

    20 ghostofsichuan

    No mate, you have got it wrong. Joe Public knows that he cannot get to the ones that half-inched the trill, because they are one step removed, that step being parliment. They know they can do something about the ones who have also been glad handing in parliment. This is not just about ridiculous claims where a husband and wife have two properties but they are declared as 2 second homes and two main residences, ie 4 properties, when only two exist - this is also about the fact that these expenses have been authorised - vetted and paid, a fact which seldom seems to be repeated other than by the claimants. In what way is it anything to do with the taxpayer that somebody would like their moat cleaned or their house dry rot treated. As for Stephen Fry shouting the odds that it is all okay, well Stephen I am sorry but you are the one who was advised to be a guest in Her Majestys hotel for months for fraud, please correct me if I am wrong, so you might be funny most of the time but not on this.

    We all know who stole the money and who was involved. As for Lrd Turner of the SFA, sorry FSA, saying financial houses were delegating verification of income on mortgage apps downwards, so what, you cannot delegate responsibility, so get on and take some action against those involved.

    There is no pain without gain, yes but the idea is not that one lot have the pain, and another seperate lot have the gain. I think this government wants doing under the trades description act, socialist, as if.

    23 sisterkaff

    What really bugs me about this is some of the tax will have come from people struggling on the minimum wage with kids. 20 percent of kids in this country are still in families under the poverty line. Just what sort of country is this.

  • Comment number 26.

    4 Mr T

    Re accomodation - I suggest a spare prison ship, I think there are one or two about, be towed up the Thames and parked alongside Westminster, and offered for free. Problem sorted. Might even come with a few security bods. I gather they have jolly good accomodation, even come with water around them, not quite a moat, but the water is maintenance free so another expense spared.

  • Comment number 27.

    Well done Stephanie,as usual you are not getting distracted by the slights of hands and misconstructions placed on the canal retentive faustian types working for the mefirstuffallease bankers that guide the runoff from the fractional reserve money making machine ,

    the real issue is the total ammount of tax free expences claimed by pollytitians doubleing up as flippers in their spare time [when they are not sleeping in the parlamiental express gravytrain on its way to palookahville]

    If there was someway to halve the debt to the public purse it wouldnt matter if the "allowance"was used to float naked in the moonlight down the thames drunk on top of a japanese inflatable that repeats to the point of tedium "con eachywa my darling how about a quick bonus" and then stabbing it to create a mini boom to attract the insore rescue heloicopter.

    Whilst on the subject of the thames ,perhaps prison ships could be moored up against parlamment, initialy to satisfy the inkomebents temporary requirements of overnight stay to be nearer their floating voters and later on a moor permanent basis.

    As for fungi bility it brings to mind the Lootonian Moran that claimed 25,000 for dry rot treatment [it may only have been tommyrot]which no doubt included the newkitchen carpets and double glazing on top of the bottle of detol.

    Then theres the Lord of the flies still at the brown stuff and his 2,500 pound roof repair ,localiesed tornado was it .

    Parlamment is a breeding ground for bankerrstraining from potty training,to offbalance sheet[sheet] accounting ,only ALIEN would do it justice.

  • Comment number 28.

    Either insightful in a week of madness, or complete folly in a week of revelation. Not sure which.
    There have been suggestions that, when MP's salaries were pegged for political reasons, the expenses regime was changed and MP's told to go and claim it by the then PM (whoever she was). In other words the expenses system was intended to be pseudo salary rather than real expenses, and the 'claims' not intended to be justified in the same way as my travel claim, but a paper exercise to make up the £24k. If that was the case, then it was a systemic device to decieve the electorate. Wrong and immoral as that may be, I find it marginally less discomforting than virtually the whole of the House deliberately stealing from the Treasury.
    The distinction is important. If the £24k has become part of an MP's salary package, then taking it away will reduce his pay, reduce his ability and motivation to do the job, and further reduce the attraction of being an MP to talented and able candidates. That I fear will be the end result of the Daily Fascist's revelations this week.
    Unfortunately the only way out of the mess is to include MP's salary levels in the independent review, which may result in substantially increasing their formal salaries to compensate for the loss of expenses. Not a popular policy when everyone else is feeling the pinch and and there are £2.2m unemployed.
    Perhaps our favourite milk snatcher should have had the bottle to sort it out properly in the first place.

  • Comment number 29.

    The unavoidable corollary to the 'money is fungible' argument must be that our view of MPs is that which influence our perception. Apparently Footballers can get ten times the money that MPs get and not even attempt to do any 'good' for, or serve, society and that is OK. This must mean that MPs are some form of lower pond life from our point of view than footballers or the chief executive of BT for example. We despise MPs, yet we make not a murmur against BT's boss or footballers - why is that!!!

    Come of - we get all worked up about one group but not about the other - blame The Telegraph and their cheque book journalism, not wishing to defend either group (MPS or Footballers) but MPs at least attempt to do some good, or at least they pretend to, whereas footballers just threaten referees in a way that if they were normal members of society would have them in front of the magistrate charged with affray - but apparently that is OK!!!! Hypocrisy! It is that same moral issue.

  • Comment number 30.

    Charles Gordonzi talking to a newly arrived MP

    http://www.youtube.com/watch?v=eeVq1e6JKlw

  • Comment number 31.

    #24 strategycall,

    Well argued

  • Comment number 32.

    In the days of yore,when life was gore, there was an interesting accounting test for the "rightness" of expense claims. The question was - is it *wholly, exclusively and necessarily* for the performance of their duty. All expense claim *MUST* pass *ALL* three tests to be considered as valid !!

    I seriously doubt that TV porn channel subscriptions and cleaning of moats fall into this category, regardless of the fungibility of money !!

    Any claim that fails any one of these three tests are considered as payment in lieu of salary, i.e. the fungibility of the payments, and taxed accordingly !! Considering that their salary is 65k or more, all these failed expense claims should be taxed at the top rate ruling (currently 50%) !! Repayment of the moneys spent *only after being caught out, and even so, done in bad grace* is *NOT* considered to be sufficient by HMRC !!

    Therefore, it seems that George Orwell is *still* right. "All animals are considered equal but some animals, i.e. the pigs, are more equal than others !!" Does anyone now still wonder why they, the MPs, will do anything to keep getting re-elected ?? Is there any other job that pays a fortune for *NO MARKETABLE SKILLS* ??

    Welcome to the democratic and equitable Britain !!

  • Comment number 33.

    32 As Jesus said ,do not look for the dirty moat in your brothers tax deductables when you have a bmovie going through the aye of a needall in your own ,or something like that .

