Politics is a nice little earner – if you're a Tory
Harvard study reveals the financial benefits of winning a seat in the House of Commons
After revelations about duck houses, moats and fake mortgages, many suspected it. Now a Harvard study claims to have proof that the life of a politician really is a nice little earner.
In recent history it has been Conservatives who have managed to profit the most, according to Andy Eggers and Jens Hainmueller, who have calculated that a career gracing the benches of the Commons leaves Tory MPs almost twice as wealthy as their unfortunate colleagues who ran unsuccessfully for Parliament.
The study, published this month in the American Political Science Review, is thought to be the first to put a figure on the financial benefits of serving as an MP. It found that while the median Conservative member died with an estate worth £483,448, those who failed to win seats died with a total of £250,699, a difference of £232,749. By contrast, Labour members benefited by a mere £10,200. The two academics examined the personal fortunes of 427 recently deceased MPs who entered Parliament between 1950 and 1970 and served into the 1990s.
Their paper, MPs For Sale? Returns to Office in Postwar British politics, concludes that Conservative MPs profit from their time in office largely through lucrative second jobs gained as a result of their political connections. Winning a seat more than tripled their chances of being offered a job as a company director. Many enjoyed profitable retirements as firms bought them up. However, Labour politicians, who were more likely to take up posts with unions, enjoyed far less lucrative positions.
Sir Peter Emery, who served in Parliament from 1959 until 2001, accumulated several directorships during his career. He also attracted controversy in the 1980s over his links with a company gaining from government contracts and his indirect financial links with the South African administration. It was calculated that he died with an estate valued at close to £4m.
Sir Michael Grylls, who retired in 1997, was often criticised for involvement in lobbying work through his career, accumulating four company directorships that enabled him to build up an estate valued at £898,068. The researchers found that Sir Marcus Fox, who also retired in 1997, accumulated six directorships after he was sacked as a minister in 1981.
"The data makes us quite confident that the difference in wealth we observe between winning and losing candidates is due to serving in Parliament itself, as opposed to background differences such as schooling, family circumstances etc," said Mr Hainmueller. "Being in office was lucrative for Conservative politicians because it endowed them with political connections and knowledge that they could put to personal financial advantage."
Mr Eggers said that the parliamentary salary received by MPs, which currently stands at just under £65,000, was only part of what they gained financially from the job. "We focus on the outside employment MPs enjoy, which we are able to show directly resulted from their political roles, but liberal use of allowances of various kinds certainly could have helped make serving in Parliament pay off for some MPs," he said.
He added that regulating the financial gains of politicians was a "challenge" in every country. He pointed out that US congressmen were paid around 50 per cent more than MPs, but were subjected to much stricter rules on second jobs. "Members of Congress haven't been able to take on paid directorships since the late 1970s," he said.
Tory rich list
Sir Peter Emery was in parliament from 1959 to 2001. His estate was valued at close to £4m.
Sir Michael Grylls was an MP for 27 years, leaving in 1997. He built up most of his £898,000 fortune via four directorships.
Sir Marcus Fox was also in parliament between 1970 and 1997. On his death his estate was valued around £770,000. All amounts are at 2007 prices.
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