United Kingdom parliamentary expenses scandal


The United Kingdom parliamentary expenses scandal was a major political scandal that emerged in 2009, concerning expense claims made by members of the British Parliament in both the House of Commons and the House of Lords over the previous years. The disclosure of widespread misuse of allowances and expenses permitted to members of Parliament aroused widespread anger among the UK public and resulted in a large number of resignations, sackings, de-selections, and retirement announcements, together with public apologies and the repayment of expenses. Several members, and former members, of both the House of Commons and the House of Lords were prosecuted and sentenced to terms of imprisonment.
A February 2008 Freedom of Information Act request for the release of details of MPs' expense claims was allowed by an Information Tribunal and was challenged by the House of Commons Authorities on the grounds that it was "unlawfully intrusive". In May 2008, the High Court ruled in favour of releasing the information. In April 2009, the House of Commons authorities announced that publication of expenses, with certain information deemed "sensitive" redacted, would be made available in July 2009. However, before this could take place, the expenses' records and documentation were leaked to The Daily Telegraph newspaper, which began publishing details in daily instalments from 8 May 2009. These disclosures dominated the British media for weeks. On 18 June 2009, the details of all MP expenses and allowance claims approved from 2004 to 2008 were published on the official Parliament website, but with some details removed, such as addresses, claims that were not approved for payment, and correspondence between MPs and the parliamentary fees office. This brought further accusations of unnecessary secrecy and allegations that this might have prevented serious abuses from being disclosed.
Since most claims revolved around MPs' second homes in London, a panel was established to investigate all claims relating to the "second homes" allowance between 2004 and 2008. Headed by former civil servant Sir Thomas Legg, the panel published its findings on 12 October as MPs returned to Westminster following the summer recess. Each MP received a letter stating whether or not he or she would be required to repay any expenses claimed. Details of voluntary repayments by MPs amounting to almost £500,000 were also officially published.
It was announced on 5 February 2010 that criminal charges of false accounting were to be prosecuted against four parliamentarians, all later jailed. On 19 May, charges were brought against two more, and on 13 and 14 October 2010, two more faced legal proceedings. Three peers were suspended on 18 October 2010 due to their expense claims.

Background and legal proceedings

In the United Kingdom, MPs can claim expenses, including the cost of accommodation, 'wholly, exclusively and necessarily incurred for the performance of a Member's parliamentary duties'.
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. One early request came from the journalist Jon Ungoed-Thomas. Another request came from journalist and freedom of information campaigner Heather Brooke. Both 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 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 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 a 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.
In the tax year 2007–2008, MPs' costs of staying away from their main homes were limited to £23,083.
In January 2009, Harriet Harman, Leader of the House of Commons, tabled a motion that 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.
Ultimately, the media disclosure made the legal appeal moot; the appeal was finally 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, and the requested details were made public on 23 May 2008.

Pre-publication controversies

Prior to The Daily Telegraph's revelations in May and June 2009 and the official publication of expenses claimed in June 2009, and during the Freedom of Information cases, there were a variety of exposés that covered the controversial John Lewis List and individual MPs' expenses claims. Examples of items publicised prior to the May 2009 disclosures included:
  • Tony Blair's expenses were shredded 'by mistake' when they were the subject of a legal bid to have them published.
  • Conservative Derek Conway was alleged in May 2007 to have paid his son, a student at the time, using public funds despite little evidence of his having done the work he was supposed to do. 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 overpaid 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 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 that 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 that 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 where she spent as little as two 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'.
  • Labour minister Tony McNulty admitted claiming expenses for a second home in Harrow, 8 miles from his main home in Hammersmith, and asserted they were appropriate, but ceased claiming the allowances. Under continuing pressure, he apologised to the House for expenses abuses on 29 October 2009.
  • 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 obtained a full copy of all expenses claimed. 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 information in the leaks published by The Daily Telegraph originated from the parliamentary fees office, and had been offered to other newspaper organisations for more than £150,000. In September 2009, the assistant editor of the Telegraph, Andrew Pierce, revealed in an interview that the newspaper had paid £110,000 for the information, and described it as 'money well spent in the public interest'. The Times and The Sun had turned down an offer to buy the leaked expenses file.
Shortly after the publication of the information, the House of Commons authorities asked the Metropolitan Police to investigate. The Police declined, on the grounds that any attempted prosecution might meet with a successful public interest defence.

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:
  • 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 the nominated home was near neither their constituency nor Westminster.
  • Re-designating second homes: MPs were able to repeatedly switch the designation of their second home, enabling them to claim for purchasing, renovating, and furnishing more than one property. This practice became widely known as 'flipping'.
  • Renting out homes: 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.
  • Over-claiming for council tax on second home: MPs were able to round up actual amounts due, claiming for 12 monthly instalments where only 10 were due or by claiming up to £250.00 per month with no receipt required until those rules were changed. Over 50 MPs were alleged to have over-claimed council tax.
  • Subsidising property development: the Green Book rule that MPs could not claim for repairs 'beyond making good dilapidations' was not enforced and consequently MPs were able to add significantly to the value of a property. By implication some 'second homes' were effectively businesses since they were renovated on expenses and then rapidly sold.
  • Evading tax and inappropriate attempts at avoiding tax: 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 a property as their second home to claim expenses, and to the UK tax authority HM Revenue and Customs as their primary residence in order to sell it without 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 criticised 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: 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: 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: MPs were able to claim for items of furniture that were actually delivered somewhere other than their second home.
  • Exploiting the 'no receipt' rule: 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: under a rule permitting up to £400 for food each month, 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: 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.