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MPs For Sale? Estimating Returns to Office in Post-War British Politics
Unformatted Document Text:  Since 1996, the RMI has provided further detail on the amounts of outside income re- ceived from consultancy and journalism fees obtained through “providing services in the capacity of a Member of Parliament.” Table 6 summarizes the total amount reported from both categories combined for the year 2007. 32 Outside income from journalism and con- sultancies varies widely across candidates, with some reporting no income and the highest- earning MP reporting an annual total of 713,000 GBP. The distributions are highly skewed. For Conservatives, about 65 percent of MPs report no fees, about 23 percent report fees up to 10,000 GBP, another 10 percent report fees between 10,000 and 50,000 GBP. The top 3 MPs report an annual outside income of more than 200,000 GBP. (As a benchmark, the MP salary in 2007 was 60,675 GBP.) In the Labour party, reported outside income from both journalism and consultancies is generally significantly lower, except for the top earners who earn more than 75,000 in fees. It is important to note that the RMI earnings figures do not include compensation for directorships, disclosure of which is not required under RMI rules. Based on public records and anecdotal accounts, though, directorships were lucrative. In 1990 the average annual fee for outside directors was about 15,000 GBP plus benefits, with some directorships paying over 60,000 (Hollingsworth 1991, pp. 21,157). 33 Considering how much more common directorships were among Conservative MPs, the difference in outside income between the parties was likely to be significantly greater than the RMI indicates. It bears noting that the difference in earnings between winners and losers was likely to be quite a bit larger than the difference in estimated wealth. As noted above, we estimate that the median Conservative MP, who died with around 530,000 GBP, would have died with about 245,000 GBP if he had not served. Only a fraction of earnings ultimately is bequeathed; using US probates from the 1960’s and 1970’s Menchik & David (1983) estimated the marginal propensity to bequeath from earnings at about .25 for the top 1996. 32 Earnings are reported within bands of 5,000 GBP; we used midpoint values unless the actual amount for an engagement was reported (eg. so for the 45,001-50,000 band, 47,500 GBP is used). 33 Conservative MP Sir Geoffrey Rippon, the sixth wealthiest person among the Conservative candidates in our estimation sample, had a directorship with the Britannia Arrows financial group that paid himPounds 60,000 in 1986 Hollingsworth (1991, pg. 21). According to the RMI of that year, Rippon hadaccumulated 33 directorships overall. 23

Authors: Eggers, Andy. and Hainmueller, Jens.
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Since 1996, the RMI has provided further detail on the amounts of outside income re-
ceived from consultancy and journalism fees obtained through “providing services in the
capacity of a Member of Parliament.” Table 6 summarizes the total amount reported from
both categories combined for the year 2007.
32
Outside income from journalism and con-
sultancies varies widely across candidates, with some reporting no income and the highest-
earning MP reporting an annual total of 713,000 GBP. The distributions are highly skewed.
For Conservatives, about 65 percent of MPs report no fees, about 23 percent report fees up
to 10,000 GBP, another 10 percent report fees between 10,000 and 50,000 GBP. The top 3
MPs report an annual outside income of more than 200,000 GBP. (As a benchmark, the MP
salary in 2007 was 60,675 GBP.) In the Labour party, reported outside income from both
journalism and consultancies is generally significantly lower, except for the top earners who
earn more than 75,000 in fees. It is important to note that the RMI earnings figures do not
include compensation for directorships, disclosure of which is not required under RMI rules.
Based on public records and anecdotal accounts, though, directorships were lucrative. In
1990 the average annual fee for outside directors was about 15,000 GBP plus benefits, with
some directorships paying over 60,000 (Hollingsworth 1991, pp. 21,157).
33
Considering how
much more common directorships were among Conservative MPs, the difference in outside
income between the parties was likely to be significantly greater than the RMI indicates.
It bears noting that the difference in earnings between winners and losers was likely to
be quite a bit larger than the difference in estimated wealth. As noted above, we estimate
that the median Conservative MP, who died with around 530,000 GBP, would have died
with about 245,000 GBP if he had not served. Only a fraction of earnings ultimately
is bequeathed; using US probates from the 1960’s and 1970’s Menchik & David (1983)
estimated the marginal propensity to bequeath from earnings at about .25 for the top
1996.
32
Earnings are reported within bands of 5,000 GBP; we used midpoint values unless the actual amount
for an engagement was reported (eg. so for the 45,001-50,000 band, 47,500 GBP is used).
33
Conservative MP Sir Geoffrey Rippon, the sixth wealthiest person among the Conservative candidates
in our estimation sample, had a directorship with the Britannia Arrows financial group that paid him
Pounds 60,000 in 1986 Hollingsworth (1991, pg. 21). According to the RMI of that year, Rippon had
accumulated 33 directorships overall.
23


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