MPs must repay £1.1m expenses

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Indy Politics

The long-awaited review of Commons expenses delivered its damning verdict today - ordering hundreds of MPs to repay more than £1.1 million and accusing senior figures of being obsessed with feathering their own nests.

Former mandarin Sir Thomas Legg lambasted the "deeply flawed" system at Westminster, saying even the "vague" rules that existed had not been enforced.

A Crown Prosecution Service (CPS) spokeswoman said it would be announcing decisions at 11am tomorrow about whether charges would be brought in expenses abuse cases.

Gordon Brown, who has handed back more than £13,000, welcomed the findings as "a very significant step forward" in restoring public trust following the damaging scandal.

But the credibility of the audit was called into question when it emerged that retired judge Sir Paul Kennedy had fully or partially upheld appeals by 44 MPs against Sir Thomas's initial conclusions, reducing the total repayment demand from £1.3 million to £1.12 million.

That is less than the £1.16 million bill for the Legg process, that is being met by the taxpayer.

In his own foreword, Sir Paul accused the auditor of acting beyond his remit by implying that MPs who made claims that were permitted under rules at the time had acted improperly.

"It was not the function of the review, nor is it my function, to make judgments of that kind," he said.

The Prime Minister and the ruling Commons Members Estimate Committee turned to Sir Thomas to re-examine five years of claims after revelations of abuses began appearing in the Daily Telegraph last May.

His recommendations, published by the House authority today, were for 390 MPs to repay some £1.3 million of "invalid" claims.

Tory backbencher Bernard Jenkin faced the highest demand, for £64,000 spent renting a property from his sister-in-law.

Mr Jenkin was among those whose challenges were successful, with the sum being halved to around £36,000.

In the wake of the appeals, the biggest repayment has been asked of culture minister Barbara Follett - £42,458 that went on security, telephone lines and insurance for artworks.

In his report, Sir Thomas said the "culture of deference" in the Fees Office had left it "vulnerable to the influence of higher authorities in the House of Commons, from the Speaker down, and of individual MPs".

"In practice, during most of the review period, these influences tended more towards looking after the immediate interests of MPs than to safeguarding propriety in public expenditure," he said.

Last May, Michael Martin became the first speaker forced out of office in 300 years, amid widespread anger from MPs at his handling of the crisis.

Sir Thomas, who served as an external member of the Commons Audit Committee during the period in question, bemoaned the fact that there was "no audit of any kind" of the Additional Costs Allowance (ACA), which funded second homes, or any other parliamentary expenses.

"Neither internal nor external auditors could 'go behind the Member's signature'," he wrote.

Sir Thomas stressed that his findings merely dealt with whether expenses claims had been "valid", and intended "no reflections on the conduct or motives of individual MPs".

Sir Thomas said the "rules were vague, and MPs were themselves self-certifying as to the propriety of their use of the allowance".

There was also a "prevailing lack of transparency" and problems were exacerbated by inadequate record-keeping.

"A particular challenge has proved to be the widespread lack of proper evidence on the record from MPs to support substantial payments, especially of mortgage interest, even though this was expressly required by the rules," he added.

Sir Thomas roundly rejected complaints from many MPs that he had imposed retrospective rules and spending limits for items such as gardening and cleaning.

He insisted second home allowance could only ever "be used as reimbursement for specific and proportionate expenditure on accommodation needed for the performance of Parliamentary duties".

"Payments by the Fees Office which contravened these requirements breached the published rules and standards in force at the time.

"To hold such payments invalid is not to impose new rules retrospectively, but to apply now the rules that were properly in force then, but were overlooked or misunderstood at the time."

He went on: "Suggestions that MPs necessarily acted 'in accordance with the rules' simply because the Fees Office made payments to them, and even encouraged and endorsed their claims, are therefore misconceived."

But in upholding fully or partially 44 of the 75 appeals that were filed, Sir Paul indicated he was not happy with key elements of the approach that had been taken.

The application of retrospective caps for cleaning and gardening was "a rational response to a difficult problem" but it was "bound to have unfortunate consequences".

Sir Paul said imposing such limits on the grounds of "propriety" carried with it "the inevitable implication that those who made claims in excess of the retrospectively-imposed limits were lacking in propriety".

"I found little, if any, evidence of that," he added.

Sir Paul disputed Sir Thomas's decision to order the wholesale repayment of so-called "conflicted transactions" - such as buying or renting a second home from a close relative, a company in which the MP had shares, or a close associate.

The former appeal court judge said he found "little room for the application of the approach which commended itself to the Review" and that each case should have been considered separately.

It was "particularly troubling" that claims made before the rules were changed in 2006 to outlaw such arrangements should have been dubbed "tainted", invalid and improper.

