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How to make a million in five years (become a Euro MP)
I left the European parliament’s imposing Brussels buildings and walked towards the Place du Luxembourg, turned left into the Rue de Trèves, took a first right at the flower shop on the corner and stumbled on just what I needed. Three buildings were advertising studios for rent. This would be a handy pied-à-terre while I worked on an investigation into European Union waste and corruption. I tracked down a concierge.
Non, monsieur, he explained without a smirk, these studios are hired by the hour, with the price depending on the type of facilities required.
Belgians call them les cinq à sept (five to sevens) because people using them leave work at five and arrive home to their wives at seven. They seem to have been enthusiastically adopted by some members of the nearby parliament for daytime jiggery-pokery.
Most provide large double beds, full-wall mirrors and X-rated porn films. There are S&M films in some of the more expensive rooms and many other extras for the discerning guest.
How can MEPs afford it in these straitened times? Well, Brussels is a bubble that has escaped the recession, thanks to the many millions that European taxpayers pour into the pockets of Euro-parliamentarians and Eurocrats alike.
In Britain, we complain about bankers’ bonuses and about the denizens of Westminster and Whitehall who cushion themselves financially through perks and pensions while the economy totters.
However, the Euro fatcats – enjoying allowances that, by my reckoning, enable them to save £1m during a single parliament – vastly outpace the British for sheer effrontery, and they do so without having to account for themselves.
The past few months have been an interesting time to be working in Brussels. Outside, in the real world, reputable banks crumbled to dust, shares went into a nosedive, big companies became close to worthless, hundreds of thousands lost their jobs and millions feared the worst.
Inside the Eurobubble, you’d hardly have known. The elite continued to go to champagne receptions in the evenings before eating in highly rated restaurants at taxpayers’ expense. They continued to flit from city to city to attend meetings; continued to fly around the world on fact-finding missions; and continued to think of ever more rules and regulations to help organise the lives of the EU’s almost 500m citizens.
There are certainly many talented and fundamentally honest people working within the EU’s halls of power. Unfortunately for us, the EU has also become an irresistible magnet for the more-than-ambitious, the dogmatic, the self-righteous, the rapacious, the lazy, the profligate, the self-serving, the incompetent and the morally corrupt.
As a former management consultant, I’ve done a fair bit of investigation into waste in the private and public sector, but I went to Brussels with no preconceptions. Matthew Elliott of the TaxPayers’ Alliance, who had spent two years working for an MEP, gave me some guidance and I was introduced to some EU insiders, whose names I can’t reveal. With their help (and EU documents that I shouldn’t have seen) I managed to piece together what was happening in Brussels in our name.
I soon realised that the EU project and the institutions have been hijacked by an arrogant, self-serving and undemocratic elite, which has become increasingly isolated from and disdainful of the people who pay their considerable salaries, expenses and pensions – us.
Among the things that shocked me were the arrogance, cynicism and avarice of the MEPs, commissioners and EU staff; and the extraordinary levels of thieving.
Look at what goes into MEPs’ pockets. In July this year, a big pay increase will come in – more of that later – but at present, their salaries are fixed at the same level as members of parliament in their country of origin. British MEPs get £63,291.
To say this is not especially high is to reckon without MEPs’ overliberal expense allowances. Becoming an MEP is a bit like joining a millionaires’ club – you can easily live like royalty and still walk away with more than £1m saved up in your bank account from serving just one five-year term at the European parliament.Get elected twice or more and you can become a multi-millionaire.
The benefits of being an MEP don’t stop here. MEPs also have a huge list of other entitlements that are generously subsidised by Europe’s taxpayers. If they take language and computer courses we pay their fees, travel and living expenses.
They have full, free accident insurance, travel insurance and life assurance. They and their families get money for spectacles, contact lenses and dental treatment. MEPs and their families can also get full payment for things such as hydrotherapy, mud baths, aerosol therapy and acupuncture.
Even when MEPs lose their seats in the European parliament, they don’t have to bid goodbye to the financial benefits immediately.
Once they leave office they continue to enjoy a “transitional allowance” (basically their parliamentary salary) for anything from six months to two years, depending on their length of service. They can also keep on using the parliament’s subsidised restaurants and cafeterias, libraries and telephone facilities in Brussels, Strasbourg and Luxembourg.
Moreover, once they start drawing their EU pensions, these are subject to special, low EU tax rates and not the usually much higher tax rates in whichever country they may retire to.
There have been repeated attempts by a small number of more responsible MEPs to have the expenses system changed to a more honest and transparent one.
In June 2005, under pressure to clean up their act, MEPs finally agreed to move to a members’ statute by which they would all get the same salary and would be reimbursed for the real cost of their weekly travel expenses. However, the new rules will not come into effect until after the European elections in June this year. And they may not be quite as “open” and “transparent” as the EU might like us to believe.
