openDemocracyUK: Opinion

As UK MPs hide extra income, people on state support must declare every penny

If MPs don’t have to prove they’re not gaming the system, then why do we?

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Caroline Molloy
23 March 2021, 2.09pm
Those who lost income due to COVID will have discovered little room for privacy in the benefits system
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betty finney / Alamy Stock Photo

A new investigation by openDemocracy reveals today that over the pandemic year, British MPs’ side hustles netted them a total of nearly £5m, on top of their annual £82,000 salaries.

But the figures we analysed significantly understate the wealth pouring into MPs’ coffers. The rules on declaring financial interests give our representatives a lot of privacy – contrasting sharply with the level of financial information you or I would have had to provide in order to access financial support this past year.

MPs’ interests are still too secret...

The 116 MPs with significant landlord income do have to declare how many properties they rent out – something both Jeremy Hunt and Boris Johnson were notoriously rather slow to do – but not how much their property portfolio is worth. Nor, in any detail, do they have to tell us how much they receive in rent – just whether it totals more than £10,000 a year.

Given that average London rents are nearly twice that sum; that a significant number of MPs are renting out London homes (including those bought with taxpayer money under the old expenses system); and that and around half of Conservative MP landlords rent out more than one property, many MPs’ rental incomes are likely to be substantially higher than parliament’s Register of Interests reveals. But how much higher, we’re not to be told.

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MPs also don’t have to declare the value of any other savings or shares or property they hold, unless they have a particular shareholding worth more than £70,000 or more than 15% of a company’s stock. And even then, as with rental income, it’s a simple ‘yes’ or ‘no’ answer – they don’t have to tell us how much more.

Nor do they have to tell us what level of dividend payments they receive from any of their shareholdings.

And they certainly don’t have to tell us anything about their spouse’s income or financial holdings.

...while claimants must declare everything

Contrast this with the situation you or I might have found ourselves in over the past year. If we had lost some or all of our income due to the pandemic, and had needed to ask the state for support, we would have discovered very little room for privacy.

If we have to claim Universal Credit, the Department for Work and Pensions (DWP) wants to know about every last penny we earn. It also insists on knowing the exact value of any savings we might have, the value of any property we rent out, and any shareholdings. Not just ours – but our partners or spouses’, too.

Many people are horrified to discover quite how intrusive and mean the benefit system is

Many people who haven’t been through the benefit system in recent years are horrified, when they find themselves in it, to discover quite how intrusive and mean it is. Detailed information about our lives is used to reduce our entitlement to Universal Credit, straight away, by at least 63 pence for every pound earned – unless we have children or are disabled, in which case the state would allow us to keep the first £3,444 we earned.

And if we, or anyone in our household, has any assets – savings, shares, or property we rent out – we have to declare it all. If these add up to more than £6,000, our benefit payments will, again, be cut. And if they’re worth more than £16,000, then we get nothing from the DWP. We might possibly be allowed to keep a little more of our savings – but only if we could prove these were to pay for our tax return; a COVID-era concession.

There’s no leeway not to declare any of this – however high or low the figures are.

The level of trust and information required is hugely disparate, particularly given that the amounts of money for Universal Credit claimants are piddling. The bullying, the intrusiveness, the scraping through every little detail of your life, all for £4,919 a year for a single, childless person, or £7,128 for a couple, plus some woefully inadequate help for rent costs.

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Self-employment and the excluded three million

If our self-employment income had vanished under the pandemic, we might have turned to Her Majesty’s Revenue and Customs for support under the Self-Employment Income Support Scheme. But HMRC would have gone through our tax records with a fine toothcomb, looking not just at every penny our self-employment netted pre-pandemic, but also at precisely how much we got in rent, savings, PAYE earnings, and dividends (for example, from our own small business).

If more than half our pre-pandemic income was in these ‘wrong’ categories – as it was for many ordinary self-employed people who earn a lot less than the average MP – we wouldn’t have received any support from the self-employment scheme. Nor would anyone whose self-employed work earned more than £50,000 pre-pandemic, nor anyone whose self-employment is new. That’s why three million self-employed people have been excluded from any support at all, whilst MPs’ side hustles boomed.

One rule for MPs... another for us

The rationale for the scrutiny of those of us claiming state support, has long been to stop ‘slackers’ living the life of Riley, and the safeguarding of public finances.

But MPs make huge decisions that affect all our finances, public and private.

Don’t tenants hoping for better regulation of landlords have a right to know how much their MP makes as a landlord? Don’t environmental activists campaigning against Big Oil have a right to know how many shares their representative has in Shell or BP?

Those of us who are scrabbling to keep their heads above water are treated with suspicion, whilst those exercising power are trusted to act as ‘honest brokers’

If they don’t have to explain every penny to prove they’re not gaming the system, then why do we? Doesn’t democracy rely on the idea that we are equals?

Those of us who are scrabbling to keep their heads above water are treated with suspicion, whilst those exercising power are trusted to act as ‘honest brokers’.

Aside from introducing better reporting requirements in the Register of Interests, another approach would be for MPs to have to publish their tax returns, as happens in much of Scandinavia. Even that would not fully expose all the offshore investments, family trusts or income from exotic sources that some MPs take advantage of, but it would be a start.

Back in 2016, when the Panama Papers leak exposed how David Cameron had benefitted for years from an offshore investment trust that he’d paid no tax on, Jacob Rees-Mogg said he expected all MPs would have to publish their tax returns, within a couple of years. But even though Rees-Mogg is now leader of the House of Commons, it all seems to have gone noticeably quiet at Westminster on that front.

Earlier this month, health minister Nadine Dorries said that offering the nurses a 1% pay rise was reasonable because, “Many people in the private sector have lost their jobs or are on reduced salaries and their economic future is uncertain.”

But whilst Dorries seems to expect many of us to put up with worsening uncertainty about whether we can even afford the basics, MPs remain comfortable in the knowledge that they can top up their income from all sorts of imaginative sources with minimal scrutiny.

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