"The ACA Review is, at least in part, the result of enormous publicity, and will no doubt generate further publicity when it is published.

"Against that background, it seems to me that to describe any apparently genuine transaction as tainted, or breaching the requirement of propriety, when there is no evidence of impropriety, is damaging, unfair and wrong."

Sir Paul put this view into practice in his judgments, deciding that North Essex MP Mr Jenkin had to hand back rent claims only since 2006.

Ruling that Labour backbencher Ann Cryer did not have to hand back more than £16,000 in "conflicted" rent paid to her son, the ex-judge insisted there was "no evidence of impropriety in what you did, which did not contravene any rule in existence at the time".

In the case of Tory MP Peter Lilley, Sir Paul wiped out a massive £41,057.36 repayment demand, saying he was "at a loss" to understand why Sir Thomas had levied it.

Mr Lilley obtained a loan from his wife to make a cash purchase of a second home in 2003, but declared the arrangement in full to the Fees Office and interest payments were lower than a bank would have charged.

The arrangement was substituted with a conventional bank mortgage in 2005.

"I find your arguments compelling," Sir Paul wrote to the MP. "I am at a loss to understand why the review should state that what you did was not permitted under the ACA..."

In a statement, the MEC said it had set a deadline of February 22 for MPs to arrange repayments.

"The MEC will support a resolution in the House to authorise the recovery from salaries and other allowance payments of any sums outstanding after that date," it added.

The statement also revealed that there were 13 more appeals still waiting to be held, including that of shadow defence secretary Liam Fox.

"In a small number of cases MPs were unable to submit an appeal to Sir Paul before the December 23 deadline because they had not received the final decisions of the Legg review in time," it said.

"The MEC has agreed they should be offered the opportunity to make an appeal, and 13 have submitted an appeal."

The additions will take the total number of appeals considered by Sir Paul to 88.

Dr Fox is facing one of the highest repayment demands, at £24,878. He said he had already handed over the sum while the case was pending, insisting: "I have no wish to have or appear to have any money to which I am not entitled."

Mrs Follett, who has repaid the money in full, said she made the claims in good faith but accepted that the expenses rules had been shown to be "vague and deeply flawed".

"This has been a sad and sorry episode in Britain's political life which I deeply regret," she said.

Sir Thomas's audit covered the second claims of 752 current and former MPs between 2004-5 and 2008-9.

The details findings reveal that Iris Robinson returned a proportion of the cost of a £1,644.90 bed bought in January 2006.

Mrs Robinson, who is married to Northern Ireland First Minister Peter Robinson, recently quit as Strangford MP amid allegations that she made an improper loan to her toyboy lover.

Tory MP Anthony Steen, who gained notoriety at the height of the expenses scandal when he insisted critics were merely "jealous" of his large house, has handed back £28.50 spent on a flagpole rope and binding. Sir Thomas commented drily that the items had been "claimed without evidence as to their necessity".

There have also been a number of payments made which are far in excess of what has been ordered by the Legg review.

Care Services Minister Phil Hope was asked to return £4,365.65 for excess mortgage interest payments and a series of other items including an electric razor.

However, he actually paid £42,674.13 last year after being heavily criticised for avoiding capital gains when selling a taxpayer-funded property.

Sir Christopher Kelly, who led a review of the parliamentary allowances system last year, told the House of Commons Public Administration Committee today that all MPs were guilty in having failed to reform it.

"I think all of you are guilty of having gone along with a system which you must have known was flawed, even if you were not personally guilty," Sir Christopher told the cross-party committee.

He added: "I suspect that most of you were as unaware, as everybody else was until the Daily Telegraph revelations, of the extent to which people were manipulating the system."

Former Cabinet minister David Blunkett said the series of independent reviews by retired mandarins like Sir Christopher and Sir Thomas Legg amounted to "the Civil Service actually running the political system, rather than politicians representing and accountable to the people".

Mr Blunkett said the new allowances regime being put in place by Sir Ian Kennedy and Ipsa threatened to be "obtuse, perverse and extraordinarily difficult to implement".

"We have moved from the sublime to the ridiculous," Mr Blunkett told BBC Radio 4's World At One.

"We have had, obviously, both fraudulent activity, mistakes and people paying back because they were afraid to make a challenge.

"Now we have moved to... the opposite extreme where MPs are almost presumed to be fraudulent before they get into Parliament, and incapable of taking rational, sensible decisions."

Conservative backbencher Tim Yeo said only the general election - when as many as half of the existing MPs could be replaced - would draw a line under the expenses issue.

Mr Yeo told World At One: "I think it will have to wait until after the election before we have a completely new, fresh atmosphere.

"I think that the vast majority of survivors will be those who have conducted their expenses in a completely proper way."