Gordon Brown's plans to pay the vast majority of MPs up to £26,000 a year to "clock in" at the House of Commons face fierce resistance today from opposition leaders.
In a surprise announcement, he set out moves to scrap the controversial second-home allowance from July as part of an attempt to reduce the overall expenses bill for MPs. He also called for politicians with second jobs to disclose full details of outside earnings and for MPs to provide receipts for the smallest office and travel claims.
The housing allowance, currently worth a maximum of £24,006 a year, will be axed following a torrent of disclosures of MPs apparently milking their generous expenses system for their own benefit by claiming for furniture, electrical goods and mortgage interest. For most MPs, it will be replaced by a flat-rate daily payment based on the number of days they attend Westminster. A similar system operates in the European Parliament and the House of Lords.
The exact size of the daily payment will be fixed by the Senior Salaries Review Body (SSRB). If it accepts the rate of £170 previously floated by MPs, then backbenchers could be entitled to a yearly maximum allowance of £26,000 in an average parliamentary year. The Prime Minister will hold talks on the proposals with David Cameron, the Tory leader, and Nick Clegg, the Liberal Democrat leader, this evening.
Downing Street said Mr Brown "expected" the system would cut the bill to the taxpayer, but conceded the SSRB would take an "independent" decision.
Mr Clegg said: "I don't think bringing the Brussels gravy train to Westminster is the way to solve the lamentable system of MPs expenses. The great danger is this – you are giving MPs a cheque simply for turning up for work." A spokeswoman for Mr Cameron said he had "big misgivings" about a daily attendance allowance and feared it could be abused. She added: "We will seek assurances that no MP will be better off as a result."
MPs last night warned that a series of fresh anomalies could be created by the introduction of a flat-rate system. For instance, backbenchers who had paid off the mortgage on their London house – and therefore not entitled to the second home payment – could in future claim a daily allowance.
The biggest losers will be MPs from outer London who had previously been able to claim the second home allowance. Under the proposals they will join colleagues from inner London in only being entitled to the London supplement, worth £7,500 a year.
Ministers who live in "grace and favour" homes, including Mr Brown and Chancellor Alistair Darling, will in future not be entitled to the second-home allowance.
The proposals will be put to a vote in the Commons next week with a view to introducing them on 1 July. One Conservative source said: "This was clearly timed to wrong-foot us."
The speedy timetable was also seen by MPs of all parties as an attempt by the Prime Minister to move on from the twin controversies of lavish expense claims and the "smeargate" revelation of a planned Labour dirty tricks campaign against senior Tories. Ministers will be whipped to support the new expenses proposals, with Labour MPs given a free vote on the plans.
John Mann, the Labour MP who has called for an overhaul of expenses, welcomed the move. He said: "This will sweep away the outdated privileges the have so outraged the British public."
Mr Brown also sought to turn the spotlight on the Conservatives by calling for MPs with second jobs to disclose every payment, who paid them and how many hours they worked.
MPs will also have to provide receipts for every claim for office costs, travel and communications. At present they only have to produce them for items that cost £25 and above.
In a message posted on the YouTube website, Mr Brown said the changes were designed to make the system "simpler and less generous" and that action was essential to demonstrate MPs were there to "serve the public and not there to serve themselves".
The package was agreed at yesterday's Cabinet meeting. The Government faced brief embarrassment when Hazel Blears, the Communities Secretary, was photographed emerging from Downing Street with details of the announcement clearly visible on a piece of paper.
Members' benefits: The changes
The second-home allowance will be axed. MPs outside London will be entitled to claim a daily payment for attending Parliament.
Outer London MPs
Those MPs "within reasonable distance" of Parliament will lose the allowance and only be entitled to a much lower London allowance.
Grace and favour homes
Ministers in grace and favour property, such as Gordon Brown, will lose the allowance.
MPs will be have to provide fuller information about second jobs – including exact sums paid and details of how many hours they work outside Westminster.
Receipts for every item claimed – down to a 50p light bulb – will have to be produced.