Skip to content
CityAM
Main navigation
  • News
    • News
      • Latest Business News
      • Economics
      • Politics
      • Tech
      • Banking
      • FTSE 100 Live
      • Retail
      • Insurance
      • Legal
      • Property
      • Transport
      • Markets
    • From our partners
      • AON
      • Bayes Business School
      • Canada BIDs
      • Central London Alliance CIC
      • Destination City
      • Halkin
      • Olympia
      • Inside Saudi
      • Tottenham Hotspur Stadium
      • Santander X
      • YEAR SIX Dividend
    • Featured

      The next person to shop your store may not be a person at all

      AI shopping agents are rewriting the rules of online retail across North America

      Submit a story

      Tell us your story.

      Submit
  • Opinion
  • Sport
    • Latest Sports News
      • Sport
      • Sport Business
    • From our partners
      • The Morning Briefing: SBS x CityAM
      • Aramco Team Series
      • LIV Golf
    • Featured

      Cohere's Aidan Gomez bets the house on 'sovereign AI' with Aleph Alpha merger valuing the group at $20bn

      Cohere CEO Aidan Gomez on stage discussing the Toronto AI lab's strategy

      Submit a story

      Tell us your story.

      Submit
  • Life&Style
    • Life&Style
      • Life&Style
      • Toast the City Awards
      • The Magazine
      • Travel
      • Culture
      • Motoring
      • Wellness
      • The RED BULLETiN
      • Do it with Shared Ownership
      • Media Speak Hub
    • Featured

      Moonvalley's Naeem Talukdar is selling Hollywood the one thing rival AI video tools cannot: legal cover

      Moonvalley's Marey AI video model produces Hollywood-grade footage trained on licensed data

      Submit a story

      Tell us your story.

      Submit
  • Investec
  • Events
  • Latest Paper
Wednesday 11 March 2026 6:01 am  |  Updated:  Thursday 12 March 2026 1:30 pm

The Debate: Should MP salaries be linked to GDP?

By: Anna Moloney

Deputy Comment and Features Editor

Add as a preferred source on Google
Members of Parliament engaged in a debate session in the House of Commons, highlighting UK political proceedings.
MPs in the House of Commons in 1881

As MPs receive an inflation-busting five per cent pay rise, we ask if it’s time to better incentivise politicians by linking their pay to economic growth. We hear the case for and against in this week’s debate

Play Video

YES: In the private sector pay is not determined by a quango but by performance

Over the course of a typical 12-year parliamentary career (the median length of service for MPs leaving the Commons in 2019), an MP will receive well over £1m from taxpayers. This is set to rise even further by the end of the parliament, with a planned 17 per cent increase over the next four years meaning MPs will soon reach the £1m mark in less than a decade. 

The Independent Parliamentary Standards Authority (Ipsa) justified this pay rise in part by benchmarking MPs to senior managers and directors in the public and private sectors. Leaving aside the obvious conflict of interest created by basing MP pay on public sector wages, the comparison with the private sector is incomplete. In the private sector pay is not determined by a quango but by performance. 

Yet despite poor performance on nearly every metric – from the ballooning national debt to falling public sector productivity to the record high tax burden – MPs will still receive a guaranteed pay rise. This is far from the reality for taxpayers who are facing a personal recession for the second time in five years, defined as two consecutive quarters of falling GDP per capita. 

Behaviour is fundamentally shaped by incentives. Linking MP pay to GDP per capita would ensure that politicians feel the consequences of their decisions like everyone else. The only way to make themselves better off would be to actually make the country better off. 

If politicians are truly committed to economic growth and believe they are comparable to senior managers and directors in the private sector, they should put their money where their mouth is and tie their pay to GDP per capita. 

Shimeon Lee is a policy analyst at the Taxpayers’ Alliance

NO: When a measure becomes a target, it ceases to be a good measure

At first glance, the idea has an intuitive appeal. If the economy grows, politicians benefit. If it stagnates, so do their pay packets. Align incentives, reward success. Simple. But simple incentives often produce complicated distortions.

Read more

Rising salaries for junior lawyers put pressure on senior associates’ pay packages

Burges Salmon partners with legal tech startup Wexler to enhance AI-driven litigation support for UK lawyers

This is a textbook example of Goodhart’s Law: when a measure becomes a target, it ceases to be a good measure. GDP was designed as a rough indicator of economic activity; it cannot effectively be used as a compensation scheme for legislators. Once politicians’ salaries depend on it, the incentive shifts from fostering genuine prosperity to boosting the number itself.

