On 20 October 2022, Liz Truss resigned as Prime Minister (PM) of the UK after 44 days. Although some bet on how long she would last, her resignation raised various debates, including her eligibility for a lifetime allowance of up to £115,000. By demystifying the annual allowance scheme and evaluating the merits and demerits of Truss’ claim, I consider whether Truss should forgo this allowance. We are in a cost-of-living crisis, and Truss’ performance as PM has only imposed further burdens on ordinary people.
What is the £ 115,000 lifetime annual allowance?
After her resignation, claims began swirling that Truss would be getting a ‘salary’ or a ‘pension’ of £115,000 despite her length in office. Before answering this post’s question, I must clarify the annual allowance scheme. The Public Duty Costs Allowance (PDCA) was established “to assist former Prime Ministers still active in public life…to meet the actual cost of continuing to fulfil public duties.” It covers costs including Met Police surveillance, charitable work, and diary and social media management.
This is neither a salary nor a pension. It is also not for personal expenses, but rather compensation for incurred office and secretarial expenses during continued public duties.
Reasons why Truss should claim the £115,000 allowance
(1) She is entitled to it
The only eligibility requirement for the PDCA is that the recipient must be a former PM who is not currently the Leader of the Opposition. There is no length of service requirement; therefore, Truss squarely fulfils this condition. Furthermore, most former PMs claim close to the total amount annually. In 2020-21, Sir John Major and Tony Blair claimed £115,000, and Gordon Brown and David Cameron claimed more than £110,000.
(2) It is a reasonable amount
The PDCA government guidance explains that the allowance has, since 2011, remained at £115,000 and is in line with staffing allowances provided for the offices of Members of Parliament (MPs). Moreover, the amount is reviewed if the recipient takes on any public roles and is audited by the Cabinet Office Finance or the National Audit Office. Therefore, the allowance is reasonable as it is unlikely to be squandered or used for personal benefits, as all necessary documents and invoices must be evidenced.
If we look more broadly, £115,000 is on par with some of the highest salaries in the UK. An organisation’s Chief Executive Officer is paid, on average, £121,434, making this the highest average salary in the UK in 2022. Given a PM’s demanding duties, substantial compensation is reasonable, especially if they continue public duties post-service.
Reasons why Truss should not claim the £115,000 allowance
(1) She does not deserve it
The main argument against Truss is that she does not deserve the allowance due to her short time as PM, characterised by failed fiscal policies and economic turmoil, evident in the British pound plummeting below the US dollar for the first time in 37 years after her government’s mini-budget. Sir Ed Davey, Leader of the Liberal Democrats, made a powerful statement urging Truss to deny the allowance. He stated, “I think working 45 days shouldn’t give you a pension that is many many times what ordinary people out there get after a lifetime of work”. Similarly, the Liberal Democrat Treasury spokesperson, Christine Jardine, commented, “she should [not] be permitted to access the same £115,000 a year for life fund as her recent predecessors — all of whom served for well over two years”. She furthered that this allowance would leave “a bitter taste in the mouth” of those struggling to pay their bills and mortgages due to Truss’ government’s fiscal failures.
Although the PDCA is not a pension or a salary, the essence of these statements is profound. In the minds of the British people, Truss has failed her political promises and caused too much damage in such a short time; she does not deserve a lifetime allowance. I contest that although the failed mini-budget initiated severe economic upheaval, the ‘bitter taste’ is exacerbated more by the cost-of-living crisis and Truss’s failure to adequately alleviate its effects on the average citizen. This notion will be explored further in the second reason why Truss should not claim the allowance.
(2) Cost-of-living crisis
The above quotation represents a sample of the flurry created across social media platforms after Truss’ resignation. For this reason, I argue that the knowledge that Truss is entitled to a lifetime allowance after being in office for less than two months is the cause of the ‘bitter taste’ in the mouths of British people.
People are currently unable to pay their mortgages and utilities and are skipping meals. Unite Students, the largest student accommodation provider, surveyed undergraduate students and parents, highlighting that 73% of parents and 66% of students are “extremely worried” about rising living costs. Moreover, 29% of students admit to hiding debts from family and friends.
If Truss claims the allowance because she is entitled to it, it could be regarded as a personal affront considering that her policies caused a significant economic downturn in the current climate of the cost-of-living crisis and increased taxation.
Concluding Remarks
Indisputably, Truss is entitled to the £115,000 annual allowance. However, she severely mishandled the economy in a short time, which caused severe repercussions even after her resignation. She has further reduced citizens’ ‘volitional freedom’—the limited economic power that individuals have in market societies, according to Robert Lee Hale; through higher bills and increasing debts, for example, mortgages. On 20 October 2020, the annual interest rate was 2.25%, surging to 6.65% post-resignation, resulting in British families paying over £530 extra on their monthly mortgage repayments. It is, therefore, substantively and morally unacceptable for Truss to benefit from this allowance, considering the costs she has imposed on citizens during an already difficult cost-of-living crisis and looming recession.
Nevertheless, this scenario raises questions, such as whether PM lifetime allowances should exist, or whether a length-in-office requirement should be imposed. The scheme is due for review next year since 2011—should it be increased due to inflation? In the event of another record-breaking PM, this review is an excellent opportunity for reform.
Author: Anaya Price