Deputy first minister faces police inquiry over expenses

Lothian and Borders Police confirmed it has received a complaint from a member of the public over Mr Stephen's failure to inform Holyrood authorities that the mortgage on his Edinburgh home was held jointly with his wife.

Mr Stephen has been claiming around 9,000 a year in expenses on the 190,000 home under the parliament's Edinburgh accommodation allowance (EAA), which allows MSPs from outwith the capital to claim back the interest on their mortgage payments.

But on Friday the Scottish Parliament's Corporate Body (SPCB), which manages Holyrood's budget, found the Aberdeen South MSP had breached its guidelines by wrongly informing them that his was the only name on the mortgage.

However, the SPCB also found neither Mr Stephen nor his wife had gained financially, as the mortgage payment would have been the same if it was just in his name.

Mr Stephen, who is also the Scottish Liberal Democrats' leader, said: "I fully acknowledge there has been a breach of the guidance.

"I very much regret this error. I sincerely believed the arrangements I had put in place were acceptable."

Mr Stephen's hopes of putting the row behind him were dashed, however, by news of the police involvement.

A spokeswoman for Lothian and Borders Police said: "We have been asked to investigate."

However, it is not clear whether the force will launch a formal investigation.

Meanwhile, fresh concerns were raised over the EAA yesterday when it emerged that a former MSP made a 38,000 profit on a flat partly funded by the taxpayer.

Andrew Wilson, who was not re-elected at the 2003 election, sold the Edinburgh flat he had bought for 92,000 in May 2000 for 130,000.

The property was bought by the SNP MSP Rob Gibson and his wife Eleanor Scott, who was elected as a Green MSP in 2003.

And it emerged last month that Labour MSP John Home-Robertson was claiming 600 a month for renting a flat owned by his son, while Tavish Scott, the transport minister, has been criticised for receiving around 1,000 in expenses for his 380,000 Edinburgh home.

The revelations have led to calls for changes to the system.

Eleanor Scott last night said her party wanted the system investigated.

She said: "We've called for an independent inquiry. We don't think MSPs should set their own conditions on expenses any more than they set their own salary."

Tommy Sheridan, the Solidarity MSP, said he would be writing to George Reid, the presiding officer, urging him to look again at how the system works.