One In Three MPs Abused The Expenses System

(Daily Mail) – ONE IN THREE MPS have been found guilty of abusing their expenses, laying bare the true scale of the scandal.

About 200 are being sent final demands by auditor Sir Thomas Legg today to hand back up to £1 million of taxpayers’ cash.

At least one MP couple will be asked to repay more than £100,000, senior Commons sources said.

A further three dozen MPs will get new demands averaging £20,000 after Sir Thomas scrutinised their mortgage papers and found they had made unreasonable claims.

He has decided not to accept excuses or delays and will publish his report naming and shaming the culprits on December 14.

In a double blow for MPs, the Daily Mail also revealed that the enforcer brought in to introduce a new expenses system has decided not to authorise a major pay rise for five years.

Nearly 40 MPs have signed a Commons motion calling for an increase in their £65,000 salaries.

But Sir Ian Kennedy, chairman of the Independent Parliamentary Standards Authority, has made clear privately that he wants reform to ‘bed in’ first.

A source who has spoken to him said: ‘The public has to see the new system working and trust it before we can even talk about that. MPs can scream all they want but it’s not going to happen.’

Sir Thomas had already ordered 166 MPs to repay money totalling £300,000 after overclaiming for items such as gardening and cleaning — an average of £1,800 each.

But at least another 35 will be asked to hand back sums averaging £20,000 in mortgage interest claims, clawing back another £700,000 for the public purse.

A senior Commons source said: ‘The second wave is a small number of larger demands, after the large number of small demands.

‘The second wave are demands that you really wouldn’t want to receive. If you’ve got a dodgy mortgage, it’s going to be a large amount of money.

‘One couple has a bill between them that is in excess of £100,000. I have seen nothing to suggest that a final bill of £1 million is wide of the mark.’

Allies of Sir Thomas say he has decided to come down particularly hard on MPs who paid money to members of their own families.

‘He has taken the view that if it looks like a scam, and smells like a scam, that it is a scam,’ a Commons official said.

The demands do not even include the half dozen MPs facing investigation by the police for possible fraud. They include Elliott Morley and David Chaytor, the Labour MPs who both claimed for ‘phantom mortgages’ that had been paid off.

One couple who are widely thought to be in the firing line are Sir Nicholas and Lady Ann Winterton.

The Tory MPs paid off their mortgage, put their taxpayer-funded second home in a trust set up for their children, and then claimed £83,000 to pay rent on the property to the trust.

Tory Bernard Jenkin has been asked to return a large sum after paying £63,000 in rent to his sister-in-law. He has said he will pay back whatever is recommended in Sir Thomas’s final report.

Meanwhile, the Parliamentary Commissioner for Standards was last night asked to launch an investigation into whether Labour MP Peter Kilfoyle used taxpayers’ money to pay for a report he commissioned from his daughter Lucy’s firm.

Legg To Scupper Repayment Challenges

(Telegraph) – MPS WHO REFUSE TO REPAY excessive or incorrect expenses claims could be forced to appear in public before a High Court judge to plead their case.

Sir Thomas Legg, the independent auditor charged with reviewing Commons second home claims following The Daily Telegraph’s disclosures of widespread abuse of the system, is said to be concerned that many MPs are challenging his findings.

Amid fears that many of the worst culprits could escape ‘Scot free’ by spinning out their exchanges with him until after the election, he is reported to be considering asking a high court judge to hear individual MPs’ arguments in person.

A number of MPs wrote to Sir Thomas challenging his initial findings after receiving requests to return money claimed in expenses in letters from him last month.

They included Bernard Jenkin, Tory MP for Essex North, who was asked to return funds he paid in rent to his sister-in-law amounting to £63,000, the highest repayment request made public to date.

He wrote to the Legg team to protest that the arrangement was cleared by the Commons fees office, but has agreed to abide by Sir Thomas’ final ruling.

Other MPs, including many who are standing down at the election, plan to simply refuse any repayment requests, saying that the Legg audit has no legal power to demand they comply.

Frank Cook, Labour MP for Stockton North, who was asked to return £980 for utility bills and a refrigerator, said he would tell Sir Thomas to **** off if he continued to reject claims which were in line with the rules at the time.

He said: ‘I have told him, if he will please provide me with a copy of the guidelines that existed on that, I will think about it. I won’t pay up without justification and, if the one they provide is not good enough, I will tell them to p*** off.’

Auditors are said to feel that a ‘quick appeals’ process in the form of a ‘trial’ heard in public and conducted by an independent figure such as a High Court judge would speed up the process and avoid delays caused by ‘dragging out’ exchanges of correspondence.

