Irresponsible mortgages (3 of 3): Reckless lending is a boon for buy-to-let

Reckless lending got us all into this mess, and can get some of us out of it

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Fairtrade - the good reason, and the real reason

“A man always has two reasons for doing anything: a good reason and the real reason.” 

J. P. Morgan (1837-1913), banker

Fairtrade products cost more. But what happens to that extra you pay to be Fair? The supermarkets want you to think it goes like this:

You don’t have to be a bleeding heart to believe in fair trade. Fair trade isn’t in itself just about charitable giving. Of course, charity can be an element in any decision. An OFGEM survey on why people swapped energy supplier showed 9% of switchers over 65 years old did so in part because they wanted to do the salesman a favour. Even the Fairtrade Foundation states that its mission is not just about charity – it is about being Fair. But what does “Fair” mean? Does it mean it pays enough for a farmer to bring up and educate his family in good health regardless of the value the market puts on his produce? Or does it mean ensuring the farmer doesn’t get ripped-off by local agents, wholesalers and supermarkets? All that debate is important and is complicated, but not central to the subject of getting more cash to the farmers. For ordinary Fairtrade buying Britons, it is principally about getting more money to the farmers for whatever reason, just as Free-Range is about getting better conditions for chickens. If that motivates you, then you should be pretty grumpy about what is actually going on. Even if you don’t care much about our rural brethren, be they animal or vegetable, conscience driven products are easing food prices up in the UK marketplace. With about half of all eggs sold being free-range, barn or organically raised, and a fifth of all coffee and bananas being Fairtrade certified you are paying extra whatever the state of your conscience. When you know where all the extra pennies and pounds you are paying go to, regardless of your “Fair” sympathies, then you may sit less easily of a morning in your cotton pyjamas, downing your scrambled eggs and coffee whatever their origin.

Take the coffee industry as an example. Fairtrade promises farmers a minimum price for their coffee. When the price falls beneath this level, farmers on the Fairtrade scheme get paid the ‘Fairtrade Minimum Price’. When the market price is higher, they get paid that higher price. The pact with the consumer is that you pay more not for the flavour, the quantity, the quality, nor the environment, but you pay more for the farmer. And many consumers are willing to sign up to this pact, as can be seen from the supermarket shelf space allocated to Fairtrade Coffee. Going from a few token bottles just a few years ago, Fairtrade now fills up to half the instant coffee shelf space in some supermarkets. In February 2011, the price of Tesco’s own brand 100g bottles of instant coffee were £1.69 for “Gold” and £2.73 for “Fair Trade”. A difference of £1.04.

So if that extra pound is going to the farmer, then it’s money well spent. Isn’t it?

Actually, according to Oxfam, the amount paid to the farmers makes up just 2% of the retail price of a jar of coffee. The Oxfam figures break down the cost of the jar of coffee on your breakfast table as follows, which is best illustrated using a Pie Chart, showing the ‘share of the pie’ the farmer gets when you buy a bottle of instant. In effect, for every £1 you pay for instant coffee, the farmer gets 2 pence. So, doubling his money – more than what Fairtrade actually does - should only add another 2 pence in the pound to the cost of Fairtrade coffee.

Overall, the way this £1 is shared out along the chain of supply is as follows

·        Farmer       -           2%                   2p

·        Exporter     -           3%                   3p

·        Shipper      -           6%                   6p

·        Roaster      -           64%                 64p

·        Retailer       -           25%                 25p

Doubling the farmer’s share ups his money from £0.02 to £0.04.

What we know for certain is

a)      How much the farmer gets, from the Fairtrade guaranteed price 

b)      How much Tesco charges for the bottle of Fairtrade instant coffee

By taking (a) from (b), we know how much of the £1.04 the farmer is not getting – i.e. he is not getting £1.  We don’t really know who does get that £1, but it doesn’t go on additional costs as happens with Organic foods. There are many additional costs to producing Organic coffee, including how the coffee is grown, certifying that it is grown properly, tracking around the various dispersed producers to collect the organic beans, and having a separate manufacturing process to keep the organic stuff uncontaminated. The only true additional costs for Fairtrade is paying the farmer his extra couple of pennies in the premium pound.