    As for Orwell "All anymeals are deductable but some anymeals are more tax diddeluctable than others "or something like that.

  • Comment number 34.

    Good article. This is precisely the sort of thing that Sir Christopher Kelly will no doubt be addressing. The real issue is not the headlines-grabbing nature of some of the things purchased - it is the deceit and dishonesty brought about by not publicly acknowledging the fundamental question: which do we want?

    1. Pay MPs a generous salary and say to them "you know that the job entails attending Westminster and your constituency plus travel between the two but here is a large salary (with no rights to expenses) and it is up to you how you spend it. Your constituents will tell you if you have managed things well." Presumably the salary should be graded by distance from Westminster to take account of the unequal burden of travel.

    2. Pay MPs a much smaller salary and reimburse them, subject to an upper limit, for expenses that are unavoidably and actually incurred in carrying out those duties.

    For many years MPs salaries have been held down either voluntarily or by edict from their leaders in order to show restraint and to give an example to the country. Without doubt low pay rises for MPs have influenced other pay settlements around the country. The population has taken note of the restraint on the basis that the MPs were within the second remuneration system - all the rhetoric and rules have pointed firmly towards this second category. Even HMRC seems to have been firmly under the impression that MPs were being reimbursed for their additional costs.

    What has now emerged is that MPs have been dishonest and deceitful as they have always been operating under the first system whilst showing a public face of being under the second. For them the entire package has been "salary" and it has simply been wrapped in a slightly cumbersome administrative manner. On being given small formal salary increases they must have effectively been told to fill their boots with expense claims. Thus they have been able to paint a picture of restraint to the country whilst actually receiving significant pay rises through the back door.

    They have now been found out and, not surprisingly, the country is unhappy.

    The first system is undoubtedly more simple but will result in problems and inequalities as MPs use their discretion in how they spend the funds. The second is perhaps ultimately fairer but requires a lot of bureaucracy and rules defining what can and cannot be accepted as a legitimate expense. However clear the set of rules there will always be opportunities to manipulate circumstances in order to be on the chosen side - these opportunities will eat into the fairness.

  • Comment number 35.

    "Fungible" originated into the English language in the 17th century from the medieval Latin 'fungibilis' from 'fungi' meaning "perform, enjoy".

    So there.

  • Comment number 36.

    Message 2 mcgrathbryan

    If you want good old fashioned sex scandals then you will have to vote Tory next time.

    The old saying is that with Labour the scandals are about money but with the Tories it is about sex.

  • Comment number 37.

    The concept of fungibility has been long understood by Politicians... to them words are fungible objects.

    Our country has been debased in a number of ways for a number of years, as things ordinary people hold dear; probity, honesty, sticking to the spirit of the rules and not just the rules; all the things that go into British Fair Play and forbearance, have become increasingly disregarded by the people voted in to rule the country, and entrusted with the savings, homes and governance of the country.

    I shouldn't need to say this but I will anyway 'for the avoidance of doubt' as the Lawyers say...this isn't a disguised point being made about Racis; Indian, Pakistani , West Indian and Chinese people I know display a respect for the virtues in the paragraph above.

    In Government, Banking and Big business people of all ethnic groups have been busy doing the debasing----- Scottish Bankers, Celtic property speculators, Chinese, Indian, Old Etonian businessmen, and women.

    IT's not a Race, Gender, or age issue...it's about a whole group at the 'top' of Society have lost the ability to make and then apply fundemental moral judgements to themselves.

    The long running divergence between the governed and the governing classes has been a long time in the making but this this recession has acted as a catalyst in bringing these long running, and previously buried, rifts to the surface.

    Not that issue of MP's 'organised theft'..by which I fungibly mean 'expenses'...is irrelevant in itself.
    But it connects to other things like, obviously, the exposure of the Banking industry as equally venial and even into the amoral deceptions that led us into the war in Iraq.

    The above examples (and there are others) are essentially connected by a thread that runs through the ruling class, and business elite,as well as down even through Local Councils (spying on their own Ratepayers--the public they are meant to serve---like a toy-town Stasi).

    As in France, say, at the end of the eighteenth century, there has been a profound erosion of faith in these structures and groups with the concomitant reduction in their authority and ability to command real allegiance.

    And as in pre-revolutionary France the system had rotted well before the final triggering event---then it was two years of near Famine that triggered the collapse, here it's the Depression that has exposed the fault lines.

    And unfortunately for the Politicans there isn't enough Fungibility in the universe to bridge the meaning gap between 'them' and 'us'

  • Comment number 38.

    34 "the third way"

    Use the now nationalised Olympic Village as housing for M.P's and abolish all expenses

  • Comment number 39.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 40.

    I travel on public transport. I pay my bus fares. This gives me no rights at all to know how much my bus driver is paid, how well the bus company is using my money to manage their business, or to unilaterally change bus routes.

    Surely the issue here should be the overall cost of government and whether we as a nation are getting value for money across all fields - education, military, health, crossrail and so on. MPs expenses are dwarved by the other expenditures of government, and while I think that many of the claims are bizarre and the amounts involved are significant compared to what most people view as reasonable, surely there are bigger issues to focus on?

  • Comment number 41.

    Do you know, I don't think most people give a stuff about the details of what MP's spent their expenses on. The media does, it makes good copy. Maybe on a personal and voyeuristic level it would interest us for a minute or two.

    The bigger picture (and where MP's are underestimating our intelligence) is this.

    If my house was burgled or I was robbed in the street I wouldn't waste a second thinking about whether the thief was going to use my money to buy drugs or pay his rent with it. I would just be angry that somebody else had taken my money or possessions for themselves when they had no right to it.

    If the same thief then used a defence that he thought it was OK or he had made a mistake, would I be any less angry that I'd been robbed? No.

  • Comment number 42.

    "40. At 10:19am on 15 May 2009, Cyberpumpkin wrote:
    I travel on public transport. I pay my bus fares. This gives me no rights at all to know how much my bus driver is paid, how well the bus company is using my money to manage their business, or to unilaterally change bus routes"

    Bus drivers aren't elected to run the country and set rules for the rest of us. Although they could probably do a better job than the people we do elect to be fair.

  • Comment number 43.

    Stephanie,

    You make a good point, and the fact that the claims can escape tax means they award a significantly enhanced purchasing power. But what moral conclusion can be drawn from a wealthy MP not claiming, when he could - he is the good guy, is he?

  • Comment number 44.

    #31 fdDave,

    Thanks for that Dave

    Of course the girl who we all have to thank for starting the exposures is Heather Brooke who played a blinder on FOI and MPs claims when everyone was trying to kick it into the long grass.

