House of Commons Committee on Standards and Privileges
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
Eleventh Report of Session 2009–10
Report, Appendix, oral and written evidence and formal minutes
Ordered by The House of Commons to be printed 16 March 2010
HC 491 Published on 19 March 2010 by authority of the House of Commons London: The Stationery Office Limited £0.00
The Committee on Standards and Privileges
The Committee on Standards and Privileges is appointed by the House of Commons to oversee the work of the Parliamentary Commissioner for Standards; to examine the arrangements proposed by the Commissioner for the compilation, maintenance and accessibility of the Register of Members’ Interests and any other registers of interest established by the House; to review from time to time the form and content of those registers; to consider any specific complaints made in relation to the registering or declaring of interests referred to it by the Commissioner; to consider any matter relating to the conduct of Members, including specific complaints in relation to alleged breaches in the Code of Conduct which have been drawn to the Committee’s attention by the Commissioner; and to recommend any modifications to the Code of Conduct as may from time to time appear to be necessary.
Current membership Rt hon Sir Malcolm Rifkind MP (Conservative, Kensington & Chelsea) (Chairman) Rt hon Kevin Barron MP (Labour, Rother Valley) Mr Andrew Dismore MP (Labour, Hendon) Nick Harvey MP (Liberal Democrat, North Devon) Rt hon Greg Knight MP (Conservative, East Yorkshire) Mr Elfyn Llwyd MP (Plaid Cymru, Meirionnydd Nant Conwy) Mr Chris Mullin MP (Labour, Sunderland South) The hon Nicholas Soames MP (Conservative, Mid Sussex) Mr Paddy Tipping MP (Labour, Sherwood) Dr Alan Whitehead MP (Labour, Southampton Test)
Powers The constitution and powers of the Committee are set out in Standing Order No. 149. In particular, the Committee has power to order the attendance of any Member of Parliament before the committee and to require that specific documents or records in the possession of a Member relating to its inquiries, or to the inquiries of the Commissioner, be laid before the Committee. The Committee has power to refuse to allow its public proceedings to be broadcast. The Law Officers, if they are Members of Parliament, may attend and take part in the Committee’s proceedings, but may not vote.
Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at: www.parliament.uk/sandp.
Committee staff The current staff of the Committee are Mr Steve Priestley (Clerk), Miss Rhiannon Hollis (Second Clerk) and Ms Jane Cooper (Committee Assistant).
Contacts All correspondence should be addressed to The Clerk of the Committee on Standards and Privileges, Journal Office, House of Commons, London SW1A 0AA. The telephone number for general enquiries is 020 7219 6615.
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 1
Contents
Report Page Introduction 3 Referral 3 The Commissioner’s findings 3 The Committee’s approach to this inquiry 6 The public interest 6 The property sale windfall analogy 7 Advice from the House authorities 7 The position of other Members 7 John Barrett 8 Summary 8 Mr Barrett’s evidence and the Commissioner’s conclusions 8 The public interest 8 The property sale windfall analogy 9 Advice from the House authorities 10 Mr Barrett’s comments on the Commissioner’s report 11 The effect on the public purse 12 Conclusions and recommendation 13 Sandra Gidley 15 Summary 15 Ms Gidley’s evidence and the Commissioner’s conclusions 15 The public interest 15 Advice from the House authorities 16 The property sale windfall analogy 16 Ms Gidley’s comments on the Commissioner’s report 17 The effect on the public purse 18 Conclusions and recommendation 18 Paul Holmes 19 Summary 19 Mr Holmes’ evidence and the Commissioner’s conclusions 19 The public interest 19 The property sale windfall analogy 20 Advice from the House authorities 20 Mr Holmes’ comments on the Commissioner’s report 20 The effect on the public purse 21 Conclusions and recommendation 22 Richard Younger-Ross 23 Summary 23 Mr Younger-Ross’s evidence and the Commissioner’s conclusions 23 The public interest 23 The property sale windfall analogy 24 Advice from the House authorities 24 Mr Younger-Ross’s comments on the Commissioner’s report 25 The effect on the public purse 26 Conclusions and recommendation 27
2 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
Sir Alan Beith 28 Summary 28 Sir Alan’s evidence and the Commissioner’s conclusions 28 The public interest 28 The property sale windfall analogy 30 Advice from the House authorities 30 Sir Alan’s comments on the Commissioner’s report 31 The effect on the public purse 31 Conclusions and recommendation 31 Sir Menzies Campbell 33 Summary 33 Sir Menzies’ evidence and the Commissioner’s conclusions 33 The public interest 33 The property sale windfall analogy 34 Advice from the House authorities 35 Sir Menzies’ comments on the Commissioner’s report 35 The effect on the public purse 36 Conclusions and recommendation 36
Formal Minutes 37
Appendix 39
Written evidence to the Committee 196
Oral Evidence 205
Further written evidence 235
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 3
Introduction
Referral
1. In May 2009, a national newspaper alleged that at least thirteen Members of Parliament had received “windfalls worth thousands of pounds to give up their right to cheap rent in a deal that led to taxpayers paying substantially more for their second homes.” The newspaper report stated that, following the sale of the Dolphin Square estate in Westminster in 2005, all tenants had received offers from the estate’s new owners of a lump sum in exchange for moving out or paying a higher rent, and that the new owners had also offered £5,000 “to give up the right to pass the tenancy on to family.” It was claimed that “Many MPs accepted the windfalls and stayed in the flats while the taxpayer picked up their higher rental bills.”1
2. Between 29 May and 6 June 2009, six Members wrote to the Parliamentary Commissioner for Standards, asking him to rule on whether their decisions in respect of the offers from the new owners had been appropriate. In accordance with established procedures, the Commissioner sought the approval of the Committee for him to accept the self-referrals. The Committee agreed that the Commissioner should undertake an inquiry into each Member who decided to make a self-referral. The six Members who did so were: John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross. As well as taking part in the Commissioner’s inquiry, all six Members gave oral evidence to this Committee and all but Sir Alan submitted written evidence, which is published in full with this Report.
The Commissioner’s findings
3. The Commissioner sent us a report of his investigation on 17 February.2 In his report, the Commissioner has set out his findings of fact for each of the six Members, and each will be considered separately below.
4. The Commissioner was told by Members that the Dolphin Square flats had been run by the Dolphin Square Trust, a non-profit making body, which had held down rents to a level below market rates.3 Many Members found the flats a useful and low-cost place to stay when in London. Each of the six Members who self-referred claimed Additional Costs Allowance (ACA) which covered all or (in one case) part of the cost of their rent at Dolphin Square, except for periods when Parliament was dissolved.
5. In 2005, Westminster City Council sold the head lease of the flats, and a long negotiation ensued.4 In October of that year, letters were sent to all tenants making them a number of different offers. The aim of the new owners appears to have been to encourage existing tenants, many of whom were on long leases which guaranteed advantageous terms, to give up their right to those terms. The Members who self-referred received the offers from the
1 Appendix, paragraph 2 2 Appendix 3 Appendix, paragraph 12 4 Appendix, paragraph 13
4 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
new owners, and each decided to accept a payment. The amounts accepted varied, as did the rights and benefits in exchange for which the payments were offered. The six Members used the payments in a variety of ways, although none decided to pay any of the money received to the House. The facts of each case are examined in more detail in later sections of this Report.
6. The three offers are summarised in the Commissioner’s memorandum, as follows:
• Option A, “Cash and Go” version, which would involve the current tenant being paid a sum of money by the new owners of Dolphin Square, who would secure vacant possession of the flat;
• Option A, “Cash and Stay” version, which would involve the current tenant being paid a sum of money by the new owners of Dolphin Square, and staying in their flat at a higher rent, on an assured shorthold tenancy, with no security of tenure on expiry of the fixed term;
• Option B, a fixed term lease that could run until June 2034, starting with a rent the same as the current rent but gradually increasing year on year.5
The Commissioner was also told that a separate offer of £5,000 was made at the same time to those long-standing tenants who, it was believed, might have a right to pass the tenancy on to their children.6
7. Solicitors retained by the Dolphin Square Trust sent advice to tenants of the flats. The advice explained the three main offers being made to tenants, and gave indications about which offer tenants might find most beneficial, depending on their future plans.
8. The House of Commons service, and specifically the then Department of Finance and Administration, was aware at the time that the Dolphin Square offers were being made to Members. The Commissioner has been told that a decision was taken to prepare advice, which would be given to any Member staying in Dolphin Square who asked for guidance on what to do about the offered payments. This advice was produced on 1 November 2005, about three weeks before the deadline for tenants to respond to the offers. For reasons which are not clear, it was decided not to send the advice out proactively to Members who were tenants in Dolphin Square.7
9. The DFA’s advice is reproduced in full in the Commissioner’s memorandum. In summary, it stated that there was “potential awkwardness” in accepting the payments because of the use of “public money ... to meet past rental costs either in part or in full.” It advised Members who had claimed the whole of their rent from ACA to pass on to the House any money they decided to accept, because it would be “inappropriate to gain a personal benefit.” Arrangements could be made to set the amount against future rental
5 Appendix, paragraph 14 6 Appendix, paragraph 18 7 Appendix, paragraph 39
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 5
payments. Members who had claimed only a part of their rent would be advised that they could keep part of the payment.8
10. In the event, none of the six Members who have self-referred sought advice directly from the DFA. The records of the Department suggest that only two Members did seek written guidance and that they were sent the advice on 22 November; neither of these Members has self-referred.9
11. Some of the self-referring Members have told the Commissioner that they sought advice from other Members living in Dolphin Square. Ms Gidley told the Commissioner she had spoken to such a Member, Mrs Joan Humble, who said she had received very different advice from the DFA. Mrs Humble wrote to the Commissioner to say that she had contacted the Department, to seek their advice about the offered payments. She had been told in a telephone conversation with a member of staff in the Department in March 2006 that any renegotiation of her lease, including the offer of a buy-out from her previous tenancy agreement, was an entirely private matter between her and the new landlord. She also said that during the conversation the analogy had been drawn between the offered payments, and profits made by Members selling property bought with the help of ACA. Such profits were, and still are, allowed to be retained by the Members concerned.10 The successor to the DFA, the Department of Resources, has told the Commissioner that there is no record of such a conversation and that it is “not clear ... why such advice would have been given when the authoritative guidance was readily available.”11 However, another Member later wrote to our Chairman, stating that he too had been advised by the DFA that the offer was a private matter between him and his landlord.12
12. The Commissioner has set out the relevant rules of the House. He points out that the rules relating to Members’ expenses deal primarily with the propriety of Members’ claims against allowances. The detailed rules are not therefore readily applicable to the receipt of payments. However, more broadly, the Code of Conduct states that Members must avoid conflict between their personal interest and the public interest, and “resolve any conflict between the two, at once, and in favour of the public interest.”13 We agree with the Commissioner’s view that the question of whether or not the Members should have accepted the offer made to them as tenants of Dolphin Square and kept the proceeds is primarily an ethical rather than a technical question.14 The Speaker’s introduction to the Green Book, published in 2005, notes that “Members themselves are responsible for ensuring that their use of allowances is above reproach.”15
13. The Commissioner concludes that the sums Members received under the buy-out scheme, although not themselves claims on allowances, resulted from the payments made to them from the public purse to cover, in whole or in part, the cost of their rent on their
8 Appendix, paragraph 24 9 Appendix, paragraph 25 10 Appendix, paragraph 26 11 Appendix, paragraph 32 12 Not printed 13 Appendix, paragraph 4 14 Appendix, paragraph 327 15 Appendix, paragraph 6
6 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
flats in Dolphin Square. Because the use of public funds had created the situation in which the offer of payment would be made to each Member, the Commissioner judges that the public purse should have been the beneficiary of the payments, if Members accepted them. Therefore, Members who accepted the payments and did not pass them on to the House of Commons “were in breach of the Code of Conduct because the decision of each Member to accept and keep these financial offers had the effect of putting their personal interest above the public interest, contrary to the Code of Conduct for Members of Parliament.”16
The Committee’s approach to this inquiry
14. The Committee starts from the premise that the personal circumstances of the six Members who referred themselves to the Commissioner differed and their decisions at the time they accepted the payments were their own decisions, taken for their own reasons. We therefore reach a separate conclusion in respect of each Member.
15. There are, however, two central questions which can be asked in each of these cases. These are:
• How did the Member seek to apply the principles set out in the Code of Conduct when reaching a decision and subsequently?
• Did the public purse benefit or lose out as a consequence of the Member’s decision?
We have borne these questions in mind when drawing up the conclusions and the recommendations set out later in this Report.
16. Our overall approach when reaching the conclusions below has been that the public purse should not have lost out as a result of Members accepting one of the Dolphin Square offers. We consider that Members should have sought official advice at the time the offers were made and we are surprised that none of the six who referred themselves did so. If Members had sought advice in writing, they should have been advised to recognise the contribution made from public funds to the position they were in and to have paid a proportion of any windfall payment to the House. However, those who kept the payment and achieved a saving to public funds are, in our judgment, in a different position from those who kept it but did not achieve a saving, or who added to public expenditure. These considerations are reflected in our conclusions.
The public interest
17. In evidence to ourselves and to the Commissioner, Members have put forward examples of the ways in which the money they received from the new owners of Dolphin Square was spent and, to a greater or lesser extent, all have said that the payments were used to defray expenses that resulted from their positions as MPs. Some said that if they had not used the payments in this way, they would have been able to make claims for the amounts under Parliamentary allowances; others said that the payments helped to make up for costs they had incurred in excess of, or outside of, the amounts available under
16 Appendix, paragraph 328
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 7
Parliamentary allowances. All deny putting their personal interest before the public interest. The arguments advanced by each are considered in the relevant section below.
The property sale windfall analogy
18. In his memorandum, the Commissioner offers a discussion of the analogy each of the six Members drew between their own situations, and that of Members who chose to use the ACA to help fund the purchase of a second home. Those Members have been allowed to keep any profit arising from the sale of such property. The Commissioner’s view is that the analogy does not hold good. Members choosing to use ACA for a mortgage may have been able to claim the interest element of any payment, but they “will normally have some interest in the equity of their property, either because of their initial capital outlay, or because of the payments they have made to the capital element of their mortgage, or both.”17 In addition, they must at some stage repay the loan, which means the equity of the property is with the Member. The same does not hold true for Members claiming for rent.
Advice from the House authorities
19. As noted above, advice that might have prevented Members from taking the decisions that they took about accepting payments had been prepared by the Department of Finance and Administration, who, the Commissioner was told, had consulted the then Clerk and Speaker. For reasons that are not clear, a decision was taken not to promulgate it, although the Department held address details for Members claiming for ACA and so could have contacted and advised the Members living in Dolphin Square. The Commissioner has concluded that, had Members sought advice, or had the advice had been promulgated, all those Members should have been able to avoid the difficulties which they now find themselves in. He has described the fact that the advice was not given out as “deeply unfortunate” and “regrettable.” We agree.
The position of other Members
20. We are aware that other Members have received cash windfalls. However, they have neither been the subject of complaints to the Commissioner, nor have they sought to refer themselves. We have no information on their circumstances and, as the current six cases have demonstrated, circumstances are likely to vary, substantially, from individual to individual. In our view, it would be grossly unfair to seek to apply by analogy the findings in this Report to the cases of other Members, in the absence of a thorough examination of the facts in each such case.
