United Kingdom parliamentary expenses scandal

The Houses of Parliament

See also: Salaries of Members of the United Kingdom Parliament and List of notable expenses claims by Members of the United Kingdom Parliament

This article covers an ongoing political scandal in the United Kingdom following the disclosure of expenses of Members of the United Kingdom Parliament. It involves the disclosure of widespread actual and alleged misuse of the permitted allowances and expenses claimed by Members of Parliament (MP) and attempts by MPs to exempt themselves from Freedom of Information legislation.

In the United Kingdom MPs may claim expenses, including the cost of accommodation "wholly, exclusively and necessarily incurred for the performance of a Member’s parliamentary duties". The expression occurs in UK tax and company law, with a narrow and tightly drawn interpretation. In January 2005, journalists Ben Leapman of The Sunday Telegraph and Jon Ungoed-Thomas of The Sunday Times made requests under the Freedom of Information Act 2000 for the release of details of MPs' expenses claims; they were joined in March 2006 by a third journalist, the freelance Heather Brooke. Although the request was allowed by an Information Tribunal, the House of Commons Authorities challenged the decision, as per the 2000 Act, on the grounds that it was "unlawfully intrusive". In May 2008, the English High Court ruled in favour of releasing the expenses claims. The House of Commons authorities announced that full publication of expenses would be made in July 2009, with certain information, which they deemed sensitive, being held back. Before this happened, The Daily Telegraph newspaper obtained a full copy of the expenses record. The newspaper began publishing this in daily instalments from 8 May 2009. Highlights were given great coverage in the British media, with the findings being considered to show flagrant and sometimes gross misuse of the expenses system for personal gain by many MPs across all ranks and parties.

As of 15 May 2009, major national newspapers such as The Times described the resulting controversy as "Parliament's darkest day" and a "full blown political crisis", reporting upon cross-party firings and resignations, an exodus of shamed MPs, the prospect of criminal and tax evasion charges, and a motion of no confidence being prepared against the Speaker.

On 19 May 2009, Michael Martin, the Speaker, issued a statement that following criticism of his handling of the issue and the preparation of a motion of no confidence he would step down on 21 June 2009 and an election for a new Speaker would take place the following day. This was the first such removal in the United Kingdom (though John Trevor was removed from the then English House of Commons in 1695). The Leader of the House of Commons, Harriet Harman, announced the creation of the Parliamentary Standards Authority on 20 May 2009, to manage members' expenses at an "arm's length" from the House, ending the historical self-policing by MPs of their expenses.

The disclosures continue to be published as of June 3.

Background and legal proceedings

In January 2005, the Freedom of Information Act 2000 came into force, allowing members of the public to request disclosure of information from public bodies. Two early requests came from the journalists Ben Leapman and Jon Ungoed-Thomas. Another request came from journalist and freedom of information campaigner Heather Brooke. All three asked for details of the expenses claimed by certain MPs to be released. The requests were subsequently passed over to the Information Commissioner, who joined the three journalists' cases together and ordered the release of some information on 15 June 2007. House of Commons authorities objected to this order in June 2007 and MPs had, in May 2007, voted in favour of the Freedom of Information (Amendment) Bill which sought to exempt MPs from the 2000 act. The House of Commons voted 96 to 25 in favour of the Exemption of the House of Commons amendment but the bill was ultimately withdrawn prior to second reading in the House of Lords because peers were unwilling to sponsor the bill.

In February 2008, after referral to an Information Tribunal, it was held that Commons authorities would release information on 14 MPs. This decision was subsequently appealed against, delaying the release of information. The appeal was heard at the High Court, which ruled on 16 May 2008 in favour of releasing the information. No appeal was lodged against the High Court ruling. As such, the requested details were made public on 23 May 2008.

In January 2009, Harriet Harman, Leader of the House of Commons, tabled a motion which would exempt MPs' expenses from being disclosed under a Freedom of Information request, in order to prevent any further disclosure of information. Labour MPs were placed under a three line whip in order to force the motion through the Commons. However, opposition parties stated they would vote against the proposals, and large scale public opposition emerged. The proposals were ultimately dropped on 21 January 2009. The Commons authorities announced that full disclosure of all MPs’ expenses would be published on 1 July 2009.

