How do House of Lords expenses work?

Electoral Reform Society,

Posted on the 23rd April 2020

As Lords lobby to receive their expenses to work from home, it’s worth taking a look at the current payments system in Britain’s unelected second chamber.  

Unlike MPs, members of the House of Lords do not get paid a formal salary for their parliamentary duties. Instead the House operates on a system of allowances and expenses.

The chamber’s 800 or so members can claim an allowance for each ‘qualifying day of attendance’ in Westminster and, within certain limits, can claim back travel expenses.

The Sunday Times found that the average tax-free payment to peers in the year to March 2019 was £30,827 – higher than the median salary of a UK worker, despite the House sitting for just half the year. Thirty-one Lords claimed more in expenses than the standard take-home pay of an MP.

The criterion of ‘attendance’ includes sitting in the chamber when formal business takes place, voting in a division, and attending meetings of committees/sub-committees of the House. (There are two exceptions to this: office holders and some peers with ministerial duties can receive a salary for their roles, but cannot claim a daily allowance based on attendance.)

Peers can claim a tax-free flat rate of up to £323 for each sitting day, following an above-inflation rise in April. It is up to peers to decide if they want to claim the full daily allowance, a reduced rate (around £160, which applies to parliamentary business conducted away from the House), or not make a claim at all.

Peers who live outside of Greater London can claim back travel expenses between their registered residential address and Westminster. Peers can also claim back the cost of journeys made on parliamentary business.

Lords expense claims surged last year to £23m, partly due to an increase in sitting days. The House of Lords’ House Committee is responsible for the rules on financial support for peers, while the House of Lords Finance Department administers the system and checks the claims made.

And while Peers have to declare on paper that they attended Parliament, there appear to be no formal checks as to whether they’re actually conducting parliamentary business – leading to the former Lords Speaker Baroness D’Souza saying some peers would ‘leave the taxi running’, simply going in to claim their expenses and hop back out again.

Explosive ERS analysis in 2017 showed that 115 Lords – one in seven of the total – failed to speak at all in the 2016/17 session, despite claiming an average of £11,091 each, while 18 peers failed to vote but still claimed £93,162.

A Guardian investigation in 2019 suggests this is still going on. One peer claimed almost £50,000 in attendance and travel expenses, covering every single day the House of Lords was sitting – yet  never spoke or asked any written questions. One peer claimed £25,000 without voting, while another claimed £41,000 but only voted once.

The new rate of expenses could see peers take home nearly £50,000 tax-free, for an average 145 sitting days in the chamber. If all current 794 peers turned up for the 145 sitting days, it would cost £46,835 per peer, per year; £256,462 per day, for all eligible peers; and £37,186,990 per year, all eligible peers.

And with the number of Lords steadily rising, the expenses problem is only likely to get worse. The House of Lords is already the second-largest chamber in the world, after China’s ‘People’s Congress’.


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