The Times’s Sam Coates has the story:

MPs should be forced to sell their second homes and return most of the profits to the taxpayer, under plans to be put forward by the Liberal Democrat leader. Nick Clegg moves to outflank both Gordon Brown and David Cameron today with the toughest suggestions to date in the effort to end the damaging row over MPs’ perks and allowances.

Under Mr Clegg’s proposals, to be put forward at a meeting with the Labour and Conservative leaders, MPs would no longer be able to claim mortgage interest payments on expenses and would be compensated only for rental payments. …

Mr Clegg told The Times: “It is easy enough for politicians to talk about how the current system for pay and expenses needs to be changed, but what people want to know is what we are actually going to do about it.”

The Liberal Democrat leader is determined, however, to lay down the principle that MPs should not continue to profit from huge capital gains at the taxpayers’ expense. Research in 2006 by House of Commons authorities found that 485 MPs — three quarters of the total — claimed mortgage interest payments. MPs have benefited considerably from the tripling of property prices since 1997, which have pushed up the average price of a Westminster flat from £171,000 to £543,000 last year. Despite being able to claim more than £20,000 a year for mortgage interest payments, MPs can keep any profit from second home sales when they leave Parliament.

The proposals have not yet been approved by the whole Liberal Democrat parliamentary party, and are likely to be greeted with horror by many MPs.