Page last updated at 10:47 GMT, Tuesday, 12 May 2009 11:47 UK

Who writes the rules on MPs' allowances?

The Magazine answers...

Big Ben
The allowances row has damaged the image of Parliament

MPs are engulfed in a damaging row after the Daily Telegraph obtained and published their confidential allowance claims. But who sets the rules on Members' expenses? And who polices the system?

Almost without exception, every MP named so far has justified their actions by saying they were only "following the rules".

Critics point out that the rules were approved and ultimately policed by the very people who are now accused of stretching them to the limit - the MPs themselves.

But are they right? Or are MPs merely victims of a system beyond their control?

The answer lies partly within the covers of the official guide to Members' allowances - otherwise known as the Green Book.

This 66-page House of Commons publication, also available online lays out in detail exactly what MPs are allowed to claim for and it is updated annually.

Civil servants write the rules under the instruction of MPs
The rules are set out in the Green Book
The same civil servants enforce the rules, although their work is supervised by MPs

The rules are drafted by officials from the Department of Resources, which is an administrative department in the House of Commons.

They are then approved and amended each year by up to three cross-party committees of MPs, most notably the Administration Committee.

The Green Book advises on what furnishings MPs can expect to be reimbursed for, as well as guidance on office, staffing, travel and communication costs - all of which can be claimed back.

It contains guidelines regarding the controversial Personal Additional Accommodation Expenditure (PAAE), popularly known as the second-home allowance.

Some changes have been agreed
They include more receipts to be required
And no second home allowance for London MPs
MPs have also proposed internal and external audits
Gordon Brown's daily attendance allowance was dropped

This allows MPs to claim back the interest on their mortgages, due to the need for many to have a home near Westminster and a home in their constituency.

Members are not specifically banned from "flipping" their properties - changing the designation of their homes from "primary" to "secondary" so as to claim back improvement and furnishing costs. There is no mention of this in the book.

Regulation of the system is the responsibility of staff, formerly of the Fees Office, now at the Department of Resources.

Green Book
Green is a common theme

It is their job to weed out bogus claims and make sure MPs are not bending the rules.

MPs are advised to "ensure that claims do not give rise to, or give the appearance of giving rise to, an improper personal financial benefit to themselves or anyone else".

And there have been examples where MPs' claims have been questioned.

According to the Telegraph, a claim for gardening costs made by Conservative MP Alan Duncan was rejected because it was deemed to not be in the spirit of the rules.

But critics question how these regulators can be effective when they are ultimately responsible to and employed by the House of Commons Speaker, Michael Martin MP, and their work is overseen by committees of MPs.

An outside body called the Senior Salaries Review Board (SSRB) can make recommendations on MP allowances, but members are not bound to follow them. Last year Members rejected all but one of the SSRB suggestions.

Question mark floor plan of BBC Television Centre
A regular part of the BBC News Magazine, Who, What, Why? aims to answer some of the questions behind the headlines

In any other walk of life, the idea of workers setting and approving their own allowances might appear bizarre. But constitutional expert Lord Norton said MPs are in a unique position.

"Parliament is a sovereign institution - no-one else can tell MPs what to do," he said.

"Because it is parliament that ultimately authorises all public spending - including MPs' salaries - they are bound to vote for their own salaries and allowances."

Describing the current situation as a "conundrum" Lord Norton identified two characteristics of the current system - a lack of transparency, and the power MPs have to decide their own allowances.

These always had the "potential" to generate the current controversy, he said.

He suggests setting up a statutory body detached from the process to decide on the level of wages and allowances.

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