In the tax year 2007-2008, MPs' costs of staying away from their main homes was limited to £23,083.

Pre-publication controversies

Main article: List of notable expenses claims by Members of the United Kingdom Parliament

Prior to the official publication of expenses claims in July 2009 and the Daily Telegraph's revelations in May 2009, and during the Freedom of Information cases, there were a variety of exposés that covered the controversial John Lewis List (a list considered to indicate amounts that could be claimed without question) and individual MPs’ expenses claims. Examples of items publicised prior to the May 2009 disclosures included:

• Conservative Derek Conway was alleged in May 2007 to have employed and paid his son, a student at the time. The matter was forwarded to the House of Commons Standards and Privileges Committee. whose report dated 28 January 2008 concluded there was no record of such work. Conway was suspended for 10 days and ordered to repay £13,000. Conway was also expelled from the party. A second case a year later found he had done the same with regard to his other son.
• Chairman of the Conservative Party Caroline Spelman was alleged in June 2008 to have paid for her nanny out of parliamentary expenses during her early years in Parliament, between 1997 and 1998 - an allegation that became known as "Nannygate". It was ruled that she had inadvertently "misapplied part of [her] parliamentary allowances", but calls for her sacking were rebutted since she might not have been aware of the rules governing the use or purpose of parliamentary allowances. The committee recommended that Spelman repay £9,600.
• Married couple and Labour Cabinet ministers, Ed Balls and Yvette Cooper were accused in September 2007 of exploiting the Commons' allowances system in order to pay for a £655,000 house in London. The complaint, centering on the gain made by allocation of their "second house", was dismissed since it was held the couple had acted in accordance with parliamentary rules.
• Married Conservative MPs Sir Nicholas and Lady Winterton were accused in June 2008 of claiming back mortgage interest on a mortgage they had fully repaid, on a flat they owned in London, and then also placing the flat in trust and claiming for the rent on it. It was held there had been a clear breach of the rules, but no repayment was ordered.
• Labour Home Secretary Jacqui Smith was stated to have claimed for her main home by designating it as a second home, while identifying as her main home a location she spent as little as 2 days a week, and despite also having access to a "grace and favour" home in Westminster. No investigation was held, however, the Parliamentary Commissioner for Standards stating there was "not sufficient evidence for an inquiry". A string of further claims came to light in 2009, including various domestic items and a claim for her husband's pornographic films.
• Labour minister Tony McNulty admitted claiming expenses for a second home 8 miles from his main home, and asserted they were appropriate, but ceased claiming the allowances.
• Conservative MP Eric Pickles likewise was identified as claiming for a second home 37 miles from his main home,

Information disclosed by the Daily Telegraph

In May 2009, two months prior to the official disclosure of full expenses claims, the Daily Telegraph newspaper obtained a full copy of all expenses claims. The Telegraph began publishing in instalments from 8 May 2009, certain MPs' expenses. The Telegraph justified the publication of the information because it contended that the official information due to be released would have omitted key information about re-designating of second-home nominations.

The Telegraph has refused to disclose whether, and if anything how much, it had paid for the information, which originated from the parliamentary fees office. The information had been offered to other newspaper organisations, for more than £150,000. Shortly after the publication of the information, the House of Commons authorities asked the Metropolitan Police to investigate , a request that the Metropolitan Police declined, on the grounds that a prosecution would not be in the public interest.

