Recommendations which would have split MPs' allowances into staff and equipment costs, and established a personnel office to improve the treatment of staff were rejected by the Cabinet.
The whole package would have taken MPs' allowances up by 23.6 per cent from pounds 28,986 to pounds 37,360 a year, with an additional one-off grant of pounds 5,000 for office computer equipment, plus an extra pounds 2,000 a year for MPs who base their activities in their constituencies rather than in Westminster.
Instead, Tony Newton, Leader of the House, said, MPs were to be offered a 9.8 per cent rise to pounds 33,190 in their office costs allowance, on top of a 4.25 per cent rise from 1 April under an existing uprating formula.
The Government's decision, he said, provided a 'substantial increase' and a fair balance between the taxpayer's interests and the needs of MPs.
The Top Salaries Review Body argued, however, for much bigger increases to help staff who find MPs' employment practices 'at best variable and at worst unacceptable'. Many MPs themselves would agree with that analysis, the report said.
It argued that rather than a simple increase in the allowance, 'fundamental reforms' were needed. Since 1987, the last time the allowance was seriously examined, the pressures and demands on MPs had altered significantly. Television and local radio coverage had led to more demanding constituents - letters had risen from 200 to 300 a week on average - and MPs were more involved in select committees which required more research. The resources available to MPs were 'no longer adequate'.
In addition, it said, the way MPs use their allowances should meet 'high standards of accountability and employment practice'.
Over half employ more than their notional 1.5 staff, but pay them less than the notional amount in the allowance. There is evidence that staff pay is being squeezed to pay for expensive office equipment, the review body said, and squeezed so that more help can be employed.
Many MPs are as concerned as staff that they are not good employers, the report says. Many part-time staff work close to full- time hours. Pension payments are forgotten. There are no standard conditions of employment, and some written contracts are so badly drafted as to be meaningless. MPs commonly forget pay review dates, occasionally fire secretaries to employ their wives, and have had to fire staff because they mismanage the allowance.
MPs should be given a separate pounds 32,000 allowance for two staff, payable only when a decent written contract is provided to the Fees Office, the review body said. A personnel office should be set up to help staff and MPs who should receive a one-off pounds 5,000 equipment grant, and pounds 4,000 a year payable on proof of expenditure.
Rejecting the package, Mr Newton said splitting the allowance would reduce the flexibility MPs have in spending it, and the Government opposed a personnel office, 'conscious of the concern of many members about possible external intervention in the relationships between themselves and their staff'.
The 9.8 per cent rise the Government is offering includes an extra quarter member of staff per member and pounds 4,000 for office expenses, but both as an aggregate rather than a separate allowance.
Review of the House of Commons Office Costs Allowance. TSRB Report no 32. HMSO pounds 8.35.