Chairman, I'm very pleased to be asked to appear before the Standing Committee on Procedure and House Affairs today. At IPSA we're very proud of what we've achieved over the past four years and I'm glad to have the opportunity to share some of our experiences with you.
As you know, IPSA was created by the Parliamentary Standards Act in 2009 in response to the MPs' expenses scandal in 2008. Parliament decided that the scandal was so serious that the only way to restore public confidence was to take both regulation and the payment of MPs' costs and expenses out of Parliament's hands, to create an independent regulator.
The Constitutional Reform and Governance Act in 2010 refined IPSA's role, giving it the power to determine MPs' pay and pensions as well, and creating the role of the compliance officer, which I'm happy to discuss further during questions. That independence is what defines IPSA. It allows us to take decisions about the rules we set, about the administrative services we provide, that we believe are in the public interest. We frequently consult, we always listen to all sides of an argument, especially when they are backed by evidence, but ultimately the decisions are ours.
A second crucial characteristic of how IPSA operates is transparency. The House of Commons in the U.K. had begun to publish receipts before the last general election in 2010, but that was after resisting their publication in the courts and then, unavoidably, after the full details had been leaked to the media.
For IPSA, publication of information about MPs' claims for business costs and expenses has been a priority from the start. We first published claims in November 2010, and have been doing so on a two-monthly cycle ever since. We also publish aggregate data for the preceding financial year, ending in March, every September. This transparency, as well as complying with the aims of the U.K.'s Freedom of Information Act, allows the public to see what their MPs are spending and to decide for themselves what they think of it. It means that there's strong accountability and better understanding of the financial support an MP needs to undertake his or her parliamentary duties.
A third important element is how we provide support to MPs in carrying out their parliamentary duties. Quite unusually, we provide the payroll services, model contracts, and pay ranges for MPs' staff and, of course, we pay their costs and expenses. So we both regulate and provide those services.
Our system is based on reimbursement on the provision of evidence. But we also pay some suppliers, like landlords, pooled research services, and stationery suppliers directly. This means the MP doesn't have to pay the money out of his or her account first. MPs also have access to an online rail ticket service and have a payment card that can be used for a range of transactions. What this means is that it's possible for an MP to now pay for up to 70% of claims by value through direct payment.
We didn't have all of this from the start. IPSA moved from a blank sheet of paper on the chief executive's desk in October of 2009 to a fully functioning organization with an office, with an online claims system and a new scheme of rules, in time for the new Parliament on May 6, 2010, a really quick process.
The Office of Government Commerce in the U.K., reviewing our implementation program, said we had achieved the impossible. There were certainly challenges operationally in the early days, not least because of the registration requirements before claims could be made, and the time needed by some MPs to get used to claiming online. Some MPs also experienced cashflow problems, and we addressed those in the short term through the swift introduction of an interest-free loan of up to £4,000.
It was a learning process for both MPs and for IPSA. There were tensions. But over time most of these problems have subsided, and we have a system that works well. Most MPs and their staff are familiar with the rules and the IT system. Claims are generally paid within seven to nine working days of receipt. As I noted earlier, many of the high-value transactions can be paid directly by IPSA. Salaries are paid promptly and accurately, and every two months we publish the details of over 30,000 claims.
In policy terms we keep an eye on how the rules are working, and we review them and consult every year. We're about to open a new consultation next week. But our focus has shifted in the last year or so to MPs' pay and pensions, where IPSA's powers were brought into force in 2011. We have run two consultations, the first an open exploration of the issues; the second a focused consultation on a proposed remuneration package that features a pay increase of about 9% to begin after the 2015 general election in the U.K., and a reform of MPs' pensions to bring them more into line with the rest of the public sector. Our board will be taking decisions independently later this year.
So, to end, what are our priorities right now? First, it's to complete the work on pay and pensions. Second, it's to continue our preparations for the 2015 general election. We'll be doing that in cooperation with the House of Commons and with MPs themselves. And thirdly, we continue to look at ways of streamlining our processes to make sure we are maximizing value for money and delivering our services as efficiently as possible.
I hope that gives you something to get the ball rolling. I welcome questions, Chairman, from you and from your committee.