Alleged areas of abuse

Alongside specific allegations of incorrect claims such as claims for the cost of mortgages which it transpired had already been repaid in full. the Telegraph alleged that parliamentary “Green Book” expenses rules gave wide scope for a number of abuses, especially those related to costs of maintaining two residences, one in the constituency and one in London. Areas of questionable claims highlighted by the Telegraph included (but were not limited to):

• Nominating second homes: The Green Book states that "the location of your main home will normally be a matter of fact" MPs and peers were, able to ensure that their second home was the one which enabled them to claim more expenses. In at least one case (Margaret Moran) the nominated home was near neither constituency nor Westminster.
• Re-designating second homes: That MPs were able repeatedly to switch the designation of their second home, enabling them to claim for purchasing (e.g. Stamp Duty), renovating and furnishing more than one property. This practice became widely-known as "flipping".
• Renting out homes: That MPs were able to claim for their “second home” while they were, in fact, renting other homes out. In most cases the rented homes were ‘third’ properties, but in Elliott Morley’s case, a second home was rented to another MP, Ian Cawsey who was claiming the rent on expenses.
• Subsidising property development: That the Green Book rule that MPs could not claim for repairs "beyond making good dilapidations" was not enforced and consequently that MPs were able to add significantly to the value of a property. By implication some “second homes” were effectively businesses (not homes) since they were renovated on expenses and then rapidly sold.
• Evading tax and inappropriate attempts at avoiding tax: That MPs either evaded tax, or inappropriately deemed themselves not required to pay tax on reimbursements when it was likely tax was due. This covered two areas:

• Capital Gains tax: MPs were able to designate a property as their second home with the parliamentary fees office so as to claim the cost of renovating it on expenses, but a number of MPs had concurrently described it to HM Revenue and Customs as their primary residence in order to sell it without paying Capital Gains tax. Some also designated a property as a primary or secondary residence for tax or expenses benefits which was apparently little if at all used by them in that role.
• Income tax: A number of MPs were criticized for non-payment of income tax for benefits in kind or for reimbursed expenses considered under UK tax law to be of a personal nature. As of 31 May 2009, some 40 MPs had been identified as claiming for personal expenses such as preparation of their tax returns, despite UK tax law and ministerial guidance both of which had stated such expenses were not claimable for tax purposes; of those claiming, only a minority paid tax on the benefit in kind.

• Claiming expenses while living in grace and favour homes: That ministers with "grace and favour" homes in Westminster as well as their existing primary residence, were able to claim for a further "second home" in addition.
• Renovating and furnishing properties when standing down: That MPs were able to claim for renovations and furniture even when they had already announced their intention to resign from Parliament.
• Furnishing of other homes: That MPs were able to claim for items of furniture that were actually delivered somewhere other than their second home.
• Exploiting the 'no receipt' rule: That MPs submitted a large number of claims for just below £250, the ceiling under which they were not required to produce receipts, without being challenged as to their legitimacy.
• Over claiming for food: That, under a rule permitting up to £400 for food each month (without receipts), MPs were simply able to claim the whole £400 every month, even when Parliament was not sitting.
• Overspending at the end of the financial year: That MPs were able to submit claims just before the end of the financial year, so as to use up allowances, without being challenged as to their legitimacy.

Specific claims

Main article: List of claims criticised in the British Parliamentary expenses controversy

The Telegraph firstly revealed expenses of the governing Labour Party, beginning with the Cabinet on May 8 2009, before releasing details of the claims by junior ministers and Labour backbenchers. Further allegations were made on Thursday 14 May. The main allegations the newspaper made, alongside any responses to them from the various MPs, are shown in the related article.

On May 11 and 12, publication focused on the frontbench of the Conservative Party. followed by the claims of backbench Conservative MPs whom the newspaper dubbed "the grandees" of the party. On May 12, the Leader of the Opposition, David Cameron, announced that all questionable claims by the Shadow Cabinet would be repaid.

The Liberal Democrats expenses were revealed last of the three main parties. followed by Sinn Féin members' claims in which it was reported that the five Sinn Féin MPs together had claimed nearly £500,000 in second home allowances, despite never taking up their seats at Westminster due to the party's abstentionist policy. Sinn Féin stated that its members often have to travel to London on parliamentary business.

The claims published by the Daily Telegraph ultimately covered the entire gamut of Parliament — all major parties and several minor ones, ministers (including the Prime Minister Gordon Brown, the Chancellor, cabinet and shadow cabinet members) through to backbenchers, and members of both the House of Lords and the House of Commons. A number of members were expelled from their parties, or would not stand for re-election, some members repaid in part or whole, sums they had previously claimed. Expenses claims repaid to date have included several amounts from £10,000 up to £42,000, as well as payments to the UK tax authority for taxes on possible gains or income previously not paid.