17 Appendix, paragraph 330 (iv)
8 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
John Barrett
Summary
21. Mr Barrett asked the Commissioner to look into his case on 29 May 2009. The Commissioner heard from Mr Barrett that he had moved into an unfurnished flat in Dolphin Square in 2001, the year he was first elected to the House. He had stayed there until 2006, claiming the full rental amount from the ACA, except when Parliament was dissolved. In 2006 he had decided to look around for another place to stay in better condition. When Dolphin Square changed hands, he was offered a lump sum in exchange for giving up his rights to his short assured tenancy, and accepted this offer. Mr Barrett said that the gross amount received was £11,234, on which Capital Gains Tax was paid.18
22. In summer 2006 Mr Barrett moved to another, “improved” flat in Dolphin Square. The new rent was higher than the rent for the previous flat, and the flat was “larger and much nicer.” He continued to claim the full rental amount from ACA. Mr Barrett told the Commissioner that the rental charged for this second flat was not related to the lump sum he had received. Mr Barrett left the second flat in summer 2008 after being informed of planned rental rises that would take the rent for the flat above the ACA ceiling. He moved to a flat away from Dolphin Square at a slightly higher rent.19
23. The Commissioner concludes that Mr Barrett’s decision to accept the principal offer was a serious misjudgement and that he breached the rules of the House of Commons.20
Mr Barrett’s evidence and the Commissioner’s conclusions
The public interest
24. Mr Barrett has argued that he was not in the wrong in accepting and keeping the payment, for a number of reasons. He says that he derived no personal benefit from the transaction because the money was used to pay for a range of costs which he had “incurred as a direct result of becoming an MP.” He estimated that on average he had incurred about £2,000 of such costs a year. These included furnishing costs in excess of the maximum allowances; the rent charged during the dissolution period of 2005, which he incurred only because he was an MP; a similar amount that would need to be paid at the next election; food and subsistence costs, which Mr Barrett said he had not claimed in 2008-09 and was not currently claiming; mileage costs, which he was not currently claiming; and the costs of an accountant to deal with tax returns that resulted exclusively from being an MP.21 He said there were a number of allowances for which he stopped claiming after he received the windfall, and that the amount could be established by checking his claims: “I did not keep
18 Appendix, paragraphs 46 to 52 19 Appendix, paragraph 57 20 Appendix, paragraphs 334 and 335 21 Appendix, paragraphs 52 to 54
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 9
receipts for those allowances but if my published ACA is looked at, several thousands of pounds which could have been claimed have not been claimed.”22
25. Mr Barrett also listed a range of other costs for which he had not claimed, and which he would have accepted himself whether or not he had received the windfall. These included “prizes for local events, schools, fairs and gala days, supplying wreaths for remembrance services, taking constituents to lunch or dinner after they have visited Parliament,” etc. He believed these totalled at least £1,000 a year, or £8,000 for the period since his election. Further costs included telephone calls from his mobile and land line, and the cost of keeping one room of his house as an office. There was no direct relationship between the costs listed and the payment he received, Mr Barrett explained; but they showed where the money had been spent.23 He told the Committee: “I did not use the windfall for any other costs than those associated with me being a Member of Parliament.”24
26. The Commissioner accepts that this point is relevant.25 However, he points out that such informal allocation of the money left no audit trail, and there was no check to make sure the use of the money was within the rules. It had the effect of adding an extra category of expenses to Mr Barrett’s entitlement, which other Members could not access, although the Commissioner does not believe that was his intention.26 The Commissioner observes that, although the terms of the lease were a private matter between Mr Barrett and his landlord, the offer was not, because it resulted from the payment of Mr Barrett’s rent by the House of Commons, out of public funds.27 The Commissioner concludes that Mr Barrett’s use of the money does not absolve him of the responsibility of handing the payment to the House.
The property sale windfall analogy
27. In Mr Barrett’s judgement his position was exactly the same as that of Members who had used the ACA to help purchase a property, and then sold that property at a profit. He understood such Members would pay Capital Gains Tax on any profit, as he had also done, and then “use their own judgement as to what they would spend the balance on.”28 He told the Committee: “I know from conversations at the time the general consensus of opinion was that this was very similar to giving up a lease or selling the lease of a leasehold property.”29 He believed that other Members in the past had been offered payments from landlords to vacate premises, although he was not aware of specific examples.30 Mr Barrett said that the offered payment “was not an allowance or an expense and the use of such sums is not clearly defined in the rules.”31
22 Q 204 23 Appendix, paragraph 63 24 Q 204 25 Appendix, paragraph 330 (v) 26 Appendix, paragraph 330 (v) 27 Appendix, paragraph 330 (i) 28 Appendix, paragraph 55 29 Q216 30 Appendix, paragraph 72 31 Appendix, paragraph 48
10 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
28. The Commissioner concludes that the analogy between the offered payment and the profit from selling a property bought with the help of Parliamentary allowances is not sufficiently close to justify the acceptance and retention of the payment. Mr Barrett and the other Members who self-referred claimed all or most of their rental costs back from Parliamentary allowances. In contrast, states the Commissioner,
... Members who buy a property—whether freehold or leasehold—will normally have some interest in the equity of their property, either because of their initial capital outlay, or because of the payments they have made to the capital element of their mortgage, or both. Those with interest-only mortgages must still themselves at some stage find the capital to repay the loan. The equity in the property is, therefore, held by the Member. There is no such equity in a rented property. In addition, the size of the rent might be assumed to take account of the capital investment of the landlord. If so, the cost of servicing that investment would normally be included in the rent. And in these cases, the rent was met in full from parliamentary resources. Given that the full rental costs (excluding those for the Dissolution period) had been met by the House, any financial benefit should, in my judgement, have been returned to it. … I do not believe that the analogy is so close as to require the same treatment to be applied to the tenants of Dolphin Square.32
Advice from the House authorities
29. Mr Barrett said that he had considered the offer of the lump sum carefully and discussed it with his wife.33 But Mr Barrett did not seek other advice—in part because, in his opinion, advice given by the Department was often incorrect. Mr Barrett told us that it was common for incorrect advice to be given to Members:
... the advice which has been given to me over the years, had I only taken advice and not checked it with colleagues, would have cost me several thousand pounds. In my evidence to the Commissioner I gave two clear examples where the Fees Office has given very poor advice.34
Mr Barrett said he could not rely upon the advice about the Dolphin Square offers that the Department had prepared, and given out to two Members who had asked for it, being correct.35 It was also unclear whether that advice covered the position of Members, like himself, who had used the lump sum to pay for costs incurred as a result of being a Member.36
30. Mr Barrett also says his understanding was that the Department had advised those Members who asked that the offer was a private matter between landlord and tenant.37 He asks why the advice that the Department have supplied to the Commissioner was not
32 Appendix, paragraph 330 (iv) 33 Appendix, paragraph 51 34 Q223 35 Appendix, paragraph 84 36 Appendix, paragraph 90 37 Appendix, paragraph 64
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distributed to all relevant Members.38 The Commissioner agrees that the decision not to distribute the advice was “deeply unfortunate.” However, he considers that the unusual nature of the offer, and the connection to public funds which Mr Barrett ought to have perceived, mean that it would have been wise of Mr Barrett to seek advice from the Department.39
Mr Barrett’s comments on the Commissioner’s report
31. When he appeared before us, Mr Barrett made three specific criticisms of the Commissioner’s report. First, he suggested that parts of the report were “factually incorrect.” Mr Barrett based this claim on several references in the Commissioner’s memorandum to Members’ rental payments having been met in full out of Parliamentary allowances. He suggested that the Commissioner had failed to take account of the pre- election period of Dissolution—during which MPs cease to be Members of Parliament and so are ineligible to claim Parliamentary allowances—when Mr Barrett and others who wished to retain their flats paid a month’s rent out of their own means.
32. This criticism was based in large part on the fact that several references in the Commissioner’s memorandum to the Members’ rental payments having been met in full out of Parliamentary allowances do not mention that, during periods of Dissolution, the Members (or, more accurately, Parliamentary candidates) had to pay their own rent, if they wished to retain their tenancies. There are indeed several places where the Commissioner does not qualify his findings in this way; but there are many more where he does. The Commissioner accepts the point which, we believe, Mr Barrett and other Members were putting to us, which is that not all of their rent over the years was paid out of Parliamentary allowances, and so do we. However, a rough calculation based on a general election every four years suggests that the overall proportion paid from those allowances would have been about 98%.
33. Mr Barrett also told us that the Commissioner’s conclusion that the six Members’ use of their allowances was not above reproach was factually wrong, because the allowances had properly been used to meet rental payments.40 However, it appears to us that Mr Barrett is challenging the Commissioner’s judgement, rather than the facts.
34. Secondly, Mr Barrett told us, the Commissioner had failed to understand how the expenses system works. In Mr Barrett’s view, the Commissioner’s focus on the potential higher rental costs created by the acceptance of payments by Members living in Dolphin Square was flawed, because,
… it misses out an understanding that MPs are entitled to and can use the balance of their account for perfectly justifiable claims ... it is perfectly acceptable for MPs to move maybe to a different flat or an upgraded flat if their own flat is in a poorer state. I do not think it is for the Commissioner to say that they should stay in
38 Appendix, paragraph 71 39 Appendix, paragraph 333 (ii), (i) 40 Q204
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specific accommodation in order to spend less than the amount that has been allocated in the budget.41
35. We do not agree with Mr Barrett that the Commissioner failed to understand how the expenses system works. In our view, the Commissioner’s references to the potentially higher rental costs created by the acceptance of payments by Members living in Dolphin Square properly recognise the general obligation placed on Members to obtain the best value for money from their claims for allowances. The Commissioner has also recognised that it was always open to any Member to move to a property with a higher rent and— subject to ‘headroom’ in their allowance—to claim for that rent.42 However, any such claim would have been submitted to the Department for approval, whereas the uses to which the windfall payments were put were entirely unregulated. Even if, as for example Mr Holmes contends, a Member’s acceptance of the payment allowed him to reduce his claims, that fact does not of itself mean that he was right to keep all of the money.
36. Mr Barrett’s third criticism was that the Commissioner had reached conclusions on the basis of insufficient evidence. He told us that “extra work should have been done in detail” to establish exactly how the Members had spent the money they received and the allowances they could have claimed but had not. As noted above, Mr Barrett told us he had stopped claiming for a number of allowances. In fact, Mr Barrett argued, there had been a reduced cost to the public purse as a result of the decision he had taken and the way in which he had used the money.43 We reject Mr Barrett’s contention that the Commissioner reached his conclusions on the basis of insufficient evidence. We are satisfied that the Commissioner offered the Members every opportunity to provide him with full information on their claims and expenditure.
The effect on the public purse
37. Mr Barrett told the Commissioner that, before he accepted the payment from the new owners of Dolphin Square, he was paying a rent of about £13,500 a year for his flat.44 He accepted a payment of £11,234—the “Cash & Stay” offer—on which he paid Capital Gains Tax. He then remained in his flat for four months. During this time the rent went up by £44 per month, Mr Barrett told us. He then moved to a “larger and much nicer” flat in Dolphin Square. The new rent was £18,456 a year. Later, when rents looked set to increase still further, he moved away from Dolphin Square to another rented flat costing £19,992 a year. Both higher rents represented a substantial increase in cost, which was then charged in full to the ACA.
38. Mr Barrett pointed out that at any time, he could have moved to a more expensive flat, or indeed he could have bought a flat. Both courses of action were allowed under the then rules on allowances. A more expensive rented flat would have increased the charge to the public purse; buying would have opened the possibility of a larger profit for him. Mr Barrett also told us that he had intended to move before the offer was made; that he did not
41 Q204 42 Appendix, paragraph 330 (iii) 43 Q204 44 Appendix, paragraph 57. This figure has been arrived at by adding the figures for original rent and for subsequent increases supplied by Mr Barrett.
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 13
move straight away on receiving the payment; and that the level of the new rent in his second, larger Dolphin Square flat was not related to his acceptance of the offered payment.
39. Finally, Mr Barrett disputes the Commissioner’s conclusion that he should have paid the money he received in exchange for his tenancy to the House. He told us that:
Were that to be the case the obvious course of action could have been that the House authorities could have asked the developer that the money be paid directly to them. It was in fact paid to the individual MPs and those MPs paid tax on that sum of money. I think it was clear that the authorities did not do so because the House authorities neither had a direct interest in the lease nor in the discussions which then took place.
Mr Barrett continued:
I believe that using a property developer’s money for costs associated with my work as an MP while at the same time reducing cost to the public purse was the correct thing to do ... I am absolutely convinced that at no time did I benefit personally from [the payment].45
40. We accept there were other options open to Mr Barrett, which if taken up could have led to his making higher claims under ACA. However, in this Report we are concerned with the decisions that Mr Barrett did take, and with their consequences. We agree with the Commissioner that Mr Barrett’s decision to accept the payment did lead to an increased cost to the public purse. That increase was substantial.
Conclusions and recommendation
41. The Commissioner concludes that Mr Barrett made a “serious misjudgement” when he decided to accept the principal offer of a lump sum in exchange for relinquishing tenancy rights. Mr Barrett considers that his actions were consistent with the rules and with the public interest. However, in our view the fact that two of Mr Barrett’s colleagues separately considered whether to accept a similar offer and rejected it on grounds of principle is not helpful to this defence.
42. We conclude that Mr Barrett made a serious misjudgement when he decided to accept the principal offer of a lump sum without sharing it with the public purse and that in doing so he breached the Code of Conduct by putting his personal interest before the public interest. We also note that after his decision there was a substantial increase in the cost to the public purse of his claims for allowances. However, the money that he received did not itself come from the public purse, and some of the costs of the legal obligations arising from the tenancy, such as rent during Dissolution periods, were borne by Mr Barrett and not by the House. In our view, it would have been in the public interest for Mr Barrett to have paid a proportion of the sum he received to the House.
45 Q 204, Q 227
14 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
43. In the particular circumstances of his case, we recommend that Mr Barrett should pay to the House half of the entire amount he received from the new owners of Dolphin Square, after deducting any capital gains tax he paid. We further recommend that he should apologise to the House in writing, through this Committee, within seven days of the publication of this Report. We will publish the letter of apology on our website.
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 15
Sandra Gidley
Summary
44. Ms Gidley asked the Commissioner to look into her case on 18 June. She first moved into a small flat in Dolphin Square in July 2000. In October 2002 she moved to a larger, better flat in the Square. During the final year she lived there, her rent was £1,542 a month and she judged this was at the limit of what was affordable. The whole amount of her rent was always claimed from the ACA, except during periods of Dissolution.46
45. When Dolphin Square changed hands, Ms Gidley was offered £18,751 to give up her tenancy and move out. She looked into moving to a smaller flat within Dolphin Square, as she found living there convenient, but the office there told her that moving was not an option unless she accepted the new, less favourable terms. She accepted the payment in exchange for giving up her tenancy and moved out of Dolphin Square to a smaller flat a short distance away, at a slightly lower rent.47
46. The Commissioner concludes that Ms Gidley’s decision to accept the principal offer was a serious misjudgement and that she breached the rules of the House of Commons.48
Ms Gidley’s evidence and the Commissioner’s conclusions
The public interest
47. Ms Gidley told the Commissioner that she had felt that she had no option other than to move out of Dolphin Square, as rent there was already high, it was projected to rise, and she was not able to move to a smaller flat within the Square. Moving to the new flat saved money on her claims; although the initial rent was not much lower than her rent in the Square, it was fixed for two years; the flat was furnished, had laundry facilities and enjoyed good public transport links, all of which reduced the amount that she would need to claim. Had she accepted the payment and stayed in the Dolphin Square flat, her rent would have gone up, and if she had refused the payment her rent would also have gone up, and was already high. By moving to a cheaper flat, she had saved the taxpayer money.49 She pointed out to us that her rent had not been as low as that of Members who had rented in Dolphin Square over a long period, and that her decision might have been different if it had been: “It would be very, very difficult for them to find equivalent rents ... for that rent I would have stayed. There would have been no question; I would not have been thinking to move.”50
46 Appendix, paragraph 195 47 Appendix, paragraph 196 48 Appendix, paragraphs 334 and 335 49 Appendix, paragraphs 210, 197 50 Q 158, Q 159
16 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
48. The Commissioner observes that, although the terms of the lease were indeed a private matter between Ms Gidley and her landlord, the offer was not, because it resulted from the payment of Ms Gidley’s rent by the House of Commons, out of public funds.51
49. Ms Gidley argues that there was no conflict between public and private interests as a result of her acceptance of the money from the new owners, because the rent claimed from the ACA had decreased when she moved out of Dolphin Square and she had herself paid the moving costs and the deposits.52 The Commissioner concludes that, even if the cost to the public purse had not increased, the public purse also did not benefit from the payment, which, he considers, it should have done given that it had funded the cost of the rent.53
Advice from the House authorities
50. Ms Gidley did not seek advice from the House authorities. However, she said that the offer was “the subject of much discussion” among colleagues and “the consensus seemed to be that this payment was a property-related offer, payable for giving up certain rights as a tenant.”54 She could recall seeing the advice from the solicitors about the offers, but pointed out that many large documents had been sent to Dolphin Square tenants over that period of time and that the job of an MP meant there was not time to read them all thoroughly; she had not been able to read the advice document in full.55
51. Ms Gidley thought the evidence from Mrs Humble about the advice she had received was relevant, and she wondered why the Department had not taken steps to publicise its advice to all affected Members: “The Fees Office usually, if there is an issue affecting a lot of MPs, will disseminate that advice, but clearly that advice was not consistently given [in this case].”56 The Commissioner agrees that the decision not to distribute the advice was “deeply unfortunate”. However, he considers that the unusual nature of the offer, and the connection to public funds which Ms Gidley ought to have perceived, mean that it would have been wise of Ms Gidley to seek advice from the Department.57
The property sale windfall analogy
52. Ms Gidley said she believed her situation was analogous to that of a Member who had sold a property at a profit after claiming mortgage interest through ACA. If her decision had been wrong, then Members in that situation would also have a “question mark” over them. She told us it was difficult to see why the situation of Members offered payments to relinquish tenancy rights should be judged to be different from that of Members selling property at a profit when ACA had helped pay the mortgage, a choice she had deliberately avoided: “When first elected I made a conscious decision to rent a property because I did
51 Appendix, paragraph 330 (i) 52 Appendix, paragraph 201 53 Appendix, paragraph 330 (iii) 54 Appendix, paragraph 200 55 Appendix, paragraph 205 56 Q174 57 Appendix, paragraph 333 (ii), (i)
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 17
not want to profit personally from an investment which was initially funded by the taxpayer.”58
53. The Commissioner concludes that this analogy is not sufficiently close to justify the acceptance and retention of the payment. Members buying property using a mortgage may (under the then arrangements) have had the interest paid from ACA, but there is usually some capital investment which the Member must provide. The Member must also find the money to repay the mortgage eventually. These two factors mean that such Members have an interest in the property they buy, which Members claiming for rental do not have.59
Ms Gidley’s comments on the Commissioner’s report
54. Ms Gidley told us that she completely disagreed with the Commissioner’s conclusion that she had put private interest before public interest.60 The money received from Dolphin Square had in part been used to cover the costs of moving flat.61 Although she said she regarded it as an entirely separate matter, she explained there had been many occasions during her time as an MP when she had funded parliamentary costs from her own purse. Examples included payments made when IEP was insufficient to cover her office costs, payment for rent in Dolphin Square when Parliament had been dissolved in 2005, staffing expenses, legal costs for a politically motivated case she had defended, and stationery costs.62 The payment for the Dolphin Square tenancy had allowed her to provide a better service to her constituents, and this was important to her although she had judged that the money was a private matter:
I felt that if people asked about the Dolphin Square payment I would be happy to tell them that I had spent the money on staff and support to undertake my parliamentary work even better. The money was not public money but because of the circumstances in which the money was available I felt happier if I could broadly account for it even though the money was effectively a private payment.63
55. Although the public purse had not benefited from the receipt of the payment, she believed the public had benefited because of this support to her work as an MP.64 We put to Ms Gidley the Commissioner’s view that the taxpayer ought to have benefited from the payment she received. Ms Gidley replied that,
I felt that if I used that money to cover my moving costs and as down-payment on a flat, then there would be no problem with that because the money would effectively have otherwise have come from the ACA. I also felt that the wider point of principle was that this was no different to profiting from a mortgage. It was my personal thought about it, so I did not think there was any fundamental problem— rightly or wrongly—and my personal thought about it was that I actually wanted
58 Q152 59 Appendix, paragraph 330 (iv) 60 Q152 61 Q176 62 Appendix, paragraphs 202, 203 63 Q152 64 Q164
18 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
the money to go back into the public purse in some way. I did not keep a line-by- line account, it was approximate, but I did not keep the money for my personal gain.65
Ms Gidley told us that she spent the money on moving to her new flat, overtime payments to her office staff, a personal computer for working from home and a digital camera.66
The effect on the public purse
56. Ms Gidley told the Commissioner that before the offer was made, her rent in Dolphin Square was £1,542 per month. She told us she was in one of the most expensive rent bands in Dolphin Square; even that level, she felt, was at the limit of what was affordable under the allowances. She accepted the “Cash and Go” offer and received a payment of £18,751, on which she paid Capital Gains Tax. She left Dolphin Square and moved to a slightly cheaper flat, costing £1,517 per month. She told us that, although the difference in amounts appeared small, the new flat was furnished and allowed her to benefit from laundry facilities and good public transport links, reducing the amount she would need to claim from allowances. She did not claim for moving costs, instead using some of the payment she had accepted to fund those costs. Her acceptance of the payment, therefore, did not lead to an increased cost to public funds.
