Speaker's Committee for IPSA
Oral evidence: IPSA's Main Estimate and Business Plan 2025-26
Tuesday 11 March 2025
Ordered by the House of Commons to be published on 11 March 2025.
Members present: Sir Lindsay Hoyle (Chair); Alberto Costa; Marie Goldman; Leigh Ingham; Gordon McKee; Charlotte Nichols; Jesse Norman; Lucy Powell.
Lay Members: Theresa Middleton CBE; Tina Fahm.
Questions 1-23
Witnesses
I: Richard Lloyd OBE, Chair of the Independent Parliamentary Standards Authority (IPSA), and Ian Todd, Chief Executive of the Independent Parliamentary Standards Authority (IPSA).
Witnesses: Richard Lloyd and Ian Todd.
Chair: Welcome to this meeting of the Speaker’s Committee for IPSA. We are here today to consider IPSA’s main estimate for 2025-26. Richard and Ian, could you introduce yourselves for the record?
Richard Lloyd: I am Richard Lloyd, chair of the Independent Parliamentary Standards Authority.
Ian Todd: I am Ian Todd, the chief executive and accounting officer for IPSA.
Q1 Chair: Before we begin our questioning, could you briefly summarise your main estimate?
Richard Lloyd: If I may, I will set out some context, as well as some of the elements of the plan that we would most like the Committee to recognise.
First, this is the first estimate of this Parliament, following the biggest change of MPs and staff ever: 2,500 people left last year, and the same number have now joined. We are listening carefully and learning about the priorities and experiences of the new intake, as well as of the returning Members, and we will continue to do so.
Secondly, we made significant improvements in the last Parliament to the services IPSA provides, within the constraints of the operating model we inherited, but we want to do better. We made major commitments to overhauling the way IPSA operates. That work was paused so that we could focus on supporting the new people joining Parliament. We have reviewed those plans for change, and found them to still contain the right priorities. We are now returning to them, and they are in the plan and estimate before you. They include developing a more user-friendly IPSA online; centralising the procurement and provision of more services; changing the way we publish our spending data, so that it is less open to misinterpretation; and evolving our regulatory approach.
Thirdly, we are looking carefully at the remuneration arrangements for Members and staff, and also at evidence of pressures on key budgets, including for offices. As you will remember, Mr Speaker, we increased staffing budgets by 70% in the last Parliament and began a major review of staff terms and conditions. But we are determined to ensure that these arrangements are fair to MPs, staff and the taxpayer, and we will consult on elements of them in the coming months.
Finally, as you know, we have been consulting on some of the first steps towards a more proportionate and simpler set of rules. I will be writing to Members in the coming days to confirm that we will make gradual and careful steps towards a greater reliance on guidance rather than prescription; allow for the recognition of past service when a member of staff moves to the employment of a different MP; clarify the arrangements for constituency communications; and change the way we publish details of small-value items and staff absence, to avoid negative impacts on staff wellbeing.
We know we have a lot to do to modernise the operating model that IPSA took on from the House 15 years ago, but we cannot do any of these things in isolation, so I want to finish by recognising two things. The first is the very welcome and improving collaboration between IPSA, Members, Members’ staff and the House services. We cannot build a more effective IPSA in isolation. Secondly, I want to thank Ian and every single person who works at IPSA for their commitment to supporting Parliament and a continually improving service.
Chair: Thank you. Right, let’s get into the questions. Charlotte, please.
Q2 Charlotte Nichols: Subhead A contains an increase for office costs of between 8.2% and 8.8%. Do you believe that that is sufficient to address the difficulties some MPs have had in finding suitable office space?
Richard Lloyd: This is a budget we wrestle with every year, because there are very different forms of data from the market. There are also different requirements from different MPs, and we have obviously had a very large number of new MPs taking on new premises—again, sometimes with differing requirements.
We have tried to set the uplift for next year’s budget in response to the market data that we have and the arrangements that are already in place. A small number of MPs are still searching for a suitable office. By the way, the absolute fundamental for us is that MPs and their staff have safe, healthy, secure offices to work in, and there are differences of view about how that can be brought about.
Where we have seen Members face difficulties with local market pressures, we have had some very constructive conversations about how we might respond. In short, we think we have provided for the vast majority of instances we already know about based on market data, but where there is extra pressure, we will continue to have those conversations and to support MPs, where necessary.