Bananas are the clearest way of seeing how the Fairtrade business works. Coffee and garments made of Fairtrade Cotton involve a great deal of processing – a complex supply and manufacturing chain from farmer to supermarket in which the original commodity is primped and preened into something very different. But a banana is a banana. Nothing much happens to it from plant to palate beyond being transported, stored, and sold. What you put into your mouth is what left the farm. The Fairtrade Foundation set a minimum price in January 2010

·        From 1st January 2010, the Fairtrade minimum farmgate prices for conventional bananas will range from $5.30 to $9.00  per standard 18.14kg box.

·        Organic bananas’ Fairtrade price per box ranges from US$7.00 to US$10.76

On this basis, the Fairtrade price paid to a farmer for a kilogram of bananas is

·        30-50 US cents per kilo for non-organic

·        39-59 US cents per kilo for organic

The free market wholesale price for bananas has been higher than this for several years.

Which means the Fairtrade farmer gets the same market rate as any other farmer, as the Fairtrade price only applies if the market rate falls below that guaranteed Fairtrade price. And yet, in supermarkets such as Asda and Tesco, Fairtrade bananas cost 30-50% more. In February 2011, the Tesco “Eat me keep me” bananas cost 18.6p each, and their Fairtrade bananas cost 27.4p each.

The Fairtrade Foundation is trying to do a good thing. But it has no power to make the supermarkets change their ways and send the extra money you pay to the people you intend it for instead of pocketing it for executive bonuses and shareholder dividends. On the other hand, by asking the right questions you do.

Read More

Fairtrade - the good reason, and the real reason

“A man always has two reasons for doing anything: a good reason and the real reason.” 

J. P. Morgan (1837-1913), banker

Fairtrade products cost more. But what happens to that extra you pay to be Fair? The supermarkets want you to think it goes like this:

You don’t have to be a bleeding heart to believe in fair trade. Fair trade isn’t in itself just about charitable giving. Of course, charity can be an element in any decision. An OFGEM survey on why people swapped energy supplier showed 9% of switchers over 65 years old did so in part because they wanted to do the salesman a favour. Even the Fairtrade Foundation states that its mission is not just about charity – it is about being Fair. But what does “Fair” mean? Does it mean it pays enough for a farmer to bring up and educate his family in good health regardless of the value the market puts on his produce? Or does it mean ensuring the farmer doesn’t get ripped-off by local agents, wholesalers and supermarkets? All that debate is important and is complicated, but not central to the subject of getting more cash to the farmers. For ordinary Fairtrade buying Britons, it is principally about getting more money to the farmers for whatever reason, just as Free-Range is about getting better conditions for chickens. If that motivates you, then you should be pretty grumpy about what is actually going on. Even if you don’t care much about our rural brethren, be they animal or vegetable, conscience driven products are easing food prices up in the UK marketplace. With about half of all eggs sold being free-range, barn or organically raised, and a fifth of all coffee and bananas being Fairtrade certified you are paying extra whatever the state of your conscience. When you know where all the extra pennies and pounds you are paying go to, regardless of your “Fair” sympathies, then you may sit less easily of a morning in your cotton pyjamas, downing your scrambled eggs and coffee whatever their origin.

Take the coffee industry as an example. Fairtrade promises farmers a minimum price for their coffee. When the price falls beneath this level, farmers on the Fairtrade scheme get paid the ‘Fairtrade Minimum Price’. When the market price is higher, they get paid that higher price. The pact with the consumer is that you pay more not for the flavour, the quantity, the quality, nor the environment, but you pay more for the farmer. And many consumers are willing to sign up to this pact, as can be seen from the supermarket shelf space allocated to Fairtrade Coffee. Going from a few token bottles just a few years ago, Fairtrade now fills up to half the instant coffee shelf space in some supermarkets. In February 2011, the price of Tesco’s own brand 100g bottles of instant coffee were £1.69 for “Gold” and £2.73 for “Fair Trade”. A difference of £1.04.