    She still doesn't get as much recognition and publicity as she deserves but she is my recommendation for being knighted for services to Rentokil in pest control.

    How about her as Head of the Expenses Committee.

    Looks a bit of a Goth don't you think ?
    A sort of a uniquely attractive feminine mysticism with a slight threat of danger about her from a studded punch up the bracket if you don't fill in the expense claim properly.
    More Heathers and Goths, thats the answer.

    Heather Brooke or Yvette Cooper in managing the economy ?
    Bit of a difficult one that.

    http://www.yrtk.org/about-author/

  • Comment number 45.

    ELECTION IMMINENT, ECONOMY A MESS, WHIP UP PUBLIC INTEREST IN POLITICS:
    (NO SUCH THING AS BAD PUBLICITY)

    "Labour minister Shahid Malik claimed the most at £185,421. Tory MP Philip Hollobone claimed the least - £44,551.

    Nick Harvey MP, who is on the members' estimate committee, said taxpayers got "excellent value for money".

    The previous year's total came to £86.8m, but was inflated by the general election as "winding up" payments were made to departing MPs. On a like-for-like basis, the increase amounts to about 5%."

    25th Oct 2007 BBC News


    This is an old story is it not? - MPs' £87.6m expenses claim bill

    Even an extra 20,000 a year for each MP x 600 odd MPs is only 12,000,000 a year.

    Look at our demographics (yawn).

  • Comment number 46.

    At the risk of "treading on a land mine" does this not expose the limits of empricism - the expense receipts empirically show for the record what the money has been spent on - because of the fungibility of money we don't really know what the money was spent on.

    Stephanie you could apply the concept of fungibility to the recapitalisation of banks - taxpayers money was plugged into the banks to replace the credit lost through the collapse of the wholesale credit markets and used to support/restart lending to the real economy, in reality they are still largely sitting on the cash to bolster their balance sheets and fund past losses.

    The British public in either case know that they have been taken for a ride.

  • Comment number 47.

    Ref #44,

    It looks as if the World is cottoning on to Heather's good bit of investigative journalism on FOI and the expenses affair (5 years of work).

    Front page article on today's Guardian2.
    (new photo as well, she now looks like the winner of the Queen of the May competition. From Goth heavy rock to Elgar in an hour and a bit - can't keep up with all these changes in fashion styles)

    http://www.guardian.co.uk/politics/2009/may/15/mps-expenses-heather-brooke-foi

  • Comment number 48.

    Stephanie, you have a beautiful mind.

    The conclusion is that the only clean system for expenses is a flat rate. You receive x pounds per night away from home and y pounds per year for office costs, etc. And it remains totally up to you if and how you spend the allowance.

  • Comment number 49.

    All very interesting but ommits the point that it's MY money and YOUR money they are taking and spending it like its gone out of fashion when the vast majority of us are struggling to keep their heads above water.

    On another matter I await the report from a committee of bankers on the profligate expense/allowance scheme opperated by our parliamentarians that resulted in greed, extravagance and quite possibly fraud. Will I have long to wait?

  • Comment number 50.

    WolfiePeters (#48) "Stephanie, you have a beautiful mind".

    It's a girl thing.

  • Comment number 51.

    In the Fraud Act (2006), note how intention (i.e. the intenSional idiom 'knowing that') is key.

    Listen to how politicans, lawyers (and especially spin-doctors) speak. In the end, their 'truth' comes down to nebulous, easily exploited, populism. There's the problem. You'll find scientists avoid these people, as science strives for extensionality.

  • Comment number 52.

    No.51. JadedJean

    You're only saying that to the best of your knowledge and belief, in good faith, without prejudice......

    It's just a feeling you have, which you wish to convey, not withstanding mutatis mutandis.

  • Comment number 53.

    IS IT KAFKAESQUE OR QUINEAN?

    MrTweedy (#52) Well, is it working? (It's a predicate logic thing, it works like garlic on some!).

  • Comment number 54.

    40 Cyberpumpkin

    ''MPs expenses are dwarved by the other expenditures of government, and while I think that many of the claims are bizarre and the amounts involved are significant compared to what most people view as reasonable, surely there are bigger issues''

    No - for the simple reason that parliment has a duty of government. The expenses issue is a culture issue, as is the fact this was fought so hard to avoid the release of the data, as is the Speakers objection to the theft of something which should be in the public domain anyway. where do you think the whole lack of control of the finance sector came from. There is no such thing as a free market, they are all regulated. Regulation is the duty of government, to balance the capitalist desire to build monoploy and exploit a market. If the regulators are corrupt then corrupt regulation follows. Why do you think vested interests have ot be declared.

  • Comment number 55.

    Stephanie

    Why did you not warn us about the goat-backed securities while you had the chance?

    Excellent!

  • Comment number 56.

    So Stephanie, what you are intimating is, that the £100 claimed, might have bought a chair, might have made an MP £100 'richer' or been used for another purpose, that MAY or MAY NOT have been legal?
    So are you saying that it might be worth going back through expense receipts and whereabouts of MP's and see WHAT and more importantly WHO they spent their money on?
    Might be interesting to see who got up to what in the days before the Iraq war or even look closely at the itemised phone bills!

  • Comment number 57.

    I wrote a piece on Robert Peston's blog but it may have suited this one better. Take a look if you want 'cos I aint typing it all again.

  • Comment number 58.

    Stephanie

    Thank you. Now I understand far better why the economy is in such a mess. Fungibility (a new term for me) appears to be a construct of economic philosophy. You can use it to obfuscate cause and effect or intent and outcome.

    Unfortunately, it is this kind of philosophy, combined with econo-science, that allows politicians to disconnect themselves from the real world - aided and abetted by academics, journalists and other experts.

    So, for example, you can use fungibility to explain that an MP might appear good for submitting only expenses for rail travel to Westminster, but is naughty because he or she then uses the refund to buy pornography - in effect, at our expense. You presumably think this is difficult to distinguish from another MP that is up-front because he or she submits the invoice for the porn with parliamentary expenses. Or another who submits the expense without an invoice, because it is a small enough amount not to need one.

    To my mind, there is a difference, and honourable members are honourable only if they observe the difference. It is all about intent. Fungibility is an idea that encourages muddled thinking.

    The same kind of muddled thinking allows treasury ministers and officials to talk about different kinds of money, treating each differently and having different criteria for managing them. The econoscience is, no doubt, flawless. However, it makes it easier for politicians and officials to lose sight of economic reality as it affects individuals. While dealing with the billions and trillions of bailouts, using one sort of money, they ignore the hundreds and thousands and millions one the sort of money that makes a difference to citizens' lives.

