Watchdog upholds Baroness Warsi rental income complaint
Tuesday 27 November 2012
A House of Lords standards watchdog upheld a complaint against Foreign Office Minister Baroness Warsi today over her failure to register rental income.
The peer - formerly co-chair of the Conservative Party - has accepted the finding and apologised, and the matter is now regarded as closed, said the House of Lords Privileges and Conduct Committee in a report.
Two other peers, Labour's Lord Elder and Lord Willoughby de Broke, of the UK Independence Party (Ukip), were also found to have breached the Lords Code of Conduct.
Today's ruling by the independent Lords Commissioner for Standards, Paul Kernaghan follows a complaint form Labour MP John Mann that she failed to register an interest as the recipient of more than £5,000 from renting out a flat in Wembley after she moved closer to Westminster when she was appointed a minister in 2010.
However, Mr Kernaghan cleared Lady Warsi of a more serious allegation that she improperly claimed overnight subsistence allowance while staying in the spare room of a flat in Acton, west London, which was being rented by Tory official Naweed Khan.
Lady Warsi referred herself to the Commissioner over the allegation, which relates to a six-month period in 2007-08 after she was made a peer and was waiting to move into the Wembley property, which she bought in September 2007 while it was in the process of being built.
At the time, peers were allowed to claim £165.50 a night for the cost of staying in London to attend the House of Lords.
Lady Warsi told Mr Kernaghan that she spent part of that time staying in hotels but also spent around 12 nights at the Acton flat and paid an "appropriate" amount of £1,200 to Mr Khan.
She said she was also facing additional expenses for taxis, evening meals, overnight parking and dry cleaning, as well as interest on the deposit for the £270,000 Wembley flat, during this period and was "confident" that these totalled more than she was claiming in allowances.
In today's report, Mr Kernaghan said he had interviewed both Mr Khan and the property's owner Wafik Moustafa, and concluded: "There is an arguable case that she was entitled to claim a night subsistence allowance towards the cost of maintaining a residence in London from the point where she took on contractual liability for her flat in Wembley and incurred financial costs by reason of paying a deposit.
"She has also put forward evidence of expenditure in relation to her interim accommodation arrangements, even if some of that expenditure might not always be viewed as necessarily incurred. In any event, I cannot be satisfied that on the balance of probabilities that she breached the Code of Conduct."
However, the Commissioner ruled that Lady Warsi did breach the Code by failing to register the rental income received from the Wembley flat in the House of Lords Register of Members' Interests, even though she did tell the Cabinet Office about it.
His report stated: "Baroness Warsi was not engaged in any comprehensive scheme to obscure her property interests and it should be noted that her failure to register her rental income did not result in any financial loss to the taxpayer, or additional monetary gain to herself.
"Nevertheless, the Code seeks to promote openness and accountability and the absence of monetary gain does not absolve members of the requirement properly to register relevant interests."
In a letter to the committee, Lady Warsi said that she moved out of the Wembley flat on security advice after becoming a minister, but found that she would be in negative equity if she sold it, due to a £30,000 fall in its value since 2007.
She obtained agreement from the Cabinet Office that she could let the property, and received £6,937 in rent during 2010/11, although she said that this resulted in a net loss of £324 overall. She said she was expecting the net income during 2011/12 to be below £5,000.
"Due to an oversight, for which I take full responsibility, I did not address the question of whether the property needed to be included on the Register of Lords' Interests when the rent received came to exceed the £5,000 threshold," she said.
"Throughout this process, I have endeavoured to ensure that relevant authorities have been notified at all times. The fact that I owned, and was letting out, the flat was known to Cabinet Office, the Leader of the House, and HM Revenue and Customs. As soon as I became aware that the flat was not included on the Register of Lords' Interests, I immediately informed the Registrar.
"I would sincerely like to apologise for any failure to disclose my personal interests in accordance with the rules of the House."
The Commissioner rejected a complaint against Conservative Party treasurer Lord Fink over a dinner he arranged to host in the House of Lords.
The planned dinner last June was the subject of press reports claiming the meal was part of a £6,000 Wimbledon fortnight corporate package offered to American Express customers, including tennis, accommodation and a drinks reception with John McEnroe.
However, the peer had already cancelled the event on the advice of the House of Lords Director of Facilities, and Mr Kernaghan ruled that as a result he did not breach the Lords Code of Conduct.
Meanwhile, Mr Kernaghan upheld a complaint that Lord Elder incorrectly registered his interests in the Dundee-based Al-Maktoum Institute for Arabic and Islamic Studies as a non-financial interest when it should have been registered as remunerated employment and improperly used a House of Lords envelope for non-parliamentary business.
The complaint was made by the former principal of the Institute, who said the envelope was used for a letter to him informing him of his dismissal.
The Institute informed Mr Kernaghan that Lord Elder had been its chancellor since 2004 and had received an annual "honorarium" of £5,000 a year since 2008 to cover expenses.
The peer said he had never regarded this money as "either remuneration or taxable income". He accepted he should not have used the House of Lords envelope, but "had no other envelope to hand" at the time.
Lord Elder accepted the finding and wrote a letter of "unreserved" apology, and the committee agreed no further sanction was required.
The Commissioner also upheld complaints against Lord Willoughby de Broke that he failed to register an interest as a director of a company concerned in the maintenance of four flats and failed to declare an interest in debates as a recipient of farm subsidy payments.
However, he found that Lord Willoughby did not breach the Code in relation to his presidency of a tennis club.
Following a letter of apology, the committee agreed that no further action should be taken against the peer.
The Commissioner dismissed a complaint against Conservative peer Lord Blencathra, alleging that he provided parliamentary services to the government of the Cayman Islands, and rejected a complaint against Tory Baroness Cumberlege that she failed to declare an interest in debates on healthcare.
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