All MEPs will receive the same salary, which will be fixed at 38.5% of the salary of a judge at the European Court of Justice. At about £6,800 a month, this will give most MEPs from the wealthier EU countries a large pay rise (30% for the British).
The only group which could have seen pay significantly cut are Italian MEPs, who were on the highest salaries, but they managed to block the reform package until their government agreed to compensate them with Italian taxpayers’ money.
Austrian and Irish MEPs also could have been losers, but under article 25 of the members’ statute, MEPs are free to choose whether they wish to remain on the pre-2009 salary and pension scheme or move to the new one. This creates a “heads I win, tails I win” situation: MEPs can take whichever salary and pension option gives them the most money.
Moreover, as with their pensions, all MEPs who move to the new salary scheme will no longer have to pay national income taxes in their countries. Instead they will pay a special EU tax, which for most should be between 13% and 17% depending on their family circumstances.
As another reform, MEPs have voted to ban the hiring of close family members as assistants. However, any family member employed as an assistant in July 2008 may remain on the EU payroll until the 2014 European parliament elections.
And then there is the “reform” on travel. From July, MEPs’ weekly travel expenses will be paid out only against actual expenses incurred, but experience suggests that the more enterprising MEPs will find it easy to get friendly with a travel agent, buy a full-price airline ticket each week, take the receipt page out of the ticket, get a full refund from the travel agent, change the ticket to a low-price alternative and hand in the original expensive, full-price receipt to the parliament bean-counters as part of MEPs’ expenses claims.
As far as the payments for subsistence and constituency offices of up to £94,000 a year are concerned, these will continue as before with no need to produce any proof that any money was spent, allowing MEPs to legally make many tens of thousands of euros or pounds a year, tax free, thanks to the generosity of the parliament’s still enviably lax expenses payment procedures.
In other words, plus ça change, plus c’est la même chose.
– The Great European Rip-Off: How the Corrupt, Wasteful EU is Taking Control of Our Lives by David Craig and Matthew Elliott will be published by Random House Books on March 5 at £8.99. Copies can be ordered for £8.54 including postage from The Sunday Times BooksFirst on 0845 271 2135
Loading up the gravy train
The biggest pot of money MEPs can dip into is for employing staff. This stands at about £182,000 a year after increasing by an inflation-busting 34% in the past five years.
There are no guidelines regulating how much an assistant should be paid, and many MEPs use this allowance to pay members of their own family. The amount is so generous that an MEP can slip his or her spouse or offspring £50,000 to £60,000 a year and still have enough loose change to employ more than one full-time secretary and a few researchers.
Each MEP is provided with two fully furnished, rent-free offices in the European parliament building and an allowance
of £43,600 a year for having an office in their constituency. No receipts are required. Many MPs claim that their constituency office is in their own home. This allows them to rent out a room in their homes to themselves, paid for with taxpayers’ money. Some take all the cash without having a constituency office at all.
MEPs can also claim a subsistence allowance of £257 a day, tax free, for every one of the 40 or so weeks of European parliamentary sessions without having to provide receipts. There is no requirement to attend a debate or committee session. On Fridays at 7am there is usually a queue of MEPs with their luggage waiting to sign in to get their allowance before rushing off to the airport or station.
The £257 subsistence allowance is meant to pay for accommodation and meals. Most MEPs can pocket more than £90 of it every day tax free. A three-star hotel near the European parliament
costs about £112 a night, including breakfast. That leaves about £145 a day for lunch and dinner – and there are subsidised canteens and restaurants.
In addition, MEPs get generous travel expenses. They can claim weekly flights from their constituencies. They are not asked how much they have paid, but are usually reimbursed for more than a business class fare. By buying cheap tickets, MEPs can rake in more than £270 a week tax free. They also get an allowance of £3,600 a year to go anywhere in the world as long as this travel is “connected” with their work as an MEP.
MEPs have made sure they have one of the best pension schemes in Europe. They get the same benefits as national politicians but can save for an additional voluntary EU pension. For every £900 they pay into their pension scheme each month, the EU will pay double. MEPs are allowed to pay this £900 from their £43,600 office expenses. In theory, they are supposed to reimburse this money from their own bank accounts. But a few years ago they voted down a proposal that auditors should check whether any of them did so. This means an MEP would have to work for only about 15 years to get a pension of half their final salary.
Adding all this up, a typical British, French or German MEP is getting more than £400,000 a year in salary, pension and expenses – more than £2m for each five-year parliamentary period in Brussels. With judicious financial management, they can probably get by on about £200,000 per annum.
This means they can save about £200,000 each year. It’s easy to see how, by careful choice of travel and modest accommodation, they can walk away with savings of more than £1m after five years.