Q&A: MP expenses row explained

Why have scores of MPs found themselves defending their expenses claims and why is the system to be overhauled?

WHY ARE MPs' EXPENSES CHANGING?

Because the old system is widely regarded as having been discredited. From the case of Derek Conway, who lost the Tory whip after being heavily criticised for paying his sons too much from public funds, to Labour Home Secretary Jacqui Smith, who apologised for mistakenly claiming for an adult film, to MPs claiming for mortgages on homes relatives live in, MPs' expenses have been making headlines for nearly two years.

WHY DO WE PAY FOR MPs' HOMES?

Most MPs say they have to live in two places - in their constituencies and in London where they attend Parliament. They have been allowed to claim expenses to cover the cost of running a second home. What was known as the "additional costs allowance" was worth up to £24,006 in 2008/9 for MPs representing seats outside central London. It covers things like mortgage interest payments on second homes and utility bills - but officials also allowed claims for items of furniture, electrical goods like televisions, refurbishments and up to £400 each month for food. It is just one of several allowances available to MPs. What MPs can claim

SO, WHAT WENT WRONG?

Details of claims under the second homes allowance used to be kept secret, but Freedom of Information campaigners won a High Court case to get them released after years of battling Commons authorities. There was uproar in May when claims for expensive TVs and furniture emerged alongside stories about MPs who claimed for more than one property by "flipping" their designated second home , or did not pay capital gains tax on sales of second homes or over-claimed for mortgages. Constituents were so angry at the revelations in the Daily Telegraph - which had obtained details of all expenses claims - many MPs announced they would be repaying claims and some have said they will stand down at the general election.

SO WHAT IS BEING DONE ABOUT IT?

The party leaders pledged to act and ordered a series of interim changes, reviews and new legislation. The main inquiry is by the independent committee on standards in public life - chaired by Sir Christopher Kelly. He has set out recommendations on how the system should change in the future. Separately former civil servant Sir Thomas Legg has been carrying out an audit of all MPs' past claims - back to 2004 - under the second homes allowance.

WHAT ARE SIR CHRISTOPHER'S RECOMMENDATIONS?

MPs would be banned from claiming towards the cost of their mortgages and employing relatives at public expense. Sir Christopher says mortgage claims should be stopped after an "appropriate transitional" period and employing relatives should be phased out within five years. MPs would be allowed to claim for rent instead of mortgage payments. The practice of "flipping" which of their properties an MP calls their second home would be banned. Any MP making a capital gain over the next five years on the sale of a subsidised home will have to give it up. Generous resettlement grants for MPs who stand down would also be axed under the proposals. In future, MPs would get eight weeks' pay instead - under the current system some long-serving MPs can get up to £64,000. Other proposals include a ban on MPs near London claiming for a second home, an end to MPs' £25-a-day subsistence allowance and a ban on the £10,000 communication allowance. All candidates to become MPs must also declare all their external financial interests and second jobs they want to keep.

WHAT HAPPENS NEXT?

Sir Christopher's recommendations can only become law if they are adopted by a newly-created watchdog, the Independent Parliamentary Standards Authority, after another period of consultation. So it is not likely to happen until after the next general election, widely expected in May. MPs may also revolt against the new regime and demand changes. And even if the recommendations are all accepted, Sir Thomas Legg's audit continues to make waves - he is due to publish his final recommendations in December. The police are also investigating some MPs' claims . With the general election approaching, the expenses issue is likely to remain high profile.

HOW MANY MPS WOULD BE AFFECTED?

If the recommendations are accepted, a lot. According to the committee's hearings, about 415 MPs claim for mortgage interest payments through the second homes allowance. The committee was told about 250 MPs employed relatives, according to the official Parliament register of employed relatives it is just over 200. In addition 12 more MPs would be unable to claim for a second home at all. Currently only those living within 20 miles of Parliament are unable to claim the full £24,000 a year, but before changes earlier this year it was available to any MP outside inner London.

WHY HAS THE EXPENSES AUDIT PROVED CONTROVERSIAL?

Because Sir Thomas has asked many MPs to repay claims which were approved under the old rules, because he feels they claimed too much. He has imposed his own retrospective limits on claims for gardening and cleaning, and asked MPs to repay the difference. Gordon Brown was asked to repay £12,415. He has repaid and urged others to do so, but many MPs are annoyed, say Sir Thomas went beyond his remit and many may struggle to repay the amounts asked for. The biggest repayment requested so far, that we know about, is £63,250.

WILL WE KNOW WHAT MPS ARE CLAIMING IN FUTURE?

We will certainly know more as the Commons has agreed to publish claims on a quarterly basis and in July 2009 the Members Estimate Committee announced that claims for 2008-09 onwards would be made available in much more detail and in a "new searchable format". It is expected to include all claim forms and supporting documents. But the last time the Commons published all the receipts there was much criticism of the amount of key details that were blacked out . The MEC has promised much less zealous "redactions" in future.

WERE ALL MPS ACCUSED OF ABUSING EXPENSES?

No, many were not. Many take exception to suggestions they padded out their salaries with the allowance. Others vehemently resent being accused of wrong doing over expenses when they were acting on the advice of officials in the House of Commons fees office. Some MPs who were entitled to claim the allowance because they had constituencies outside inner London, chose not to. Others made modest claims.