TWO Cabinet ministers yesterday escaped the threat of the sack when Gordon Brown dismissed claims that they had dodged capital gains tax.
The Prime Minister said there was "no problem" with the actions of James Purnell and Geoff Hoon, who his spokesman insisted had followed "the letter and the spirit" of Westminster's rules on declaring expenses.
This contrasted with Mr Brown's previous condemnation of Hazel Blears, whose avoidance of capital gains tax he described as "totally unacceptable" – leading to speculation that she has been cast adrift by Downing Street in advance of a summer reshuffle.
Mr Purnell, the Work and Pensions Secretary, did not pay capital gains tax on the sale of a London flat in 2004, while Mr Hoon, the Transport Secretary, did not pay the tax on the sale of his London home in 2006, despite making a profit of about 300,000. The tax is payable at a rate of 40 per cent on profits made on the sale of second homes.
Mr Brown has already had to force one member of the government, justice minister Shahid Malik, to stand down pending investigation of his expenses claims and the allegation that he failed to declare a financial benefit in the ministers' register of interests.
Asked about Mr Purnell and Mr Hoon, the Prime Minister, who was on a visit to the West Midlands, said yesterday: "As far as I know, there is no problem that needs to be dealt with."
However, his spokesman struggled to explain the difference between Mr Brown's condemnation of Ms Blears – who went on to repay 13,322 to the taxman – and his backing for the other Cabinet ministers.
The spokesman said that the Prime Minister believed it was right for Ms Blears to have paid the money to "remove any ambiguity" about her position – even though she was not technically liable to pay the tax on the house sale, because she had classed the property as her primary residence.
As for Mr Purnell and Mr Hoon – who are seen as more powerful figures in the Cabinet, with Mr Purnell a potential party leader – the Prime Minister was said to be happy to accept their assurances, following advice they had sought from HM Revenue and Customs that no tax was due.
The growing view that Mr Brown was preparing to sack Ms Blears followed her public criticism of his "lamentable" communications skills and her mocking of his use of the internet to convey a message on reforming MPs' expenses. "YouTube if you want to," she infamously told him.
Ms Blears yesterday admitted that the controversy around her claims had inflicted long-term damage on her political standing.
"I know it will take many months and years for my reputation to recover," she said.
Meanwhile, a fifth MP caught up in the expenses scandal announced he would stand down at the general election.
Ben Chapman, the Labour MP for Wirral South, who was accused of claiming 15,000 in excess mortgage repayments, follows Tories Douglas Hogg, Anthony Steen and Sir Michael Viggers in not seeking re-election, while Speaker Michael Martin will quit as an MP on 21 June.
Mr Chapman said: "I maintain that I have done nothing wrong and have acted in good faith and with absolute transparency throughout.
"The House of Commons Fees Office have expressed their apologies and regret that the advice they gave me was incorrect. But the publicity … has been hurtful to my family, friends and local party members and supporters, and I have therefore decided to stand down at the next general election."
Sir Michael, the MP for Gosport, was ordered by a furious Tory leader David Cameron to stand down or face expulsion from the party after it emerged that he had claimed for a 1,645 floating "duck island" for a garden pond – arguably the most ludicrous use of taxpayers' cash exposed thus far.
Mr Cameron said: "If it didn't make you so angry, one might be able to see some sort of joke in it. It does make me unbelievably angry. I just cannot think what people were thinking.
"I spoke to him last night and I said, 'You are going to announce immediately your retirement or I will remove the whip'."
Mr Steen, the MP for Totnes, launched a remarkable attack on the exposure of his claims of almost 88,000 for his 1.5 million constituency home – with the bill including an inspection of 500 trees and advice on protecting his shrubs from rabbits.
He said critics were jealous of his home – which he compared to Balmoral – and claimed he was the victim of a "kangaroo court". But last night Mr Steen issued an apology after speaking to Mr Cameron, who was not impressed with his initial remarks.
"I was so deeply upset with the situation, which resulted in me overreacting," Mr Steen said.
