Legg review orders MPs to repay more than £1 million in expenses » Central Government » 24dash.com

The long-awaited review of House of Commons expenses has ordered MPs to repay £1.12 million, it was revealed today.

The review's author Sir Thomas Legg lambasted the "deeply flawed" system at Westminster and recommended that MPs hand back £1.3 million.

But that figure was reduced by £185,000 after former judge Sir Paul Kennedy upheld a number of appeals by MPs against the repayment demands.

In his executive summary, Sir Thomas said the "rules were vague, and MPs were themselves self-certifying as to the propriety of their use of the allowance".

There was also a "prevailing lack of transparency" and officials had a "culture of deference" to MPs.

"A particular challenge has proved to be the widespread lack of proper evidence on the record from MPs to support substantial payments, especially of mortgage interest, even though this was expressly required by the rules," he added.

Sir Thomas roundly rejected complaints from many MPs that he had imposed retrospective rules and spending limits for items such as gardening and cleaning.

He insisted the regulations governing use of second home allowance had indicated it could "only be used as reimbursement for specific and proportionate expenditure on accommodation needed for the performance of Parliamentary duties".

"Payments by the Fees Office which contravened these requirements breached the published rules and standards in force at the time. To hold such payments invalid is not to impose new rules retrospectively, but to apply now the rules that were properly in force then, but were overlooked or misunderstood at the time.

"For this reason, the fact that in some cases the Fees Office and MPs acted in apparent ignorance of the rules and standards then in force cannot cure the invalidity of the payments.

"Suggestions that MPs necessarily acted 'in accordance with the rules' simply because the Fees Office made payments to them, and even encouraged and endorsed their claims, are therefore misconceived."

Former judge Sir Paul Kennedy, who was asked by the Commons to hear MPs' appeals against the Legg findings, wholly or partially threw out 44 of 75 disputed demands.

And he used the foreword to his own report to level several serious criticisms at the methods used by Sir Thomas in his audit

Sir Paul said he was "particularly troubled" that MPs who had not broken rules that were in place at the time had been accused of making "tainted" claims or having "breached the requirement of propriety".

The application of retrospective caps for cleaning and gardening was "a rational response to a difficult problem" but it was "bound to have unfortunate consequences".

While it was "irritating, to say the least" for anyone to be asked to repay money claimed in good faith, he went on, it was "infinitely more irritating and potentially very damaging to reputation if the exercise takes place in the full glare of media publicity".

Sir Paul said it was "unfortunate" that the Legg review had invoked "the requirement of propriety" over cleaning and gardening claims.

"That carries with it the inevitable implication that those who made claims in excess of the retrospectively-imposed limits were lacking in propriety.

"I found little, if any, evidence of that," he said - accusing Sir Thomas of acting beyond his remit.

"It was not the function of the review, nor is it my function, to make judgments of that kind."

The largest sums ordered to be repaid by sitting MPs - after appeals are taken into account - were £42,458 by Barbara Follett (Lab, Stevenage), £36,250 by Bernard Jenkin (Con, North Essex), £31,193 by Andrew Mackay (Con, Bracknell), £29,398 by John Gummer (Con, Suffolk Coastal), £29,243 by Julie Kirkbride (Con, Bromsgrove) and £24,878 by Liam Fox (Con, Woodspring).

Local government minister Mrs Follett - wife of best-selling author Ken - was ordered to repay £34,776.30 for mobile security patrols at her second home, as well as £4,454.18, representing half the cost of an "excessive" six telephone lines at the property.

She was overpaid £2,812.95 for a non-allowable insurance premium for fine art, and was paid £221 twice for boiler insurance, as well as £193.78 for pest control at an address which was not her second home, said Legg.

Mrs Follett has already repaid £32,976.17, leaving £9,482.04 outstanding.

Mr Jenkin was initially ordered to repay £63,250 claimed over the review period to rent his second home from his sister-in-law, which Sir Thomas ruled was "a conflicted transaction". But the sum was reduced to £36,250 on appeal, and as he has already handed back £36,909, he has no further money to return.

Husband-and-wife MPs Mr Mackay and Ms Kirkbride were ordered to repay about £60,000 between them in second home allowances, after it emerged that they owned two properties, with each claiming one as their second home so that the couple had no main residence which was not funded by the taxpayer.