Source of information

Former SAS officer John Wick has been named as the middle-man for an un-named whistleblower; he has spoken of the need to bring the information he had been given into the public domain.

Media handling

Public interest in the expenses debate led to the 14 May 2009 edition of the BBC political and current affairs television programme Question Time recording its highest viewing figures in its 30 year run, of 3.8 million, with audience members heckling guest panelist Margaret Beckett. This figure was a million more than usual, and surpassed the figure of 3.4 million recorded in 2003 for the declaration of the war on Iraq. The following week's edition on 21 May was brought forward for a special edition into the prime time slot of 9pm BST.

Nadine Dorries, a Conservative MP, criticised the Telegraph's handling, which she described as "picking off a few MPs each day, emailing at noon, giving five hours to reply, recording the conversation, not allowing them to speak, telling them they are going to publish anyway". She stated that the stress felt by some MPs was akin to "torture". Her comment was rejected by senior Conservatives. (See also Effect on MPs and on the political structure below)

Impact

A widespread public reaction was heightened as a result of several factors: the incident broke in the face of an economic recession and financial crisis, under an already-unpopular government, only weeks before the 2009 European Parliamentary elections.

Political response

Following the publication of expenses politicians from all parties responded to the controversy.

• Gordon Brown, the Prime Minister, during a speech to the Royal College of Nursing Conference on Monday 11 May, apologised "on behalf of all politicians" for the expenses claims that had been made.
• David Cameron, the Leader of the Opposition, said that all MPs should apologise for the expenses scandal, shortly after the Telegraph published the claims of members of the Shadow Cabinet. Cameron also admitted that the existing system "was wrong and we're sorry about it". The following day, Tuesday 12 May, Cameron said that some of the claims made were "unethical and wrong", and imposed new rules on what Conservative MPs could claim for in the future.
• Michael Martin, the Commons Speaker made a statement to MPs on 11 May, the first sitting of the Commons since the Daily Telegraph began publishing specific details of individual claims. Martin said that "serious change" was required in the future and that, in the present, MPs should not just work within the rules, an explanation that many accused MPs had given in their defence, but rather in "the spirit of what is right". The Speaker also announced that a new 'Operational Assurance Unit' would be set up to independently oversee all claims, and that the House of Commons Commission would meet that evening to discuss whether or not to bring forward the official expenses publication date from 1 July.
  • In the aftermath of the Speaker's statement to MPs, questions were widely raised regarding Martin's future in the job, largely due to his focusing on the actual leak of information, rather than the expenses themselves, and due to his response to the point of order raised by the Labour MP Kate Hoey, who suggested that the Speaker and Commons' decision to call in the police was "an awful waste of resources". A Conservative MP, Douglas Carswell, subsequently announced that he planned to table a motion of no confidence in the Speaker, if he could garner sufficient support.
• Harriet Harman, the Leader of the House of Commons, asked Don Touhig, the Chairman of the Members' Allowance Committee, to devise a method for MPs to repay any excessive expenses.
• Ben Bradshaw, Minister of State in the Department of Health, raised the spectre of MPs being sent to prison for abusing the expenses system.
• William Hague, Shadow Foreign Secretary and a senior member of the Shadow Cabinet (Deputy to party leader David Cameron), also suggested that a number of MPs may face criminal prosecution after details of their claims were disclosed.
• Lord Tebbit, a Eurosceptic and former Chairman of the Conservative Party, urged voters to snub the main three political parties in the upcoming EU Parliament election. Tebbit, who in March 2009 revealed that he would vote for the United Kingdom Independence Party (UKIP), said "Local elections, the Great British public should just treat as normal" but suggested using the European election to send a message to the implicated parties. Tebbit pointed out that there were a series of smaller parties people could vote for in addition to UKIP, including the Green Party, but he urged against voting for the British National Party.
• Lord Foulkes, when being interviewed for BBC News by Carrie Gracie to defend Michael Martin, asked Gracie how much money she earned. When she said she earned £92,000, Foulkes said: "£92,000? So you're paid nearly twice as much as an MP to come on and talk this nonsense." Gracie defended herself by saying that she paid for all of her phone calls and "understood what public sector money is about".

