Speaker John Bercow Ensures ‘Flippers’ Get Away With It

(Telegraph) – MPS WHO ‘FLIPPED’ THEIR SECOND HOMES to maximise their expenses or avoided paying capital gains tax will escape censure under the official House of Commons inquiry while those with far less questionable claims are asked to repay tens of thousands of pounds.

John Bercow, the Speaker, has turned down a request by Nick Clegg, the Liberal Democrat leader, to widen the scope of his audit into MPs expenses amid concerns that some of the worst abusers of Commons allowances are escaping punishment.

A number of MPs whose claims triggered public outrage, including Elliot Morley and David Chaytor who claimed thousands of pounds for ‘phantom’ mortgages, have been given the all-clear by Sir Thomas Legg.

Meanwhile, others with far less questionable claims have been asked to repay thousands.

Mr Bercow, who was elected as Michael Martin’s replacement after claiming he was the right candidate to clean up Parliament has admitted using a legal loophole to avoid paying CGT.

Now he has ruled against broadening the Legg inquiry, claiming such an investigation would take too long.

The decision was approved by the Members Estimates Committee, a group of senior MPs including Harriet Harman, the Leader of the House, and her shadow, George Young.

In his reply to Mr Clegg, seen by the Daily Telegraph, the Speaker said: ‘Extending the review to cover changes of home designations for personal gain and the payment of capital gains tax would unquestionably involve significant retrospective changes to the rules on allowances…’

‘Agreeing to your proposal would therefore considerably lengthen the timescale of the review and the MEC did not feel it could support this.’

Mr Clegg said that he was ‘dismayed’ by the ruling, which was taken in private and referred to only briefly in published minutes of the meeting.

He had warned that the audit would not be ‘credible’ if abuses such as flipping and non-payment of CGT were not investigated.

‘This response shows that despite people’s anger at the expenses scandal the worst perpetrators are still being let off the hook,’ he said.

‘Only in a place as mad as Westminster can MPs make fat profits playing the property market with taxpayers’ money and get away with it.

‘Despite all the rhetoric of cleaning up politics we now know that at the very heart of the Westminster establishment there is still no will to deal with the biggest offences.’

On Tuesday it was disclosed that Bernard Jenkin, a former vice chairman of the Conservative Party, has been asked by Sir Thomas to return more than £63,000, including £50,000 which he claimed in rent for a property owned by his sister-in-law. This represents the largest repayment demand to be made public.

He has written to Sir Thomas challenging his ruling on the grounds that his arrangement had the approval of the Commons fees office.

Critics of the Legg inquiry will argue that Mr Jenkin’s case is not as questionable as those involving flipping (where MPs changed the designation of their second homes to maximise their claims) and CGT avoidance.

Both attracted widespread public anger when they were exposed by The Daily Telegraph during the expenses scandal earlier this year.

Mr Bercow himself legally avoided paying thousands of pounds in capital gains tax on the sale of two properties by declaring them as his main residence to the taxman despite nominating them as his second homes for the purposes of his expenses.

He volunteered to repay £6,500 after his claims were questioned by The Daily Telegraph. However, this was not raised by Sir Thomas who instead asked him to repay nearly £1,000 that he had overclaimed for his mortgage interest costs.

Kitty Ussher resigned as a Treasury Minister in June after it emerged that she had avoided paying CGT by changing her second home designation for a single month on the advice of her accountant when selling a house in her constituency of Burnley, enabling her to declare that it was her main home.

Hazel Blears, the former communities secretary, Eleanor Laing, shadow justice minister, and Greg Barker, a shadow environment minister, all voluntarily wrote cheques for five figure sums to assuage constituents’ anger over their legal non-payment of CGT.

Margaret Moran, the Labour backbencher who announced she would stand down at the next election after being heavily criticised over her expenses, ‘flipped’ her designation between three properties, spending thousands on decorating each home.

Other prominent ‘flippers’ include Keith Vaz, chairman of the Commons Home Affairs Committee, who switched designation from his London house to his Leicester constituency home and back again within the space of a year.

Andrew Lansley, the shadow health secretary, was criticised for decorating his constituency home before ‘flipping’ and selling the property, while Alistair Darling, the Chancellor, changed his designation between three properties on four occasions.

While some of these MPs have revealed that they have been asked to pay back money by Sir Thomas in relation to other claims judged excessive or incorrect, none have been asked to make any repayment in relation to ‘flipping’ or CGT.

Ordered by Mr Brown at the height of the scandal as a means of ‘cleaning up’ the Commons, the audit led by Sir Thomas Legg has now made provisional rulings on every MP. They have until Monday to challenge the findings.

The process has provoked a storm of protest from MPs who were angered that Sir Thomas had focused on items such as excessive claims for gardening and cleaning, while over-looking some of the practices attracting the most public concern.

While a handful of MPs are waiting to hear whether they must answer criminal charges for practices such as claiming for ‘phantom mortgages,’ the tax authorities are also investigating the tax affairs of 27 MPs in the wake of the Telegraph’s disclosures.

Earlier this month, the Standards and Privileges Committee was criticised for ruling that Jacqui Smith, the former home secretary, need not repay any money after she was found to have broken rules by declaring a spare room in her sister’s house as her main residence, allowing her to claim £116,000 in expenses on her family home.

As well as the Speaker, who chaired the meeting, the decision was approved by Miss Harman, Sir George, and Sir Stuart Bell, a veteran Labour backbencher who has urged MPs to refuse to pay money asked of them by Legg.

Also present were David Maclean, a Tory backbencher who led the battle to keep MPs expenses secret, and Nick Harvey, representing the Liberal Democrats.