For the future, as I said earlier, we are looking hard at a different model of provision of constituency offices, which ought to take the strain of negotiating local leases out of the hands of MPs and office managers and ensure that we, again, have a centralised model that is more responsive to local need.
I completely recognise that there are strains in some constituencies. As I said, we are confident that what we have provided for the vast majority of MPs will be sufficient, but we will have those conversations about individual circumstances, when necessary.
Charlotte Nichols: Is there anything you would like to add, Ian?
Ian Todd: No, Charlotte. Thank you.
Q3 Charlotte Nichols: Moving on to staff pay increases, subhead A includes an increase of 5% for MPs’ staff pay costs, made up of an automatic 3% increase and a 2% budget increase for flexibility. Do you believe that that is sufficient reward for parliamentary staff?
Richard Lloyd: Again, this is a complicated set of arrangements. There are many—roughly 2,200—new staff, including people who have just joined. Our approach for some years now, as you know, Charlotte, has been to apply an automatic uplift, but to communicate the fact that, where circumstances are appropriate, either a higher uplift or no uplift might be what an MP, as the employer, chooses to do. In other words, we make the baseline uplift as simple, administratively, as possible.
We have looked at two things. One is the pressure on staffing budgets, particularly for new offices where staff are coming in, sometimes on short-term contracts, so that picture is not as clear as it is in a normal year. The second is the additional costs this year for MPs as employers. We think that the 5% budget uplift overall enables MPs—again, in the vast majority of cases—to provide the automatic cost of living uplift and to have headroom in their budgets for some of those exceptional cost pressures this year. We have explained that to the unions and to MAPSA. They understand the rationale.
Finally, one thing we have to keep in mind is the wider public spending context and where settlements are. We have looked very carefully at where settlements are going across the public sector, and indeed the private sector. Taking all that into account, we felt that a 5% budget uplift was appropriate.
Q4 Charlotte Nichols: You referenced some of your conversations with the trade unions. The unions have raised concerns that some offices are operating close to the limit of their budgets and may not be able to pass on the automatic 3% award. That is particularly pertinent for returning members of staff and long-serving MPs’ staff, who are more likely to be on slightly higher salaries, so that percentage uplift will be a larger part of the budget. Have you done any modelling on how many offices are in that position, and what can be done to ensure that those staff members receive the pay award as intended?
Ian Todd: That is quite a complex calculation to do. There are a number of different variables that play into that. It is important to say that, across 650 Members, there is not a homogeneous pattern of spend. Some Members are very close to spending their full staffing budget. Around 50% have about £30,000 or more left at the end of the year, and 25% have £50,000 or more left over, which would allow them to employ an additional person if they so wished.
The best modelling we can achieve suggests there may—and I stress the “may”—be 13 Members whose current pattern of spend is such that the increases to the cost of employment, in addition to the 3% uplift, will take them over their budget for the year, when they otherwise would not be over budget. As we get into the next financial year, we will monitor those offices very closely, in conjunction with the Members and their staff. We will help them with forecasting through the year. I think that a number of those other variables will kick in and the number of Members ultimately affected will be less than 13, but we will help and support them through that if they incur a difficulty because of the changes we have made.
Q5 Charlotte Nichols: Has IPSA reached out proactively to the people who may be affected?
Ian Todd: We are in the process of doing that, yes.
Q6 Theresa Middleton: I have a few questions for Richard and Ian about subhead B—IPSA’s own running costs. Your business plan and your introductory remarks just now highlighted that there has been a higher workload on IPSA in the run-up to the election, but also, more importantly, now, in the aftermath. Your planned staff cost budget is around 4.5% lower than last year’s budget due to efficiencies you have made, which is great, but do you feel you have enough staff now to manage the demands that will be made on you during the coming year?
Richard Lloyd: I will start and then hand over to Ian. This is something that the IPSA board has spent a lot of time interrogating, as you can imagine. We want the most efficient and effective IPSA possible. We had very strong performance through the election and in the second half of last year by using our existing staff, rather than bringing in additional, temporary staff. That is why some of the projects we had planned for last year were put on ice.
We have a really strong, experienced, highly motivated and highly engaged team of staff. We think it is the right size to do the two key things that we are talking about here: to keep improving the existing service and, at the same time, to build the future IPSA that we all want to see. There are some additional costs for IT, for example, and one or two other elements of building that new operating model, but we are confident that the team we have is well capable of delivering that, with some external support as well.
Again, that is a result of some years of building a team at IPSA that has very different capabilities, a very different mindset and a very different culture. I think we have proved, through the election and towards the latter part of the last Parliament, that IPSA is now a very different organisation.
