MPs who break tough new rules risk one year in jail

Bill rushed through in bid to restore confidence in Parliament as John Bercow reiterates call for reform on first day in Speaker's chair
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MPs who fiddle their expenses in future could face 12 months in jail or an unlimited fine under a crackdown announced last night. A Bill will be rushed through Parliament by next month with all-party support in an attempt to restore public confidence in MPs after it was shattered by the revelations about the allowances system.

The tough new measures will not be retrospective and so will not apply to the MPs who made the claims exposed in recent weeks. However, Scotland Yard announced last week it is investigating a small number of MPs and peers. The new rules are expected to take effect early next year, when an independent investigator will start to police MPs' claims and a new commission will have the power to force them to repay money if they overclaim.

The Parliamentary Standards Bill will create a new offence for MPs of "knowingly providing false or misleading information in a claim for an allowance", punishable by up to a year in prison or an unlimited fine. An MP who fails to comply with the rules on registering an interest could be fined up to £5,000. The same penalty will apply to breaching the rules on "paid advocacy" – asking questions or making speeches which could benefit someone who pays them.

Although the House of Lords will not be covered by the emergency measures, they will be introduced for peers at a later stage following the "cash for amendments" affair which saw two Labour peers suspended.

MPs will have to sign up to a new code of conduct which, for the first time, will have legal force – ending the "Westminster club" under which MPs regulate themselves.

A new Parliamentary Standards Authority will regulate and oversee MPs' expenses claims. A Commissioner for Parliamentary Investigations will have the power to conduct investigations and report to the authority, which will be able to recommend that the Commons exercises its disciplinary powers to withhold a salary for a specified period, suspend or expel an MP. Serious cases of abuse will be referred to the police.

The moves were agreed in all-party talks chaired by Jack Straw, the Justice Secretary. They were announced by Harriet Harman, the Commons Leader, who said: "The public want to be able to have full confidence in the parliamentary system. Members of Parliament also want confidence in the system, so that the cloud of suspicion is lifted and the reputation of the House can be restored."

Ms Harman admitted that the Commons would have to think again about the system under which many of the receipts for expenses were blacked out. She promised a review before the next set of payments, for the 2008-09 year, are published in October.

Alan Duncan, the shadow Commons Leader, said last week's official publication of claims for the previous four years had been an "unmitigated PR disaster". He said: "Big black splodges, even if they were on top of completely blank paper beneath, looked like censorship on a massive scale even where it wasn't."

But he departed from the all-party consensus on the clean-up by questioning new rules that will force MPs to disclose all their outside earnings from 1 July, warning that the moves could be "unworkable".

Tomorrow MPs will set up a committee to draw up reforms to Parliament, such as boosting the powers of select committees, allowing public petitions to be debated and letting MPs select some issues for debate instead of the Government. The raft of reforms coincided with the election of John Bercow as the new Commons Speaker after he stood on a platform of radical change.

In his first day in his new job yesterday, Mr Bercow reiterated his call for reform. As he chaired a formal session for the first time, he urged backbenchers and ministers and to keep their questions and answers short so that "brisker progress" could be made.

Asked if he favoured the publication of uncensored expenses receipts, Mr Bercow replied: "That would be my strong preference."

He denied that his decision to switch his first and designated second home made him unfit to be Speaker and promised he would not claim second-home allowances now he has a grace-and-favour flat at the Palace of Westminster.

Mr Bercow paid £6,500 to HM Revenue and Customs after admitting that he had not paid capital gains tax on either of the 2003 sales of his previous constituency and London homes. He insisted he had been under no obligation to pay CGT, but had done so to reflect Parliament's intentions to require MPs to do so in the future.

The new Speaker played down the lukewarm reaction to his election from his former Tory colleagues. He promised to try to win over his critics by displaying "total fairness" in the chair.

Nadine Dorries, the outspoken Conservative backbencher, claimed Mr Bercow had won the support of only three Tory MPs and said his election had been "made through a red mist" as "the last hurrah of a dying Labour government".

But Martin Salter, his campaign manager and a Labour MP, called that "a lie and a smear" and insisted between 15 and 20 Tories had backed him in the secret ballot. He said of the Tory criticism: "I think they should grow up. The election of the Speaker is above party politics. It's a shame that these people are so intolerant, so bigoted, that they cannot give the new Speaker at least a few weeks."

Mr Duncan dismissed speculation that Tory MPs might oust Mr Bercow if their party wins the general election, saying he deserved the respect of the House. But he added: "A lot of Conservatives feel that John positioned himself in order to woo Labour to get the speakership. A lot of people are annoyed that it worked."

Sir George Young, Mr Bercow's main rival, who enjoyed strong support from Tory colleagues, said: "I think it would be wrong for an elected party of whatever complexion to use its majority to unseat a Speaker. The moment you do that you have politicised the speakership."

Brown's Bill: The new rules

* Commissioner for Parliamentary Investigations appointed to look into potential abuses of the expenses system.

* New criminal offence for MPs of "knowingly providing false or misleading information in a claim for an allowance", with a maximum penalty of a year in prison or an unlimited fine.

* New offence of failing to comply with rules on registration – a maximum fine of up to £5,000.

* New offence of breaching the rules which ban paid advocacy – a maximum fine of up to £5,000.

* New statutory code of conduct for MPs.

Why the Speaker prefers to stand

Despite his promise to boost the stature of the Speaker, MPs soon realised that John Bercow's pledge was purely metaphorical. Sitting down after his acceptance speech, the diminutive Tory MP looked swamped by the imposing leather upholstery of the Speaker's chair.

Just 24 hours later, he appeared to have grown into the role – literally – as his 5ft 6in frame seemed higher up in the famous seat. But suspicions of the addition of a Speaker's cushion were quickly squashed by his spokeswoman.

In his first full day in the job, Mr Bercow was far from keen to use the chair he had fought so hard to win, often choosing to stand in a manner foreign to his burlier predecessor, Michael Martin.

He also revealed that he was dispensing with the traditional robes worn by Mr Martin, preferring a suit and tie, covered with a simple robe similar to those worn by academics. He will not wear a wig, a tradition ended by Betty Boothroyd in 1992.

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