So if that extra pound is going to the farmer, then it’s money well spent. Isn’t it?

Actually, according to Oxfam, the amount paid to the farmers makes up just 2% of the retail price of a jar of coffee. The Oxfam figures break down the cost of the jar of coffee on your breakfast table as follows, which is best illustrated using a Pie Chart, showing the ‘share of the pie’ the farmer gets when you buy a bottle of instant. In effect, for every £1 you pay for instant coffee, the farmer gets 2 pence. So, doubling his money – more than what Fairtrade actually does - should only add another 2 pence in the pound to the cost of Fairtrade coffee.

Overall, the way this £1 is shared out along the chain of supply is as follows

·        Farmer       -           2%                   2p

·        Exporter     -           3%                   3p

·        Shipper      -           6%                   6p

·        Roaster      -           64%                 64p

·        Retailer       -           25%                 25p

Doubling the farmer’s share ups his money from £0.02 to £0.04.

What we know for certain is

a)      How much the farmer gets, from the Fairtrade guaranteed price 

b)      How much Tesco charges for the bottle of Fairtrade instant coffee

By taking (a) from (b), we know how much of the £1.04 the farmer is not getting – i.e. he is not getting £1.  We don’t really know who does get that £1, but it doesn’t go on additional costs as happens with Organic foods. There are many additional costs to producing Organic coffee, including how the coffee is grown, certifying that it is grown properly, tracking around the various dispersed producers to collect the organic beans, and having a separate manufacturing process to keep the organic stuff uncontaminated. The only true additional costs for Fairtrade is paying the farmer his extra couple of pennies in the premium pound.

Bananas are the clearest way of seeing how the Fairtrade business works. Coffee and garments made of Fairtrade Cotton involve a great deal of processing – a complex supply and manufacturing chain from farmer to supermarket in which the original commodity is primped and preened into something very different. But a banana is a banana. Nothing much happens to it from plant to palate beyond being transported, stored, and sold. What you put into your mouth is what left the farm. The Fairtrade Foundation set a minimum price in January 2010

·        From 1st January 2010, the Fairtrade minimum farmgate prices for conventional bananas will range from $5.30 to $9.00  per standard 18.14kg box.

·        Organic bananas’ Fairtrade price per box ranges from US$7.00 to US$10.76

On this basis, the Fairtrade price paid to a farmer for a kilogram of bananas is

·        30-50 US cents per kilo for non-organic

·        39-59 US cents per kilo for organic

The free market wholesale price for bananas has been higher than this for several years.

Which means the Fairtrade farmer gets the same market rate as any other farmer, as the Fairtrade price only applies if the market rate falls below that guaranteed Fairtrade price. And yet, in supermarkets such as Asda and Tesco, Fairtrade bananas cost 30-50% more. In February 2011, the Tesco “Eat me keep me” bananas cost 18.6p each, and their Fairtrade bananas cost 27.4p each.

The Fairtrade Foundation is trying to do a good thing. But it has no power to make the supermarkets change their ways and send the extra money you pay to the people you intend it for instead of pocketing it for executive bonuses and shareholder dividends. On the other hand, by asking the right questions you do.

Read More

Irresponsible mortgages (2 of 3): buy-to-let is the nation's great hope

KJ discovers that responsible lending is dependent on who your tenants are

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Irresponsible mortgages (1 of 3): No let up on buy-to-let

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Larry the cat isn't pussyfooting around

Will Downing Street's new appointment subvert the Tories from the inside?

