Socialist Worker

Innovative use made of public help with MPs' housing costs

by Simon Basketter
Issue No. 2088

For those having trouble meeting their housing costs there is over £20,000 available to help. The only catch is you have to be an MP.

The additional-cost allowance (ACA) is supposed to reimburse MPs for the cost of renting, mortgage interest payments or staying in a hotel.

Many MPs use it to buy a property in London. Of the 586 MPs who claimed the allowance last year, more than half claimed over 90 percent of the £22,110 maximum.

MPs are also allowed to claim for food bills of up to £400 a month under the ACA. They do not have to provide receipts for items under £250.

MPs can submit mortgage claims on a monthly basis without any receipts and have to provide a mortgage statement only once a year.

It is very helpful to MPs. For instance Tory MPs Sir Nicholas and Lady Ann Winterton claimed back £165,000 in “rent” they paid on a London home they had already bought outright.

They were able to claim from their ACA by transferring the home to a trust for their children.

While this is generous, 43 MPs get the allowance for the second home and then rent it out.

The Commons register of interests shows that 43 MPs declare rental income from properties in London or in their constituencies while claiming the ACA. Of these, 34 receive rent from properties in London while claiming the allowance.

The annual grant has now been increased to £23,083.

There are 19 Tory MPs, 15 Labour, seven Liberal Democrats, one DUP and one SDLP who admit to using the system. They include senior MPs such as Margaret Beckett, Michael Howard, John Reid, David Blunkett, Alan Milburn, Frank Field and Charles Kennedy.

A number of MPs have condemned the ACA system. Their proposed solution is to scrap the allowance and give themselves a 33 percent pay rise.

Just like his predecessor at the Department for Work and Pensions, minister James Purnell seems to have some memory loss when he declares his interests.

Purnell who is currently axing jobs in the civil service and pushing through proposals to throw people off benefits, seems to have been confused about where he lives.

He bought a home in London before becoming an MP and has a house in Manchester, which he acquired several years later.

He was able to claim thousands of pounds of expenses on the London home and is accused of exploiting a loophole to avoid a huge tax bill on its sale.

Purnell received about £20,000 a year in allowances on the London flat because he said it was his second home.

From at least April 2003 he had been telling the Commons’ authorities that it was his second home.

But when Purnell sold the flat in October 2004 he told the Inland Revenue that it qualified as his main home, meaning he didn’t have to pay thousands of pounds in capital gains tax charges.

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Article information

Tue 12 Feb 2008, 19:06 GMT
Issue No. 2088
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