Page last updated at 01:25 GMT, Monday, 27 April 2009 02:25 UK

Clegg seeks end to MP home gains

Nick Clegg
Mr Clegg wants strict limits placed on second-home claims

The Lib Dem leader has urged his fellow party leaders to back his plans for reforming MPs' second-homes allowances.

Nick Clegg's proposals would see the allowance replaced with expenses for only basic utility bills, council tax and either rent or mortgage interest.

He also suggests measures to stop MPs making a profit from any part of a mortgage funded by the taxpayer.

Mr Clegg and David Cameron have rejected the PM's plan for a flat-rate fee based on attendance at Westminster.

Mr Clegg has set out his revised proposals in a letter to the Tory leader and Gordon Brown.

Public anger

The moves towards reform follow criticism of MPs' and ministers' use of second-homes allowances, worth up to £24,000 a year to MPs whose constituencies are outside inner London.

Sir Christopher Kelly, chairman of the Committee on Public Standards, has begun an in-depth investigation into reforming the system, with the findings due by the end of the year.

Any reforms must be durable, transparent, reduce the cost of our politics and not merely constitute an interim fix that falls apart under public scrutiny
Nick Clegg
Lib Dem leader

But all the major parties want to reach agreement on an interim measure because of the scale of public anger at some MPs' allowance claims.

In his letter, Mr Clegg said he had dropped one of his original reform demands to try to reach cross-party consensus quickly.

He had argued MPs should be stopped from buying second homes altogether, but his proposal was rejected by Mr Brown and Mr Cameron last week.

Now Mr Clegg suggests MPs should instead be prevented from making any financial gains from any part of a mortgage paid for by the taxpayer.

In addition, the taxpayer should get a share of any capital appreciation in the value of the property, proportionate to the amount funded out of public funds, he argues.


Outlining his plan to Mr Brown, Mr Clegg wrote: "If it is an interest-only mortgage, the taxpayer would get 100% of the capital gain; if it is a capital and interest mortgage, the taxpayer would get the capital gain in proportion to the share of total mortgage costs paid."

He said this would meet the objective of allowing home ownership to continue - insisted on by Mr Brown and Mr Cameron - but would still mean MPs would not profit from using taxpayers' money to make investments in the property market.

But while Mr Clegg said he was prepared to alter his proposals in this way to secure agreement, he still rejected the idea of daily allowances.

"Such a system - in almost any form - means taxpayers will have almost no idea what their money is being spent on by MPs," he wrote.

"Any reforms must be durable, transparent, reduce the cost of our politics and not merely constitute an interim fix that falls apart under public scrutiny."

Despite lacking support from the other parties for a daily allowance, Downing Street has said the government still plans to table a vote on expenses reform next week.

Tory plans

The Conservative Party has published its own plans for reform, calling for the second homes allowance to be replaced by a transparent Parliamentary allowance from 1 July.

In a similar way to the Lib Dem proposals, this could be used to pay only for rent, utility bills, council tax and mortgage interest - subject to a new cap.

All claims would have to published, with receipts, within 28 days, with no MP living within 20 miles of London eligible for the new allowance.

Sir Christopher's inquiry, set up by Mr Brown, was brought forward after newspaper revelations about the use of second-home expenses.

Home Secretary Jacqui Smith and work minister Tony McNulty are being investigated over their claims - but both say they acted within the rules.

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