MP expenses body must cut costs, says spending watchdog

Many MPs have criticised their new expenses system

The MPs' expenses body is safeguarding public money but must do more to streamline its procedures and cut costs, the National Audit Office says.

The Independent Parliamentary Standards Authority (Ipsa) was praised for boosting public confidence badly dented by the 2009 expenses scandal.

But most MPs told the National Audit Office they were now under-claiming and covering legitimate costs themselves.

The NAO added: "Both sides should make greater effort to find common ground".

Ipsa was set up following the MPs' expenses scandal with the aim of restoring public faith in the way MPs were claiming taxpayers' money, and started work after the general election.

'Adversarial relationship'

But it has since been criticised by some MPs for being overly bureaucratic, too expensive and too slow to respond to claims.

The NAO report said this "adversarial relationship" was "not conducive to the public good for this to persist".

It said £118m had been paid out by Ipsa to MPs in 2010-11, £43m of which went on MPs' salaries, £56m on staff salaries and £19.5m on other expenses.

The public spending watchdog praised Ipsa for establishing itself so quickly and boosting public confidence in the scheme in an "impressively short period" and said it had "convincingly" demonstrated there had been no systematic abuse of the new scheme by MPs and 98.6% of claims had been paid out accurately.

But the NAO added: "The new scheme does not given enough importance to helping MPs spend in a cost-effective way."

The report noted 38% of claims made had been for sums smaller than the amount they cost to process and questioned whether the checking process had to be so thorough.

It also noted 100% of claims - of which 134,696 were processed in 2010-11 - had been checked at least once, and some more, but only 0.5% had been rejected.

'Purchasing power'

It recommended a more "risk based approach" - for example, identifying low risk claims and carrying out spot checks, rather than physically checking every single claim that comes in - as they were published anyway.

MPs also had little advice on how to cut their costs, the report said, and were offered "a high degree of flexibility" in the way they bought goods and services - rather than buying in commonly used services - like transport - centrally and making more of "bulk purchasing power".

And it estimated MPs had been paying out about half of their basic pay on items, which they then had had to claim back - although Ipsa had extended its use of advances, payment cards and direct payment.

"The scheme as a whole will offer better value for money if Ipsa accelerates the streamlining of its own procedures and gives greater priority to minimising the costs necessarily falling on MPs," the report said.

It says Ipsa should work with MPs to come up with a plan to reduce the amount of time MPs were spending on their claims.

The NAO report said a majority of MPs surveyed - 70% - agreed major changes had been needed on expenses and 75% believed all claims should be backed up by evidence of money spent.

But 85% said the new system was such a burden it was hindering them in doing their jobs - and despite some changes, they were still finding it "hard to operate" and "laborious".

They told the NAO they were spending four hours a month on dealing with expenses, and their staff 12 hours a month - time which the NAO calculates costs £2.4m a year.

And although the report found most MPs had not claimed the maximum expenses allowed - the vast majority, 91%, believed they were having to subsidise their own work themselves.

Under the new scheme - 15% less had been paid out in expenses than was done under the old scheme the previous year. But as MPs' claimed more money was coming out of their pockets, it was hard to say "whether the reduction represents a genuine efficiency improvement".

MPs were under-claiming for various reasons, the report says - including because the process was too complex and because of concerns about the claims being published.

The reasons for the stand-off between MPs and Ipsa were likely to include a dislike of change among long-serving MPs, a reluctance to be seen to be claiming too much and the complicated claims process.

NAO head Amyas Morse said: "To improve the present uneasy relationship between the authority and many MPs, both sides should make greater effort to find common ground."

A spokesman for Ipsa welcomed the report's findings but said it acknowledged that while progress had been made "there is more for us to do" and said it was already acting on some of the NAO's recommendations.

He added: "As a regulator created to establish a system of meeting MPs' costs and expenses in which the public can have confidence, the recognition that we have made considerable progress is very significant. The report itself also contributes to our goal - providing assurance to the public that the new system is working well."