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“A fat policeman chasing a speeding Ferrari” – Her Majesty’s Taxmen versus corporate tax departments

As it gets towards 4pm, when there is nothing but crumbs left on the biscuit plate, a civil servant’s thoughts turn lightly to the commute home. This is the moment the highly compensated teams of private sector lawyers, accountants and bankers focus laser-like on their incentives and try on their wheeze of the day. Hopeful that Her Majesty's tax officials have no desire to enter into another detailed debate, potentially threatening their chances of getting to the 17.25 train out of Victoria Station early enough to get a seat. Hopeful that in their haste to finish the day's session without appearing to be slackers, the taxmen will pretend to understand things they don't entirely.

Lord Oakeshott, who in February 2011 resigned as the Liberal Democrat Treasury Spokesman, has the insight on this. An insight that cost him his job.  The Coalition Government said that Oakeshott’s departure had been a mutual decision.  Perhaps something along the lines of:

Oakeshott: “This makes me sick to the stomach. I resign!”

Treasury Munchkin: “Good riddance!”

While that exchange is just a guess, the following quotes from Oakeshott are minuted and publicly available. Made in an interview with the BBC’s File on Four, Oakeshott commented:

“HMRC are miles behind the curve on this. It’s like a fat policeman chasing a speeding Ferrari..”

In reference to documents leaked from Barclays Bank, detailing some of the bank’s tax avoidance schemes, Oakeshott commented during a session of the House of Lords:

“These, my Lords, are documents which describe deals worth billions of pounds set up by the bank in order to make money out of depriving the UK and foreign exchequers of revenue. Barclays would not last for one minute without the British taxpayer standing behind them.  Yet they’re holding out one hand for taxpayers’ money while they picking taxpayers’ pockets with tax avoidance activities on the other.”

Oakeshott made these comments in the House of Lords using Parliamentary Privilege, as he would have faced prosecution had he made them anywhere else. Barclays had taken out a court injunction forbidding publication of any part of these documents, which had already been widely distributed on the internet.

Barclays denied dodging tax. But the full success of their evasive manoeuvring became clear this week. On the 11^th January 2011, the Barclays CEO, Bob Diamond, appeared before the UK Parliament’s Treasury Select Committee. Under questioning by the Labour MP Mr. Chuka Umunna, Diamond stated:

Bob Diamond: We paid £2 billion in tax last year to HMRC and over the last six years we’ve paid about £12.5 billion in tax. I think that’s the number you’re looking for.

Q556 Mr Umunna: Of that £2 billion, what percentage were non-payroll taxes?

Bob Diamond: I don’t have the percentages.

Q557 Mr Umunna: So it could be that most of that is actual payroll tax paid by your employees, but in terms of the corporate tax we don’t really know the figure, do we, Mr Diamond?

Bob Diamond: That’s the payment from Barclays to HMRC.

Mr Umunna: Yes, but what percentage of that was non-payroll tax?

Bob Diamond: I don’t have the percentages.

It turned out that less than 6% of the £2bn Diamond was trumpeting was actually corporation tax.  Barclays provided this information in a letter dated 15^th February 2011:

“In 2009, Barclays paid over £2bn to HM Revenue & Customs. Of this, £113m constituted Corporation Tax”

The rest was largely made up of payroll taxes paid by its staff, such as PAYE taxes and national insurance. Barclays claiming credit for taxes paid by its staff is as fatuous as the Department of Health claiming brownie points for billions of taxes paid by doctors and nurses.  Arguing that the Financial Sector can justifiably take credit for the taxes of their employees makes the dubious assumption that if these people didn't work for the banks they would be unemployed and not paying taxes from alternative employment.

Barclays directors presumably plan, on that final day of judgement, to get through the Pearly Gates into Heaven on the basis of good deeds done by their staff.

But let’s not pick only on Barclays.  In July 2007, the National Audit Office’s report, “HM Revenue and Customs, Management of large business Corporation Tax” stated that of the UK’s 700 largest companies, almost a third paid no corporation tax at all. Avoidance is not only endemic, but it is legal. In such companies, anyone who doesn’t do it as far as is legally permissible is not fit to run a company.