    When, for example, a few weeks ago Tories and Liberals talked of scrapping the ID card scheme, government spokespeople sneered that this would save only a few billion - a drop in the ocean compared with the hundreds of billions we need to save! But when a report said recently that Equitable Life policyholders should be compensated, it was apparently too expensive - presumably it required a different sort of money. I have read many comments in the last week about how the MPs' expenses are also a drop in the ocean compared with, say, the cost of Afghanistan.

    The result of all this sloppiness is national ruin. I used to understand that if you looked after the pennies, the pounds would look after themselves. So, if MPs pretended that their expense "allowances" were like a household budget, maybe they would spend with care - saving a million or two. If they thought before implementing ID cards - a billion or two. Pretty soon the millions and billions add up. And by setting examples, maybe they'll teach local councillors not to fiddle expenses, and so on. And maybe benefits cheats would feel guilty too and reduce our taxes. And maybe journalists with expense accounts - then our newspapers and TV licences would be cheaper.

    Trouble is, with all the stories of pigs, snouts and troughs, more and more people at the bottom of the heap will give up maintaining standards. You reap what you sow!

  • Comment number 59.

    Fungible, fungibility, fungi - what I really want to know is what all of this has got to do with FUNGUS THE BOGEYMAN?

    Oh! and who are this group the Tax Alliance?

  • Comment number 60.

    #57 johnno

    Never heared of Copy and Paste?

  • Comment number 61.

    No.58. jiminhursley wrote:
    "....more and more people will give up maintaining standards".

    There are no rules in a liberal consumer society, just freedoms. Therefore, there are no standards, just indulgence. Our economy and society are just polite forms of anarchy.....

    Roughly speaking:

    17th century - puritans

    18th century - rakes (reacted against puritanism)

    19th century - buttoned up (reacted against rakes' progress)

    20th century - half decent (wars and economic hardship kept ideas of "decency" alive until mid-1960s, then reaction set in against Victorian values)

    Early 21st century - over-indulgent (further reaction against Victorian "hypocrisy and injustice")

    Note, the consumer society really started with the industrial revolution in the 18th century. But what next, now that everyone has a car, a mobile phone, a computer, owns their own house?
    There is no further market for us to reach and exploit. Why would China manufacture goods for British companies to sell to Chinese consumers? Hence, is China really a new market for British mass goods?

    What of the scarcity of the world's natural resources, and the law of diminishing returns?

  • Comment number 62.

    Mr Cameron claimed £24k, on the basis he spent at least that much on mortgage payments. However, if he wasn't able to claim mortgage payments, he would still have paid them - just out of his normal salary. So, although the money is nominally paid for the mortgage, all the taxpayer really does is allow money Mr Cameron to spend £24k on unclaimable items.

  • Comment number 63.

    THE OTHER BUBBLE

    In the UK, 30,000 went into HE in the 1960s (5% of cohort), 300,000 today (50% of cohort). Student loans are good business. This bubble is far more pernicious for reasons I've given before - it changes the genetic composition of the population, dysgenically - even faster.

  • Comment number 64.

    #61 MrTweedy

    It could be argued that consumerism started when the first tribesman decided to specialise.

    "But what next, now that everyone has a car, a mobile phone, a computer, owns their own house? " That's just the point, not everybody does. These markets may be mature but they are far from satisfied - hence the variety of product offerings.

    Will China's consumers take-up the slack? To some extent they will if the West can provide them with goods that they cannot make (or have the quality/cache) at home. The bigger question is will the West continue to buy solely on price alone. The target for Western producers will be to provide benefits in their products that consumers are prepared to pay for over and above the price differential. Maybe the environmental movement can be a stimulous for that - all electric cars etc.

    Some posters appear to think that the 21st cenury will belong to China. I don't accept that this is a given. We do however need to re-evaluate the true purpose of our societies and adapt our behaviours.

  • Comment number 65.

    PERSECUTION AND OPPRESSION

    Here's a point or two to ponder:- Why, in the 1990s when the allegedly 'inefficient' state was 'sold off' to the people of Russia with the help of American Jewish Chicago School economists and their Jewish USSR helpers, did it nearly all end up in the hands of a small group of Jewish Russian 'Oligarchs', and why did Blair (who were Brown and Blair's fund raisers?) give so many of the latter asylum in the UK when Russia tried to prosecute them?

  • Comment number 66.

    65 JadedDean

    Why indeed !

    So that they could offshore their ill gotten gains in Britains money laundering banks stuck on their maaa'sonic spin cycle and now finding that they have well and truly plucked themselves bare.

  • Comment number 67.

    Was it that what was done in the UK from 1979- and in the USA from 1980- just took a bit longer because they had mixed economies?

  • Comment number 68.

    Sounds like there's a lot more fungi in Parliament than there's spores to be.

    Perhaps people would feel better about it if they thought of it as a stimulus package for a part of the economy that's often overlooked and neglected. Underground swimming pool and platinum cycle helmet salesmen gotta eat too ya know. And where would Britain be if the platinum cycle helmet craftsmen were allowed to disappear for lack of work and this valuable art was lost to Britain forever? Something to think about.

  • Comment number 69.

    #34 "What has now emerged is that MPs have been dishonest and deceitful..."

    Rather an oxymoron here, don't you think !!

  • Comment number 70.

    #61 "But what next, now that everyone has a car, a mobile phone, a computer, owns their own house?
    There is no further market for us to reach and exploit. Why would China manufacture goods for British companies to sell to Chinese consumers? Hence, is China really a new market for British mass goods?"

    There are two interesting points here.

    The first is about saturation of markets and the exploitation thereof. The saturation of markets is a Socialist/Communist dream where no one will want for anything. Like all dreams it is unrealistic and to achieve any dream, a very high price has to be paid. Unfortunately most people want the dream but refuse to pay the price and this is what the NuLabour crowd spun out of the picture in order to make themselves look good. What we have now is the enforced payment of that price. The massive debt overhang is a price that, not only we but our children and our children's children, will still be paying for !!

    The other part of that dream presupposes that that society will be in an enclosed self-sufficient shell and there is no need for any input or output, i.e. a stable equilibrium. Britain does not have enough resources to manage that at all. Therefore, Britain has to trade in order to survive. If, going back to the premise that all other societies are self-sufficient, why then would they want to trade with Britain ??

    Therefore, this idea operates on two totally contradictory principles of self-sufficiency existing hand in hand with insufficiency.

    The second point about future markets is based on the word "exploit" !! If exploitation is what is desired, then that "market" is shrinking rapidly as more and more of the third world countries are refusing to be exploited any more !! Perhaps, what you really mean is "new markets to develop" !! In this case, there are still plenty of room for expansion as the African and Latin American countries are ever willing to progress and need help to make that progress. They are ever willing to trade resources for knowledge and expertise. The days of trading a handful of glass beads for Manhattan Island are over !!