Conclusions and recommendation
57. The Commissioner concludes that Ms Gidley made a “serious misjudgement” when he decided to accept the principal offer of a lump sum in exchange for relinquishing tenancy rights. Ms Gidley considers that her actions were consistent with the rules and with the public interest. However, in our view the fact that two of Ms Gidley’s colleagues separately considered whether to accept a similar offer and rejected it on grounds of principle is not helpful to this defence.
58. We conclude that Ms Gidley made a serious misjudgement when she decided to accept the principal offer of a lump sum without sharing it with the public purse and that in doing so she breached the Code of Conduct by putting her personal interest before the public interest. We note, however, that her acceptance of the payment did not lead to an increased cost to public funds. The money that she received did not itself come from the public purse, and some of the costs of the legal obligations arising from the tenancy, such as rent during Dissolution periods, were borne by Ms Gidley and not by the House. In our view, it would have been in the public interest for Ms Gidley to have paid a proportion of the sum she received to the House.
59. In the particular circumstances of her case, we recommend that Ms Gidley should pay to the House one quarter of the entire amount she received from the new owners of Dolphin Square, after any capital gains tax she paid. We further recommend that she should apologise to the House in writing, through this Committee, within seven days of the publication of this Report. We will publish the letter of apology on our website.
65 Q156 66 Qq182 to 194
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 19
Paul Holmes
Summary
60. Mr Holmes asked the Commissioner to look into his case on 10 June. Mr Holmes had rented a one bedroom flat in Dolphin Square since 2001. In March 2006 his monthly rent was £1,198. After receiving the principal offer and accepting the sum of £9,440, Mr Holmes moved to another flat away from the Square on a temporary short let at £1,000 a month. However, he was unable to find anywhere to stay that was as convenient and affordable as Dolphin Square. He therefore moved back to the Square into a smaller flat in September 2006, costing £1,083 a month. By September 2008, the rent had increased to £1,245 per month.67
61. The Commissioner concludes that Mr Holmes’ decision to accept the principal offer was a serious misjudgement and that he breached the rules of the House of Commons.68
Mr Holmes’ evidence and the Commissioner’s conclusions
The public interest
62. Mr Holmes argues that his decision to accept the payment did not result in a cost to public funds, because he moved out of Dolphin Square to a cheaper flat.69 He also notes that the payment helped offset costs he had incurred purely as a result of being an MP. When paid into Mr Holmes’ bank account, the payment “more or less cleared” his overdraft, which included many costs that Mr Holmes had incurred only because of being an MP:
£6,200 of that bank overdraft was the money that I paid to set up my office in 2001/02 to implement all the security measures the police recommended but that Parliament, for example, only pays the first whatever it was then—the first £1,000, sort of thing. Most years I have to pay some of the bills on my constituency office around about February/March when the IEP sum runs out, so I had been running on a permanent overdraft from the day I was elected.70
63. The Commissioner concludes that, even if the cost to the public purse had not increased—and he judges that in fact it did—the public purse also did not benefit from the payment, which, he considers, it should have done, given that it had funded the cost of the rent.71
67 Appendix, paragraphs 225 to 230 68 Appendix, paragraphs 334 and 335 69 Appendix, paragraph 230 70 Q 76 71 Appendix, paragraphs 330 (iii)
20 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
The property sale windfall analogy
64. Like other Members, Mr Holmes draws an analogy between the offered payment, and the profit a Member could legitimately derive from selling a property bought with the help of ACA, or a windfall payment he might receive when a building society became a bank. The Commissioner concludes that the mortgage analogy is not sufficiently close to justify the acceptance and retention of the payment. Members buying property using a mortgage may (under the then arrangements) have had the interest paid from ACA, but there is usually some capital investment which the Member must provide. The Member must also find the money to repay the mortgage eventually. These two factors mean that such Members have an interest in the property they buy, which Members claiming for rental do not have.72
Advice from the House authorities
65. Mr Holmes describes the advice that the Department supplied to the two Members who requested it as “private” and “unknown”, because it was decided not to distribute it to all relevant Members.73 The Department should have communicated its advice to all affected Members. That would not have taken long to do.74 He pointed out that “Nothing in the published guidance and common practice of the ‘Green Book’ led me to believe that I should not accept this windfall and only [the Commissioner’s] research four years later has uncovered the secret and highly contradictory ‘advice’ on this.”75
66. The Commissioner agrees that the decision not to distribute the advice was “deeply unfortunate.” However, he considers that the unusual nature of the offer, and the connection to public funds which Mr Holmes ought to have perceived, mean that it would have been wise of Mr Holmes to seek advice from the Department.76
Mr Holmes’ comments on the Commissioner’s report
67. Mr Holmes thought the analogy between the offered payments, and the profit made by other MPs with the help of ACA, was clear.77 At any time, he could within the then rules have moved to a better flat and claimed higher rental, or he could have bought a property using ACA for interest.78 He did not do so. He told the Committee he could not see how the Commissioner and Department of Resources could have reached a conclusion which, he said, applied “one rule to the minority of MPs who rent, entirely different to the rule that they apply to the majority of MPs who buy.”79 He could not have foreseen the benefit that would arise from being a tenant in Dolphin Square. He told us that the new owners took steps which had the effect of making life in Dolphin Square less convenient, reducing maintenance, staffing, parking and security. Mr Holmes believed the payments offered
72 Appendix, paragraph 330 (iv) 73 Appendix, paragraph 241 74 Appendix, paragraph 242 75 Appendix, paragraph 249 76 Appendix, paragraph 333 (ii), (i) 77 Appendix, paragraph 241 78 Appendix, paragraph 239 79 Q66
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 21
were at least in part a compensation for those changes, as well as the changes to the lease. Mr Holmes decided the change of owner was a good opportunity to move to more satisfactory accommodation.80
68. Mr Holmes also pointed out that the amount of rent he had claimed over the period after leaving Dolphin Square was less than it would have been if he had stayed in his original flat. Once the costs of moving and overlaps in rent were removed, a saving to the taxpayer of about £530 remained: “I was moving to a cheaper flat so the rent I would be claiming was less and was for the next 18 months. You have to go for two-and-a-half years before I am paying more rent than had I stayed in the original flat.”81 Although after two and a half years his rent did rise above that level, that was not foreseen: “It was not something that involved my judgment in 2005 when I was moving to a cheaper flat, with no intention of ever going back to Dolphin Square.”82 In addition, there was no rule that said a Member had to stay in one flat rather than moving to a more expensive one, as long as expenses claimed were within the rules. He could have moved to a more expensive flat at any time, but chose not to.83
69. Mr Holmes did not seek advice about the offers because the position seemed clear; “There was nothing in the Green Book that specifically referred to it; I could not see that there was an issue.”84 The Green Book contained no advice about the circumstances involved. He was moving out to a cheaper flat, and did not intend to move back to Dolphin Square. It was only force of circumstance that later obliged him to do so.85
The effect on the public purse
70. Mr Holmes told the Commissioner that in 2006 his rent in Dolphin Square was £1,198 a month. He accepted the “Cash and Go” offer, receiving a payment of £9,950 on which he paid Capital Gains Tax. He moved to a cheaper flat away from Dolphin Square on a temporary let. He then returned to a different, smaller flat at Dolphin Square, the monthly rent for which was £1,083. Over time this rent increased, and by September 2008, two years after his acceptance of the offer, it was at £1,245 a month. Mr Holmes told us this figure was approximately the amount he would have been paying had he stayed in his original flat, allowing for rent inflation. He told us the cost of his rental had not increased over the level he had been paying in 2006 in his original flat until two and a half years after he accepted the payment. Moving costs were incurred and claimed by Mr Holmes. Those costs, which proceeded from his acceptance of the offer, are however more than offset by the saving in the amount of rent Mr Holmes claimed over that period, compared with his 2006 rent in Dolphin Square. Although, as the Commissioner has found, the cost to the public purse did increase in the long run, this was not for more than two years. Our judgement is that an increase after such a long time is not relevant to an assessment of Mr Holmes’ original decision; we conclude therefore that his decision to accept the payment did not lead to a significant extra cost to public funds.
80 Appendix, paragraph 228 81 Q77 82 Q84 83 Appendix, paragraph 226 84 Q67 85 Appendix, paragraph 231
22 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
Conclusions and recommendation
71. The Commissioner concludes that Mr Holmes made a “serious misjudgement” when he decided to accept the principal offer of a lump sum in exchange for relinquishing tenancy rights. Mr Holmes considers that his actions were consistent with the rules and with the public interest. However, in our view the fact that two of Mr Holmes’ colleagues separately considered whether to accept a similar offer and rejected it on grounds of principle is not helpful to this defence.
72. We conclude that Mr Holmes made a serious misjudgement when he decided to accept the principal offer of a lump sum without sharing it with the public purse and that in doing so he breached the Code of Conduct by putting his personal interest before the public interest. We note, however, that there was no significant extra cost to the public purse as a result of his decision. The money that he received did not itself come from the public purse, and some of the costs of the legal obligations arising from the tenancy, such as rent during Dissolution periods, were borne by Mr Holmes and not by the House. In our view, it would have been in the public interest for Mr Holmes to have paid a proportion of the sum he received to the House.
73. In the particular circumstances of his case, we recommend that Mr Holmes should pay to the House one quarter of the entire amount he received from the new owners of Dolphin Square, after deducting any capital gains tax he paid. We further recommend that he should apologise to the House in writing, through this Committee, within seven days of the publication of this Report. We will publish the letter of apology on our website.
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 23
Richard Younger-Ross
Summary
74. Mr Younger-Ross wrote to the Commissioner on 29 May 2009. Mr Younger-Ross had moved into his flat in August 2001, and the rent for the first year was £12,870, including heating and hot water. The term was for three years, renewable. In 2003 his tenancy was renewed and under the new terms the rent rose each year. The projected rent in 2006-07 was to be £14,678 for the year.86
75. Mr Younger-Ross had been offered and had accepted £8,031, to relinquish all future claims on his tenancy. He had then stayed in his Dolphin Square flat; his intention to move had been frustrated by family bereavements. A new lease was agreed and in 2006-07 the rent rose to £14,820, and by 2009-10 it was at £19,140, after Mr Younger-Ross refused to pay a higher charge.87
76. The Commissioner concludes that in accepting the principal offer, Mr Younger-Ross made a serious misjudgement and that he breached the rules of the House.88
Mr Younger-Ross’s evidence and the Commissioner’s conclusions
The public interest
77. Before accepting the principal offer, Mr Younger-Ross had considered whether or not he would stay in Dolphin Square, and had decided that he would not. However, his intention to move had been sadly frustrated when his mother had died in July 2006, followed shortly afterwards by his wife’s mother and father.89 This meant Mr Younger- Ross and his wife could not face the strain of a move in early 2007: “If it had not been for the tragic deaths of three members of close family, I would almost certainly have moved out in 2007 [so that the] rental increases ... would not have had any impact at all.”90
78. Mr Younger-Ross argues that his decision to accept the payment did not result in a cost to public funds, because the increased rent as a result of accepting the payment would have been matched by the amount he would have needed to spend on refurbishing his flat if he had not accepted the payment.91 He also notes that the payment helped offset costs he had incurred purely as a result of being an MP. Mr Younger-Ross told the Commissioner that as an MP he incurred costs that he had not been able to claim, including extra costs for his office above the amount covered by the IEP. He believed he had spent about £15,000 over the last eight years in supporting his Parliamentary work, some of which had been set against tax. In addition, other expenses incurred in his work as an MP had been neither
86 Appendix, paragraphs 250 and 252 87 Appendix, paragraph 253 88 Appendix, paragraphs 334 and 335 89 Appendix, paragraphs 256 and 257 90 Q149 91 Q125
24 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
claimed nor set against tax, including support for volunteers, entertaining constituents, Christmas cards and charitable donations.92
79. The Commissioner concludes that, even if the cost to the public purse did not increase—and he judges that it did—the public purse also did not benefit from the payment, which, he considers, it should have done given that it had funded the cost of the rent.93 The Commissioner also finds that the use of the money to recoup costs incurred as a result of being an MP does not absolve Mr Younger-Ross of the responsibility to pay the money to the House. Such informal allocation of the money left no audit trail, and there was no check to make sure the use of the money was within the rules. It had the effect of adding an extra category of expenses to his entitlement, which other Members could not access, although the Commissioner does not believe that was intentional.94
80. Mr Younger-Ross points out that the payment arose from the landlord-tenant relationship, which also creates responsibilities on the tenant that the House takes no part in; for instance, accepting a twelve-month lease.95 The benefits given up were personal to him, and did not belong to the House; the more demanding conditions he accepted in return for the payment, such as a 12-month lease, also applied to him personally, not the House. If he had lost his seat then he would have had to pay for the remainder of that lease, even though he would have no use for the flat if he was no longer an MP.96 The Commissioner takes the view that this relationship was one that Mr Younger-Ross freely chose to enter. But it was payments from the public funds that allowed him to benefit from the offered payments. 97
The property sale windfall analogy
81. Mr Younger-Ross draws an analogy between the offered payment, and the profit a Member could legitimately derive from selling a property bought with the help of ACA.98 The Commissioner concludes that this analogy is not sufficiently close to justify the acceptance and retention of the payment. Members buying property using a mortgage may (under the then arrangements) have had the interest paid from ACA, but there is usually some capital investment which the Member must provide. The Member must also find the money to repay the mortgage eventually. These two factors mean that such Members have an interest in the property they buy, which Members claiming for rental do not have.99
Advice from the House authorities
82. Mr Younger-Ross looked at the Green Book and consulted with colleagues before accepting the offer, and said that he may have spoken to an official in the Department of
92 Appendix, paragraph 258 93 Appendix, paragraph 330 (iii) 94 Appendix, paragraph 330 (v) 95 Appendix, paragraph 263 96 Appendix, paragraph 263 97 Appendix, paragraphs 330 (i) 98 Appendix, paragraphs 255 99 Appendix, paragraphs 330 (iv)
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 25
Finance and Administration, although he was not sure whether they had discussed it, and no record of a discussion has been found.100
83. He expressed surprise that the Department had done nothing to communicate the advice it had prepared to the Members concerned.101 He believed that Mrs Humble had been given advice that the money offered was hers to use as she chose, and he also understood that at least one other Member had been so advised.102 Had evidence been taken from that Member, he told us, “that would put a slightly different light on these proceedings.”103
84. The Commissioner agrees that the decision not to distribute the advice was “deeply unfortunate”. However, he considers that the unusual nature of the offer, and the connection to public funds which Mr Younger-Ross ought to have perceived, mean that it would have been wise to seek advice from the Department.104 It is not clear whether Mr Younger-Ross sought advice from the official he usually spoke to in the Department—he is unsure, and the Department of Resources has no record of any communication. They have no record of supplying the agreed advice to him.105
Mr Younger-Ross’s comments on the Commissioner’s report
85. Mr Younger-Ross said he had concluded that the payment he had received was not a cost to the taxpayer and could be used for the good of his constituents. Asked about the difference that the money made to his work for his constituents, he told the Committee: “what it did allow me to do was in terms of funding the office, in terms of the excess of bills, in terms of telephone bills. ... In taking this it enabled me to carry on at a higher level than I would have done otherwise.”106 If he had not accepted the payment, then the rent would have been lower, but Mr Younger-Ross said the cost to allowances would not:
If the lease had carried on as was then I would have undertaken other works to bring it up to a more acceptable standard—i.e. the carpets were in fairly poor condition and needed replacing and the kitchen was in a very poor condition. So although the rental payments would have increased, the cost to the ACA and the taxpayer would not have increased ... The ACA is the burden on the taxpayer and it is the total of the ACA that is a burden, not just the rental element. It has to be seen as a total sum, not just as in part.107
86. Mr Younger-Ross also pointed out that, if taking the payment meant wrongly accepting a benefit, so too, by analogy, did refusing the payment and keeping the favourable terms of the lease even after leaving the House:
100 Appendix, paragraphs 254 and 275 101 Appendix, paragraphs 264 102 Appendix, paragraphs 268 103 Q120 104 Appendix, paragraph 333 (ii), (i) 105 Appendix, paragraph 30 106 Q139 107 Q125
26 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
In entering that tenancy agreement, Members have actually already, in a future time, a benefit in that if they had stayed on the lower rent and they had retired say, at this election, and they had stayed in London, then they would benefit from a below-market rent. That could be a benefit of £20,000, £30,000 or £40,000, depending on where they were staying. So if it is wrong, hypothetically, as you are saying, for someone to benefit from taking a cash windfall at one point in time then, logically, it must be wrong for any Member whose rental payments have accrued a benefit post leaving this House to benefit from lower rents.108
87. We understand the point Mr Younger-Ross is making, but any potential benefit cannot be quantified at this stage and would not be realised until after a Member has left the House. This is something that the new Independent Parliamentary Standards Authority may wish to consider. The payments accepted by Mr Younger-Ross and by other Members, however, are now a matter of record.