In that same Treasury Committee meeting, Diamond was asked about Barclays putting an injunction on The Guardian preventing it from publicising the documents detailing Barclays’ tax avoidance strategies.

Q555 Mr Umunna: ...If it wasn’t engaged in tax avoidance, why then did your bank injunct The Guardian in March 2009 when they sought to disclose the activities of that division within the bank?

Bob Diamond: Again, that’s not why we did it. I’m happy to explain. The information that The Guardian released had two features to it: first, it was already known to HMRC that it had the documents; we had sent them before the transaction. Our injunction was because someone stole confidential client information, which is against the law.

Perhaps the unembarrassable Barclays was actually seeking to save the blushes of the fat policemen at HMRC, who already had the details of the avoidance strategies and had accepted them?


Governments of all hues have treated the commercial sector with kid gloves. Perhaps it is because political parties need to raise money, and a large proportion comes from a small number of wealthy people - who need to make their money somehow. The excuse given to the public for this 'hands-off' regulation, and puny enforcement has been the contribution companies make to the national coffers. Healthy profits, we are told, make for healthy taxes.


However, the reality is that corporation tax contributes less than 10% of tax revenues. 

The Financial Sector, the greatest of the rippers-off of us Britons from cradle to grave, is lionised for paying 20% of all corporation tax. But 20% of 10% is a measly 2% of all tax revenues.


We can see whether allowing the Financial Sector to rip us off is made worthwhile by its contribution to the tax take from these figures:

a) Whole Financial Sector total corporation tax in 2007 = £12.17 billion (from a report done by PWC for the City of London Corporation in Dec 2008)

b) In a press release in October 2010, Which?, the consumer magazine, reported "Savers are missing out on £12 billion a year by keeping their money in accounts that pay miserly rates, according to new Which? research."

With this single simple scam reported by Which?, UK banks cover virtually the entire the cost of the whole Financial Sector's corporation tax.  

The convoluted nature of UK tax law means the civil servants of HMRC will never be able to match the tax-wrangling talents of the commercial sector. The problem won't be solved by recruiting more and better wranglers into HMRC - an arms race HMRC can't hope to win. It will be solved by simplifying tax law. Tax shouldn't be a game of poker, it should be a simple game of snap. 

The question is, do the political movers and shakers who make the rules have the will to do it?

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UK immigration for the non-EU super rich

Chris, Fee and KJ on how fast the despots fleeing their home countries in the Middle East could settle in the UK

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Power to the Egyptian people

Chris, Fee and KJ salute the strength of Egypt's ordinary citizens

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Graphs at a glance: MPs' salary and allowances and how they raced ahead of inflation

Regardless of their paid hobbies (i.e. all their other paid jobs), which suggest they have more free time than many of them claim, MP’s basic salaries have grown vigorously over the decades. The strategy seems to have been to take the pain, or more accurately the gain, in occasional bucketloads. For most years, salaries go up at around inflation – sometimes a little more, sometimes a little less.  But every now and then a major payrise is slipped through. And there is a certain correlation with changes of government – perhaps to cement members’ loyalty, and perhaps to give the losers’ generous final salary pensions a little filip. 

• In 1979, when the Labour government fell, MP’s salaries went up by 37% when the retail price index (RPI) measure of inflation was 13.4%.
• In 1996, the year before the fall of the Tory government, MP’s salaries went up by 29.6% when the RPI was 2.4%

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Parliamentary Expenses - Westminster Gravy Train's return journey

Having been knocked back by public outrage over many of their brethren’s fraudulent expense claims over the years, Members of Parliament have just come up with a new tactic to justify cutting the strings of the public purse.  Their spokesman has stated that they should be more liberally provided for to help the poor, those who have to care for relatives, and to fight child neglect. 

"It would be a tragedy if the implementation of an expenses scheme were to have the effect of inadvertently and unnecessarily limiting access to the role of MP for those with young families, caring responsibilities or other challenging personal circumstances."

