Labour rising star resigns over expenses

Kitty Ussher to quit at next election after claims she avoided capital gains tax

The MPs' expenses scandal claimed another victim last night when the Treasury minister Kitty Ussher resigned from the Government over allegations that she avoided paying capital gains tax (CGT).

Ms Ussher, a rising Labour star and, at 38, one of its youngest ministers, also announced that she would stand down as MP for Burnley at the next general election for family reasons.

Her resignation is a setback for Gordon Brown, who had hoped the new team he selected in his reshuffle two weeks ago would survive the storm over parliamentary expenses. All ministers were given an "expenses audit", after which Ms Ussher moved from the Work and Pensions department to the Treasury.

The audit did not discover that Ms Ussher was advised by an accountant to switch her designated primary home from London to Burnley for one month, a move that saw her avoid paying £16,800 in CGT when she sold her constituency home in 2007. Ms Ussher sold the flat for £62,000, a profit of more than £40,000.

The Daily Telegraph, which has obtained the expenses claims of all 646 MPs, is believed to have discovered the switch in correspondence between the MP and the Commons Fees Office.

Ms Ussher jumped before she was pushed. Government sources said she offered to quit when she realised the severity of the allegations and the Prime Minister believed that was the right decision. Ms Ussher insisted yesterday that she "did not do anything wrong". "At all times my actions have been in line with HM Revenue and Customs guidance and based on the advice of a reputable firm of accountants who in turn were recommended to me by the House of Commons Fees Office," she said. "Neither have I abused the allowance system of the House of Commons in any way."

In her resignation letter, she assured Mr Brown that he continued to enjoy her support. She was leaving "with the greatest regret" because she did not want to cause the Prime Minister or the Government any embarrassment.

Ms Ussher, who has two children under the age of five, said: "I decided some time ago, completely for family reasons, that I would not be putting my name forward to contest the next general election. The hours of Parliament simply don't work with kids. There is no other reason for this decision."

Downing Street announced last night that Portsmouth North MP Sarah McCarthy-Fry was being moved to the Treasury to replace Ms Ussher, after less than a fortnight at the Department for Communities and Local Government.

Last month it was revealed that Ms Ussher attempted to make the taxpayer pick up a £20,000 bill to refurbish her family home in south London months after being elected as an MP in 2005.

In a two-page letter to the Fees Office, she complained about the Artex ceilings in her Victorian property, that she believed were in "bad taste" and should be replaced. Her note asked for 12 major repairs to be carried out on the property she had occupied for five years. She wrote: "Most of the ceilings have Artex coverings. Three-dimensional swirls. It could be a matter of taste, but this counts as 'dilapidations' in my book!"

Her spokesman said that her approved claims were within the rules.

Ussher out: The fall of Brown's young gun

The departure of Kitty Ussher from the Government and the Labour benches is a blow to Gordon Brown. At 38, she was one of his youngest ministers and had been marked out for a bright future having already taken on jobs at the Treasury and the Department of Work and Pensions. She was known as a strong Europhile, coming into politics having served as the chief economist of Britain in Europe, a pro-euro group hated by the Tories. She left the job in 2001 to become special adviser to the Pensions Secretary, Patricia Hewitt, winning her own Commons seat, Burnley, at the 2005 election.