Speaker Bercow tells Nick: no inquiry into MPs’ ‘flipping’ or CGT evasion

Two weeks ago, Nick Clegg wrote to Sir Thomas Legg – in the wake of Sir Thomas’s decision to recommend MPs repay public money if they had been found to have overclaimed expenses for cleaning and gardening – asking that he examine the most serious allegations levelled against MPs:

… when your inquiry was first announced, I think most people expected the worst offences such as flipping to come under the toughest scrutiny. The letters sent this week, however, appear not to focus on these offences. If your review is to be seen as credible it must expose every single one of those MPs who claimed for a non-existent mortgage or ‘flipped’ their second homes purely for personal gain, some of whom then went on to avoid Capital Gains Tax. Some of these MPs appear to have made tens or even hundreds of thousands of pounds in profits with the help of taxpayer subsidies. They must be exposed and these illegitimate profits returned.

Today Nick got his answer, but not the one he – or the public – would have hoped for. Sir Thomas passed Nick’s letter to the Speaker of the House of Commons, John Bercow, to reply. Here’s what he said (with a big hat-tip to The Times’s Sam Coates):

Dear Nick,

Thank you for your letter of 14 October concerning the ACA review, which was forwarded to me as Chairman of the Members Estimate Committee by Sir Thomas Legg.

At its meeting on Monday, the MEC considered your proposal and whether Sir Thomas Legg should be asked to extend the review of past ACA payments. It was able to discuss the practicality of it with Sir Thomas himself. Any claims for non-existing mortgages are of course already covered by the review or by police investigations. Extending the review to cover changes of home designation for personal gain and the payment of Capital Gains Tax would unquestionably involve significant retrospective changes to the rules on allowances, although some cases of extensive property renovation may be identified by the review as being in breach of the rules and standards in force at the time.

What concerned the MEC most was that your proposal would require a major new exercise in gathering evidence, since the evidence needed is not within the records of the Department of Resources. Indeed, investigating the payment of CGT would go well beyond the responsibilitie sof the Department of Resources, which does not have authority over Members’ tax affairs. Agreeing to your proposal would, therefore, considerably lengthen the timescale of the review, and the MEC did not feel it could support this.

The MEC does of course recognise the seriousness of the issues you raise, and hopes they will be fully dealt with by the Kelly Committee.

Yours ever,

John

So, for all the sound and fury of six months ago, none of the MPs alleged to have committed the most serious offences are to be investigated. The only MPs who are likely to have to repay money are those who spent too much on cleaning and gardening: minor offences compared to the hanging offences of ‘flipping’ and CGT evasion which, if true, saw the taxpayer seriously defrauded.

The Speaker’s reference to Sir Christopher Kelly’s review is disingenuous. As I understand it, his review is ‘forward-looking’ – ie, he’ll draw up a system of expenses for the future, rather than examine the alleged wrong-doings of the past. Those MPs who have got away with it are the ones who fiddled the most. That’s a depressing outcome to one of the shabbiest episodes in modern British political life.

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6 Comments

  • Herbert Brown 28th Oct '09 - 12:21am

    If Nick Clegg considers “flipping” to be one of the “worst offences”, perhaps he should direct his attention to Lord Rennard, who unquestionably “flipped”. Whether it was “purely for personal gain”, who can say? But as he has ended up more than £40,000 in the black – as reimbursement for sleeping in his own bed, in his own house – it seems safe to conclude that personal loss didn’t come into it …

  • Andrew Suffield 28th Oct '09 - 2:02am

    To be fair, they aren’t exactly saying “no”, they’re saying “this is too big for us and not within our mandate; please fetch a larger cannon”. Unfortunately there doesn’t seem to be anybody else left, so it will be difficult to get anything done about it.

    The problem here is that flipping, while unethical, falls under the heading of “things that would have been illegal if anybody had thought of it” – there was no actual rule against it. This means that doing anything about it is probably going to require new legislation, which would be… problematic.

    The question of tax evasion is of course a matter for HMRC and not parliament.

  • “Extending the review to cover changes of home designation for personal gain and the payment of Capital Gains Tax would unquestionably involve significant retrospective changes to the rules on allowances”

    That didn’t stop Legg in the original review.

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