The effect on the public purse
88. Mr Younger-Ross told the Commissioner that in 2005-06, his rent in Dolphin Square was £14,203 per year. He accepted the “Cash & Stay” offer, and received a payment of £8,031, on which he paid Capital Gains Tax. He remained in his Dolphin Square flat. Over the following years, his rent rose each year. In 2006-07 it was £14,820 (compared to a previously planned increase of £14,678 before the offer had been made), rising to £15,561 for 2007–2008 and around £18,700 for 2008–2009. For 2009–10 he refused to pay a 3.5% rise and secured the rent at £19,140. These were steep rises. As the Commissioner has pointed out, rises in rent were the “predicted consequence” of accepting the revised tenancy agreement.109 On that basis, Mr Younger-Ross’s decision to accept the cash offer led to a significant increased cost to the public purse.
89. Mr Younger-Ross told us that he had accepted the “Cash and Stay” offer with the intention of moving from Dolphin Square in the near future. The advice from solicitors retained by the Dolphin Square Trust had been that the “Cash and Stay” offer was likely to be attractive to those intending to move after 2007. His intention to move had been sadly frustrated by three family bereavements, as described above. Mr Younger-Ross expressed the view that the cost to the taxpayer had not increased as a result of his decision, because, had he not accepted the payment, he would have claimed more money from his allowances to redecorate his flat. He told us: “The ACA is the burden on the taxpayer and it is the total of the ACA that is a burden, not just the rental element. It has to be seen as a total sum, not just as in part.”110 However, our assessment is that the claim that Mr Younger-Ross’s claims would have been no less than they were even if he had not accepted the payment is too hypothetical to be of relevance. We agree with the Commissioner that the cost to the public purse did increase as a result of Mr Younger-Ross’s decision.
108 Q 132 109 Appendix, paragraph 330 (iii) 110 Q 127
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 27
Conclusions and recommendation
90. The Commissioner concludes that Mr Younger-Ross made a “serious misjudgement” when he decided to accept the principal offer of a lump sum in exchange for relinquishing tenancy rights. Mr Younger-Ross considers that his actions were consistent with the rules and with the public interest. However, in our view the fact that two of Mr Younger-Ross’s colleagues separately considered whether to accept a similar offer and rejected it on grounds of principle is not helpful to this defence.
91. We conclude that Mr Younger-Ross made a serious misjudgement when he decided to accept the principal offer of a lump sum without sharing it with the public purse and that in doing so he breached the Code of Conduct by putting his personal interest before the public interest. We also note that his decision led to a substantially increased cost to the public purse. However, the money that he received did not itself come from the public purse, and some of the costs of the legal obligations arising from the tenancy, such as rent during Dissolution periods, were borne by Mr Younger-Ross and not by the House. In our view, it would have been in the public interest for Mr Younger-Ross to have paid a proportion of the sum he received to the House.
92. In the particular circumstances of his case, we recommend that Mr Younger-Ross should pay to the House half of the entire amount he received from the new owners of Dolphin Square, after the deduction of any capital gains tax he paid. We further recommend that he should apologise to the House in writing, through this Committee, within seven days of the publication of this Report. We will publish the letter of apology on our website.
28 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
Sir Alan Beith
Summary
93. Sir Alan asked the Commissioner to look into his case on 30 May 2009. The Commissioner heard that Sir Alan had rented a flat in Dolphin Square since 22 December 1975 and had moved into his present flat in 1993. He claims a proportion of the rent from Additional Costs Allowance, the balance being made up by his wife, who is a member of the House of Lords. In October 2005, Sir Alan was offered £48,030 to give up his tenancy either by leaving or by taking a new tenancy at a higher market rent without any security of tenure. Sir Alan refused this offer.111
94. Sir Alan accepted a payment of £5,000 to give up any succession rights that might arise under the tenancy. He set aside the money to pay for redecoration of the flat; just over half of it has so far been spent in this way and he is able to provide receipts to this effect.112
95. The Commissioner has concluded that Sir Alan’s decision to accept and retain the payment was a misjudgement and that he breached the rules of the House of Commons. He concludes that it was a “lesser” misjudgement than accepting the principal, much larger offer, and that Sir Alan’s recognition of the public interest and desire to avoid increasing the cost to the public purse in refusing that larger offer mitigates that misjudgement.113
Sir Alan’s evidence and the Commissioner’s conclusions
The public interest
96. In Sir Alan’s view, it would not have been in the public interest for him to accept the offer of £48,030 to give up his rights as a tenant, because that would have led to payment of a higher rent, and hence higher claims.114 His rent “would have risen immediately to £22,880 per annum on a shorthold tenancy, as opposed to £14,441 per annum if I retained my then existing terms.”115 He refused the offer. The Commissioner commends him for this.116
97. However, accepting the separate offer of £5,000 did not in Sir Alan’s view affect the public interest. The rent (and hence his claims) would not rise as a result; the only rights that were being surrendered were those of his successors, and the retention of those rights would not be in the public interest. “The separate offer of £5,000 was for disposing of family rights. It had no effect on the tenancy, there was no public interest in it.”117 Sir Alan therefore took the view that it would not be against the public interest to accept and to use he money for redecoration that he could otherwise have claimed for; he told us that at that
111 Appendix, paragraphs 93 and 96 112 Appendix, paragraph 98, and Q51 113 Appendix, paragraph 335 114 Appendix, paragraph 245 115 Appendix, paragraph 96 116 Appendix, paragraph 335 117 Q 45
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 29
time “there was no established practice of the Fees Office receiving sums of money from people who had made gains of any kind.”118
98. Although the Commissioner recognises that Sir Alan’s decision did not lead to a higher call on public funds, he points out it also did not lead to a benefit to public funds, even though public money had created the situation in which Sir Alan was offered the payment.119
99. Sir Alan explained that he had set aside the £5,000 to pay for decoration of his Dolphin Square flat. Due to an unexpected illness, he had not been able to arrange for all the redecoration work he had planned.120 Some of it had since been carried out, however:
The flat has to be redecorated every seven years [under the terms of the lease] and I try to do that on a cyclical basis, not doing the whole flat at the same time ... The redecoration done so far amounted to about £2,800, and I would expect that the next stage would be round about that sum.121
Sir Alan told us that had he not spent the money on redecorating, he might have had the tenancy taken away, or else been charged for a full redecoration on leaving the flat.122 He did not think it was persuasive to say that he ought to have paid back the money to the House, then claimed from allowances for the redecoration, in order to be more transparent; he did not think the rules at the time could be taken to advise such a course of action: “The rules and practice of the House in 2005 did not cover or attach sufficient importance to public transparency, as we have all had to acknowledge since.”123
100. The Commissioner notes, however, that such informal allocation of the money left no audit trail, and there was no check to make sure the use of the money was within the rules. The Commissioner therefore concludes that his use of the money does not absolve Sir Alan of the responsibility of handing the payment to the House.124
101. Sir Alan also told us he had not claimed for the full cost of his rent: “My wife has contributed amounts from the House of Lords allowances which are governed by different rules, and her contributions have been deducted from what I would otherwise have claimed.”125 Sir Alan said he and his wife had never “double-claimed”—each claimed for expenses they had incurred.126 The Department of Resources confirmed that Sir Alan’s claims were abated to reflect his wife’s contribution, although the amounts varied. Details are given in the Commissioner’s memorandum.
102. The Commissioner accepts that he cannot judge on House of Lords matters, but notes that Sir Alan’s wife’s contributions to the rental payments came from House of Lords
118 Q 53 119 Appendix, paragraph 330 (iii) 120 Appendix, paragraph 101 121 Q 49, Q 51 122 Q 52 123 Q 45 124 Appendix, paragraph 330 (v) 125 Q 45 126 Appendix, paragraph 99
30 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
attendance allowance. The full cost of the rent, therefore, was met from Parliamentary allowances.127
The property sale windfall analogy
103. Sir Alan also drew attention to the fact that Members selling properties funded through ACA mortgage claims were not expected to pay any profits back to the House; “if completely different principles were applied [to Members in Dolphin Square] injustice would arise.”128 The Director of Operations, consulted by the Commissioner, described it as a “fair observation” that the two positions could be considered analogous.129 Had he wished to make a personal profit, Sir Alan told us, he would not have acted as he did:
If I had wanted to make a personal profit I would have accepted the £48,000 offer to give up the low market rent tenancy and by refusing to do so I have achieved a saving of well over £35,000 in rental costs which would otherwise have arisen. Actually, if I had wanted to make a personal profit I should have taken out a mortgage early in my 36-year parliamentary career as I would be sitting on a profit probably of several hundred thousand pounds, but I actually made a deliberate decision that I did not think that was the appropriate course for me.130
104. The Commissioner notes that, with the exception of periods when Parliament was dissolved and no Parliamentary allowances are payable, the full cost of Sir Alan’s rent was paid from Parliamentary allowances. He notes that Members buying property using a mortgage may (under the then arrangements) have had the interest paid from ACA, but there is usually some capital investment which the Member must provide. The Member must also find the money to repay the mortgage eventually. These two factors lead the Commissioner to conclude that such Members have an interest in the property they buy, which Members claiming for rental do not have.131
Advice from the House authorities
105. Sir Alan did not consult the House service over any part of the decision. He “did not believe it was covered by Mr Speaker’s reference [in the Green Book] to seeking advice in cases of doubt because I had no doubt about it at the time.”132 The advice given by the Department of Finance and Administration to two Members who requested it referred to Members being offered payment to “buy out their existing tenancies.” Sir Alan pointed out that this did not cover his situation.133 He had refused an offer of a payment to buy out his tenancy, and accepted only the offer relating to removal of terms which did not affect the public interest. He also pointed out that the advice had in any case not been promulgated, but had been given only to two Members who had specifically asked for it.134
127 Appendix, paragraph 330 (iv) 128 Q45 129 Appendix, paragraph 109 130 Q 45 131 Appendix, paragraph 330 (iv) 132 Q45 133 Appendix, paragraph 106 134 Appendix, paragraph 106
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106. The Commissioner concludes that the same principle applies in Sir Alan’s case, where succession rights were given up, as applies to those cases where the tenancy was bought out. Sir Alan was only in a position to receive the offer because public money had been used to pay for his rent. In the Commissioner’s view the public purse, therefore, should have benefited from the offer, if Sir Alan chose to accept it.135
Sir Alan’s comments on the Commissioner’s report
107. Sir Alan told the Committee that an audit trail of his use of part of the £5,000 did exist: he had “made available ... the account for the decorating and it is quite clear how much was spent, what it was spent on and how much remains available to maintain the cycle of redecorating which the lease requires.”136 However, Sir Alan accepted that, with hindsight, it would have been more transparent to have paid the £5,000 to the House and to have claimed the money for redecoration from allowances. Sir Alan confirmed to us that he had “headroom” in his allowances over the relevant period that would have made it possible for him to claim the amounts involve.137
108. Sir Alan asked us to recognise that any misjudgement by him had been unintended; that he had tried carefully to keep to both the letter and the spirit of the rules; that he did not place his private interest ahead of the public interest; and that he kept down the cost to public funds of his accommodation in London.138
The effect on the public purse
109. Sir Alan refused the offer of £48,030 from the new owners of Dolphin Square to relinquish his tenancy rights. He told the Commissioner that if he had accepted and remained in his flat, “the rent would have risen immediately to £22,880 per annum on a shorthold tenancy, as opposed to £14,441 per annum if I retained my then existing terms.”139 There was therefore no extra cost to public purse as a result of his decision. Sir Alan then accepted £5,000 to relinquish certain succession rights. We agree with Sir Alan that there was no public interest in the retention of those rights. It is true that by refusing the offer to relinquish tenancy rights, Sir Alan kept the right to a favourable tenancy that would still be available to him if he were to leave the House. However, we do not consider that to be relevant to our judgement of his decision. In any case, it is clear that Sir Alan’s decision did not lead to any increased cost to the public purse.
Conclusions and recommendation
110. Sir Alan rejected the offer of a large sum of money to relinquish his tenancy rights, and did so because in his view, acceptance would not be in the public interest. In the view of the Commissioner his acknowledgement of the public interest in that refusal mitigates the “lesser misjudgement” he made in accepting the second, much lower offer to relinquish certain rights of succession. We agree with the Commissioner.
135 Appendix, paragraph 330 (i) 136 Q45 137 Q55 138 Q45 139 Appendix, paragraph 96
32 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
111. Whilst all the other five Members who self-referred had always claimed the full rental amount against ACA, except for periods when Parliament was dissolved, Sir Alan had made reduced claims to account for the contribution made by his wife, although the scale of that contribution varied from year to year. The evidence is that the contributions from his wife were in whole or in part funded by the House of Lords, but that does not detract from the fact that the rental payments on Sir Alan’s flat, and hence the benefit he received as a result of them, were not wholly derived from House of Commons allowances. In addition, Sir Alan has already spent over half of the money he received from the new owners of Dolphin Square on redecorating his flat, which he tells us is a legal requirement of his tenancy. We consider that this application of the cash payment to a purpose directly connected with the tenancy requirements was a sensible decision. However, it would still have been preferable for Sir Alan to have paid the amount to the House and then to have made claims on allowances, in the interests of transparency.