    Therefore, it is up to us to develop new markets that are non-exploitative in order to maintain a long-tern trading relationship with others. In other words, a win-win situation !! The Chinese are already doing it, why can't we ??

  • Comment number 71.

    #54 Excellently put !! It's all cultural. When the rot sets in at the top, it will find its way down and infect the whole of society !! If it's alright for the big pigs to fiddle their expenses, then it should be alright for the little pigs to do the same too !! And soon, it's all Fiddlers on the hoof, so to speak !! :-)

  • Comment number 72.

    Fungibilty does sound rather like a play on the old joke about being kept in the dark and fed s***. But then thinking about it, it's amazingly appropriate.

    Pigs have their snouts in the trough and produce the perfect medium for growing more mushrooms and thus the cycle contiues.

  • Comment number 73.

    Obsession with fungible truffles has certainly distracted most sheeple from the architects and beneficiaries of the 'economic crisis'...

  • Comment number 74.

    Maybe overdosing on these particular magic mushrooms would render the addict with selective memory loss provoking tourettes-like outbursts like "I forgot I'd paid my mortgage off" or "I forgot Southampton is further from London than Luton" or even "I didn't know I had to pay capital gains tax when I made a ......... capital gain"

  • Comment number 75.

    Looks like the British House of Parliament could do with a heavy application of fungicide.

    I think the MPs are going to try to make the Speaker of the House the scape-goat for their own malfeasance. Now isn't that just like politicians, never owning up to their mistakes. Where's Boomin' Betty Boothroyd when you need her? I'll be she wouldn't have put up with any of their games. Awda! Awda! Is it time to bring the old gal out of mothballs? Has she still got it in her? Will she be appearing on "Britain's Got Talent?"

  • Comment number 76.

    I do not believe that the things Members bought were "needs" They were the vehicle to soak up the money that they could draw - within their rules. True greed in other words.

  • Comment number 77.

    Bang to rights British Public. We were supplementing our less than spectacular annual salaries and yes it was wrong. A heart felt SORRY!

    The rest Ms Flanders was just gravy and as they were all allegedly on a train full of it - why am I not surprised?

    I read an article about a certain BBC correspondent in the Evening Standard Internet edition yesterday was it?

    And yes I did close my eyes when an age was mentioned and yes I refuse to believe it - the alleged age that is. How dare they suggest she was that.... lol

    But this terrific article was full of words - set out in roughly the correct grammatical order (I should talk) and I understood every word - except that - forgive the word Ms Bakewell - "oldish" adage about thinking mens eating habits. Dah Evening Standard.

    Then I stumbled across this sentence just now. It fell on the floor next to my radio. "the road to the election could be even bumpier than we thought".

    I mulled over it for a while and thought why? My Email is working. My doorbell too. Snail Mail even. Telephone - word of mouth.

    You do know they are starting off that George Smiley radio season with "Call for the Dead"?

    Twenty what? Never that old.lol

  • Comment number 78.

    #3 ChangEngland makes a good point that the allowance is not only fungible but tax free.

    But it's also free of NI (1% above upper earnings limit) and the MP won't be making any of the 10% pension contributions they pay on their salary on since the allowance isn't pensionable. That means the GBP24,000 allowance is the equivalent of GBP47,058 salary increase.

    So its supercharged fungible.

  • Comment number 79.

    Steph you raise such an important and more so pertinent point.

    I do laugh at those condemning Chris Huhne as a trougher for buying a trouser press but ignore his boss Nick Clegg who claims the highest expenses of ALL the party leaders!!!

    If I were an MP, I would have done exactly what Mr Cameron has done, which is to use the ACA to claim against Mortgage, Council Tax, Utilities, Service Charges, Insurances. Al on a LONDON second home.

    None of these would trigger much attention from the telegraph as they are not controversial items to spend money on.

    NOTE: John Bercow, Labours preffered candidate for SPEAKER (a Conservative) has been 1st for most of the last few years on Expenses claims, yet he is lauded as a radical reformer of parliament.

    Is it just me who sees the ridiculous irony in this?

    The only thing I can say about those MP's caught spending on idiotic items, is WHAT A BUNCH OF INCOMPETENTS.

    The only exceptions being those that have defrauded the taxpayer, such as the home flippers, and phantom mortgage claimers.

  • Comment number 80.

    I usually read your essays with interest. But your piece on the fungibility of MP's expenses was quite disgraceful.
    The spirit of the rule book says that the taxpayer only has to refund those real expenses incurred in carrying out the MP's necessary and unavoidable duties. Nothing else.
    Your use of the term "fungible" is highly suspect. I quote from the OED :
    fungible = said of a thing which is the subject of an *obligation* when another thing of the same or another class may be delivered in lieu of it.
    So if Fred Bloggs owes the slate in the Dog and Duck ten shillings, he might feel able to offer a couple of dead rabbits instead.
    This has nothing in common with MPs' claims for food, refurbishments, secret flipping of home ownership to dodge tax liabilities, and on and on.
    The ordinary taxpayer is flayed with punitive regulation - eg if the Tax Office gets my annual assessment wrong, and I don't tell them about it, *I* am the one who will have to pay the fine.
    What MPs have allowed themselves to see as fungible is perceived by the Man on the Clapham Omnibus as a total rip-off and a complete denial of democratic accountability.
    I look forward to the beneficiaries of my licence fee payments taking a more realistic and sympathetic view of what the common man is having to put up with in this current economic crisis.

  • Comment number 81.

    Hi, I'm also an economist and I completely understand your perspective, However, I disagree.

    I do not mind if an MP maxes on their allowance for a legitimate mortgage.

    But I do, deeply, care if an MP spends nowt on their mortgage but £x on a duck island or flat for their child or a gold-plated plasma television for their pet chinchilla to view, whilst awaiting the MP's return. This applies even if said spending MPs are substantially under-claiming on the mortgage allowance which they could have claimed for. And, I contend this is an equally rational perspective to the particular economic one you present.

    My rationale is thus: MPs are paid a salary - this is their money to spend howsoever they wish (assuming such is legal); there your analysis is sound. However, allowances are specifically for allowing MPs to have a necessary second home, which is reasonably comfortable. To mis-use allowances - even if they under-claim by far more on legitimate expenses - is immoral, I would argue.