They argue that to encourage all these people in these "challenging personal circumstances" to become MPs, all MPs' expenses regardless of circumstances should be more liberally forked out.

While Britain has seen shortages in teachers, nurses, policemen, scientists and engineers, never in the recorded history of these islands has there been a shortage of politicians. However, in a profession where supply is wildly greater than demand, as can be seen by the unseemly scrabble first to get selected by a constituency party and then to get voted in by the electorate, MPs have over the last two decades persuaded us that they deserve more money. Not that they wouldn’t do what they do without it, because they do what they do because of their public spirit, but they just plainly and simply deserve the cash. And that it would be unseemly, and would be a national embarrassment on the international stage, if the rulers of the United Kingdom had to live a less than well padded lifestyle.

The objections to all this are not simply based on a certain queasiness at the MPs helping themselves more and more liberally to public funds, but on the more basic reason of what MPs are for. MPs arguing for better pay, and their sympathisers, are forgetting that MPs are not our rulers but are our representatives. 

There was a time when MPs were men of substance, who like a country squire would look down on the populace and decide what is best for them. But those were men emerging from centuries of feudal rule. Their ‘substance’ was not earned by plying their parliamentary trade in Westminster, though in many cases it would have been augmented there. Today, it is not the MPs purpose to sit at the high table as one of the masters looking down at the masses. It is his purpose to sit at the high table representing the masses. The masters and the masses treat him with respect because of what is in his vote bank, not his bank account. The MP shouldn't be there to merely sympathise with the interests of his constituents, but to have the same interests as the voters who sent him there. The impact of Parliament’s decisions should affect the MPs in the same way as it does the population.

Which, of course, means that in financial terms some MPs should live like nurses, some like GPs, and a few like CEOs. But if all MPs get a standard salary, how would this income disparity arise? Well, MPs are absolutely allowed to supplement their parliamentary incomes, and by their talents earn extra money to make that difference. The MPs register of interests shows their remunerated positions.

Looking back a few years, from the April 2008 register, members’ interests include

• BLUNKETT, Rt. Hon. David (Sheffield, Brightside)
• Weekly column for The Sun newspaper commencing 3 August 2007 (renewal of contract). (£101,000-£105,000)
• CABORN, Rt. Hon. Richard (Sheffield Central)
• Consultant to AMEC; construction in the nuclear industry. (£70,001-£75,000)
• Consultant to Fitness Industry Association; trade association for fitness industry. (£10,001–£15,000)

To their credit, Blunkett and Caborn are among the MPs who actually state how much they make from their remunerated interests. There are others who were more coy about how much they are paid for their hobbies.

• CLARKE, Rt. Hon. Kenneth (Rushcliffe)
• Deputy Chairman (non-executive) of British American Tobacco PLC.
• Director (non-executive) of Independent News and Media (UK). Independent News and Media plc.
• HEWITT, Rt. Hon. Patricia (Leicester West)
• BT Group plc (non-executive)
• Special consultant, Alliance Boots Ltd. (£45,001-£50,000)
• Senor Adviser, Cinven. (£55,001-£60,000)

However, a quick look at the annual reports of these companies provides an insight.

• The BAT annual report for 2007 reveals that “with effect from 1 January 2007 as follows: Deputy Chairman (also the Senior Independent Director) [was paid] £165,000”.  
• The 2007 Independent News and Media annual report states that “K Clarke (appointed to the Board on 14 June 2007) received total remuneration of €65,000 for 2007.” Having been appointed mid-year this presumably represents something like half what he would receive in full years. 
• The BT Group annual report for 2008 reveals “The basic fee for non-executive directors is £60,000 per year.” 

So long as they declare the interests that pay them, MPs are fully allowed to take money – and many of them openly and enthusiastically do. The argument is not that we should pay MPs well enough that they don’t need to take money from special interest groups, because they are allowed to take such money in any case. Banning this would mean money would move from over the table to under it, where conflicted interests would be more difficult to spot. The argument is that allowing this enables MPs to occupy the income brackets all the way to the most elevated, providing a truer cross-section of the electorate.