Ian Todd: Just to expand on that, to the end of December last year, we saw 6,000 more phone calls and 4,000 more emails than we saw in the entirety of the year before. Our performance in dealing with those has improved from the previous year, both in terms of call answering and email answering. So the four years that we have invested in the improvements to IPSA mean that we are now able to handle those kinds of volumes in a more efficient and effective way.
We also think that those volumes will start to drop. They are significantly the product of a new Parliament, as Richard said, with a very substantial number of new MPs. These are people who have come in and do not necessarily understand our systems—how to access support directly—and who are not necessarily able to take the training as soon as they come into Parliament; that follows further down the line. So we anticipate that that increase in volume is an initial peak following the election, but that it will then start to tail off over time.
The other thing compared with last year, of course, is that, although those volumes have peaked and, we assume, will start to tail off, neither the work before nor after compares to the actual volume of work we had to do during the election itself.
So we are we are confident that the staffing model is correct. We have, hopefully, developed a degree of trust with this Committee over the last four years, in which our estimate and our out-turn against that estimate have been more accurate from one year to the next, and our forecasting and financial management have been better. I think that that should give you the confidence that the calculations are done correctly, and that we can do what we need to do to continue to improve IPSA with this staffing, based on the funding we have asked for.
Q7 Theresa Middleton: You touched briefly on telephony and IT. You are spending a fair bit more there, around £1.4 million, which is just shy of 20% more than you planned to spend last year. Why is the increase so significant?
Ian Todd: It is particularly related to one contract. Unit4 is the supplier of the Business World system, which is the product that we use in IPSA and that is used in Members’ offices to support their business costs. Unit4 moved on to a different model of contract part-way through the year, and on to different licensing and service-provision models.
It was not a change that we were necessarily particularly happy to adopt, in the way that Unit4 put it forward, and its initial charges, or proposed charges, were significantly higher than those we were ultimately able to negotiate with it. That does mean that we have a period of double-running, where we are paying Unit4 for provision of cloud services, while we are also tied into our existing contract. That will come to an end relatively shortly.
I would say that that is a significant increase, and it was one that we had no real opportunity to step away from, other than to negotiate a better deal; we are not in a position to provide a different product at such short notice. I would say to Unit4, in front of this Committee, that it will now need to demonstrate the value of that product at the increased cost, or we may need to consider alternate provision in the longer term.
Q8 Gordon McKee: You just mentioned it, but did you give consideration to an alternative provider?
Ian Todd: The lead time to procure, customise or configure an alternative product that would work for us and across 650 MPs’ offices, and the implementation of that, including all the training requirements that would go with it, is just something that cannot be done at short notice. It is something we continue to keep under review. Obviously, the contract comes up for renewal on a regular basis. As I say, the changes that have happened recently would make me consider whether it remains the right long-term solution, but if we were to move away from it, that would be a considerable piece of work, and we would have to get it right because we need continuity of service.
Q9 Theresa Middleton: The last question from me is about consultancy fees. You have put in a bit more than £330,000 for them, which is quite a lot more than the previous year’s budget—about double. What are these consultants for?
Ian Todd: There is a variety of costs. I think it is recognition of the fact that we are a small organisation and, particularly during a major change programme, we do not always have the expert, specialist resource, and we often need it only for a short period of time, so contracting people into the organisation—employing people within the organisation—would not be either a viable or a sensible alternative.
The costs have not gone up as much as they might appear to have done. We are asking for broadly the same amount that we asked for last year, plus the money we did not spend last year because the general election diverted us away from doing those projects. To ensure that we can deliver successfully this year and catch up, we are looking effectively to bring the underspend from last year into this year’s budget.
That covers a variety of specialist skills. It includes commercial procurement, but is predominantly around the IT space and the development we are doing, at the request of Members, to improve the accessibility of the systems that we have.
Q10 Jesse Norman: Gentlemen, the McCloud remediation costs were £7.3 million. Then they came down to £5.5 million as a result of an HMRC ruling. What was the ruling, how have they come down, and why?
Richard Lloyd: This is an estimate provided by the Government Actuary—it is not our own—and once it has been given to us by the GAD, we have to recognise it in our estimate. Essentially, this was a projection of the number of Members who would take up one of the McCloud options and might incur an unfair tax charge. Therefore we have committed, through the PCPF, to put people in that situation back into the position that they would otherwise have been in. It is now a certainty, because of HMRC; the statutory instrument has now been made to provide for that redress scheme. The quantum is still uncertain. There is not absolute certainty about the behaviour, or the take-up by every single MP who has been affected through the McCloud issue, but once the GAD gave us that number, we had to include it.
