I should like to make a statement, for the second time today.
This afternoon I convened a meeting of party leaders—both major and minor parties—and members of the House of Commons Commission to make decisions on the operation of parliamentary allowances pending the recommendations of Sir Christopher Kelly’s Committee on Standards in Public Life. The Chairman of the Committee on Members’ Allowances was also present to advise us.
The Committee on Standards in Public Life will come forward with long-term reforms to the current allowances system. All parties are now committed to implementing its recommendations as a whole, subject to the formal agreement of this House, provided that these reforms meet the tests of increased transparency and accountability and reduced cost for the taxpayer. We have today agreed a robust set of interim measures which will take effect at once and do not pre-empt any more substantial changes to be put forward by the Kelly committee.
Second homes: there will be no more claims for such items as furniture, household goods, capital improvements, gardening, cleaning and stamp duty. The following only should be claimable: rent, including ground rent; hotel accommodation; overnight subsistence; mortgage interest; council tax; service charges; utility bills, including gas, water, electricity, oil, telephone calls and line rental; and insurance—buildings and contents.
Designation of second homes: no changes to be made to designation of second homes in the years 2009-10, with a transparent appeal procedure for exceptional cases.
Capital gains tax: Members selling any property must be completely open with the tax authorities about whether they have claimed additional costs allowance on that property as a second home and are liable for capital gains tax. Members should make a declaration in respect of any property on which they claim for expenditure that it is not—and will never be—their main residence for capital gains tax purposes. Whether such a declaration has been made will be made public.
Couples: Members who are married or living together as partners must nominate the same main home, and will be limited to claiming a maximum of one person’s accommodation allowance between them.
Mortgages: all those Members claiming reimbursement must confirm that the mortgage continues, that the payments are for interest only, and the amount claimed is accurate. Mortgage interest claims will be capped at £1,250 per month. In the view of the meeting—and subject to the recommendations of the Kelly committee—this maximum figure should be reduced in the longer term. The same cap will apply to rent and hotel accommodation. Some of these measures I am announcing will require a resolution by the House in the near future; others will be put into effect by administrative action.
Staffing: we confirmed the enforcement of deposit of staff contracts and the registration of any relatives employed.
While the Kelly committee recommendations are awaited, there will be no specific changes to other allowances. The Department of Resources is instructed to tighten the administration of all claims and apply a clear test of “reasonableness”. If there is any doubt about the eligibility of a claim, it will be refused and there will be no appeal. In future, all authorised payments will be published online at transaction level on a quarterly basis by the Department of Resources.
All past claims under the former additional costs allowance over the past four years will be examined. This will be carried out by a team with external management; the external manager will be appointed after consultation with the Comptroller and Auditor General. All necessary resources will be made available. The team will look at claims in relation to the rules which existed at that time, and will take account of any issues which arise from that examination which cause them to question the original judgment.
The meeting also received a paper from the Prime Minister, which was endorsed by the other party leaders, calling for a fundamental reform of allowances—moving from self-regulation to regulation by an independent body. The Government will consult widely on this proposal. Further to this, the Leader of the House will be making a statement tomorrow, which will allow the House a full opportunity to ask questions, and Members to air their views on the decisions we have made and the proposals for the future.
Further to your statement, Mr. Speaker. As you said, the Prime Minister provided a document for today’s discussions with you and other party leaders. For the convenience of Members, I will deposit this paper in the Library tonight, and copies will be made available for Members in the Vote Office.