Regardless of their paid hobbies, which suggest they have more free time than many of them claim, MP’s basic salaries have grown vigorously over the decades. The strategy seems to have been to take the pain, or more accurately the gain, in occasional bucketloads. For most years, salaries go up at around inflation – sometimes a little more, sometimes a little less.  But every now and then a major payrise is slipped through. And there is a certain correlation with changes of government – perhaps to cement members’ loyalty, and perhaps to give the losers’ generous final salary pensions a little filip. 

• In 1979, when the Labour government fell, MP’s salaries went up by 37% when the retail price index (RPI) measure of inflation was 13.4%.
• In 1996, the year before the fall of the Tory government, MP’s salaries went up by 29.6% when the RPI was 2.4%

If an MP’s 1975 salary, of £5,750, had simply matched the RPI inflation, then in 2007 it would be £34,801 rather than the actual £60,675. 

But in terms of vigorous growth the MP’s salaries have been far outstripped by their allowances. An MP’s allowances in 1975, of £3,200, would have risen by 2007 to £19,367 if RPI inflation had been applied – while the actual 2007 figure is £90,505.

The purpose of the MPs salary is to ensure that even those sectors of society who are unable to fund their representation will still have it. MPs should be paid a salary for their employment as an MP, which should be set to the national average wage – something around £25,000 a year. MPs are already allowed to supplement these salaries by other remunerated roles, as can be seen from the register of interests. As for their other costs, MPs are by no means in an unusual position having to work away from home and run offices. Tens of thousands of people working in the private sector are posted away from their homes – be they travelling salesmen or company executives. The mechanism for supplying such people is well established, well proved, and vigorously policed by the taxman – nothing like what is offered to MPs.

Does an MP’s salary need to be raised because there is an insufficient number of people wanting the job? Clearly not, as supply has always exceeded demand. Or else, does it need to be raised because the calibre of people who do apply is to low? In 1993 an MP’s basic salary was £30,854. This was about the same as a 1993 mid level ordinary teacher’s salary on ‘spine point 23’ (the teacher’s scale ran from spine point 1, £22,404, up to spine point 51, £50,682).  In 2008 MP’s basic salary was £61,820 – off the ordinary teachers scale entirely. I leave it to the reader to judge whether our current batch of MPs are ‘off the scale’ in terms of quality compared to those of 20 years ago and before.

When MPs salaries were first introduced in 1911, Lloyd-George made clear what its purpose was. "When we offer £400 a year as payment of Members of Parliament it is not a recognition of the magnitude of the service, it is not a remuneration, it is not a recompense, it is not even a salary. It is just an allowance, and I think the minimum allowance, to enable men to come here, men who would render incalculable service to the State, and whom it is an incalculable loss to the State not to have here, but who cannot be here because their means do not allow it.”

The great majority of MPs already do little more than vote according to their party’s instructions. According to The Public Whip website, which keeps track of such things, the number of MPs who voted against their party more than 5% of the time was as follows

·        Labour             -           0 out of 254

·        Conservative    -           25 out of 305

·        LibDem            -           7 out of 57

figures for current parliament, as at 11th February 2011.

Figures for the previous parliament, 2005-2010, show that the few rebels tend to be in whichever party is in power

·        Labour             -           31 out of 349

·        Conservative    -           5 out of 193

·        LibDem            -           0 out of 63

The obedience of our MPs is currently held by the honour of belonging to the most exclusive club in Europe, and for some by the hope of promotion into ministerial office – both of which are in the gift of their party. The voting figures show that it is a very rare MP whose courage will rise to risk these honours. If their obedience was also held for fear of their party taking away their pay and perks, by deselecting them, then we will have surely arrived at a bought and paid for democracy. Effectively a feudal system, no different to medieval kings granting lands and revenues to their nobility – confiscating and reallocating at the party leader’s whim. And there is perhaps no greater rip-off than that abuse of democratic trust.

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