So far, 167 MPs have come forward to admit that they have been asked to repay a total of more than £300,000.

Another 176, including a number who stand accused of some of making the most questionable expenses claims, have failed to reveal the contents of their ‘Legg letters.’

Just 89 have announced that they had been given a clean bill of health, with 127 asked to provide auditors with documents such as mortgage statements or rental agreements.

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.

Harriet Harman Accused Of Ignoring Inquiry Warning

(Guardian) – THE LEADER OF THE HOUSE, Harriet Harman, was warned by Labour whips in early September that the inquiry into MPs’ expenses by Sir Thomas Legg was going off the rails and likely to lead to a complete rethink of the rules, the Guardian has learned.

Senior sources say Harman did nothing to act on the advice, opening the way for the public relations disaster that has hit parliament this week. The furore has also derailed Gordon Brown’s efforts to focus on the policy differences on the economy between Labour and the Conservatives.

It is thought that a few MPs are facing bills they simply cannot repay in the short term and are looking to take Legg to court on the grounds of natural justice. Harman has become the focus of blame for many Labour MPs angry that they are being required to pay tens of thousands of pounds they were told they could claim.

There is deeper despair at the prospect of expenses remaining at the top of the political agenda. One minister said: ‘There is a danger the general election will be conducted in an anti-politics atmosphere that had such a disastrous effect on Labour’s vote in the June European elections.’

It was also reported that the Speaker, John Bercow, twice urged Legg to drop his plan for caps on cleaning and gardening expenses but was twice rebuffed. Bercow decided it would be improper to try to interfere further with an independent audit.

The spokesman for the Speaker insisted he had not asked Sir Thomas to drop the limits, however. They discussed only whether the limits should be cash or a percentage of expenses claimed, he said.

Anger across the parliamentary Labour party, including in the cabinet, is also being directed at the prime minister for setting up the inquiry, arguing that it has prolonged the agony and was a panic response to Tory and Lib Dem initiatives.

One senior figure said: ‘We were led up the garden path by Gordon. I have never known a prime minister to be heckled at a meeting of the parliamentary party as he was on Monday. Not even Tony during the Iraq war got such a rough ride.’

Setting up Legg also ran counter to Brown’s demands on Harman in the early summer that the issue was closed down by the summer.

Downing Street only realised the scale of the problem posed by Legg’s approach in the middle of last week. It was also claimed that his unexpected assertiveness had left the government floundering on how to discipline MPs who refuse to pay up.

MPs have three weeks to make representations to Legg in response to the letters either demanding specific repayments, requesting further information or giving MPs the all-clear. Legg has applied his own annual limits of what he thinks was reasonable to claim – £1,000 a year for gardening and £2,000 a year for cleaning – and has asked those who exceeded these amounts to repay the difference.

He is also demanding greater details about mortgages involving “the buying or renting of a second home from a close relative, a company in which he had shares or a close associate such as an employee”.

More of his demands were disclosed by MPs today. The Conservative MP Brian Binley was thought to be required to repay more than £50,000, but he has told his local paper he has been cleared.

Married Tory MPs Sir Nicholas and Ann Winterton may have to return more than £100,000. Sir Nicholas refused to disclose the contents of his letter, but said he was ‘satisfied with its contents.’

One Labour MP is facing a bill of £16,000 and is seeking legal advice on how he can challenge Legg’s finding. But No 10 still believes most Labour MPs will pay rather than be seen to be defying the public.

Lord Mandelson, the business secretary, said he recognised that some MPs faced real difficulties, but added: ‘We have got to take this on the chin. If it requires some pay back that is a necessary price to pay.’

‘All MPs should be subject to an investigation by HM Revenue and Customs’

FOLLOWING THE DISAPPOINTING ATTEMPT BY LEGG to thoroughly address the valid concerns of an embittered public, The Telegraph turned the heat up under the British establishment today by calling for MPs to be ‘subject to an investigation by HM Revenue and Customs and suffer the same consequences that would befall the rest of us.’

Bob Spink, our local MP, will be one of those whom will not be happy with the call, which includes ‘extending Sir Thomas’s remit beyond the additional costs allowance and letting him examine whether claims for office costs were legitimate as well.’

In its online editorial, The Telegraph says this:-

A bigger jeer than normal greeted Nick Clegg, the Liberal Democrat leader, during Prime Minister’s Questions yesterday. The MPs of the two big parties delight in baiting Mr Clegg; but there was a new edge to their disdain that owed something to his calls in this newspaper for a wider inquiry into the issue of MPs’ expenses than has so far been carried out.