    I am not arguing for cheaper MPs (though Cameron's plea for cheaper Westminster politics, based on fewer MPs is appealing). I actually think our MPs should cost us much more per MP - e.g. a basic salary of £100k. This would pay them far more than their salary plus max allowances. (Though, they have messed this up because of the scandal - how can the public now be persuaded to pay substantially more?).

    What riles with me is not the amounts spent, per se, it is the dishonesty (where does one start?), the pettiness (claiming chocolate bars), the incompetence and the utter contempt for the tax-payer - which includes almost everyone, including young children buying a VAT-charged chocolate bar. (So much for selling politics to youngsters).

    So, for once, I do not think the Economics approach is the correct one. It is not a matter of opportunity cost but of historical cost; not what they spent but how they spent it, even if they failed to max their total spending.

    I think my ultimate case would be the MP who claimed a court-summons of £40 back. From a supposedly competent law-maker that is a massive insult to the tax-paying, law-abiding electorate. And I do not care if he didn't claim another penny - that £40 is far too much.



  • Comment number 82.

    I'm not an economist, but even I can see that the second homes trough needs to be taken away! The government should provide apartments for all MPs, even if it means a compulsory purchase order on County Hall!

  • Comment number 83.

    PS (to my above post)

    I have noticed some others on here also talk of morals etc. Ms Flanders is right about Economics - it is am amoral - viz: it is outside any and all morals; it is a form of analysis and conclusion, based on cold logic, despite Welfare Economics having muddied that stance in recent years.

    This is why Ms Flanders is right in her analysis and why I argued that Economics was the wrong analysis to apply.

    PPS

    In case of doubt, one has to say that MPs have brought the House down upon their own heads. Their real crime is deception: not so much the deception of spurious - even false claims - but the deception wrought when they decided awarding themselves pay increases would vex voters and, therefore, they would increase their pay "invisibly" via allowances. Had they simply had the courage to properly increase their pay and suffer voter ire, then-and-there, this would not have happened. MPs regard (rightly, in my view) their basic pay as too (relatively) low and increased it cowardly, in secret. Those are their biggest sins: cowardice and deception. Makes them fairly unfit to govern, I would contend.

    So, sorry, I think this is a political matter, rather than an issue of political economy.

  • Comment number 84.

    Count It... Don't follow it?
    I must suggest that to my accountant, who in turn can pass the message on to the Tax Man when he next questions my genuine business expenses.
    Don't think, expense claims for gardening, duck houses, blue movies, moat cleaning or multiple loo seats would pass muster.
    Why should MPs business expenses be any different to mine, the same rules should apply.
    MPs are paid by us, every penny should be accountable to the Tax Man.


  • Comment number 85.

    Yes, allowances are 'fungible', but the point is they should never have been so. Allowances were not originally supposed to be lump sum payments, although MPs came to treat them as such because they were unwilling to raise their actual wage. The allowance should have been for 'genuine expenses' - extra money in direct proportion to the increased expense to an individual MP of running an extra home. The problem, of course, is that it is difficult to draw the line between 'necessary' and 'luxury' when kitting out a home, and so the whole system has become rotten.

    I'm not sure that it is possible at all to define a 'genuine expense', and for that reason I'd say that MPs will have to fund themselves out of their own salary, perhaps with a one-off payrise (bigger for non-London MPs). There will still be inequities, but at least that will sweep away the corruption and deceit.

  • Comment number 86.

    Whilst MP's and bankers have been found out and rightly so, this whole idea of 'if I can get away with it, its OK' is systemic in our culture. From MP's to cowboy builders, people are trying to pull a fast one over everyone else.
    David Cameron might be trying to gain the moral highground but I don't recall him ever making such an issue of MP's expenses until forced to. He never said it was wrong and should be changed and he claims his maximum allowance.
    The only way to clean up is to start again and if David Cameron wants an election every single MP should stand down and we start again. ( not going to happen) they are all guilty even if they haven't claimed because no-one stood up and said this is wrong.
    The Tories are up to their necks in this one historically, as Mrs Thatcher created a non violent revolution in this Country and made it OK to think first 'what's in it for me' The Thatcher years gave rise to NIMBY's DINKI's YUPPI's City Slickers etc etc. Nothing very moral or uplifting there!!

    The media and the press are equally guilty of hype, they can make claims and don't have to substantiate them. There are fantastic people in the Health Service, in the Emergency Services, in our schools working day after day doing amazing work and yet the press highlight MRSA, which in the great scheme of things is a very small part of the whole NHS and if you have sat in a hospital you will see the staff constantly washing their hands, yet the media choose to ignore this and make them scapegoats. The press & media can only ever be negative. If the media gave as much space to people who really do an honest days work, often going beyond the call of duty instead of filling their pages with total rubbish about silly celebrities who doing nothing for no-one but themselves, maybe the right role models would emerge for future generations to follow.

    My understanding is that MP's are servants of the people, so not leaders and maybe if this was at the top of their job specification we might encourage people keen to serve us and not themselves?? In Sweden the Government own flats, which their MP's stay in rent free, quite simple really!!!
    So whilst we are angry at first with the Bankers and now the MP's we do need to look closely at the whole picture and our whole culture needs to be radically changed. We are on a slippery slope and it will take a generation to turn things round but if we don't it will only get worse and the consequences of that for ordinary law abiiding people will be dire. We have to stop the rot now from the top down. A revolution, preferably quiet is what we need nothing less.
    Politics, business, the economy, life itself are so intertwinned you cannot talk about one without the others.

  • Comment number 87.

    No.86. timetoponder

    Whatever happened to the notion of being of service to one's country?
    As Sashaclarkson pointed out, on another of Stephanie's threads, Keynes died young having worn himself out in the service of his country.

    Brown says MPs can't run their expenses system like a gentlemen's club, when he really means that many MPs do not behave like gentlemen, as they serve themselves first and their country is only an afterthought. The same applies to many of the senior bankers, the media, and celebrity and consumer culture in general. Too much over-indulgence and individualism, and not enough attention to duty.

  • Comment number 88.

    Stephanie, this article is rubbish. Don't go soft on MPs. They should only claim for travel, accommodation and essential business costs (for which they have legitimate receipts. All the other things mentioned are living expenses and come out of their salaries. They wouldn't get away with it in the private sector and they shouldn't get away with it in the Public one. The general public are sick of double-standards in public life. If the so-called 'leaders' are going to impose laws on the status quo, theny they need to realise they apply equally to them too. Flippers are tax dodgers, pure and simple, they should be prosecuted for tax evasion. Why should MP's even have generous mortgage allowances and tax exemptions. Why excessive pensions? Expenses are the 'thin end of the wedge'.

