Earnings vs. ermine

‘The real reason for former prime ministers not going to the Lords is their dislike of declaring how much they earn’

Michael Mosbacher

While he did accept a knighthood in this year’s New Year’s honours list, he has not taken ermine (Chatham House CC BY 2.0)

Former Deputy Prime Minister and Liberal Democrat leader Nick Clegg is leaving Brexiting Britain for Palo Alto, California, to take on the role of head of global policy and communications for Facebook at a reported annual salary of over £1 million. After he ignominiously lost his Sheffield Hallam seat in the 2017 general election, one would have expected him to be promptly raised to the House of Lords. While he did accept a knighthood in this year’s New Year’s honours list, he has not taken ermine.

Indeed, none of the “Quad” of top players in the 2010-15 coalition government — all now outside the Commons — are in the Lords. Former Lib Dem Chief Secretary to the Treasury Danny Alexander, also knighted, has moved to Beijing and is a Vice President of the Asian Infrastructure Investment Bank, a sort of regional World Bank. George Osborne apparently lobbied hard for Alexander to be given this role as a consolation prize for losing his seat in the 2015 crushing of the Lib Dems. Osborne himself has famously taken on eight jobs, including the editorship of the Evening Standard and advising the US fund managers Blackrock at £650,000 a year for one day’s work per week. David Cameron is busy with his memoirs and a slew of advisory roles, most controversially heading up a £750 million fund to improve road, rail and shipping links between China and the countries it trades with.

The House of Lords — and indeed the Commons — has  become a place not to be seen in by former prime ministers. The last one to accept a peerage was Margaret Thatcher. Before that, with two readily explainable exceptions, all former prime ministers since the start of the 20th century who were not already peers (Salisbury) or died while still serving as an MP (Campbell-Bannerman, Bonar Law, MacDonald and Chamberlain) were raised to the peerage. The exceptions were Sir Winston Churchill, who lived on for only four months after retiring from the Commons just short of his 90th birthday in 1964, and Sir Edward Heath, who quit the Commons aged 84 in 2001, 27 years after leaving Downing Street. Not so long ago, it would have seemed most odd that John Major, Tony Blair, Gordon Brown and Cameron — all men who could still offer much in public life — decided to forgo their place in the Lords.

What has changed? Major and Blair were the first two prime ministers to create serious wealth for themselves after leaving office. This is now a route open to all former prime ministers — with the possible exception of Jeremy Corbyn, should we be unlucky enough to see him elevated to the highest office. Harold Wilson and Jim Callaghan lived modestly after leaving office.

There was much innuendo about Heath profiting from his links to the Chinese regime and talk about the sources of Thatcher’s wealth — but both former leaders left relatively modest estates of £5.3 million and £4.7 million respectively. Some readers might choke over their drinks at such sums being described as modest —but they are when compared to the kind of wealth their successors have accumulated. The bulk of Heath’s estate consisted of Arundells, his house on Salisbury’s Cathedral Close which he left to his charitable foundation. This trust ran out of money to keep the house open a few years back but is now on a firmer financial footing (its website is available in only two languages, English and Chinese). Lady Thatcher’s estate did not include her Chester Square home, which was owned by an offshore company. This caused the Guardian to chunter about tax evasion — but it is as likely that the company was not ultimately owned by Thatcher but by a very wealthy well-wisher.

What has put so many top politicians off going to the Lords? The rules for registering financial interests have grown much stricter — and alongside the possibility of earnings for ex-prime ministers growing exponentially, the public has grown more censorious about such high earnings. Members of the Lords have to declare all employment and freelance work if it adds up to more than £1,000 a year, and individual shareholdings (except for holdings in collective investment funds such as unit or investment trusts) worth over £50,000, or indeed any shareholding if they have a controlling interest even when worth less than that. All property and land worth more than £250,000 that is not solely used as a home must be declared. The rules remain laxer than those of the Commons in that, in the case of earnings and employment, only the fact of the employment needs to be declared. In the Commons the actual amount earned also needs to be declared. It is these rules — and the desire not to have their finances pored over — which has excluded so many recent top-tier politicians from the Lords. Is it a matter of legitimate public interest that the going rate for a Gordon Brown speech — as the Commons Register of Members’ Interests show from the 2010-15 period when he was still an MP but no longer in office — was £40-60,000 while a Clegg speech post-2015 pulled in £20-35,000?

The register is also partly why very wealthy figures who have played a leading role in politics — including the Marquess of Salisbury and Michael Ashcroft — have retired from the Lords without losing their title, as it has been possible to do since 2014 and in a more limited way since 2011. Both Lords Sainsbury — the Blairite minister and ultra-Remainer David, and the Tory John — are on a leave of absence from the Lords that exempts them from having to declare their interests.

Peers’ outside earnings in the Lords should be looked at rather differently from those of MPs. No one disputes that being an MP is a full-time job with a salary of £77,379 to go with it. A small minority of MPs have substantial outside earnings — such as Geoffrey Cox, until his appointment as Attorney General, from his successful practice as a QC, or Jacob Rees-Mogg from his continuing role in the asset management company Somerset Capital Management, of which he was a co-founder. But the vast majority today draw most of their earnings from their parliamentary or ministerial salaries. Membership of the House of Lords is not meant to be a job and is not paid a salary, merely a generous attendance allowance of £305 per full day. It would be a pity if the Lords’ Register of Interests — or rather politicians’ fears of how their earnings might be perceived — put off men and women who could still have a worthwhile role to play in public life.

Underrated: Abroad

The ravenous longing for the infinite possibilities of “otherwhere”

The king of cakes

"Yuletide revels were designed to see you through the dark days — and how dark they seem today"