An "endorsement panel" set up by the Labour Party's ruling National Executive Committee will meet next week to decide whether to ban three MPs from standing again for parliament.
Elliot Morley and David Chaytor have both been suspended from the parliamentary party after allegations that they had claimed for "phantom" mortgages, while Margaret Moran, the MP for Luton South, faces deselection for claiming 22,500 to treat dry rot at a property in Southampton.
Mr Brown made clear his determination to force through changes that would result in any Labour MP who is found to have defied the rules on expenses being barred from standing at the general election. "I'm not going to tolerate this sort of behaviour," Mr Brown said.
The Liberal Democrats were also yesterday hit with problems of their own when Lord Rennard, their chief executive and elections supremo, announced that he would step down in the summer.
The peer was said to have claimed 40,000 in allowances for a second home, but the party insisted his departure, which will come after the European elections, was health-related.
Meanwhile, the Scottish Parliament heard Tory and SNP calls for Mr Brown to call a general election. Annabel Goldie, the Scottish Tory leader, said this would be the best way to restore public trust in politicians.
• Former Conservative Cabinet minister Ann Widdecombe indicated she may yet put herself forward to replace Mr Martin as Speaker.
She was thought to have initially ruled herself out, but yesterday said she had received encouragement to stand from a number of Tory MPs.
Pound shops? No, he spent 191 on headphones
A SCOTTISH Labour MP has defended his expenses claim for more than 2,000 for household items by saying: "Are we only allowed to buy things from the 99p store?"
Michael Connarty, who represents Linlithgow and East Falkirk, also appeared to pin part of the blame for the claim on his fellow Labour MP Ian Davidson, with whom he shared a flat in London. He said they were "like the odd couple", adding that he left many of the items behind when he moved out.
Mr Connarty's claims include 230 for bedding, 228 for a digital radio and 178 for kitchen equipment. He also spent 249 on a clock radio, 211 on a Bose iPod docking station and 191 on headphones for the docking station.
Mr Connarty said most of the purchases were chosen by Mr Davidson but he claimed for them because he had agreed to help furnish the flat to contribute to the cost of living there.
Jim Hood, the veteran Labour MP for Lanark and Hamilton East, claimed up to 1,000 a month for his London flat without submitting receipts.
He was able to exploit Commons rules that permitted claims of up to 250 a month to be made without receipts for various categories of expenditure, including cleaning and repairs.
In the 2007-8 financial year, Mr Hood, an MP since 1987, claimed 19,352 – some 4,000 below the maximum then permitted. Receipts are now required for all claims.
Meanwhile, Westminster's youngest MP yesterday denied allegations she used taxpayers' cash to pay for her make-up.
Jo Swinson, 29, the Liberal Democrat MP for East Dunbartonshire, said she had not claimed for eyeliner, dusters or cleaning products.
Ms Swinson, who has campaigned for parliament to become more transparent and who has published her expenses claims on her website for more than a year, said she had sought refunds only for items she had to buy twice because she is required to have homes in London and Scotland.
She said: "I have claimed for duplicates of the basic pieces of equipment that I use in my main home. None of these items would have been necessary if my job did not require me to travel to London and live away from home for half of the week."
Peter Luff, Tory MP for Mid-Worcestershire, spent 17,000 of taxpayers' money on furniture and other items for his two homes during a four-year period, it was reported last night.
He is said to have made expenses claims for three lavatory seats, three food mixers, two microwaves, four beds, five tables, two ironing boards, three kettles and ten sets of bed linen.
Ruth Kelly, the former transport secretary, used her allowances to bill the taxpayer for a 31,000 refurbishment of her constituency home in Bolton after it was flooded, despite having household insurance.
Bill Wiggin, a Tory whip and ally of party leader David Cameron, blamed an administrative error for claims of 11,000 on the wrong mortgage. He said he had gained "absolutely no financial advantage".
Mr Cameron said it appeared to be a "bad" but "honest mistake".