112. We agree with the Commissioner that Sir Alan Beith acted commendably in the public interest in refusing the principal offer. This must mitigate his decision to accept and retain the second, much lower offer. We believe that this latter decision was a misjudgement; however, we are persuaded that Sir Alan’s intention throughout was to act in the public interest. We also note that the payment he received did not itself come from public funds, and that some of the costs of the legal obligations arising from the tenancy, such as periodic redecoration and rent during Dissolution periods, were borne by Sir Alan and not by the House. We recommend no further action in this case.
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 33
Sir Menzies Campbell
Summary
113. Sir Menzies asked the Commissioner to look into his case on 1 June 2009. The Commissioner heard that Sir Menzies had been offered £38,000 to relinquish the protected tenancy and protected rent he enjoyed as a long-standing tenant. He had declined the principal offer, but accepted a payment of £5,000 in exchange for giving up his succession rights.140
114. Sir Menzies had used the £5,000 to offset costs which he had incurred in respect of his parliamentary duties during and after his period as Leader of the Liberal Democrats. He had not kept receipts for those amounts but they included sums not claimed for petty cash, for a TV licence, for some window cleaning, for some taxis and for cable television, all of which he said he could have claimed for at the time.141
115. The Commissioner concludes that Sir Menzies’s decision to accept and retain the payment was a misjudgement, which had the effect of putting his personal interest above the public interest. This was in breach of the rules of the House of Commons. He concludes that it was a “lesser” misjudgement than accepting the principal, much larger offer, and that Sir Menzies’ recognition of the public interest and desire to avoid increasing the cost to the public purse in refusing that larger offer mitigates that misjudgement.142
Sir Menzies’ evidence and the Commissioner’s conclusions
The public interest
116. Sir Menzies told the Commissioner that for him to have accepted the principal offer would not have been in the public interest, as he would have been forced either to pay a higher rent at Dolphin Square, or to move elsewhere and pay a higher rent, which would have meant that to recover his rental payments he would have needed to make higher ACA claims. He said that he could also have used the £38,000 as a deposit to buy a property and claim interest from the ACA, but that he had always had “personal reservations about the notion of a capital gain arising in such circumstances.” 143
117. Sir Menzies argues that his decision to refuse the principal offer of a large lump sum was in the public interest. The Commissioner agrees, and commends him for this decision. Sir Menzies suggests that his acceptance and retention of the second, much smaller offer was not against the public interest, for a number of reasons. He argues that he derived no personal benefit from the transaction because the money was used to meet costs he had incurred only as a result of being a Member of Parliament.144 Sir Menzies told us that these costs could have been claimed under then allowances rules. The Commissioner accepts
140 Appendix, paragraph 154 141 Appendix, paragraphs 154 and 162 142 Appendix, paragraph 335 143 Appendix, paragraph 156 144 Appendix, paragraph 159
34 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
that this point is relevant. However, he points out that such informal allocation of the money left no audit trail, and there was no check to make sure the use of the money was within the rules. It had the effect of adding an extra category of expenses to Sir Menzies’ entitlement, which other Members could not access. The Commissioner therefore concludes that such use of the money does not absolve Sir Menzies of the responsibility of handing the payment to the House.145
118. Sir Menzies also points out that there was no detriment to the public purse in his acceptance of the offer, in return for succession rights in which there was no public interest. It did not lead to any higher charge on public funds, as accepting the higher payment would have done.146 It was a private matter, and the offer arose from a legal right, as he told the Committee,
… which, if I had not exercised the option to take it, would still continue today and it is a legal right which, supposing, for example, I had lost my seat in 2005 and kept my flat, would have subsisted after that point ... I was giving up something which had value in return for a value.147
119. Although the Commissioner recognises that Sir Menzies’ decision did not lead to a higher call on public funds, he points out it also did not lead to a benefit to public funds, even though public money had created the situation in which Sir Menzies was offered the payment.148
The property sale windfall analogy
120. Sir Menzies pointed out that Members who sold properties for which mortgage interest claims had been made through the ACA were allowed to keep the profits, and Sir Menzies thought it would be incongruous if the same did not apply to the gain arising from the secondary right which came from his tenancy. He did not “see any distinction in principle between that and a benefit which would accrue as a result of the realisation of a property for which mortgage interest had been paid from public funds.”149 The benefit arose from the relationship between landlord and tenant, in which the House was not directly involved. If the House had decided to stop paying for Members’ accommodation in London, then Sir Menzies’ obligations under the tenancy would not have ended.150
121. The Commissioner takes the view that this relationship was one that Sir Menzies freely chose to enter. But it was payments from public funds that allowed him to benefit from the offered payments.151 As we have seen already, the Commissioner rejects the analogy with profits from sale of a property.
145 Appendix, paragraph 330 (v) 146 Appendix, paragraph 157 147 Q6 148 Appendix, paragraph 330 (iii) 149 Q2 150 Appendix, paragraph 157 151 Appendix, paragraph 330 (ii)
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 35
Advice from the House authorities
122. The evidence of Mrs Humble cast doubt on the advice the Department said it had offered, in Sir Menzies’ view, although he had not been aware of it at the time he took his decision and the advice should have been more widely disseminated.152 He told the Committee there was “no reason to assume” the Department’s advice covered his situation, because it only referred to payments for buying out tenancies, and Sir Menzies had refused such a payment.153 He had accepted a payment to discharge a legal right. But the Commissioner concludes the same principle applies. Sir Menzies was only in a position to receive the offer because public money had been used to pay for his rent. The public purse, therefore, should have benefited from the offer, if Sir Menzies chose to accept it.154
Sir Menzies’ comments on the Commissioner’s report
123. Sir Menzies told us that he was “unable to accept [the Commissioner’s] reasoning and his conclusions so far as they infer a failure on my part, and I would in general invite the Committee to accept the explanations put forward by me and recorded by the Commissioner in his report.”155 He invited the Committee to consider “whether [his] conduct was in all the circumstances reasonable at the time when the decisions were made”, and not “with the benefit of hindsight.”156
124. It is certainly true that the climate in which Members claimed and were paid allowances in 2005 was different from that which applies now. However, we do not believe that the Commissioner has sought to apply standards of conduct that should not have been met at the time. The written advice prepared at the time by the House authorities did not deal specifically with the offer to buy out succession rights and was not promulgated, but its central message—in November 2005—was clear: Members were to be advised against taking a cash offer and keeping the proceeds themselves when the rent had been paid wholly from the ACA. Members have for many years been held to be personally responsible for their compliance with the Code of Conduct and the rules of the House. That was as true in 2005 as it is now.
125. Sir Menzies also pointed out that no additional or unnecessary charge on public funds had resulted from his decision to accept the payment. Except for 2007–08, he told us, he had claimed considerably less than the maximum amounts allowed in all of the years for which figures had now been published. He had used the money to defray expenses arising from being an MP; he told us that he “did not use this money to reimburse [himself] for things which [he] could not have claimed from [his] parliamentary allowances.”157
126. Sir Menzies maintained in evidence before us that there was an important difference between his case and those cases where a Member had accepted the principal offer. The Department’s advice did not refer to the offer in respect of succession rights and the
152 Q3 153 Q3 154 Appendix, paragraph 330 (ii) 155 Q1 156 Q43 157 Q28
36 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
Commissioner, he noted, did not seem to have asked the Department what its view of the payment he did accept would have been at the time.158
127. Sir Menzies also asked us to apply a standard of proof “akin to” beyond reasonable doubt.159 That is of course the standard of proof used in cases involving a breach of the criminal law. Although some of the breaches of the rules identified in the Commissioner’s report are indeed serious, we do not regard them as being so serious as to require us to apply the criminal standard of proof.
The effect on the public purse
128. Sir Menzies refused the offer of £38,000 from the new owners of Dolphin Square to relinquish his tenancy rights. He told the Commissioner that he declined,
... because an inevitable consequence of doing so was that his reliance on public funds from the Additional Costs Allowance would increase, either because he would require to seek new premises at an increased rent, or if he remained in Dolphin Square, he would require to pay an increased rent reflecting not protected status but market value.160
There was therefore no extra cost to the public purse as a result of his decision. Sir Menzies then accepted £5,000 to relinquish certain succession rights. We agree with him that there was no public interest in the retention of those rights. Their loss did not lead to any extra cost to the public purse. It is true that by refusing the offer to relinquish tenancy rights, Sir Menzies kept the right to a favourable tenancy that would still be available to him if he were to leave the House. However, we do not consider that to be relevant to our judgement of his decision. In any case, it is clear that Sir Menzies’ decision did not lead to any increased cost to the public purse.
Conclusions and recommendation
129. Sir Menzies rejected the offer of a large sum of money to relinquish his tenancy rights and did so because in his view, acceptance would not be in the public interest. In the view of the Commissioner his acknowledgement of the public interest in that refusal mitigates the “lesser misjudgement” he made in accepting the second, much lower offer to relinquish certain rights of succession. We agree with the Commissioner.
130. We agree with the Commissioner that Sir Menzies acted commendably in the public interest in refusing the principal offer. This must mitigate his decision to accept and retain the second, much lower offer. We believe that this latter decision was a misjudgement; however, we are persuaded that Sir Menzies’ intention throughout was to act in the public interest. We also note that the payment he received did not itself come from public funds, and that some of the costs of the legal obligations arising from the tenancy, such as rent during Dissolution periods, were borne by Sir Menzies and not by the House. We recommend no further action in this case.
158 Q3 159 Q2 160 Appendix, paragraph 156
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 37
Formal Minutes
Tuesday 16 March 2010
Members present: Sir Malcolm Rifkind, in the Chair Mr Kevin Barron Mr Chris Mullin Nick Harvey Mr Paddy Tipping Mr Greg Knight Dr Alan Whitehead
Draft Report (John Barrett, Sir Alan Beith, Sir Menzies Cambell, Sandra Gidley, Paul Holmes and Richard Younger-Ross), proposed by the Chairman, brought up and read.
Ordered, That the Chairman’s draft Report be read a second time, paragraph by paragraph.
Paragraphs 1 to 10 read and agreed to.
Paragraphs 11 and 12 read, amended and agreed to.
Paragraph 13 read and agreed to.
Paragraph 14 read, amended and agreed to.
Paragraph 15 read and agreed to.
Paragraph 16 read, amended and agreed to.
Paragraphs 17 to 19 read and agreed to.
Paragraphs 20 and 21 read, amended and agreed to.
Paragraphs 22 to 32 read and agreed to.
Paragraph 33 read, amended and agreed to.
Paragraphs 34 and 35 read and agreed to.
Paragraph 36 read, amended and agreed to.
Paragraphs 37 to 41 read and agreed to.
Paragraphs 42 and 43 read, amended and agreed to.
Paragraphs 44 to 58 read and agreed to.
Paragraph 59 read, amended and agreed to.
Paragraphs 60 to 72 read and agreed to.
Paragraph 73 read, amended and agreed to.
Paragraphs 74 to 87 read and agreed to.
Paragraph 88 read, amended and agreed to.
Paragraphs 89 to 91 read and agreed to.
Paragraph 92 read, amended and agreed to.
38 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
Paragraph 93 read and agreed to.
Paragraph 94 read, amended and agreed to.
Paragraphs 95 to 111 read and agreed to.
Paragraph 112 read, amended and agreed to.
Paragraphs 113 to 129 read and agreed to.
Paragraph 130 read, amended and agreed to.
A paper was appended to the Report.
Written evidence was ordered to be reported to the House for printing with the Report.
Ordered, That the transcript of the oral evidence taken by the Committee on 2 March be reported to the House.
Resolved, That the Report, as amended, be the Eleventh Report of the Committee to the House.
Ordered, That the Chairman make the Report to the House.
[Adjourned till Tuesday 23 March at 9.30 am
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 39
Appendix: Memorandum from the Parliamentary Commissioner for Standards
Contents
Report Page Introduction 43 The Allegations 43 Relevant Rules of the House 43 My Inquiries 44 General Evidence 44 Individual Members 53 Findings of Fact 101 Individual Members: the Arguments 103 Conclusions 108 1. Extract from article in the Daily Telegraph, 30 May 2009 114 2. Letter to the Commissioner from Mr John Barrett MP, 29 May 2009 114 3. Letter to the Commissioner from Mr Richard Younger-Ross MP, 29 May 2009 114 4. Letter to the Commissioner from Rt Hon Sir Alan Beith MP, 30 May 2009 115 5. Letter to the Commissioner from Rt Hon Sir Menzies Campbell MP, 1 June 2009 115 6. Letter to the Commissioner from Ms Sandra Gidley MP, received 8 June 2009 115 7. Letter to the Commissioner from Mr Paul Holmes MP, received 10 June 2009 116 8. Letter to the Commissioner from Rt Hon Sir Alan Beith MP, 2 June 2009 116 9. Letter to Mr John Barrett MP from the Commissioner, 1 June 2009 116 10. Letter to Rt Hon Sir Alan Beith MP, from the Commissioner, 4 June 2009 117 11. Letter to Mr John Barrett MP from the Commissioner, 4 June 2009 118 12. Letter to Rt Hon Sir Menzies Campbell MP from the Commissioner, 4 June 2009 120 13. Letter to Ms Sandra Gidley MP from the Commissioner, 8 June 2009 121 14. Letter to Mr Richard Younger-Ross MP from the Commissioner, 9 June 2009 123 15. Letter to Mr Paul Holmes MP from the Commissioner, 10 June 2009 124 16. Extract from letter to the Commissioner from Rt Hon Sir Alan Beith MP, 15 June 2009 126 17. Executive summary of solicitors’ advice to Dolphin Square tenants, October 2005 128 18. Letter to Director of Operations, Department of Resources, from the Commissioner, 30 July 2009 130 19. Letter to the Commissioner from Director of Operations, Department of Resources, 14 August 2009 130 20. Letter to the Commissioner from the Director of Operations, Department of Resources, 3 September 2009 131 21. Letter to Mr John Barrett MP, Rt Hon Sir Alan Beith, MP, Rt Hon Sir Menzies Campbell MP, Ms Sandra Gidley MP, Mr Paul Holmes MP and Mr Richard Younger-Ross MP from the Commissioner, 7 September 2009 132
40 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
22. Letter to the Commissioner from the Director of Operations, Department of Resources, 17 December 2009 132 23. Letter sent to two Members by the Director of Operations, Department of Finance and Administration, 22 November 2005 133 24. Letter to the Director of Operations, Department of Resources, from the Commissioner, 17 December 2009 134 25. Letter to Rt Hon Sir Alan Beith MP from the Commissioner, 7 January 2010 134 26. Letter to Mr John Barrett MP, Rt Hon Sir Menzies Campbell MP, Ms Sandra Gidley MP, Mr Paul Holmes MP and Mr Richard Younger-Ross MP, from the Commissioner, 7 January 2010 135 27. Letter to the Director of Operations, Department of Resources, from the Commissioner, 11 November 2009 135 28. Letter to the Commissioner from Ms Sandra Gidley MP, 15 July 2009 136 29. Letter to Ms Sandra Gidley MP from the Commissioner, 16 July 2009 136 30. Letter to the Commissioner from Mrs Joan Humble MP, 20 August 2009 136 31. Letter to Mrs Joan Humble MP from the Office of the Commissioner, 20 August 2009 137 32. Letter to the Commissioner, from Mrs Joan Humble MP, 24 August 2009 137 33. Letter to the Commissioner from Mrs Joan Humble MP, 18 September 2009 137 34. Letter to Mrs Joan Humble MP from the Commissioner, 23 September 2009 138 35. Letter to Mr John Barrett MP, Rt Hon Sir Alan Beith MP, Rt Hon Sir Menzies Campbell MP, Ms Sandra Gidley MP, Mr Paul Holmes MP and Mr Richard Younger-Ross MP from the Commissioner, 23 September 2009 138 36. Letter to Director of Operations, Department of Resources from the Commissioner, 23 September 2009 138 37. Letter to the Director of Operations, Department of Resources from the Commissioner, 2 November 2009 139 38. Letter to the Commissioner from the Director of Operations, Department of Resources, 9 November 2009 139 39. Letter to the Director of Operations, Department of Resources, from the Commissioner, 17 November 2009 140 40. Letter to the Commissioner from Mr John Barrett MP, 22 June 2009 141 41. Letter to Mr John Barrett MP from the Commissioner, 25 June 2009 142 42. Letter to the Commissioner from Mr John Barrett MP, 16 July 2009 143 43. Letter to Mr John Barrett MP from the Commissioner, 20 July 2009 144 44. Letter to the Commissioner from Mr John Barrett MP, 4 August 2009 145 45. Letter to the Commissioner from Mr John Barrett MP (received 8 October 2009) 145 46. Letter to the Director of Operations, Department of Resources, from the Commissioner, 8 October 2009 146 47. Letter to Mr John Barrett MP, from the Commissioner, 8 October 2009 146 48. Letter to the Commissioner from Mr John Barrett MP, 15 October 2009 147 49. Letter to the Director of Operations, Department of Resources, from the Commissioner, 19 October 2009 147 50. Extract from Letter to the Commissioner from Mr John Barrett MP, 28 October 2009 147 51. Letter to the Director of Operations, Department of Resources from the Commissioner, 29 October 2009 148 52. Letter to Mr John Barrett MP from the Commissioner, 11 November 2009 148