Q11 Jesse Norman: So are you very confident, or at all confident?
Richard Lloyd: We will become more confident as the year wears on.
Q12 Jesse Norman: Are you slightly confident at the moment? What level of confidence do you have about the costs?
Richard Lloyd: I have a medium level of confidence, based on what I understand to be the take-up of different McCloud options. Obviously as those work through the system, we will become very confident and very clear about the need for the redress scheme and the payments that the GAD have projected.
Ian Todd: The reduction from £7.3 million to £5.5 million is not actually a reduction in cost. The regulations that the Treasury have laid mean that the £1.8 million difference does not need to go through IPSA’s estimate, because it can now be picked up directly by the pension fund, which they would not have been able to do without the regulations being in place. But the GAD—
Q13 Jesse Norman: Is that a posh way of saying that the Treasury have cooked the books so that the rules do not apply in the same way and therefore the number has gone down?
Ian Todd: No. The number in our estimate has gone down because where the funding is coming from is now split between us and the pension trustees, whereas it was originally all going to come through us, without those regulations. The GAD estimate is based on a worst-case scenario, assuming everybody chooses the option that would cost the most.
Choices had to be made by 31 January. Once those are understood, we will be able to come up with an actual calculation. It will be less, almost certainly. Assuming that the GAD are right and the estimate that they have created is the maximum, it should not be more than that. We anticipate it will be significantly less in practice.
Q14 Jesse Norman: What happens to MPs who are suddenly landed with a large bill in order to recover costs that they would have paid earlier? Do they have a choice between paying it and not getting their pension?
Richard Lloyd: No, everyone remains in the pension scheme. The choice, and the guidance that we funded to help people make that decision, was about—and in some cases, as you know, this is much more complicated than simply the parliamentary scheme, because if people had other pension pots, that needed to be part of their consideration.
Q15 Jesse Norman: But a colleague could still find themselves up for an additional payment of tens of thousands of pounds.
Richard Lloyd: They will have been given the information that told them the cost of either rejoining the final salary scheme for a period in which they were not in it, or their other options.
Chair: And there was independent advice being offered.
Richard Lloyd: And we funded—
Q16 Jesse Norman: What I mean is: do they have a choice to pay it over a period of time? Who has the cash to pay that kind of money?
Lucy Powell: Yes.
Richard Lloyd: They do, and all that will have been explained in one-to-one guidance sessions, either with the PCPF secretariat or with the guidance firm that we funded. The PCPF will be working with Members who are in that situation to ensure that it is an affordable arrangement.
Jesse Norman: Thank you. I just wanted to put that on the record.
Q17 Chair: A last question on that: how many people did not complete by 31 January?
Richard Lloyd: The PCPF secretariat know that number. I do not know it today, Mr Speaker, but I am happy to let you—
Chair: That obviously alters the figure, so the less that number is, the less the total will be out.
Q18 Marie Goldman: You have requested a significant uplift in capital spending, which I understand is for a new office to be leased in the 2025-26 financial year. Can you explain a bit more why that office move is required and why it represents value for money?
Ian Todd: Certainly. It is important to put context around the number that is in the estimate. We currently lease an office on the Strand. That lease ends in June and we are not able to renew it. The landlord intends to refurbish the entire building and we have to move; we simply have no choice. We have, with the support of Mr Speaker, spoken to the parliamentary estates team, and we have spoken to the Government Property Agency, who look after Government property more widely, about options within the public sector, and there are no offices in proximity to Parliament that meet our needs at the current time, so we have had to look to the commercial market.
We have not signed a new lease yet, so the numbers are provisional. Just to be clear, we are looking for a significantly smaller floor plate than we currently have, because we have adopted hybrid working patterns coming out of the end of covid. We would expect the annual leasing and the additional costs like rates to be at least £100,000 a year cheaper going forward than we are currently paying.
The reason the number looks so large in the estimate is that there has been a change to the international financial reporting standards, which means that we have to essentially put you on notice that we are making a five-year commitment, which will be the initial lease term, or at least up to the first break clause. The figure that you see there represents five years of leasing the new building. The amount that we draw down will actually be in the estimate for each of those five years, and a much smaller amount. It will represent better value for money. It will be smaller and it should save in the region of £100,000 a year over our current office space.