    Paying back is still an admission of guilt and anyway what about the interest on the money? They are only making token gestures which are not good enough. Standards of reform in Parliament should be set by someone outside of Parliament; perhaps even a Royal commission presided by the Queen (the only descent, credible person left that the Public can trust and a non-political one). If we go soft and let MPs handle their own reform, we fail our country. The lot should go, Parliament should be disolved and a general election forced. Daily expense allownaces are a bad idea and will only encourage more fiddling.

  • Comment number 89.

    I think the problem with assessing fungibility is that before that can become an issue there has to be another problem on which fungibility is dependent.

    And that is the issue of ownership and/or profit.

    I think all of us would agree that expenses should be consumable in nature and should not result in benefits to the claimant that exist beyond the period of work in which the expense is incurred. They should certainly never result in ownership in perpetuity.

    Many of the fungibility issues go away if no claims are allowed for other than transient, consumable items. So you cannot claim for mortgage payments or mortgage interest, you have to claim for rent/hotel accommodation - or don't claim at all.

    If ownership is to be allowed for mortgage payments or similar then the proceeds - all of the proceeds must be returnmed to the taxpayer, as has been said by many. But what if the house falls in value?

    Should the taxpayer pay that to the individual? Suddenly it is all becoming too compex - which adds to the argument that expenses are not to be used for investment, whether on behalf of the individual or the taxpayer.

    Also, you say the issue with a bathplug is not whether it is a legitimate expense, since it is - if you OWN two houses and therefore two baths then you need to have two bathplugs in working order. The issue may seem to be whether or not you would have bought it if it were not available on expenses - perhaps there is a bathplug there, but the occupant just didn't like it.

    BUT - the issue only arises if you OWN two houses. If you rent then te landlord is responsible for providing a bath with a plug and therefore there is no problem in establishing what is a legitimate expense and what is not.

    Removing the ability to claim for mortgage payments or any other item that would become or lead to personal property is the key to sorting out this mess.

    The rest of us are slapped with a benefit-in-kind charge on our tax codes when we do that.

    And... the rest of us are not allowed to claim expenses for more than two years to work in the same place - a rule that our wonderful HMRC seemed to be able to dream up all by themselves without any legislation being passed to support it - and then failed to apply it to MPs.

    What a mess.

  • Comment number 90.

    desmoh has this spot on. The fatal flaw in Stephanie's mental gymnastics here is the fact that the items bought were used to justify the expense claims. The very fact that she only hints at her conclusion (if you think like an Economist, the details of individual claims are irrelevant) rather than categorically stating it, shows that she knows her argument is nowhere near to the nub of this issue. How could it be? Arguments based purely on Economics take no account of what people are really interested in here - who was taking the public for a ride and who was at least trying, within the rules of a warped system, to apply some kind of morality. Man on the Clapham Omnibus and the rest of it.

    Taxpayers who don't get whipped up into hysteria recognise that MPs with constituencies outside of London need two homes. A 60,000 pound salary is not enought to cover the expenses of running even two modest homes given the price of real estate in this country. Taxpayers therefore are more likely to look more favourably on claims for mortgage interest and utility bills as utilising the system within the spirit for which it was intended.

    MPs would have claimed for these if they could have - it is far easier to forward your mortgage payment letters and utility bills to the Fees Office, rather than collecting every little scrappy receipt for every little bath plug and made to measure shelving unit. The fact is that either:

    Some MPs didn't have mortgage expenses to keep up - mainly the Tory Grandees who should be cleared out anyway.

    Other MPs were too stupid to recognise how this ould look in the cold light of day. Therefore they are not intelligent enough to be in Parliament drafting and overseeing legislation. Think the Junior Justice Minister and his £2500 Plasma TV.

  • Comment number 91.

    Those poopooing Steph's point, consider the below example:

    Scenario 1
    ----------
    Joe Bloggs MP owns a home in his onstituency and a 2nd home in London OUTRIGHT, no mortgage on either.

    Joe Bloggs MP spends his £24000 ACA on furnishings, repairs, doodads etc at his London second home.

    The Public are outraged at this troughing at the taxpayers expense.

    Scenario 2
    ----------

    Joe Blogs MP again owns a home in his onstituency and a 2nd home in London OUTRIGHT, no mortgage on either.

    This time however, Joe Blogs treats his London home as a legitimate investment and rents it out to a private tennant.

    Joe Bloggs buys a 3rd London apartment and designates it his second home for ACA purposes. He takes out a sizeable mortgage (London property not being cheap) and claims Mortgage/Utilities/Council Tax on this London apartment.

    He continues to make profits from his private tennant on his original London 2nd home, nothing wrong here, it's his money, his property, no taxpayers money has been spent to fund it.

    He legitimately lives in his 3rd London apartment whilst in Westminster on parliamentary duties and uses the ACA to cover the costs.

    The MP is financially BETTER OFF in scenario 2, yet to the public his expenses look fairer in this second scenario compared to scenario 1.

    Now that we have transparency in MP's expenses, you will start to see a lot more scenario 2's with MP's situations, simply because it makes their ACA claims look reasonable and mass public hysteria in check.

    So the point about fungibility is valid imo. MP's will just decide that if TV's, furnishings etc cause public outrage, they will just claim for whacking huge mortgages and utilities and spend their own money on the john lewis list items.

    Many in the public would probably be surprised to learn that those MP's who have made the most personal profits from the use of the ACA have been those that bought big expensive houses in London and claimed the maximum ACA limits on paying the mortgage on these, then pocketing huge capital gains on selling the property upon leaving westminster.

    Yet such a scenario looks rather benign in a Telegraph Tabloid like Scandal Expose...

  • Comment number 92.

    Stephanie

    Your quote:

    ...'But you still have the basic problem that money is fungible. You never really know what people would have spent if the allowance didn't exist - or if they weren't, in fact, MPs.'

    >>>>

    Sorry Stephanie but I don't see the economic merit or logic in arguing that MP's have some kind of 'excuse' due to 'fungibility'.

    The same kind of argument can be used to sugest that if the money misappropriated by MP's was/had been properly used or better used in the public good, e.g. by putting a policeman on duty outside of Jill Dando's house or an extra social worker apllied earlier or court order paid early to save baby 'P' - then one or both of them might still be alive today. Sorry to use such graphic examples but the argument against fungibility is, I think, overwhelming.

    This I think illustrates the spurious economic nature of fungibility outside of the free market.

    The other issue with fungibility is that it sounds like a very good mindset theory for things going wrong in the evolution of a global banking and finance crisis - so let's hope that the bankers are not reading this blog!