Legal responses

On May 27, Lord Millett, a Privy Councillor and past Law Lord (1998 - 2004) and Lord Justice of Appeal (1994-1998), described as "astounding" the fact that the Chancellor of the Exchequer (the office responsible for the UK's entire taxation system) had himself claimed as expenses of his office, expenses that were of a personal nature under UK tax law (in this case tax return preparation costs).

Guidance to ministers in 2005 had also stated that such expenses were not claimable for tax purposes;

Resignations and disciplinary action

Resignation of the Speaker

The resignation of the Speaker, an almost unprecedented event, was due to a perception by many that he had contributed to the scandal by poor leadership and judgement. This included lax handling of the fees office, and defence of the status quo of vested interests rather than recognition of the more significant issues, and that he therefore lacked the requisite authority to repair the harm done by the controversy. Martin was the first Speaker to be forced out of the office since John Trevor in 1695. Despite apologising to the public on behalf of the House of Commons on 18 May, Michael Martin announced his resignation as Speaker of the House of Commons and as Member of Parliament for Glasgow North East the following day, both effective 21 June.

Cabinet resignations

• Jacqui Smith announced that she would step down as Home Secretary after the European elections, but would contest her seat at the next election.
• Hazel Blears announced on June 3 that she would step down as Communities Secretary.
• Tony McNulty resigned from his position as Minister for Employment during the cabinet reshuffle on 5 June 2009.
• Geoff Hoon left his position as Secretary of State for Transport during the cabinet reshuffle on 5 June 2009, in order for him to spend more time on European and international issues with him being considered a possible candidate as the next British member of the European Commission.

Labour backbenchers

The Labour Party formed a three-person panel of its National Executive Committee (NEC) in order to investigate some of its MPs who were referred to it over expenses allegations, which quickly became known as the "Star Chamber" (a reference to the court of the same name employed by English monarchs to dispense summary justice in the 16th and 17th centuries).

• Ben Chapman announced on 21 May 2009 that he would stand down at the next election, while maintaining that he had done nothing wrong; he said he would resign because the story in the Daily Telegraph had been hurtful to his family, friends and local party members. He was the first Labour MP who announced he would stand down.
• Ian McCartney is to stand down at the next election on health grounds.
• Elliot Morley announced on 29 May that he would not stand for re-election, and has also been barred from standing for Labour at the next general election by the NEC's "star chamber".
• David Chaytor announced that he would not stand for re-election, and has also been barred from standing for Labour at the next general election.
• Ian Gibson was also barred from representing Labour at the next general election. He was said to be "deeply disappointed". On June 5th, Gibson announced his resignation as an MP, forcing a by-election to be held in his Norwich North constituency on an as-yet-undetermined date.
• Jim Devine is due to face a disciplinary hearing in front of the Labour party "star chamber".
• Margaret Moran also decided not to contest the next election, and has also been barred from standing for Labour at the next general election.

Conservatives

• On 14 May, Andrew MacKay, the Conservative MP for Bracknell, resigned as Parliamentary aide to David Cameron over what he described as "unacceptable" expenses claims made by him. Subsequently he decided to stand down at the next election. His wife, Julie Kirkbride who represents Bromsgrove, decided on 28th May 2009 that she too would not stand at the next election.
• Douglas Hogg announced on 19 May that he would retire from Parliament at the next general election.
• Anthony Steen announced on 20 May that he would retire from Parliament at the next general election.
• Sir Peter Viggers announced on 20 May that he would retire from Parliament at the next general election.
• Husband and wife Conservative backbenchers Sir Nicholas and Lady Ann Winterton announced their intention to stand down at the next election.
• Christopher Fraser stated he would stand down to "care for his ill wife".

