MPs claim back £11m a year for second homes

Published on Thursday 4 February 2010 21:41

A LONG-awaited review of Commons expenses has revealed that MPs have been claiming an average of £11 million a year for their second homes.

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In a landmark report that damned the "culture of deference" that allowed the abuse of expenses, former mandarin Sir Thomas Legg announced that 364 MPs would have to repay a total 1.1m. He attacked MPs, from the Speaker downwards, for creating an allowances system that was "deeply flawed" and used to supplement income rather than reimburse MPs for expenses they incurred.

The details emerged as the Crown Prosecution Service (CPS) said it would today announce possible criminal charges against several MPs and members of the House of Lords.

Three MPs, David Chaytor, Elliot Morley and Jim Devine, are already being investigated by Scotland Yard for claiming for mortgages that no longer existed and have had files passed to the CPS. Mr Devine, the Labour MP for Livingston, was reportedly under investigation for invoices he submitted for electrical work worth more than 2,000 from a company with an allegedly fake address and invalid VAT number.

However, one former Scottish MP ordered to repay thousands of pounds by Legg last night insisted he would not comply. Former Strathkelvin and Bearsden MP John Lyons has been told to repay 18,780.80 in mortgage interest payments. But Mr Lyons said he never received any such demand and has insisted on an apology from Sir Thomas.

He said: "Legg claimed I was being charged 18,000 because I had failed to reply to correspondence justifying my mortgage, but I have never received any correspondence. He must have written to me at the wrong address. I paid the mortgage from 2001 to 2005 so I don't owe it. "I don't owe him a penny and I want an apology."

The Legg report revealed that more than half of the MPs at Westminster, including some party leaders, had been judged to have broken the rules. Prime Minister Gordon Brown, who repaid more than 13,000, welcomed the findings as "a very significant step forward" in restoring public trust after the damaging scandal.

Conservative leader David Cameron and the Liberal Democrats' Nick Clegg were also asked to make repayments. Mr Cameron was ordered to pay back 237 in overpaid mortgage interest and has returned 965, while Mr Clegg was asked to hand back 910 for gardening costs and repaid 989.50.

However, the 1.1m demanded was seen by many as small beer compared with the total 55.5m claimed for the controversial second home allowance.

Indeed, the credibility of the audit was called into question when retired judge Sir Paul Kennedy, who has been considering MPs' appeals, criticised Sir Thomas for introducing retrospective rules and limits on spending. Sir Paul fully or partially upheld challenges by 44 of the 75 MPs who fought the Legg conclusions, reducing the total repayment demand from 1.3m to 1.12m.

That means the taxpayer faces a net loss, as the bill for the Legg process is 1.16m. Sir Paul also shocked many by saying he had found "little, if any" evidence of deliberate wrongdoing by MPs.

The Prime Minister and the Commons authorities turned to Sir Thomas to re-examine five years of claims by 752 current and former MPs after revelations of alleged abuses emerged last year.

Local government minister Barbara Follett was ordered to repay the highest amount – 42,458 – that went on security, telephone lines and insurance for artworks. Ms Follett said yesterday she had repaid in full and had only claimed expenses that were permitted by the rules. She added: "But as an independent review has now shown these to be vague and deeply flawed, I feel it is only right to repay. This has been a sad and sorry episode in Britain's political life, which I deeply regret."

Sir Thomas said the Commons "rules were vague, and MPs were themselves self-certifying as to the propriety of their use of the allowance". There was also a "prevailing lack of transparency" and problems were exacerbated by the absence of any spending audit.

"A particular challenge has proved to be the widespread lack of proper evidence on the record from MPs to support substantial payments, especially of mortgage interest, even though this was expressly required by the rules," he said.

He roundly rejected complaints from many MPs that he had imposed retrospective rules and spending limits for items such as gardening and cleaning.

He also insisted the second home allowance could only ever "be used as reimbursement for specific and proportionate expenditure on accommodation needed for the performance of parliamentary duties".

Mr Cameron told reporters:

"I was the first to come out and say that MPs had to pay back some money. Never mind that they were acting within the rules, never mind that they were given permission at the time. The fact is that the system was wrong."

Mr Clegg said he hoped the report would "draw a line under" the scandal, while

a spokesman for the Prime Minster said he "feels very strongly that this is one part of restoring trust in our political institutions".

But one campaigning MP, who took a stand against the culture of expenses long before last year's revelations, was unconvinced the report would solve anything.

Lib Dem MP Norman Baker claimed the audit had not helped efforts to clean up the system. "It was sloppy," he said. "He (Legg] asked me about mortgage repayments, when I have never had a mortgage. He started trying to reclaim money for rent from people who hadn't been renting. So the thing was full of elementary errors. It had also cost over 1m and it is 142,000 for six months' work for him."

There was criticism, too, from Tory MP Ann Widdecombe who said the review had been "lazy, incompetent and illogical".

In total, 76 MPs past and present, whose expenses from 2004 to 2009 were scrutinised by Sir Thomas, have still got to repay the money . Among them are four Scottish Labour MPs – Falkirk's Eric Joyce, East Lothian's Anne Moffat, Glasgow North West's John Robertson and Midlothian's David Hamilton. Mr Joyce and Ms Moffat were unavailable for comment, but Mr Hamilton and Mr Robertson said they would pay the money by the end of the week.

MPs provoked more anger yesterday, when they decided to finish work early. Parliament's sitting ended at 2:30pm, four hours ahead of the scheduled 6:30pm. Matthew Elliott, chief executive of the TaxPayers' Alliance, said: "It doesn't send a great message."

Q&A: Sir Thomas steps up to the mark

How did Sir Thomas come to be auditing Commons allowances?

He is a former Whitehall mandarin who served as an external member of the Commons audit committee from 2004 to last year – so he is very familiar with the expenses system. After details of MPs' claims were leaked to the Daily Telegraph in May and the extent of abuses became clear, Gordon Brown and the House authorities recruited him to re-examine how public money had been spent.

Why has the process proved so controversial?

When the ruling Commons members' estimate committee first authorised the independent audit in June, it agreed that claims from 2004-8 would be assessed "against the rules as they existed at the time". So MPs receiving letters from Sir Thomas in October were somewhat miffed to find he had retrospectively introduced "reasonable" levels of spending on items such as gardening and cleaning. As a result, hundreds are thought to have been asked to return cash.

Did they pay up?

A large number had already handed back money after coming under fire from the Telegraph revelations. All the main party leaders urged MPs to comply with the review findings to restore public trust.

But a few back-benchers suggested they were willing to fight the demands in court. Partly to placate this anger, the House authorities set up an appeal process and installed former senior judge Sir Paul Kennedy as the final arbiter of who should repay what. In total, 80 MPs launched appeals.

What do we know about Sir Paul's view of the cases he considered?

He notified MPs of his decision last week and many have already made the results public. A large proportion either had their repayments reduced or overturned, as the judge appeared to disagree with Sir Thomas's use of retrospective limits. MPs who did not appeal must be rather cross.

How much of the expenses money has been handed back?

The last official figure for repayments was about 637,000 returned by 260 MPs. Commons officials now expect the total to be well below 1 million. Sir Thomas's audit process has cost about 1.1m, and that does not include the bill for appeals.

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