It appears to be about time for a newspaper to have another go at the subsidies to the restaurants and bars in the Palace of Westminster. And fair enough, it's a reasonable questioning of public policy as to why there should be a £3 million a year subsidy to the politicians' sluicing and browsing. However, in this discussion we really need to note that there's a very much larger implicit subsidy to add to the explicit subsidy that we see. And I do speak as someone who has worked in the Palace in the past and enjoyed both those explicit and implicit subsidies.
Here's the Mail going off on one about the explicit subsidy:
MPs have been urged to scrap their multi-million pound lunch subsidy amid fury at the cut-price Christmas lunches being offered in Parliament.
Before MPs broke off for Christmas they enjoyed lavish lunches – including chargrilled partridge, salmon marinated in vodka and guinea fowl for the same price as a high street pizza.
The meals are able to be offered for way below the going rate because taxpayers subsidise Parliament's restaurant and bars to the tune of £3million a year.
That £3 million a year (down from £5 million a few years back) is only the net loss from those catering activities that needs to be made up from taxpayer funds. And as someone who had a pass to the building for a year, and enjoyed access to many (not all, where you can get into depends on whether you're an MP, a Lord, staff, journalist and so on) of those bars and restaurants I can tell you that the food is pretty good. And it's also a great deal cheaper than anywhere else in Westminster for the equality. And beer, notably (along with other booze, although with the wine they tend to up the quality rather than reduce the price) is a great deal cheaper than it is in the pub across the road (umm, St Stephen's maybe?).
However, this cheapness is not particularly down to that £3 million taxpayer explicit subsidy. It's not enough to explain the price differences between costs outside the Palace and inside it. Which is where the implicit subsidy comes in.
You'll not be all that surprised to find that restaurant or pub space in that part of London is rather expensive. Last time I looked it up there was a pub 500 metres away that was on the market for £100,000 a year in rent plus £50,000 in rates (property taxes). London rents on commercial property have near doubled since then. And that's what the implicit subsidy is. The Palace does not charge a notional rent to those catering operations. Yet of course it should: the full economic cost of providing those meals obviously should include the opportunity cost of using the space to do something else (like, perhaps, provide office space for members of the Lords, amazingly, a member of the House of Lords, unless a Minister or official of the chamber, has no office space at all. Quite seriously: I went in to meet up with Viscount Ridley a few months ago and we then had to hunt for a corner of a tea room to have a chat in. And when working for Lord
There's some 20, 22 (depending on whether you want to count the smaller bars as really being anything like a London pub or not) catering operations in the Palace. Some of them are very grand indeed and would fetch considerable rents on anything like an open market (which, being inside a security cordon, of course isn't going to happen). A very rough estimate would be that there should be £3 million of rent and perhaps another £1.5 million in business rates coming in from those properties.
Government (or a Royal Palace, if you prefer) charging itself rent for something it already owns might seem like a strange idea. But there really is that economic point that opportunity costs should be made plain and obvious. The Palace ought to be charging rent to those catering operations. Yes, even if it means that the taxpayer subsidy rises from £3 million to say £7.5 million. Because that implicit subsidy is already there and should be made obvious and plain. Only when it is can we decide upon what is the correct subsidy to the sluicing and browsing. We might even decide that MPs and Peers can pay a little bit more towards their own lunches.
You know, given that the staff who work in the Palace already pay higher amounts for the very same food in those outlets that the policies of segregation mean they are allowed to enter.
The smaller point here being that we should be upfront about how much we subsidise those who rule us. The larger one being that all subsidies, explicit and implicit, should be charged, at least in the accounts of a governmental organisation, so that we can see what they are. As the UK government does, to its credit, on the value of spectrum held by governmental organisations and as the US government, to its discredit, doesn't quite yet although they're working on it.