    Fungibility is what the former speaker of the House of Commons might describe in jutsification of a 'reasonable expenses claim' under the existing old green book rules in Parliament - I think that anyone can take fungibility to heart if it helps the materially minded justify a particular economic outcome or set of economic outcomes and the Economist magazine itself appears to be wrestling more and more with the social aspects of economics - economics itself is under strain. However, I see strong links between the banking crisis and the MP's expenses' allowances scandal and it is a cultural mindset link of decision making.

    However, fungibility should apply (be practiced), I think, solely within the free market - and not to the UK banking sector or parliament as these are national interest activity areas.

    I'd think that the simplest explanation in economic terms of misappropriated public money (by MP's) is simple waste/inefficiency - and this I think is the cardinal sin in economic terms.

    Interesting 'defence' by the BBC of MP's waste and inefficiency - I note your political editor colleagues are thin on the ground and now leaving you to hold the 'political fort' on the blogs.


  • Comment number 93.

    A possible, long-term solution is to promote co-operative working. Businesses should be handed over to those that work in them, without compensation. A level of earnings will be set for each business whereby the highest earner cannot be paid more than ten times that of the lowest. That will also be nationally, any anomolies to be dealt with throug taxation. Simples.

  • Comment number 94.

    Why is it that when sense appears from madness it is always at the fringes or expressed in such a low key and diffident manner as is this blog. Could you not chain yourself to the railings in Portland Place until every BBC producer and journalist agrees to at least address the basic arguments you have raised in each and every report which bandy s about adjectives such as 'corruption' (only reflecting public anger of course!) After all there may be a strong self interest here (for the BBC as a whole) when the political class come gunning for revenge on the massive salaries and expenses at the BBC. You present your analysis as an economist, but more than that you understand restraint and circumspection and you are brave.

  • Comment number 95.

    After the Development analogy I do understand what you're saying Stephanie, and it's an excellent argument. Perhaps you're right, and we should be examining overall claims instead! Excellent blog, thank you.

    I do however think that the detail of the claims remains fascinating, if only because it gives us an insight to the moral compass of some of these politicians and indicates what their perceive are reasonable claims. In other words, I find it amazing what some MP's felt was kind of items could be justified as vital for their day to day living - whatever the amount (or what they may have actually spent the money on)!

  • Comment number 96.

    "David Cameron could be spending his allowance on underground swimming pools and platinum cycle helmets. All we know is that he has utility bills and mortgage interest to pay of more than £20,000 a year."

    Stephanie, I believe you have misrepresented David Cameron's special family circumstances and resultant special housing requirements in this article.

    Accustomed as we are to such occasional errors by the BBC, is it not more than a little disingenuous for the BBC's economist and Economics editor to treat Cameron's position as equivalent to that of most other MPs when it so clearly was not?

    Why is there no mention of the Cameron family's special housing needs in this article?

    Why, when you attacked David Cameron's mortgage claim did you fail to mention that he required a larger than average home, specially adapted to accommodate the special needs of his severely disabled son, Ivan, including a unit for his son and his carers and nurses?

    I've read - on BBC News online! - that Ivan needed 24 hour, day and night care and that Cameron and his wife and other carers slept in Ivan's rooms, which were part treatment suite, part bedroom and play room. The BBC's report of Ivan's recent sad death:

    "Mr Cameron is expected to return to Westminster early next week. The family faces a difficult return to the London home they had extensively adapted to help them to care for Ivan."

    I believe you owe David Cameron an apology.

  • Comment number 97.

    The Truth, the Whole Truth and Nothing Like the Truth!
    It is not just a question of MP expense claims, the rights and wrongs, the rule books and a plethora of explanations as to the expenses claimed, it is about the truth of the matter, plain and simple.
    Is it any wonder that the British public are so thoroughly sick to death with politics and politicians? There is no other sector with the power and will to exert a direct impact on our lives that diminishes the truth to the extent that they do! We are fed an endless stream of unmitigated lies on a daily basis, covering every conceivable subject known to man.
    When I was growing up my parents instilled a very basic concept in my psyche, all lies are bad, and the truth is good, even if it hurts. The empirical difference between black and white has a very strong dividing line that is, until politicians got a hold of it and introduced the grey area.
    The grey area allows manipulating politicians (and others) to stretch the truth, blur the lines between black and white, to such an extent that it has become almost impossible to recognise the truth, even when it is staring us in the face. This ever enlarging grey area has now been given the title of Plausible Deniability (to you and me lying). It allows individuals we elected to lie to us with impunity. One cannot manipulate other people with the truth, only with lies, that is a fact.
    Lying is one of the most pervasive social ills in British society if not the world, it has become the norm, and people believe that the only way to get ahead is to lie, why? Because of the old adage of monkey see, monkeys do! Our continuous exposure to the culture of lying has imprinted the belief that if it works for them it must also work for me syndrome.
    I watch politicians stand up utter and make statements one after another with the words, in all honesty, to be to totally honest with you, or the truth is, trust me when I say! I know they are lying, you know they are lying, and they know they are lying, so where lays the truth! The catalogue of words to disguise the truth is growing larger by the day, how many times have you heard politicians and bankers utter the following words in the last few months. Mistaken flawed, wrong, incorrect, invalid, untrue, misspoke and misrepresented, never once have I heard someone stand up and say I lied! We are left with the unenviable task of trying to separate the wheat from the chaff, the good from the bad, and the lies from the truth and unfortunately there is no instruction manual to figure it out.
    How are we the public supposed to make educated and informed decisions on important matters affecting our everyday lives, when the only information we have is fundamentally based on lies (sorry mistruths) and erroneous statements. As it stands right now the only philosophy I can adhere to when I see a politician (and others) speaking is they must be lying, because their lips are moving!
    There has to be a fundamental and radical change in the way that politicians interact with the general public, we need The Truth the Whole Truth and Nothing but the Truth or the quality of all our lives will continue to diminish at an ever increasing rate of speed.

  • Comment number 98.

    Ref # 97.

    Well said and absolutely accurate. I have posted before on this subject and the way that politics became greyer and greyer in the past 12 years.
    When Labour became New Labour by changing themselves into the Conservatives to win votes they had either changed their principles or lied (now known as spin of course to make it sound more acceptable) to us all, it worked.
    It then became the norm to lie to the electorate to retain power.
    The point they all missed was we don't want to be lied to, we want the truth and we will respect - not necessarily like - politicians who tell the truth.

    Lies will catch up with you in the end as many MPs are discovering.

  • Comment number 99.

    Dear Stephanie,
    Thankyou so much for existing. You are a smart cookie. I enjoy your blog very much!

  • Comment number 100.

    Regards all the excessive purchases by MPs, I wonder if they all still have the items purchased? or have they given them to someone else for a SMALL remuneration?

 

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