July 3 is the day when MPs will (perhaps reluctantly) back the new expenses regime (see my last blog).

They also get a choice on pay. Do they accept or reject the recent recommendations by Sir John Baker which amount to an inflation-busting 4.5 per cent pay rise?

Sir John has suggested £650 a year for three years to catch up with past pay-lag. He also wants MPs’ pay to be based on the public sector average earnings index. (Bear with me here).

But the government wants pay to be set at a lower index based on civil service median pay, something like 2.5 per cent.

Sir John suggested his index, which is higher (currently 3.5 per cent) to take into account the lack of any career path or promotion for most MPs. Which seems fair.

The only problem is, with hairshirt public sector pay restraint the order of the day, who will agree with him?

Possibly quite a few MPs, one tells me. He has been waiting to see the orders, which have not been forthcoming. For now no one knows what they will be voting on.

Until the government comes up with a new formula (it’s not good enough to talk vaguely about some new one based on civil service pay) this could be a tricky issue.

“MPs are very much in mind to vote against the government given that the Baker proposal is the only one that works,” he says. 

Shock, horror.

Michael Martin’s committee of MPs has done the unexpected and come up with a new system of expenses for the Commons.

It is a genuine overhaul.  The sums in question remain the same; up to £24,000.

But:

1] The John Lewis list is dead (MPs will no longer be able to claim for furniture and repairs).

2] MPS in outer London will see their expense allowances halved.

3] There will be more forensic oversight of expenses, all of which – not just from £25 upwards (or £250 until recently) – will have to be declared.

There will still be criticisms.

Here they are: Ministers with grace and favour homes can still claim the allowance for a second home. Central London MPs have had a pay rise of £7,000 recommended. There will be no clocking in and out for MPs. The rules governing husband and wife MPs – both claiming on the same second home – remain up in the air. MPs can still use the allowance to pay mortgage interest instead of rent. Employment of relatives will not change.

Even so: It’s a big change, and should be applauded as – at the very least – a step in the right direction. MPs will vote on the package on July 3.

 ps: The committee did look at combining salaries with expenses (which would look like a pay rise of up to £40,000) but rejected it; contrary to the splash in one Sunday newspaper at the weekend.