Blair approves £18,000 allowance for ministers' second homes

Tony Blair has cleared the way for his ministers to receive an extra £18,000 a year to help them keep a second home.

The perk follows pressure from some government ministers who say that they are struggling to make ends meet on annual salaries of up to £128,000. They want to be able to claim the same benefit claimed by backbench MPs serving constituencies outside inner London, which is intended to help them keep a home in the capital.

MPs lose the right to the Additional Costs Allowance, which is currently worth up to £20,333, when they join the Government. Instead they can claim only the London Supplementary Allowance, amounting to a far less generous £1,574.

The Prime Minister has asked the Senior Salaries Review Body to approve changing the rules as part of its three-year review of MPs' pay packages.

The most senior member of the Government to benefit from the change would be Gordon Brown, the Chancellor of the Exchequer. Those living in grace-and-favour accommodation, such as Mr Blair himself and John Prescott, the Deputy Prime Minister, are not entitled to any help with London housing costs.

Mr Brown, however, has chosen to live in neither of his official residences, preferring his own one-bedroom flat in Westminster to a flat in Downing Street.

The arrival of their son last October may prompt the Chancellor and his wife, Sarah Macaulay, to start looking for a larger London home. With interest rates expected to increase this year, raising the cost of mortgages, a generous taxpayer-funded housing allowance is sure to help.

The SSRB will decide whether ministers should receive up to £18,000 a year extra in late spring. However, the review body is warning that MPs should not expect the same level of salary increases they have enjoyed in the past.

MPs' highly controversial vote in favour of a 25 per cent increase in parliamentary pensions last year will be taken into account when the SSRB sets the new rates, a spokesman said.

The SSRB is also to review the Office Cost Allowance, the money paid to MPs to help them equip and staff their offices. It will decide whether MPs should continue to be able to claim for computer and other IT equipment or whether this should be centrally provided.