How MPs rent out their homes at taxpayers' expense

The antics of MPs and their London homes has hit the headlines. Neil Faulkner looks at exactly what's been going on, and how politicians are cashing in.

You may have gathered from the tone of some recent news articles that MPs are doing something that seems a bit dodgy with their homes. These MPs have concealed their identities, despite Freedom of Information requests, using the convenient cover of “security reasons” and “privacy issues”.

Just because something smells fishy it's not easy to know which part of it stinks. That's what I want to clarify here.

Working from two locations

When you become an MP, you're allowed to rent a flat in London and claim it on expenses.

This is so that you can stay in London once in a while, perhaps because you need a break from all those nagging constituents, or so you can take your family to visit London Zoo, which is different to the House of Commons, incidentally. Occasionally you might even get up early enough to go to Parliament to jeer the opposition in a jocular way.

Whatever the reason, having your own taxpayer-funded London pad certainly swerves the inconvenience of needing to pick up the phone to book a room for a mere £150 per night – the maximum politicians can claim on expenses for hotels.

What's going on?

If we can return to the smell that we caught a whiff of at the start, it seems to start with the fact that 27 MPs own a London home that they are renting out to someone else, while they rent another London flat for themselves, and claim the rent back from us taxpayers.

If that doesn't smell bad, you must have a blocked nose.

Some MPs don't have to search for a flat

Most of these second homes are privately rented, with expenses claim limits in the region of £20,000 per year.

However, some of these are London flats that are owned by the taxpayer and used by high-ranking MPs. Examples include 10 and 11 Downing Street for the Prime Minister and the Chancellor respectively, but there are many more for other ministers.

These are called “grace-and-favour” apartments, and the rent on some of these - if it had to be paid - would be considerably higher than the limits shown in the expenses rules.

It's unclear which of the meanings of “grace” is intended here. It could refer to a smooth and elegant movement – which is not a meaning of grace you'd usually associate with MPs, outside of their slippery ability to avoid answering questions.

Perhaps the definition of grace intended is courteous manners – just like the good graces former Chief Whip Andrew Mitchell recently displayed to “pleb” policemen? Or is it the grace of God? Are politicians blessed with holy houses at our expense?

Personally, I think MPs might just be gracing us with their presence in Parliament. They're less likely to do any damage there than anywhere else, I suppose.

For instance...

Some MPs with grace-and-favour flats say they're “not allowed” to continue living in their own homes for “security reasons”, even if they already have a flat not a million miles away from the House of Commons. Liam Fox is one such MP who said that, while speaking of his time when he was Defence Secretary.

Despite his current, lower security risk, he still now rents a flat privately while continuing to rent out his London home – and claiming around £20,000 per year in rent.

He was quoted as saying that he will sell the flat he's renting out “eventually”. In the meantime, it's hard for him not to profit at the taxpayers' expense.

Yet the Independent Parliamentary Standards Authority's (IPSA) rules on MPs expenses state that: “Members of Parliament must not exploit the system for personal financial advantage.”

Feeding your own tail

At least eight MPs, according to IPSA, are renting flats from or to another MP – possibly both.

There is no system in place to ensure that MPs charge each other a fair amount. This means the landlord MP can charge more than the going rate to make a fat profit and the tenant MP can simply claim it all back from the taxpayer.

Meanwhile, the landlord MP rents out a flat nearby – possibly from another MP – and claims this back from the taxpayer. They could even do it in a circuit of MPs, which would be the perfect example of what Germans call a “devil's circle”.

The Daily Telegraph exposed that MPs are renting out previously taxpayer-funded homes to other MPs. Until recently, Members of Parliament were allowed to claim mortgage interest back in expenses, meaning they could buy a house and profit from price rises at no cost to themselves. By renting out these homes today, they can continue to profit from them.

It's clear that it's unclear

Politicians appear to be gaming the expenses system. But, whether or not that is really happening, under the expenses rules it is just as important that they're not seen to be profiting.

The guidance relating to MP expenses states: “The system should prohibit MPs from entering into arrangements which might appear to create a conflict of interests in the use of public resources.”

Renting flats to each other and then renting other flats at the taxpayers' expense certainly qualifies here.

You all seem to agree. In a Telegraph poll last week, more than 27,000 said MPs should be forced to reveal if they rent out their taxpayer-funded homes. Fewer than 500 voted otherwise, which is curiously close to the number of Telegraph-reading MPs in the country.

The expenses guidance also states: “The system should be clear and understandable. If it is difficult to explain an element of the system in terms which the general public will regard as reasonable, that is a powerful argument against it.”

The fact that I need to write an article merely trying to explain the system and how it could be abused puts doubt on the fact that the system is “clear and understandable”. Time for more public outrage to force this loophole to close.

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