Sir Thomas Legg, the former mandarin conducting the investigation, has focused on what he judges to be excessive gardening and cleaning claims, together with any questionable mortgage payments and arrangements involving family members.

While Sir Thomas is to be congratulated, despite the efforts of some MPs to traduce him, Mr Clegg has a point: if it is left here, the worst offenders – the flippers, the tax dodgers and those who wrongly designated their homes – will get away scot-free.

This cannot be right; nor is it fair on those who might have transgressed only marginally. There is also a strong case for extending Sir Thomas’s remit beyond the additional costs allowance and letting him examine whether claims for office costs were legitimate as well.

If one thing has been learned from this extraordinary business, it is that only complete transparency will suffice. The voters, who in a few months will be invited to return their MP to Westminster, will want to know precisely what they were up to, what they claimed and whether what they did was within the spirit of the rules, if not the letter. We are not even sure that Sir Thomas’s report will be published in full, as it surely must be, or if it will contain enough information to allow voters to make a proper judgment.

All MPs should be subject to an investigation by HM Revenue and Customs and suffer the same consequences that would befall the rest of us if found guilty of tax evasion – or even fraud.

The Legg Letters

WHILE THE PRESS PACK rightly pursues errant MPs for their comments on the Legg letters they have received, it is worth remembering that Sir Thomas reports to the Members’ Estimate Committee (MEC), which is headed by six MPs whom are themselves tainted by the expenses scandal.

The six committee members, lest we forget, are:-

  1. John Bercow, the Speaker and Conservative MP for Buckingham, who ‘flipped’ his second home from his constituency to a £540,000 flat in London and claimed the maximum possible allowances for it. His expenses files reveal he also twice charged the public purse for the cost of hiring a chartered accountant to complete his annual tax return.
  2. Harriet Harman, Leader of the House of Commons and Labour MP for Camberwell and Peckham, who hired Scarlett McGuire for ‘consultancy’ services on the public purse. She also claimed for party political propaganda and bought expensive gadgets.
  3. Sir Stuart Bell, Labour MP for Middlesbrough, who claimed £750 for food in December 2005, reduced to the maximum monthly amount of £400, and designated his second home as a flat in London and claimed £1,400 a month rent. He is also an outspoken critic of Legg setting ‘retrospective rules.’
  4. Nick Harvey, Liberal Democrat MP for North Devon, who had to be reminded twice by parliamentary officials to submit receipts with his expenses claims.
  5. David Maclean, Conservative MP for Penrith and The Border,
    who spent thousands of pounds of taxpayers’ money renovating a farmhouse before selling it for £750,000.
  6. Sir George Young, Shadow Leader of the House of Commons and Conservative MP for North West Hampshire. Young claimed the maximum second home allowance on his London flat for the past two years and also billed taxpayers for the cost of a video camera so that he could broadcast clips of himself at work on YouTube.
Sir Thomas Legg

Sir Thomas Legg

Public calls for Legg’s inquiry to be broadened from its original remit of carrying out an independent review of second home allowances claimed since 2004/05, are, therefore, unlikely to be satisfied. Diligent Legg is trying his best to make the most of a bad deal; but the fact remains that he is no more than a rabbit sent forth on a foraging mission before returning to the set of foxes that dispatched him. He cannot publish anything without it first being approved by the MEC. 

Sir Christopher Kelly

Sir Christopher Kelly

The battle to uncover the full extent of corruption in our Parliament is likely to drag on for some time. Next month will see the publication, by Parliament, of another set of MPs’ expenses (suitably redacted) and December will see the final report from Legg and the results of the inquiry headed by Sir Christopher Kelly.

This issue will not go away; but it will only be resolved to the public’s satisfaction in May, at the next general election.

Only then will it be possible for the electorate to ensure that any sitting MP, whom has been tainted by the expenses scandal, is not returned to Parliament. And it will be up to the local press to ensure that their citizens are kept fully informed.

… (14/10/2009) – ‘All MPs should be subject to an investigation by HM Revenue and Customs’

… (28/10/2009) – Speaker John Bercow Ensures ‘Flippers’ Get Away With It

MPs Threaten To Defy Expenses Enquiry

(Telegraph) – MPS HAVE THREATENED to defy an official inquiry into the Commons expenses scandal led by Sir Thomas Legg by refusing ‘unfair’ demands to repay questionable claims.

Independent auditors will on Monday write to up to 500 past and present MPs to highlight concern about their use of parliamentary allowances, before inviting them to refund the public purse.

But in an astonishing act of defiance, a spokesman for the MPs complained that many would not accept orders to repay claims which were approved by the Commons fees office.

