Watchdog denies 'watering down' expenses reforms

The head of the new parliamentary expenses watchdog today denied "watering down" proposals for reform of the current system.

Sir Ian Kennedy, the chairman of the Independent Parliamentary Standards Authority (Ipsa) said he was determined to make a "clear and clean break with the past".

However, a consultation document published today by Ipsa included significant differences from the blueprint for reform drawn up by the chairman of the Committee of Standards in Public Life, Sir Christopher Kelly.

The Ipsa recommendations open up the possibility that MPs living just outside London would still be able to claim expenses for their second homes.

MPs would have the chance to vote on whether the Treasury should be able to recover any profits they make on the sale of homes they bought with taxpayer-funded mortgages.

The consultation document also potentially reopens the issue of whether MPs should be able to employ members of their own families - a practice which the Kelly report said should be banned.

Sir Ian's paper does back some of Sir Christopher's main recommendations, including a ban on MPs claiming mortgage interest payments on second homes. In future they would have to rent.

It also goes further on the issue of MPs' resettlement allowances when they leave Parliament, which the Kelly report recommended should be cut back, suggesting that they could be scrapped altogether.

On the contentious issue of profits made on the sale of taxpayer-funded second homes, the paper said that it was for "Parliament to decide" whether to take action to enable them to be recovered for the taxpayer.

Sir Ian insisted that he remained strongly committed to the principle that the money should be paid back, although he acknowledged that his paper could be seen as a weakening of the Kelly report proposals.

"These are interpretations that some might seek to put out. I don't recognise the notion that we were watering down on capital gains," he said.

He said Ipsa was committed to the principle that "no one should use public money for private gain".

But he said they needed to ensure that the Treasury had the powers to recover the money for the public purse.

The Kelly report also recommended that MPs with constituencies "within a reasonable commuting distance of Parliament" should not be able to claim for second homes. Currently only those in inner London are barred.

The Ipsa paper said MPs should still be eligible if they have a seat outside London Transport zones 1 to 6, which would enable those in the Home Counties and on the outskirts of the capital to carry on claiming.

Although Ipsa broadly backs the Kelly report's recommendation that MPs should not be able to employ family members, paid for out of public funds, because of the potential for abuse, it said that it was prepared to reconsider the issue.

The paper said they had heard "very strong views" expressed that in practice family members might be the best qualified applicants for the posts.

"On that basis, we feel it is right to allow an opportunity to hear considered views on whether prohibiting the employment of family members is necessary and proportionate," it said.

Sir Ian said he was committed to getting the new system in place by the general election so it could be implemented in the new Parliament.

The consultation on the Ipsa proposals will remain open until February 11.

Sir Ian said that by law they were obliged to consult with MPs, the Speaker, the Committee on Standards in Public Life, HM Revenue and Customs and the Treasury. Members of the public would also be invited to submit their views.

He said Ipsa would consider the representations made to it, but he stressed that reform was essential to restore public confidence in the system.

"The context of our scheme is a total loss of confidence by the public in the existing scheme, which has ended in scandal," he said.

"The aim of the scheme that we have put forward must be to contribute to restoring public confidence in Parliament and our elected representatives and at the same time meet the needs of MPs."