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 41
53. Letter to the Commissioner from Mr John Barrett MP, 12 November 2009 148 54. Second letter to the Commissioner from Mr John Barrett MP, 12 November 2009149 55. Letter to Mr John Barrett MP from the Commissioner, 17 November 2009 149 56. Letter to the Commissioner from Mr John Barrett MP, 20 January 2010 149 57. Letter to Mr John Barrett MP from the Commissioner, 21 January 2010 150 58. Letter to Rt Hon Sir Alan Beith MP from the Commissioner, 18 June 2009 150 59. Letter to the Commissioner from Rt Hon Sir Alan Beith MP, 9 July 2009 151 60. Letter to the Commissioner from Rt Hon Sir Alan Beith MP, 14 September 2009 152 61. Letter to the Director of Operations, Department of Resources from the Commissioner, 22 September 2009 153 62. Letter to Rt Hon Sir Alan Beith MP from the Commissioner, 11 November 2009 153 63. Letter to the Commissioner from Rt Hon Sir Alan Beith MP, 18 November 2009 154 64. Letter to Rt Hon Sir Alan Beith MP from the Commissioner, 19 November 2009 154 65. Agreed Note of Interview with Rt Hon Sir Alan Beith MP at 2 pm on Tuesday 24 November 2009 155 66. Letter to the Commissioner from Rt Hon Sir Alan Beith MP, 25 November 2009 163 67. Letter to the Commissioner from Rt Hon Sir Alan Beith MP, 2 December 2009 164 68. Letter to Rt Hon Sir Alan Beith MP from the Commissioner, 3 December 2009 164 69. Letter to the Commissioner from Rt Hon Sir Alan Beith MP, 14 January 2010 165 70. Letter to Rt Hon Sir Alan Beith MP from the Commissioner, 18 January 2010 165 71. Letter to the Commissioner from Rt Hon Sir Menzies Campbell MP, 24 June 2009165 72. Letter to Rt Hon Sir Menzies Campbell MP from the Commissioner, 29 June 2009166 73. Letter to the Commissioner from Rt Hon Sir Menzies Campbell MP, 15 July 2009 167 74. Letter to Rt Hon Sir Menzies Campbell MP from the Commissioner, 16 July 2009 167 75. Letter to the Commissioner from Rt Hon Sir Menzies Campbell MP, 21 July 2009 168 76. Agreed Note of Interview with Rt Hon Sir Menzies Campbell MP at 2.30pm on Tuesday 10 November 2009 168 77. Letter to the Commissioner from Rt Hon Sir Menzies Campbell MP, 21 January 2010 175 78. Letter to Rt Hon Sir Menzies Campbell MP from the Commissioner, 25 January 2010 175 79. Letter to the Commissioner from Ms Sandra Gidley MP, 29 June 2009 176 80. Letter to Ms Sandra Gidley MP from the Commissioner, 1 July 2009 177 81. Letter to the Commissioner from Ms Sandra Gidley MP, 14 July 2009 178 82. Letter to the Commissioner from Ms Sandra Gidley MP, 12 October 2009 179 83. Extract from a letter to Ms Sandra Gidley MP from the Commissioner, 19 October 2009 179 84. Extracts from an email to the Commissioner from Ms Sandra Gidley MP, 3 November 2009 179 85. Letter to the Director of Operations, Department of Resources from the Commissioner, 4 November 2009 180 86. Letter to Ms Sandra Gidley MP from the Commissioner, 11 November 2009 180 87. Email to the Commissioner from Ms Sandra Gidley MP, 21 January 2010 180 88. Letter to Ms Sandra Gidley MP from the Commissioner, 25 January 2010 181 89. Letter to the Commissioner from Mr Paul Holmes MP, 3 July 2009 181 90. Letter to Mr Paul Holmes MP from the Commissioner, 8 July 2009 183 91. Letter to the Commissioner from Mr Paul Holmes MP, 20 July 2009 184 92. Letter to the Commissioner from Mr Paul Holmes MP, 8 October 2009 185
42 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
93. Letter to the Director of Operations, Department of Resources, from the Commissioner, 12 October 2009 186 94. Letter to Mr Paul Holmes MP from the Commissioner, 11 November 2009 186 95. Letter to the Commissioner from Mr Richard Younger-Ross MP, 30 June 2009 186 96. Letter to Mr Richard Younger-Ross MP from the Commissioner, 8 July 2009 189 97. Letter to the Commissioner from Mr Richard Younger-Ross MP, 27 July 2009 190 98. Letter to the Commissioner from Mr Richard Younger-Ross MP, 30 October 2009 190 99. Letter to Mr Richard Younger-Ross from the Commissioner, 11 November 2009 191 100. Letter to the Commissioner from Mr Richard Younger-Ross MP, 17 November 2009 192 101. Memorandum from Director of Finance and Administration, 1 November 2005 192 102. Letter to the Commissioner from Mr Richard Younger-Ross MP, 15 January 2010 194 103. Letter to Mr Richard Younger-Ross MP from the Commissioner, 18 January 2010 194 104. Letter to the Commissioner from Mr Paul Holmes MP, 8 February 2010 194
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 43
Mr John Barrett MP, Rt Hon Sir Alan Beith MP, Rt Hon Sir Menzies Campbell MP, Ms Sandra Gidley MP, Mr Paul Holmes MP and Mr Richard Younger-Ross MP
Introduction
1. This memorandum reports on my inquiry into allegations against six Members in respect of certain payments they accepted as tenants on the Dolphin Square estate. The Members are Mr John Barrett, the Member for Edinburgh West, Rt Hon Sir Alan Beith, the Member for Berwick-upon-Tweed, Rt Hon Sir Menzies Campbell, the Member for North East Fife, Ms Sandra Gidley, the Member for Romsey, Mr Paul Holmes, the Member for Chesterfield, and Mr Richard Younger-Ross, the Member for Teignbridge.
The Allegations
2. The matter was first raised publicly in a report in the Daily Telegraph on 30 May 2009, which alleged that at least thirteen Members of Parliament had received “windfalls worth thousands of pounds to give up their right to cheap rent in a deal that led to taxpayers paying substantially more for their second homes.” 1 The report said that, following the sale of the Dolphin Square estate in Westminster in 2005, all tenants had received offers of a lump sum in exchange for moving out or paying a higher rent, and that the new owners also offered £5,000 “to give up the right to pass the tenancy on to family.” It was claimed that “Many MPs accepted the windfalls and stayed in the flats while the taxpayer picked up their higher rental bills.”
3. Around the time of this report, between 29 May and 10 June 2009, six Members wrote to me to ask me to rule on whether their decisions in respect of the offers from the new owners had been appropriate.2 I can only accept a Member’s self-referral in exceptional circumstances and with the authorisation of the Committee on Standards and Privileges. Following receipt of the first of these letters I submitted the matter to the Committee on Standards and Privileges, which authorised me to undertake an inquiry into each Member who decided to refer themselves to me.
Relevant Rules of the House
4. The Code of Conduct for Members of Parliament provides in paragraph 9 as follows:
“Members shall base their conduct on a consideration of the public interest, avoid conflict between personal interest and the public interest and resolve any conflict between the two, at once, and in favour of the public interest.”
1 WE 1 2 WE 2, WE 3, WE 4, WE 5, WE 6, WE 7
44 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
5. And in Paragraph 14:
“Members shall at all times ensure that their use of expenses, allowances, facilities and services provided from the public purse is strictly in accordance with the rules laid down on these matters, and that they observe any limits placed by the House on the use of such expenses, allowances, facilities and services.”
6. The relevant rules would appear to be those set out in the Green Book published in April 2005. Mr Speaker, in the introduction, noted the following:
“Members themselves are responsible for ensuring that their use of allowances is above reproach. They should seek advice in cases of doubt and read the Green Book with care. In cases of doubt or difficulty about any aspect of the allowances or how they can be used, please contact the Department of Finance and Administration. The Members Estimate Committee, which I chair, has recently restated the Department’s authority to interpret and enforce these rules.”
7. Arrangements for the Additional Costs Allowance are set out in Section 3 of the Green Book. The scope of the Allowance is set out in Paragraph 3.1.1 as follows:
“The additional costs allowance (ACA) reimburses Members of Parliament for expenses wholly, exclusively and necessarily incurred when staying overnight away from their main UK residence (referred to below as their main home) for the purpose of performing Parliamentary duties. This excludes expenses that have been incurred for purely personal or political purposes.”
8. Paragraph 3.6.1. deals with the documentation to be supplied by Members to the Department. This includes:
“Any documentation relating to changes to these arrangements”.
My Inquiries General Evidence
9. This section reports on information I sought and received relating to the general arrangements for Dolphin Square tenants receiving offer letters from the new landlords of Dolphin Square in 2005–06.
10. I wrote to the six Members concerned, between 4 June and 10 June 2009, to invite their comments on the allegations.3 I said that in essence, the allegations against the Members concerned were that they each received a payment or payments from the landlords of Dolphin Square in return for giving up certain rights as a tenant; that they received this benefit on account of a tenancy supported by rental payments which were in whole or in part paid from the Additional Costs Allowance, and that this arrangement may, as a result,
3 My individual correspondence with them is described in the section beginning at paragraph 46 below.
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 45
have led to claims on that Allowance which were not necessarily incurred or may otherwise have favoured their personal interest over the public interest.
11. I asked the Members about the particular circumstances of their Dolphin Square lease, including the time they resided or had resided there, whether, and if so when, they had moved accommodation within the Square, the amount of their rent at the time when the landlord made the offer, the period over which they had made claims for the property against the Additional Costs Allowance, and whether they had claimed for the full rent or a proportion of it over that period; the offer which the landlord made to them, including the nature of any rights they were asked to forgo, and the options open to them in responding to that offer, together with any documentary evidence they might have about the offer; the consideration they gave to the offer, whom they consulted (including the House authorities), what advice they had received, what decision they had come to and what payments they received, together with any documentary evidence in relation to that, and whether they had supplied to the Department of Finance and Administration documentation in relation to any changes in their arrangements; why they considered that their decision was in the public interest as opposed to their personal interest; if they had accepted a payment from the landlord on entering a new arrangement with an increased rent, whether they had claimed against the allowances for the increased rent, and if so whether they considered that they had claimed for expenses that were not wholly, exclusively, and necessarily incurred; and if they had accepted a payment from the landlord in return for giving up succession rights, what they had done with it. I also asked those Members who had told me that they had moved, why they had decided to do so.
Dolphin Square: the Background
12. Sir Alan Beith replied to me on 15 June, providing me with evidence about the general position in relation to the Dolphin Square flats. He also provided me with specific evidence in respect of his own actions, which is discussed in detail beginning at paragraph 93 below.4 Sir Alan said that the flats had been run by the Dolphin Square Trust, a non-profit making body, which had “held down the rents to tenants to a level below market rents, at no cost to the taxpayer.” When Westminster City Council had decided to sell the head lease of the complex, Sir Alan said that there had begun a period of several years of uncertainty about the future of the Dolphin Square tenancies, “during which it was not feasible or prudent to carry out decoration or improvement”. Sir Alan enclosed a Dolphin Square Trust press release of 10th November 1999 and a letter from the Leader of Westminster City Council dated 1 February 2002 which he said would give me some idea of the controversy, difficulties and uncertainty which had prevailed over that period.5
The offers made to Dolphin Square tenants
13. Sir Alan said in his letter of 15 June that when the head lease of Dolphin Square had been acquired by new owners, after long negotiations with the trust, offers had been made to tenants. The objective of Dolphin Square’s new owners had been, Sir Alan said, to secure vacant possession of as many flats as possible so that they would be re-let at higher rents
4 WE 16 5 Not included in the written evidence
46 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
after improvements. Sir Alan sent me with his letter documents which had been sent to him in October 2005 which set out the options for tenants.6 Sir Alan also sent me a copy of a report prepared by a firm of solicitors, who were retained to advise all Dolphin Square tenants on the offers made to them by the new owners.7
14. The advice from the solicitors described a situation in which current Dolphin Square tenants had three options, which I summarise below:
• Option A, “Cash and Go” version, which would involve the current tenant being paid a sum of money by the new owners of Dolphin Square, who would secure vacant possession of the flat;
• Option A, “Cash and Stay” version, which would involve the current tenant being paid a sum of money by the new owners of Dolphin Square, and staying in their flat at a higher rent, on an assured shorthold tenancy, with no security of tenure on expiry of the fixed term;
• Option B, a fixed term lease that could run until June 2034, starting with a rent the same as the current rent but gradually increasing year on year.
15. Sir Alan said that “The fact that this option [Option B] was available was the result of intense negotiation by the Dolphin Square Trust.” Sir Alan noted that that Dolphin Square rents were inclusive of heating, water and service charges.
16. The legal advice provided to tenants by the firm of solicitors may be summarised as follows: i. Tenants would be seriously disadvantaged if they did not accept one of the offers. ii. Option A: Cash and Go could be attractive to tenants who were “looking to leave Dolphin Square within the first few months of 2006.” iii. Option A: Cash and Stay might be an attractive offer to tenants who were looking to leave Dolphin Square “in around spring 2007”, and might still be an attractive offer for tenants looking to move out after then. iv. The solicitors said that they had “no doubt” that an “Option B Lease” “was the most advantageous offer” for tenants who saw themselves continuing to live in Dolphin Square for the medium to long term. In both security of tenure and certainty over future rent levels it was a considerable improvement on current tenancy rights, even for Rent Act protected tenants (if there were any).
17. Sir Alan drew my attention to what he called the “clear statement” contained in the advice of the advantages of accepting Option B (and refusing the cash offer), particularly security of tenure and certainty about the rent.
6 Not included in the written evidence 7 WE 17
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 47
18. Sir Alan said that a separate offer of £5,000 was made at the same time to those long- standing tenants who, it was believed, might have a right to pass the tenancy on to their children.
19. In June and July 2009, I continued to exchange correspondence with the six Members about their individual circumstances. This correspondence is described in detail beginning at paragraph 46 below.
Advice to Members from the House authorities
20. Ms Sandra Gidley wrote to me on 15 July in relation to the advice given to Members by the House authorities. 8 She said that she had discussed the matter with a number of people who had lived in Dolphin Square at the time of the offer. Ms Gidley said that none of them had taken any advice but “it was clear that all had made a similar judgement call.”
21. However, Ms Gidley told me that she had spoken to an MP who had opted for the Cash and Stay option. She said, “I was told that the Fees Office were asked about the offer and that the advice received was that this was an entirely private matter between the landlord and the tenant and had no bearing on the ACA. This was a verbal communication and, on the basis of this, the MP proceeded to accept the offer. I asked whether the MP ever received anything in writing as a result of the inquiry and was told that there was nothing at the time or later.” Ms Gidley said that she often used to talk to this MP as they frequently caught the same bus. “Whilst I cannot recall specific details of conversations at the time I find it hard to believe that we did not discuss the offers as everybody was talking about it and sharing information.” Ms Gidley hoped that this would be helpful in clarifying the advice provided, “even though I personally did not receive this directly.”
22. I wrote back to Ms Gidley on 16 July, asking her to let me know the name of the MP she had referred to, and saying that it might be helpful if that Member could give me witness evidence about his or her discussion with the Department.9
23. On 30 July, I wrote to the Director of Operations in the Department of Resources, asking for his advice and comments on the correspondence I had received up to then from the six Members.10 I attached also a copy of the legal advice which Dolphin Square tenants received11 and samples of the offer letters which they received from the new landlords.12 In particular I said that it would be helpful to know whether the Department had received an approach about the Dolphin Square payment from these or any other Members, at the time or subsequently; what advice had been given; the reasons for that advice; and whether the Department had considered making any such advice more widely available.
24. The Director of Operations replied on 14 August.13 He said that in the autumn of 2005 the House Service had become aware that Dolphin Square tenants were being consulted on
8 WE 28 9 WE 29 10 WE 18 11 WE 17 12 Not included in the written evidence 13 WE 19
48 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
changes to their tenancies, including the offer of payments by the landlord. Discussions were held “at the most senior levels.” A decision had been taken that Members who approached the Department for advice would be offered the following in writing:
““You recently contacted the Department for advice about changes to your tenancy agreement at Dolphin Square. I can offer guidance as set out below.