Creation of Parliamentary Standards Authority

On 20 May 2009 Harriet Harman announced the creation of the Parliamentary Standards Authority, intended to manage members expenses at an "arm's length" from the House, ending the historical self-policing by MPs of their expenses.

Surge in independent candidates

A surge in proposed independent candidates and enhanced profile of minority parties were noted in the press. In various cases these candidates stood in recognition of the loss of public goodwill suffered by established MPs and parties, and proposed to stand on "clean slate" or anti-sleaze platforms. In the immediate aftermath of the revelations, a Populus survey said that only 45% of people were committed to voting in the next general election (although 54% said they wanted an election as soon as possible), which had fallen by around a quarter since before the disclosures began. The Conservatives still maintained their lead over Labour, but support for the BNP was up. The poll showed that 19% of voters were prepared to vote outside of the main three parties, with the British National Party, Green Party of England and Wales, and United Kingdom Independence Party also hoping to capitalize, and was particularly pertinent because of the forthcoming European Parliament election.

Effect on MPs and on the political structure

The expenses disclosures were published over an extended period of time, with the focus moving to different MPs daily. As a result there was significant pressure on MPs who did not know whether, and for what, they would be discussed, as well as a general deepening hostility that grew over a relatively long period.

On 22 May 2009 Nadine Dorries, the Conservative MP for Mid-Befordshire went on record in saying that many of her colleagues "feared a suicide" and that MPs were "beginning to crack". She likened the atmosphere in Westminster to that surrounding Senator Joseph McCarthy's "witch hunts" of suspected Communists during the 1950s. The comment led to a forceful rebuke by Conservative leader David Cameron, who stated that the anger and mood were warranted and that MPs should be more concerned what the public were thinking.

On 23 May 2009 the Archbishop of Canterbury Dr. Rowan Williams warned about the potential effect of the controversy on the democratic process, and that "the continuing systematic humiliation of politicians itself threatens to carry a heavy price in terms of our ability to salvage some confidence in our democracy." On the same day writing in The Times, columnist and former MP Matthew Parris reflected that "extravagance, genuine mistake, sly acquisitiveness and outright criminal fraud are now jumbled together in the national mind as though there were no moral differences"

Reform proposals

On 25 May 2009, Health Secretary Alan Johnson (seen as a possible candidate for Labour leadership) stated that one response to the controversy should be a full review of the electoral and political system. He proposed as part of this, a referendum on changing the electoral system to Alternative Vote Plus.

David Cameron, the Conservative Party leader of the opposition, set out his proposal for reform in The Guardian.He proposed strengthening the power of backbenchers over the government, and other measures as part of 'a radical redistribution of power'. Writing in the Guardian on 27 May 2009, Liberal Democrat leader Nick Clegg suggested cancelling MPs holidays until 'the constitutional crisis sparked by the row over expenses is resolved'. Setting out a week by week plan Clegg made wide ranging proposals from placing a cap on individual donations to political parties to replacing the House of Lords with an elected senate and allowing a referendum on electoral reform.

The major political parties and some minority parties (such as UKIP) have stated they will publicly disclose information on expenses claims by UK Members of the European Parliament. The proposed disclosures vary between parties.

A study of the possible influence of the voting system on MPs behaviour concluded that those MPs with the safest seats were twice as likely as those with the most marginal seats to be involved in the expenses row.

Police and tax authority responses

The UK tax authority HM Revenue and Customs ("HMRC") has identified around 40 MPs, including the Chancellor of the Exchequer, as having claimed for their tax return costs. A minority of these have affirmed they paid tax on the sums involved; HMRC have confirmed they are investigating Chancellor Alistair Darling's tax claims, along with those of others involved.

They have also stated they have "repeatedly caught out" MPs attempting to claim such expenses and that spot checks of 25 MPs' tax forms each year have produced examples of MPs "apparently trying to cheat the system".

External links

• "Q&A: MP expenses row explained". BBC News. 2009-05-21. Retrieved 2009-05-23. - BBC summary of the controversy.