Sir Stuart Bell, who sits on the Members Estimates Committee — which will rule on whether to accept the Legg inquiry’s findings — said that if the investigation asked MPs to pay back approved expenses, it would amount to a change in ‘criteria’ and would be unfair.

He suggested that if the audit, led by Sir Thomas, a former civil servant, strayed outside its ‘remit’ in this way, then MPs would be justified in refusing to pay the money back.

The threat to defy the Legg inquiry risks reigniting public anger over the expenses scandal and is likely to overshadow the return of Parliament today after the summer break and party conference season.

The public has already made clear its dismay at MPs who tried to excuse their questionable claims by explaining that they were ‘within the rules’ that existed at the time. However, some are said to be poised to call in their solicitors in an attempt to avoid repaying any money.

The prospect of MPs challenging the inquiry will alarm Gordon Brown and David Cameron, who are keen to draw a line under the affair.

Sir Thomas and his team began scrutinising MPs’ expenses claims dating back five years in the wake of The Daily Telegraph’s disclosures about widespread abuse of the system.

He is said to be applying a ‘reasonableness test’ to the task and is thought to be taking a critical view of claims, such as excessive bills for cleaning or gardening, even where they were approved by the Commons fees office.

He is writing to MPs who he feels should either repay money to the taxpayer or provide further information about questionable claims.

His inquiry, which was ordered by the Prime Minister, will ultimately report to the Members Estimates Committee, which will decide on whether to accept the inquiry’s recommendations.

But speaking on Radio 4’s World at One, Sir Stuart suggested that Sir Thomas might have ventured beyond his remit.

‘The MPs will have in their breast pocket a letter from Sir Thomas dated July 2, saying that his review will be carried out in accordance with the rules at the time and the standards that applied at the time over the past five years,’ he said.

‘I think many MPs, if they read the newspapers, may feel he’s not staying within that remit, he’s not respecting the decisions that were made by the fees office in accordance with the rules at the time.’

As the Members Estimates Committee has the final say over whether the Legg review should be implemented, Sir Stuart’s words raise the prospect of MPs refusing to repay money on a wholesale basis.

Even if the Legg recommendations are accepted by the committee, a number of MPs — including many among the 100-plus who have announced their retirement at the next election, and others who have privately made up their mind to go — are said to be planning to call in legal advice to challenge the rulings.

As Sir Thomas has no legal powers, MPs who refuse to accept a recommendation that they repay expenses cannot be forced to do so.

While it would be possible for reluctant MPs to be referred to the parliamentary watchdog, the worst sanction open to the Commissioner for Standards is suspension from the House.

And with any sleaze inquiry likely to last many months, certainly beyond the election, there is little incentive for retiring MPs to pay any money back to the public purse.

John Mann, the Labour MP for Bassetlaw, said: ‘There are going to be some very bitter MPs who feel that Legg is being unreasonable.

‘I’ve heard that some are hiring solicitors. They will argue that they made decisions based on advice from the fees office. If people are asked to repay the profits made from renovating their properties, they will be pleading poverty. But if people are standing down you won’t be able to force them.

‘For those who are not staying on in the Commons or who want to become a Lord, there will be some who will refuse to pay altogether.

‘They will say that the system wasn’t a good system, the system didn’t require them to keep receipts, and it may be unreasonable in their eyes to pay up.’

The row over Legg’s findings is likely to rumble on well into the new year, at a time when tension among MPs over expenses is already high as they wait to hear the recommendations of the review being conducted by Sir Christopher Kelly, the chairman of the Committee on Standards in Public Life, into the future system for parliamentary allowances.

Many are concerned that he could propose banning MPs from claiming mortgage payments, or even force them to live in rented communal accommodation.

And there will almost certainly be more expenses furore when the latest round of claims, relating to the financial year 2008-09, is made public in November.

So far, 106 MPs have announced their retirement from the Commons; but dozens more are expected to stand down before the election, which must come by June.

The row over the Legg review increases the likelihood that some of those with the most questionable claims will avoid refunding the taxpayer simply by opting to bow out of Parliament.

Sir Thomas has not examined the expenses of MPs who are undergoing police investigation, such as Labour’s Elliot Morley, who announced he would stand down over allegations he claimed for a ‘phantom’ mortgage.

Members subject to a parliamentary sleaze investigation, including the Conservative backbencher Anne Main, who submitted allowances for a flat in which her daughter lived, will also not be covered by the review, meaning repayments in both categories are unlikely for some time.

… (Daily Mail, 13/10/2009) – With the connivance of this wretched new Speaker, MPs are trying to destroy an honest man for daring to expose their greed

… (13/10/2009) – MPs’ Expenses Place Browns Authority In Crisis