MPs pay the price for expenses debacle
12 May 09
The mess that Westminster MPs have got into over second home allowances is a neat illustration of the difference between rules and principles
It’s rather ironic that, just weeks after a Budget that threatened all-out war on tax avoidance, many of our legislators have turned out to be pretty nifty themselves when it comes to avoiding tax.
Whether “flipping” the status of their first, second or third homes to avoid capital gains tax, or simply making use of tax-exempt expenses that would be treated as benefits-in-kind for any other salaried employees, it seems that avoiding tax is perfectly all right - as long as you are an elected MP.
The fact that Michael Martin, Speaker of the House of Commons, can display more anger at the leak of information to the press than at the fact that the allowances system has gone so badly awry, speaks volumes about the gap that has opened up between politicians and the ordinary people who elected them.
The main excuse of those MPs caught out using public funds to install mock Tudor oak beams or trim the hedge around their helipad – neither of those was made up, by the way – is that “I followed the rules.”
It just goes to show that a detailed, badly written and carelessly enforced rulebook can lead to perverse results, that would never have happened if people simply stuck to clearly understood and stated principles.
The solution isn’t, as some seem to be suggesting, paying the MPs a big enough lump sum so that their temptation to abuse the system is assuaged.
Instead, why not look at the way senior Government employees are reimbursed when their work requires frequent travel between two locations, and apply that to MPs?
For starters, it seems wrong that the state should be paying out expenses for capital assets, which, in the long run, tend to increase in value. MPs’ pieds-a-terre should be rented accommodation, not speculative property investments.
Secondly, the rules on switching second homes need to be clarified, tightened and brought into line with HMRC’s capital gains tax rules.
But above all, MPs should consider a very simple ethical test, which can be applied to anyone, in any walk of life.
It’s this: If what you are about to do was published in your local newspaper, how would you feel about it? If the answer is “very uncomfortable”, then it’s probably the wrong thing to do, whatever the rules say.