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How MPs avoided expenses payback
A scheme to stop MPs profiting from second homes bought on expenses came under fire last night.
In 2010, MPs were told that at the end of two years they would no longer be allowed to claim mortgage interest on expenses.
Dozens who continued to claim during this period were told that if the value of the second home increased, they must hand over the “capital gain” to parliamentary authorities.
But The Sunday Telegraph has found that a number of the MPs told parliamentary authorities that the value of their second home had fallen in the two-year period — meaning they did not have to pay back a penny.
Our investigation found that in some cases the MPs’ house prices had fallen despite increases of as much as 12.65 per cent in average values in their neighbourhoods in the same period.
The findings are the latest to raise questions over MPs’ expenses in the wake of the Telegraph investigation in 2009 which disclosed criminality and abuse of taxpayer funds.
The new disclosures centre on the arrangements brought in after the Telegraph exposé, to stop MPs profiting from having their mortgage interest paid on expenses.
The Independent Parliamentary Standards Authority (Ipsa), which runs the new system, wanted to stop MPs taking the profits when they sold their second homes.
There had been public revulsion at a series of politicians who had done so, including John Bercow, the Speaker, who sold his three-bedroom flat near Westminster for a profit of £610,000.
To stop the profit opportunity, Ipsa ruled that MPs who were claiming mortgage interest in May 2010 on a second home had a two-year grace period to stop — and that they would have to pass on any increase in the value of the home at the end of that period in August this year.
The deadline for handing over the money was Friday, November 30, and it had to be paid even if the MP did not sell. Each MP was told they had to provide two valuations, from the start and end of the period, from a member of the Royal Institution of Chartered Surveyors.
In total, 71 MPs continued claiming, with the bill for interest payments totalling just under £1 million, but The Sunday Telegraph has found, after contacting each one of them, that:
- Just six publicly declared that they will make a payment — with one doing so in interest-free instalments over a period of two years;
- Twenty MPs said they would not be making a payment as their house price had fallen;
- Nine of those 20 have second homes in areas where average house prices have increased in the same period;
- Eight refused to say if they were paying anything at all, despite each political party being committed to transparency on expenses.
Last night there were warnings that the findings would cause public concern over the integrity of the expenses system.
John Mann, the Labour MP who has campaigned for greater openness on parliamentary expenses, said it was right that MPs who did not profit should not have to pay but added: “Ipsa needs to demonstrate that its systems are robust and fair to everyone, including the taxpayer.”
Robert Oxley, the campaign manager of the TaxPayers’ Alliance, said: “Given the double-digit increase in house prices in London in the last two years, many will find it difficult to believe that so few MPs have seen an increase in the value of their taxpayer-funded homes.”
Ipsa has refused to say how much has been received or how many MPs are resisting paying the “capital gain”, although it has now promised to publish full details in the spring of who paid how much, meaning it will name any MP with an outstanding demand.
It is understood that Stewart Jackson, the Conservative MP for Peterborough, is in dispute over a bill for the £40,000 by which his constituency home was found to have increased in value.
He claimed £31,100 in mortgage interest over the two years. He told The Sunday Telegraph: “For the avoidance of doubt I have no comment to make to you.”
A series of MPs said they would be paying, including David Gauke, the Conservative Treasury minister, who has paid almost £40,000 which he was liable for under the rules, even though he claimed only £13,000 in interest toward the mortgage on his flat in Waterloo, south London. Sir Jim Paice, a Conservative MP, said he was still waiting to hear from Ipsa about how much he owed. Some who have agreed to repay have been granted extra time. John Denham, a former Labour Cabinet minister, said he was paying “a large amount” in instalments over two years.
However, most MPs — 20 — who responded to our investigation said they would not be paying anything back, as their house price had fallen.
The Sunday Telegraph used publicly available records to find where the MPs’ second homes were and the property website Zoopla.co.uk analysed house prices in those areas on our behalf. Where we were able to locate the exact address of the MP, Zoopla compared house prices in the “postcode sector”, a subdivision of a full postcode.
Austin Mitchell, the Labour MP, above, claimed £4,300 in mortgage for his two-bedroom flat in an area of Westminster where property prices rose 12.65 per cent, but valuations by a surveyor found his property price had fallen. He said the system was “daft” and that he had paid £1,400 for the two surveys, which he described as “an unreasonable burden”.
Other MPs with properties in London were Stewart Hosie, the Scottish National Party MP for Dundee East; David Hanson, Jamie Reed and Jim Sheridan, all Labour MPs, and Hywel Williams, a Plaid Cymru MP. Their addresses were not available on the public documents we inspected, although they did have second homes in London in that time.
On average, Zoopla said that London house prices rose by 5.6 per cent between May 2010 and August 2012.
Kieran Chalker, the managing director of Garton Jones estate agents in Westminster, said: “There would have to be severe problems with the property if, in a rising market like Westminster, it was deteriorating in value.”
Two MPs with homes outside London will also not pay despite rising average values in their neighbourhoods: Laurence Robertson, a Conservative MP, above, who claimed £27,000 for a house in a part of Tewkesbury, Glos, where prices rose by 10.6 per cent; and Pat McFadden, a Labour MP, whose house price fell despite being in an area of Wolverhampton that saw an average 0.6 per cent rise.
Two of the 71 MPs who claimed mortgage interest since May 2010 are Marsha Singh, who is now dead, and Sir Peter Soulsby, who resigned as an MP. If their house prices have risen, they or their estates will be liable. Many other MPs did not respond or refused to provide information. Among those who refused were Michael Connarty, the Labour MP for Linlithgow and East Falkirk, who said the Telegraph “should go to jail”.
The Telegraph disclosed in its investigation in 2009 that Mr Connarty had sold the contents of his London flat to Jim Devine — an MP for a neighbouring constituency who was later jailed for fraud — then billed the taxpayer for items bought in Scotland and delivered to his home there, even though his registered second home was in London.
Angela Smith, the Labour MP for Penistone and Stockbridge, said: “We don’t want to discuss this with you.” In 2009 it was disclosed that she had bought four beds for her one-bedroom London flat and put solicitors’ fees and stamp duty for its purchase on expenses.
John Whittingdale (Maldon, Conservative) said: “I am not willing to comment about it.”
Five other MPs refused to disclose the amounts they may be liable for, saying it was for Ipsa to publish them.
They were: Robert Goodwill (Scarborough and Whitby, Conservative); Mark Hoban, the employment minister and Conservative MP for Fareham; Stephen O’Brien, a junior foreign aid minister and Conservative MP for Eddisbury; David Simpson (Upper Bann, Democratic Unionist); and Sir George Young, the Chief Whip and Conservative MP for North West Hampshire. Twenty-nine other MPs failed to respond.
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