“I understand the position to be that Members who are residents of Dolphin Square have recently been offered monetary compensation to buy out their existing tenancies. You will appreciate the potential awkwardness of the situation whereby public money (Additional Costs Allowance) has been used to meet past rental costs either in part or in full. The Department has consulted the Clerk on this matter and is able to offer the following guidance to those who are considering accepting the offer:
a) Where the rent has been paid wholly from the Additional Costs Allowance (ACA), Members are advised against taking the cash offer and retaining the proceeds because it would be inappropriate to gain a personal benefit when the rent has been paid wholly from the public purse. If a Member does want to accept the cash offer and pay it over to the House, or set it against future rental payments in the current financial year, this can be arranged.
b) Where the rent has been paid partly from ACA and partly from private funds, we would advise Members that they could retain a proportionate part of the cash offer, if they so wish. It would be for the Member to decide on how much to keep. The House would be happy to receive the balance.
c) Where the rent has been paid wholly from private funds, we would advise Members that it would be appropriate to keep the cash.
d) Where a Member has in the past had rent paid from the ACA, but this has not been the case since April 2002, we consider the Member to fall into category c, above.
This guidance is only about what is appropriate in terms of the compensation offered and the use of public money. The Department is not able to offer advice about which option is the best for Members in other respects.”
25. The Director also told me that the Department’s records indicated that two Members had approached the Department and that both were sent the above advice. The Director pointed out that neither the Green Book nor any other guidance specifically covered “buy- outs” of this nature. He said he was confident that no advice had been offered by the Department other than that set out and on request from Members themselves.
26. Mrs Joan Humble, the Member for Blackpool North and Fleetwood, sent me a letter on 20 August.14 She said that she was writing to me following a conversation with Ms Gidley about advice given by the House of Commons Fees Office to Members of Parliament who
14 WE 30
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 49
were tenants at Dolphin Square when the ownership of the block of flats changed hands. She said she understood that I was looking at the advice given to MPs at the time. Mrs Humble said that she had told Ms Gidley that she (Mrs Humble) had sought advice from the Fees Office about the offer made by the new owners to all the existing tenants of Dolphin Square. Mrs Humble said she had been told in a telephone conversation that any renegotiation of her lease, including the offer of a buy out from her previous tenancy agreement, was an entirely private matter between her and the new landlord. Mrs Humble said she had asked for confirmation that the arrangement had nothing to do with the Fees Office and her claims under the Additional Costs Allowance. Again she said she had been told that it was an entirely private matter and the analogy was used with MPs who moved to other flats or sold homes, made a profit on the sale, and bought new properties using the allowances available. Mrs Humble had then acted based upon that “clear advice” from the Fees Office.
27. My office wrote to Mrs Humble on 20 August, saying that I appreciated that her conversations with the Fees Office happened several years ago but asking whether she recalled the name of the person in the Fees Office who had given her advice about Dolphin Square, and also (even approximately) the date on which the conversation had taken place.15
28. Mrs Humble wrote back to me on 24 August, saying that she did not recollect being given a name by the man she spoke to in the Fees Office about her lease at Dolphin Square. 16 She had simply rung the number for enquiries and advice and spoken briefly to a man “who seemed to be already aware of the issue and who stated very clearly that it was a private matter.” Mrs Humble believed that she had spoken to this individual two or three weeks before signing the new lease. This lease began on 19 April 2006 and so she assumed the conversation had taken place towards the end of March 2006.
29. On 26 August my office drew this exchange to the attention of the Director of Operations in the Department of Resources, and asked for his comments on it.
30. On 3 September, I received a letter from the Director of Operations.17 The Director set out the sequence of events that led to guidance being given by the then Department of Finance and Administration in respect of Dolphin Square. He said that the position was that “the offer to Dolphin Square tenants became known to staff of the House around October 2005, including to the then Clerk of the House.” In early November that year “authoritative advice became available to staff in the Department.” The Director said that this had been in the form set out in his letter to me of 14 August 2009.18 On 22 November 2005, in response to specific requests, letters were sent to two Members residing in Dolphin Square with the guidance. Neither of these Members, said the Director, was the subject of my inquiry.
15 WE 31 16 WE 32 17 WE 20 18 WE 19
50 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
31. In the Director’s view, this matter was “arguably not one for a scheme of allowance rules, which this Department has responsibility for, but rather a wider question of propriety and perhaps ethics.” He was clear that the advice referred to above had been promulgated to staff in the Department who dealt directly with Members. No guidance other than this had been offered to Members from November onward about the propriety aspects of accepting the offer from the Dolphin Square landlord. The Director then said that when the issue first surfaced in October “a more general conversation may have taken place with one or two Members pending the clarification which arrived in early November.”
32. In his letter the Director also noted that Mrs Humble recalled a telephone conversation in March 2006 with a member of the Department during which she had been told that how she responded to the landlord’s offer was entirely a matter for her. The Director told me “We have no record of that conversation. It is not clear to me why such advice would have been given when the authoritative guidance was readily available. Some three and a half years later it is, of course, difficult to be certain of the precise exchange at the time.” I sent a copy of this letter to Mrs Humble on 23 September. 19
33. On 7 September I wrote to each of the Members concerned, attaching copies of my letter of 30 July to the Department of Resources and of the Director’s replies of 14 August and 3 September.20 I said to each of the Members that it was my understanding that they fell into category (a) of Members described in the advice, in that, throughout the relevant period (except while Parliament was dissolved), their Dolphin Square rent had been paid from the Additional Costs Allowance. I noted that the advice said that: “Where the rent has been paid wholly from the Additional Costs Allowance (ACA), Members are advised against taking the cash offer and retaining the proceeds because it would be inappropriate to gain a personal benefit when the rent has been paid wholly from the public purse. If a Member does want to accept the cash offer and pay it over to the House, or set it against future rental payments in the current financial year, this can be arranged.” I told each of the Members that if they wished to give oral evidence on any aspect of this matter, they should let me know.
34. My detailed correspondence on this and others matters with individual Members following this letter is set out below, beginning at paragraph 46.
35. On 18 September Mrs Humble wrote to me, re-iterating that she had been told very clearly by the Fees Office that “my dealings with my new landlord were entirely my own private concern”. 21 The conversation she had had with the Fees Office in 2006 “was unique and the detail important in helping me reach a decision”. At no time had she received any other advice on the rules, their interpretation or guidance of a more general nature. Mrs Humble also commented: “I do wonder how the written guidance referred to in [the Director of Operations’] letter sits with the long-standing practice of Members of Parliament claiming mortgage interest payments from the Additional Costs Allowance, then selling these properties and keeping all the profits from the sale.”
19 WE 34 20 WE 21, with WE 19 and WE 20 21 WE 33
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 51
36. On 23 September I sent the Director of Operations the further letter from Mrs Humble.22 I invited the Director, if he wished to do so, to send me any further comments about the reported conversation, and to let me have any views he might have on the comparison which Mrs Humble made between the written guidance referred to in his letter of 14 August and the practice of Members retaining profits on the sale of houses whose mortgage interest had been paid for from the Additional Costs Allowance.
37. I wrote to the Director of Operations on 2 November, drawing his attention to a number of responses from Members to his letter of 3 September and seeking his views.23 On 9 November I received a letter from the Director of Operations.24 In this he told me that he could only re-iterate the instructions, set out in his earlier letters to me, that his Directorate received on the nature of the guidance to be offered and the manner in which it should be disseminated. He acknowledged Mrs Humble’s letter of 18 September25 and told me that “her points are very fair.” He also said that he had checked the Department’s telephone log for all the Members who had referred themselves to me and there were no records of any conversations about the Dolphin Square tenancy buy-out. He said: “This supports the thrust of the evidence submitted by them, subject to the points made above.” The Director also made a number of points in relation to issues raised by individual Members, which are set out below in the relevant sections.
38. On 11 November I wrote to the Director of Operations, asking him to identify the source and nature of the instructions received by his directorate on the nature of the guidance to be offered to Dolphin Square tenants about the offers in respect of the leases.26 I wrote to the Director again on 17 November, telling him, in respect of the advice he had told me he gave to two Members which was in accordance with the formal guidance he had prepared, that I did not propose to take evidence from those Members, since I had no reason to doubt what he had told me. I did, however, ask him to confirm his statement and, if it were available, to let me have any record the Department held of that advice having been given.27
39. In his letter to me of 17 December, which covered this as well as other matters, the Director of Operations recalled that he had said in his letter of 14 August that, when guidance was being developed for Members on the Dolphin Square offers, discussions were held at the most senior levels, and in his letter of 3 September that the then Clerk of the House had been aware of the position.28 He continued, “On 1 November 2005 two Assistant Directors in the Operations Directorate received a memo from the Head of Department … in respect of Dolphin Square. This memo was copied to me at the time. [The Head of Department] had consulted the Clerk of the House and the Speaker in drawing up the memo. The memo included within it substantive guidance as set out in sub-paragraphs (a)—(d) of my letter of 14 August. It is also my very clear recollection that the instruction to my staff and
22 WE 36 23 WE 37 24 WE 38. This letter also contained the Director’s responses to a number of points made in respect of the position of individual Members, which are described in the relevant sections below. 25 WE 33 26 WE 27 27 WE 39 28 WE 22
52 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
me was that the guidance was to be made available to Members who sought advice; it was not to be promulgated other than on request.”
40. The Director then re-iterated that Departmental records showed that two Members had sought written advice after 1 November and that he had sent identical letters to both on 22 November. The text of the letters had been reproduced in his letter to me of 14 August. “To the very best of my knowledge, no other Members were sent such written advice and Departmental records would appear to confirm this.” The Director said that he held electronic versions of both letters as well as signed photocopies. The Director also attached signed copies of the two letters as requested.29
41. On 17 December I wrote to the Director of Operations, asking him to send me a copy of the memorandum from his Head of Department (the Director of Finance and Administration) of 1 November 2005 which was copied to him at the time.30 On 6 January 2010, the Director of Operations sent me the 1 November 2005 memorandum,31 which I copied to all Members concerned on 7 January along with the letter sent to two Members on 22 November 2005. 32 Having set out the facts (which make no reference to the buying out of succession rights), the 1 November 2005 memorandum said that the Green Book did not cover the Dolphin Square offer in specific terms, and that it would not be reasonable for it to do so. There were “so many possible permutations of rental arrangements”, and each kind had to be looked at on its own facts and judged against the principles of normal financial governance, including propriety, regularity, accountability, transparency and value for money. The memorandum continued: “On grounds of propriety it would not seem to be appropriate for Members to accept cash and keep it personally in circumstances where the rent had been paid wholly from the ACA. It would amount to a personal windfall entirely attributable to rights earned with public money.”
42. The memorandum also included a “line to take” with Members who sought advice, which said that, where the rent had been paid wholly from the Additional Costs Allowance, “We should advise Members against taking the cash offer and keeping the proceeds themselves, on the ground that it would appear inappropriate to gain a personal benefit when the rent has been paid wholly from the ACA,” and that “If a Member does want to accept the cash offer and pay it over to the House, or set it against future rental payments in the current year, this can be arranged”. Where the rent had been partly paid from ACA and partly privately, “Members can with propriety retain a proportionate part of the cash offer if they wish. The decision on what was the appropriate proportion would be for the Member, as DFA would not have the relevant information. The House would be happy to receive the balance.” Where the rent had been paid wholly from private funds, the line to take was that tenants were free to accept or reject the offer.
43. The 1 November 2005 memorandum also said that if Members were “unhappy with this advice, please let me [the Director of Finance and Administration] know.” The memorandum said that it was possible, for example, that “other aspects will emerge when
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we start giving advice.” If Members wished to challenge the advice, the memorandum said that the matter could be “put formally to Mr Speaker, with the possibility that the Members Estimate Committee will consider it at his request.”
Registration
44. I have considered whether Members who accepted an offer from the new owners of Dolphin Square had an obligation to register that payment in the Register of Members’ Interests. I consulted the Registrar. Her advice is that no registration obligation arose in the circumstances of this case. She has stated that Members are required to register any material benefit which in any way relates to membership of the House. In this case, she notes that the offer appears to have been made to all eligible tenants in Dolphin Square. There is no evidence that the company was influenced in any way by the fact that some tenants were Members of Parliament. She does not consider, therefore, that the offer could be held to be related to their Membership of the House.
45. I turn now to the particular circumstances of the six Members with whom this memorandum is concerned.
Individual Members
Mr John Barrett MP
46. Mr Barrett wrote to me on 29 May to say that in 2006 he had received £11,234 from the owners of Dolphin Square to give up certain rights on his lease.33 He had allocated that sum to pay amounts directly related to his position as a Member. In the light of the current interest in all financial issues relating to Members he wished me to look into his position.
47. I wrote to Mr Barrett on 4 June to say that the Committee had authorised me to undertake an inquiry.34 I asked Mr Barrett about the particular circumstances of his Dolphin Square lease.
48. In his reply of 22 June 35 Mr Barrett said that while the sum paid for expenses and allowances to Members must always clearly be used in accordance with the rules, “the sum paid to me and others in similar circumstances, from the developer, was not an allowance or expense and the use of such sums is not clearly defined in the rules. At all times I believe I have acted within the spirit of, and fully complied with the rules …”
49. Mr Barrett told me he had moved into an unfurnished flat in Dolphin Square in 2001, the year he was elected to Parliament. During the following six years he had stayed in a flat that did not receive any improvement, decoration, modernisation or upgrading. He said that he did not claim for, or spend any amount on redecoration, upgrading or improvements. Mr Barrett said that at the end of this time, and after he had been re-elected for a second term, he had started to look around, as he had planned to move into a flat which had been decorated or upgraded. As well as looking at flats outside the Square, the
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landlord indicated there were other flats in a better condition that he could move to, at an increased rental level. He had always claimed the full amount of rental against the ACA, except for the period during which Parliament was dissolved.
50. Mr Barrett told me that when the ownership of the property changed hands he had been offered a lump sum in exchange for giving up his rights to his short assured tenancy, and he had accepted this offer. Mr Barrett said that the gross amount paid was £11,234 and the net amount received was £8,175.This had been arrived at after the deduction of one month’s rent, a deposit and other small charges connected to producing the inventory. The rent had been reclaimed and the deposit returned when he left the flat.
51. Mr Barrett said that in the summer of 2006, he had moved to an “improved” flat in Dolphin Square and had continued to charge the full rental level. Mr Barrett said that the rental level of the new flat was not related to the lump sum he had received in May of that year. Mr Barrett had stayed there until the summer of 2008, when the landlord had informed him of a new increased rental level for the flat that, he told me, would have been well above the level of allowances provided by Parliament. He had therefore moved out to his present address. Mr Barrett told me that he had considered the landlord’s offer carefully and discussed it with his wife. “I took no professional advice and did not consult the House authorities.” He had received the payment previously mentioned and had informed the Department of Finance and Administration that he would be moving address and supplied them with a copy of his new lease. Mr Barrett said: “My decision to move was made before the payment was received as I had planned to leave my original flat, and move into slightly better accommodation. The accommodation I have always lived in, in London, is relatively basic compared to my family home and after six years, my decision to move was based on the desire to live in a flat which was not so run down. Had there been no windfall I would still have moved.”
52. Mr Barrett said that when he had received the “windfall” he had decided to use it for a range of payments and costs, “which I have incurred as a direct result of becoming an MP.” This included additional living costs in London, which were either not covered by expenses and allowances, or which were covered, but were not claimed for. Over the eight years, since being elected, he had estimated these costs to be on average about £2,000 per year and after paying Capital Gains Tax of £1,475 on the “windfall”, Mr Barrett used the remainder of the payment to cover some of these costs. Mr Barrett said that these included approximately £1,000 for furniture for the flat, which was not reimbursed by Parliament in 2001, the year the flat was first furnished, as the allowances would not cover the initial costs of furnishing a one bedroom flat and rent, council tax, insurance, utility bills etc.
53. When Parliament was dissolved in 2005 there had been a £1,300 payment for rent which had not been reimbursed, as the allowances did not cover this, “but this rent was only due because I was an MP and there was no option but to pay.” When the next election was called the payment, Mr Barrett said, would be £1,600 and he had set aside an amount for this. Mr Barrett said he had not claimed food or subsistence costs for staying in London in the year 2008–09. In previous years this was over £2,000 per year and he was not currently claiming the £25 subsistence allowance, which again would be over £2,000 for the current year.
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54. Mr Barrett said he no longer claimed the mileage cost for using his car on Parliamentary duties in the constituency and he had used the windfall for this. This amounted to £750 - £1,000 each year for the last two years. He continued: “Other costs, which are as a direct result of being an MP and are not claimed by me include the fee I pay to an accountant each year to deal with returns which are exclusively as a result of being employed as an MP. This has been in the region of £300 per year over the last eight years. There are a number of other similar costs and I have used the windfall from the developer for this purpose.”