GDP is remarkably easy to inflate on paper. Governments can increase spending, accelerate public investment or shuffle activity across accounting lines to temporarily push the figure upward. None of this necessarily reflects meaningful improvements in living standards or productivity. But if MPs’ pay rises with GDP, the temptation to pursue short-term statistical gains rather than long-term economic health becomes obvious.

More perversely, linking salaries to GDP would simply push politicians to seek compensation elsewhere. Parliamentary expenses already exist, with their own scrutiny, to cover the costs of doing the job, but they are also one of the most politically sensitive features of Westminster life. If salaries are allowed to fluctuate in a pyramid scheme-like way, MPs may respond by leaning more heavily on expenses to stabilise their personal finances.

Hence, a policy intended to incentivise politicians and recalibrate their interests with national prosperity could instead produce creative accounting and rising expenses.

MPs should be paid transparently and independently, not through a crude macroeconomic target. Otherwise, we risk turning GDP into yet another political game – one taxpayers will ultimately end up funding.

Joanna Marchong is head of communications and external affairs at the Adam Smith Institute

THE VERDICT

This month, the parliamentary watchdog announced its latest pay rise for MPs, with basic annual salary set to rise almost five per cent to £98,599 from this April. The jump, outstripping inflation and amid a national personal recession, has naturally attracted scrutiny, with think tank the Taxpayers’ Alliance calling for MP salaries to be linked to GDP per capita. 

The rationale is tempting: certainly, it would be difficult to find many Brits who think the current crop of MPs have been doing a particularly good job. But it is also misguided.  As Ms Marchong points out, such an incentive is more likely to motivate spin than actual growth, with MPs having little direct influence over annual GDP figures. Furthermore, in public service, economic growth is not always the best value indicator – during the pandemic, or other global crises, for example. Linking pay to GDP is more likely to reward (or punish) MPs for the work of their predecessors, if not global events completely out of their control. What motivation is that?

Read more

‘Tipping point’: CBI boss slams £345bn business tax burden amid ‘cost of doing business’ crisis

Rain Newton-Smith addressing audience at a business conference, wearing a professional suit and speaking at a podium.

Share this article

  • Facebook
  • X
  • LinkedIn
  • WhatsApp
  • Email

Similarly tagged content:

Sections

  • Opinion
  • News

Categories

  • Opinion
  • Business

People & Organisations

  • economic growth
  • GDP
  • GDP per cepita
  • MPs
  • MPs expenses
  • Parliament
  • Pay
  • politicians
  • UK economic growth
  • UK economy
  • UK Government

Trending Articles

  • KPMG’s Summer Friday half-day rollback signals deeper woes for Big Four giants

  • Inflation expectations at record high in interest rates signal

  • London Tech Week sums up everything wrong with UK tech

  • KPMG report on AI found riddled with AI hallucinations

  • UK economy falters as deeper damage to growth to come

More from CityAM

  • ZayZoon, the Calgary fintech born on a fishing boat, posts 1,487% growth as earned wage access goes mainstream

    ZayZoon co-founder Tate Hackert built the Calgary fintech around earned wage access
  • Botpress raises $25m as Quebec's Sylvain Perron pitches his startup as the 'infrastructure layer' for AI agents

    Botpress product UI: the Quebec startup pitches itself as the infrastructure layer for enterprise AI agents
  • The Debate: Should CEOs be held personally accountable for cyberattacks?

    Opinion
    Evil-looking keyboard symbolizing cybersecurity threats and hacking risks in a digital landscape.
  • The Debate: Is Britain’s minimum wage too high?

    Opinion
    Hospitality workers gathered at a restaurant discussing minimum wage policy changes, highlighting industry challenges.
  • FluidAI wins US FDA clearance for its surgical monitor as Waterloo's Youssef Helwa targets 100,000 operations

    FluidAI's Origin surgical monitor wins FDA clearance for use in US hospitals
  • Jeremy Hunt: Pension triple lock is an ‘anchor drag’ on economic growth

    Politics
    Jeremy Hunt has promised to cut more taxes as “hard work is rewarded”.
  • City law firm boosts junior lawyer salaries to £189k in London

    Legal
    Getty Images logo displayed on a digital screen, symbolizing media and photography industry presence on a business platform
  • Starmer to face challenge from Streeting

    Politics
    Health secretary Wes Streeting's crackdown on junk food shopping has been dismissed as a "nanny state" policy.
  • Terms & Conditions
  • Privacy Policy
  • Cookie Policy
  • News
  • Markets & Economics
  • Politics
  • Opinion
  • Life&Style
  • Personal Finance

Follow us for breaking news and latest updates

  • Facebook
  • X
  • Instagram
  • LinkedIn
Copyright 2026 CityAM Limited