Sir Thomas ruled that the arrangements "obtained a financial benefit for the couple which appears unintended under the Green Book rules, and as such contrary to the principles governing it".

He ordered them to repay one-third of the maximum allowance which they would legitimately have been able to claim, and both have repaid the sums demanded in full.

Legg also asked Ms Kirkbride to repay £2,584.26 of mortgage interest on an extension built so her brother could provide childcare, but this was overturned on appeal by Sir Paul.

Former Cabinet minister Mr Gummer was ordered to repay amounts claimed for repair and maintenance of a lawnmower, cleaning and gardening.

Shadow defence secretary Dr Fox was overpaid by a total of £22,476.03 for mortgage interest and was paid twice for claims on three occasions. Both have repaid the sums demanded in full.

In a damning passage of the report, Sir Thomas said that between 2004 and 2009 senior figures in the Commons had been more focused on furthering the "immediate interests of MPs" than "propriety in public expenditure".

The former Whitehall mandarin said the "culture of deference" in the Fees Office had left it "vulnerable to the influence of higher authorities in the House of Commons, from the Speaker down, and of individual MPs".

"In practice, during most of the review period, these influences tended more towards looking after the immediate interests of MPs than to safeguarding propriety in public expenditure," he added.

Sir Thomas, who served as an external member of the Commons Audit Committee during the period in question, criticised the fact that there was "no audit of any kind" of the Additional Costs Allowance (ACA), which funded second homes, or any other parliamentary expenses.

"Neither internal nor external auditors could 'go behind the Member's signature'," he wrote.

Sir Thomas stressed that his findings merely dealt with whether expenses claims had been "valid", and intended "no reflections on the conduct or motives of individual MPs".

Sir Paul said it was "damaging, unfair and wrong" to publicly state that MPs who made apparently genuine claims within existing rules had engaged in "tainted" practices or had acted improperly.

He disputed the Legg review's decision to order the wholesale repayment of so-called "conflicted transactions"- such as buying or renting a second home from a close relative, a company in which the MP had shares, or a close associate.

In his report, Sir Thomas said he had regarded all such claims - of which there were seven - "as tainted and the whole payment accordingly invalid".

Sir Paul said he found "little room for the application of the approach which commended itself to the Review" and that each case should have been considered separately.

He said he was "particularly troubled" that claims made before the rules were changed in 2006 to outlaw such arrangements should have been dubbed "tainted", invalid and improper.

"The situation is not, as suggested, analogous to an underpayment of tax or an overpayment of social security benefits. Such errors are usually put right without any publicity," he said.

"The ACA Review is, at least in part, the result of enormous publicity, and will no doubt generate further publicity when it is published.

"Against that background it seems to me that to describe any apparently genuine transaction as tainted, or breaching the requirement of propriety, when there is no evidence of impropriety, is damaging, unfair and wrong."

Former cabinet minister Peter Lilley (Con, Hitchen and Harpenden) had a demand for £41,057.36 from Sir Thomas overturned in its entirety on appeal.

Mr Lilley purchased his second home in 2003 using a loan from his wife, replacing that arrangement in 2005 with a joint loan. Sir Thomas ordered him to repay the amounts claimed for mortgage interest following that change, arguing the new loan "appears to have released capital, which was not permitted under the ACA other than for the purpose of improving or repairing the home".

But Sir Paul Kennedy ruled Mrs Lilley's loan was effectively a "bridging loan", as the couple were initially unable to use a mortgage to buy their second home because the seller wanted an immediate cash offer. The subsequent change was therefore not an "additional" mortgage - which would have been banned under the rules - but a first mortgage on the property.

Sir Paul said he found Mr Lilley's appeal "compelling", adding: "I am at a loss to understand why the review should state that what you did was not permitted."

In a statement, the ruling Commons Members Estimate Committee (MEC) set a deadline of February 22 for MPs to arrange repayments of the amount demanded.

"The MEC expects that as a key part of that process any MP who has been identified by Sir Thomas as having received an overpayment will (subject to the appeal decisions) repay or make arrangements to repay those sums by February 22.

"However, the MEC will support a resolution in the House to authorise the recovery from salaries and other allowance payments of any sums outstanding after that date."