Q19 Marie Goldman: Thank you. You say that you have reduced your headcount. Can you give us a rough idea of the numbers that you were at and what you are at now?
Ian Todd: We run at around 100 people in the organisation. We were running at 104. We are at the moment, I think, at 97, and likely to reduce by maybe one or two further in the near future.
Marie Goldman: So roughly a 10% reduction.
Q20 Alberto Costa: Good afternoon, gentlemen. The questions I have are to do with IPSA’s plan to move to principles-based regulation. Your consultation on the move to principles-based regulation ended in December. What is the outcome of that consultation?
Richard Lloyd: Thank you for the question. We are about to write to members of this Committee and Members across the House to say that we intend to over time evolve our regulatory approach, but the consultation responses, including your own, were very helpful to us in ensuring that we do not create a sense that we are suddenly shifting to a dramatically different system, in particular for Members who have become used to the very detailed rules we have provided for some years now.
The outcome will be that we will move over time to a greater reliance on guidance, including individual guidance from our account managers, and less of a reliance on increasingly detailed rules in the rulebook itself. We will make the principles in the scheme clearer, but I think that approach over time—bearing in mind the need to be really clear about the intention of the overall regulatory approach and the need to offer clear guidance and examples of what is possible under the scheme—will mean that we will evolve slowly and surely and give a sense of wanting to go at a pace that Members and office managers can absorb, rather than having a sudden cliff edge.
What you will see in the first iteration of the scheme in that new approach will not be hugely different from what you have in front of you today. There are some areas where we will put more detail out in guidance and in the accompanying material that goes with the scheme than we have before to make things more clear, rather than less clear. But as I say, we want to work with you on how that will be embedded and how that will evolve over time.
Q21 Alberto Costa: You have already answered some of my other questions. How much will the move impact your operational costs? Do you envisage having to employ people specifically to give advice or guidance, as you have mentioned?
Richard Lloyd: No, it is budget-neutral. In terms of the change, we are particularly bearing in mind the pace of it and that we want there to be a sense that we are evolving rather than having a very sudden set of changes. Again, in the light of the earlier question, we are confident that we can bring that about through existing budgets—in fact, through a slightly declined budget.
Q22 Gordon McKee: Thank you both for coming in; I know it is a very busy time for IPSA at the end of the financial year, and I am sure your teams are all working very hard. You list 23 projects in your business plan, but at the same time subhead B shows a decrease in the budget for those projects. Are you confident that you are going to be able to deliver those projects with a decreased budget?
Ian Todd: It is similar to the answer that I gave to Theresa previously. We are confident. We have developed a track record of planning our improvement programme and delivering it successfully. Quite a number of the projects in the plan for this year are things that have been brought forward from last year. They are either partly delivered or were not started because of the general election.
We plan very carefully. We recognise that we are a small organisation. We have a dedicated strategy and change team, but we also rely on people throughout the business to deliver a lot of that change. We plan. We are not doing all 23 of those things simultaneously; they are sequenced throughout the year. We are confident that we have the right people, and sufficient people—with reliance on consultancy where necessary—as well as the IT systems and all the support mechanisms we need to be able to deliver that successfully.
Q23 Gordon McKee: What do you think are the most important projects?
Ian Todd: Three or four years into the change programme, I think that they are all important, frankly. We need to change the way we operate wholesale. Richard has spoken about the move to a different operating model and a different way of thinking about regulation, which would be more modern and more aligned with the principles of better regulation—in particular, proportionality, targeting and accountability.
We very much want to make further inroads into the accommodation pilot, which we delivered through the general election, but it was in a very early phase—we had not been able to do as much piloting as we would have liked, because of the timing of the election. It was successful for some Members—I am grateful to Lucy, among others, for being part of that. In her case, I believe, it was a successful product—
Lucy Powell: Love it.
Ian Todd: However, it was not sufficiently successful for enough Members, so we want to look at it and deliver it in a different way.
Other aspects that Members and their staff particularly ask us for involve the accessibility of our systems: making IPSA Online easier to use, or having direct procurement models so that you can purchase things without having to expend the money and reclaim it. In effect, you could have it invoiced directly to us. We could help to deliver value for money through economies of scale by procuring things on the basis that 650 different offices will be using the same thing, rather than each of you having to do it off your own bat. Those are probably the key priorities.
Chair: That concludes our public evidence session. I thank both of you for turning up today.