55. Mr Barrett said that the items detailed above had totalled over £13,000 and “I would not have incurred any of these costs had I not been an MP.” He had not taken professional advice and “assumed that the windfall was exactly the same as for those MPs who have sold properties purchased using the allowances to pay their mortgage interest under the allowances scheme. My understanding was that their windfall was subject to capital gains tax and they would then use their own judgement as to what they would spend the balance on.” In Mr Barrett’s judgement, it had been reasonable to use the windfall to cover some of the costs that he had had to pay because of his job as an MP and that to use the developer’s money, (instead of the taxpayer’s money in some cases), was the right thing to do. Some of the figures Mr Barrett had quoted had, he said, been estimates, “but they are all conservative ones and the amount I quoted earlier of £2,000 per year over the last eight years, a total of £16,000 is, I believe fair and accurate.”
56. I wrote again to Mr Barrett on 25 June36 to ask him the amount of rent he was paying for the unfurnished flat he took on in 2001, and the amount of rent he subsequently paid for the improved flat to which he moved in 2006; the exact nature of the rights which he surrendered in return for the payment from the landlord, including any information he had been given about the new rent which would be charged on the flat against which the offer was made; whether there was any connection at all between the offer made for the surrender of his shorthold tenancy rights, which I understood was made in October 2005, and his considering a move to another flat in Dolphin Square, or whether the timing was coincidental; which items he considered he might have claimed against parliamentary allowances but had in fact chosen to purchase without making a claim, together with any receipts; the claims he had actually made against his ACA in each of the financial years in which he had deployed his windfall for items he would otherwise have claimed from the allowance; and whether he was aware of any advice prepared by solicitors for residents of Dolphin Square in connection with the offer from the new landlord, and if so, whether he had acted on the advice it offered to tenants in his position.
57. Mr Barrett replied on 16 July.37 He said that on 9 August 2001 he had started to lease an unfurnished flat at Dolphin Square at a rate of £12,780 per year. This rent, he said, had increased by £325 in the second year and another £357 in the third year. In 2006 he had moved into his second flat in Dolphin Square. Mr Barrett said that this had cost £1,538 per month and was “a larger and much nicer flat.” Mr Barrett told me that he had left when he was informed that the new rent would be increasing and moved to a flat away from Dolphin Square in August 2008 at a rent of £1,666 per month.
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58. Mr Barrett said that he had been supplied at the time with a document detailing the rights he was giving up. “It was my understanding that I would give up all existing rights and move on to a yearly lease. I am not presently aware of the exact nature of these rights, but at the time they were detailed in a legal document which was supplied to me by the landlord.”
59. Mr Barrett said that “A number of factors played a part in my decision to move. The most important one was that [the original flat in Dolphin Square] was fairly run down and while there were few options and property was quite scarce when I was elected in 2001, a few years later there was now more of a choice in the market and having lived in London for a few years I was more aware of the options available. Secondly, having lived in the one small flat for a number of years I was looking for somewhere nicer to stay.”
60. Mr Barrett said that the ACA budget for renting a flat “provided enough provision for staying in somewhere better which would also allow my family to visit for the weekend if I decided to stay in London and not travel the 400 miles back to Edinburgh every weekend.” This had only ever been possible in his second Dolphin Square flat. It was no longer possible in his current smaller flat outside Dolphin Square nor had it been possible in Mr Barrett’s original Dolphin Square flat. Mr Barrett said that the windfall had not made him move immediately and he had stayed in the original flat for some time after the offer had been accepted.
61. Mr Barrett said that the figures for the amounts he could have claimed, but chose not to, were in his previous letter and he had not kept receipts for those amounts. One of the reasons he had decided to end a number of the claims was “that it avoided me having to keep receipts for everything and fill in a number of claim forms, which I appreciated would have to be 100% accurate, or there would be a danger of problems arising from any errors.”
62. Mr Barrett said that all of his claims for each year “since the windfall and up to the current year have been for items which were allowable under the ACA rules. When I accepted the ‘windfall’ it was added to my total income which was then spent. It is impossible to detail exactly what income was spent on what expenditure, but the totals as detailed in my previous letter, show that a range of costs incurred directly relating to my employment as an MP, which would not have happened otherwise, exceed this total.”
63. Mr Barrett said that since his previous letter, he had given this further thought and “there are another range of items I would never have considered keeping receipts for, which amount to approximately another £1,000 per year, such as prizes for local events, schools, fairs and gala days, supplying wreaths for remembrance services, taking constituents to lunch or dinner after they have visited Parliament etc. A very conservative estimate of these amounts would be £1,000 per year, or another £8,000 since I have been elected.” Mr Barrett said that whether or not he had received the windfall he would have accepted these were all costs he would have accepted himself. “I am only detailing these costs now in this way in reply to the question of ‘where was the windfall spent?’ and to make it clear that it is a smaller sum than the extra costs incurred by me, since being elected. I would however add that personally, I do not believe that the windfall and the detailed items of spending above are in fact directly linked in this way.”
64. Mr Barrett said that his understanding, at the time, and from discussions with other MPs since then, was that advice from the House was that this was a private matter between
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the landlord and the tenant and that “we had to make our own judgement as to what to do.” Mr Barrett said that “all allowances and expenses must be clearly used in accordance with the rules, but this payment was not an allowance or an expense and the use of such amount was not clearly defined within the rules.”
65. With regards to legal advice, Mr Barrett said that he did remember being told that a firm of solicitors was working on behalf of the landlord and would not be in a position to give legal advice to the tenants, but they could give information to clarify the proposals. He said that he had received “a large amount of paperwork at the time from [the solicitors], The Dolphin Square Tenants Association and was informed of meetings that would be held by a number of groups, but I did not attend any of the meetings or take any legal advice as it looked like a fairly straightforward proposal to give up my rights to the flat I occupied at the time.”
66. From speaking to colleagues recently, said Mr Barrett, it appeared that “those who did ask the House Authorities for advice were given a range of answers and that while I supplied a new lease to the Fees Office with the new rental level and the new terms and conditions on it, the Fees Office confirmed at each stage that everything was in order every time I submitted a new lease for approval.”
67. I wrote again to Mr Barrett on 20 July.38 I enclosed copies of the offers which were made to tenants at Dolphin Square in autumn 2005, one referred to as Cash and Go, the other as Cash and Stay. I asked Mr Barrett to let me know whether those were the offers he had received and if so, which of the two he had accepted. I also enclosed a copy of the report prepared by the solicitors to which I had referred in my letter of 25 June, and asked whether that was the document he had seen and whether he had taken any account of their advice in reaching his decision.
68. Mr Barrett replied on 4 August.39 He could not say for sure whether he had seen the documents but confirmed that he had accepted the Cash and Stay offer. He also supplied me with two further examples of significant costs incurred as a result of being a Member of Parliament which he could have claimed for but had decided not to. These were costs for telephone calls from his mobile and land line, and for keeping one room of his house as an office.
69. On 7 September, as explained above, I wrote to Mr Barrett attaching my correspondence with the Department of Resources and asking for his comments.40 I also sent him a letter on 23 September with a copy of Mrs Humble’s letter of 18 September.41
70. On 8 October I received a letter from Mr Barrett, who told me that there were a number of other issues that he believed required further clarification.42 In previous correspondence he had been asked for and had given details of how he had spent the payment from the landlord. He had detailed sums well in excess of the landlord’s payment,
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all of which had “directly related to my employment as an MP I believe that this detail is important as for me it proves there was no personal benefit from the transaction.”
71. Mr Barrett said he had not been given the advice as detailed in the 3 September letter to me from the Director of Operations, which, he said, clearly stated that only two members living in Dolphin Square had been given the advice in November 2005. Mr Barrett continued: “When the Department of Finance had the address and lease details of all those Members living in Dolphin Square at that time, why was this advice not then given to people, like me, when the department was giving the same advice to others who lived at that address?” Mr Barrett asked “if the Department failed to pass on this advice, when it was aware that others were staying at the same address, the Department clearly failed to carry out a basic function of communication to ensure that all Members received the same advice. This was not the case and different Members received different advice, or no advice at all.”
72. Mr Barrett noted that the Director had stated in his same letter of 3 September that arguably this was not a matter for the scheme of allowance rules. He continued: “There is no mention of such payments in those and this payment was not an allowance, therefore I cannot see how it can be covered by such rules.” Mr Barrett said that a number of MPs over the years had sold properties and kept the profits from those sales, and that others had been offered payments from landlords to vacate premises, when those properties had been paid for by the allowances. “For many years those matters were considered private arrangements and at no time have MPs been asked to refund the amounts involved. Is it not the case that this is a similar situation and that those who lived in Dolphin Square are in exactly the same position as the many MPs I referred to?”
73. Mr Barrett said he had “a great deal of sympathy with” Mrs Humble, who had asked for and was given “exactly the advice that this was not a matter for the Fees Office and that she was not advised to follow any course of action”. Mr Barrett said that he had acted in exactly the same way as Mrs Humble, although he had not contacted the Fees Office. He could not see why, if there had been any doubt at the time about how MPs were acting, the advice given to two MPs was not then made available to everyone else. Mr Barrett reiterated that “the information I was asked for and gave in earlier correspondence also confirms that I did not profit from this transaction.” If he had wanted to profit from the allowances he would have bought a property when elected in 2001 and sold it when he stood down.
74. I wrote to Mr Barrett on 8 October, telling him that I was copying his letter to the Department of Resources, since some of his comments related to the advice they had provided.43 I noted that Mr Barrett had said in his letter that Members in the past had been offered payments from landlords to vacate premises. I told Mr Barrett that it would be helpful if he could identify the cases in which he believed that had happened. I wrote to the Department on the same day.44
75. On 15 October Mr Barrett wrote to me, saying that he did not have any specific details of any individual cases, but—as with the gains made from property sales over the years—
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while he had no specific information regarding any individual’s specific case, he had “heard a number of conversations stating that this has in fact happened.”45
76. On 19 October I wrote to the Director of Operations in the Department of Resources, enclosing Mr Barrett’s letter of 15 October, together with a copy of my letter to him of 8 October about his suggestion that Members in the past had been offered payments from landlords to vacate premises.46 I noted that Mr Barrett did not have any specific details of individual cases.
77. Mr Barrett wrote to me on 28 October, expressing his view that what MPs in Dolphin Square did was to sell a lease for a property in the same way that many property sales in England were in fact the result of leases being sold, rather than the freehold, of which he had more experience in Scotland.47 Mr Barrett said that “This would again place those who sold their lease in a very similar position to the many MPs who have sold properties over the years, when that property was leasehold, rather than freehold.”
78. Mr Barrett said that much information given by the Fees Office had been incorrect and that Members often relied on the advice “given to other Members over a period of time to establish the correct procedure to follow.” In this case, Mr Barrett said, it was well established that properties sold, or leases sold, were in fact private matters, and that Members should make their own arrangements to deal with this.
79. I wrote to the Director of Operations in the Department of Resources on 29 October, now enclosing Mr Barrett’s letter of 28 October and noting his comparison of the payment he received to a payment a Member might receive in selling a leasehold property.48 I asked the Director to take into account Mr Barrett’s further points in preparing his response to my letters of 12 October 49 and 19 October.50
80. In responding to Mr Barrett’s specific points in his letter to me of 9 November, the Director of Operations in the Department of Resources told me that Mr Barrett’s comments about inconsistent guidance from the Department on the Dolphin Square lease offers were perhaps covered in his [the Director’s] letter of 3 September.51 He noted that Mr Barrett had not contacted the Department about this matter. In this context, the Director said, “I must confess to being puzzled by the final paragraph in his [Mr Barrett’s] letter of 28 October. If I understand it correctly, [it is that] information from the Department is often incorrect such that Members, like himself, rely on advice received ‘second-hand’ from other Members.”
81. On 11 November I also wrote to Mr Barrett, enclosing an extract of the Department’s letter of 9 November, which responded to the points Mr Barrett had made.52 I said that I
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was asking the Department to let me know the source of the instructions to use the guidance on the offer, to which the Director had referred in his letter. 53
82. On 12 November Mr Barrett wrote to me, saying that he could give a clear example of such contradictory advice from earlier this year, when the lease on his flat ended.54 When his current lease expired in August 2009, Mr Barrett said he had asked the Department if the £1,250 monthly cap on leases would apply to his lease renewal. Mr Barrett said he was told “categorically” that it would. As Mr Barrett’s current lease was about £5,000 above that level per year, this would have meant him moving out of his current flat or paying the £5,000 out of his own pocket. He continued “I was then advised by colleagues that this advice was wrong and that I could stay, as the cap did not apply to lease renewals. Had I accepted the advice given, it would have had serious consequences and it was the ‘second hand’ advice he [the Director of Operations] refers to in his letter, which actually saved the day.”
83. Continuing, Mr Barrett told me that, after further contacts with the Department, they had confirmed that the advice from colleagues was correct and their advice was wrong. The lease had then been renewed and the entire amount was now covered from allowances. Mr Barrett agreed with the Director’s comment that there was no record of contact with Mr Barrett on this matter on the Department’s telephone log, “as I did not contact the Department for advice about the Dolphin Square lease, but it is worth noting that the above detailed example of poor advice was from face to face conversations and would not be logged, unless the staff member wrote down the details of our conversation following our meeting.”
84. Mr Barrett wrote a second letter to me on 12 November.55 In this he said that he believed that the information provided in his other letter of that day, along with other evidence previously discussed and detailed in other correspondence, threw into question the advice given to those two Members who did ask for and were given advice at the time regarding the Dolphin Square lease. He said: “It cannot be assumed that the advice given to those two members was in fact correct advice, just because it had been given to them by the Fees Office. In concluding your deliberations it might be worth establishing whether or not that advice was in fact correct. As my other letter points out, the advice given to Members is not infallible and from our previous discussion and correspondence there appears to be an assumption that those who received advice followed the correct procedure, whereas it is clearly possible that the opposite is the case.”
85. On 17 November I wrote to Mr Barrett, telling him that I would, as he had requested, copy both of his 12 November letters to the Department.56 I told him that I thought that I now had sufficient evidence to bring my inquiry to a conclusion. I told Mr Barrett that I did not, therefore, propose to invite the Department to comment on his discussions with it in respect of his current lease. I also told him that I had considered whether I should extend my inquiry by asking the two Members concerned about the advice referred to in the Department’s letter, but that I did not believe I had been given sufficient grounds to
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suggest that the Department had provided me with false or inaccurate evidence on this aspect of their contacts with Members. I said that I would, however, ask the Department to confirm what they had told me.
86. With the letter I wrote to the Director of Operations in the Department of Resources on 17 November, I enclosed the two letters of 12 November from Mr Barrett, together with a copy of my reply of 17 November.57 I noted that I did not propose to ask the Director to comment on what Mr Barrett had said about the discussions he had with the Department about his current lease.
87. As noted above (paragraph 41) on 7 January 2010 I wrote to Mr Barrett, copying to him correspondence relating to the source and nature of the instructions received by the Directorate of Finance and Administration about the Dolphin Square offers.58
88. Mr Barrett replied to me on 20 January. 59 He observed that the memorandum from the Director of Finance and Administration dated 1st November 2005 “clearly states in paragraph 3 that the Green Book does not cover this specific situation and that of a personal windfall. This is certainly the case, but he does not then confirm that the existing, and current, custom and practice over many years is that when a windfall is received from a sale of a property paid for entirely from the ACA, the windfall is retained by the member. This has applied to many sales over the years and currently a number of MPs are in the process of selling property paid for by ACA—for which no advice regarding the windfall is currently being issued. I would therefore contend that both types of windfalls should be treated in exactly the same way.”
89. Mr Barrett said that the memorandum stated that the Department “should advise members” on a course of action, yet, he commented: “…although copies of all leases for Dolphin Square were in the hands of the Department of Finance and Administration and they were aware of everyone who was residing at Dolphin Square at that time, advice was only given to two members and not circulated to everyone. I have detailed in previous correspondence that I have had previous experience of advice which has been given to Members which has then proved to be incorrect and if acted upon would have cost me several thousand pounds. Since my last correspondence I have been given further incorrect advice regarding my current tenancy, relating to the winding up allowance, which if acted upon would have again had a significant financial impact in excess of a thousand pounds. Only after discussion with colleagues was I able to take the correct course of action.”
90. Mr Barrett said he mentioned this, as it could not be assumed that all advice given to Members by the Department was factually correct and “using the experience of colleagues for guidance has in the past been the source of helpful and accurate advice to many Members. In the case of Dolphin Square windfalls many colleagues, including myself, believed we were acting correctly at all times.” He also said that the memorandum “clearly states that the windfall can be set against future housing costs by the Department, but it does not make clear if the entire windfall was used to partly offset other costs directly resulting from employment
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as an MP, as was my own case, as to whether this was also acceptable. As someone who used more than the entire windfall for such directly associated costs, I am still not clear as to whether there exists any advice on this at all.”
91. In conclusion, Mr Barrett told me that he continued to believe that at all times he had acted within the guidance and rules set out in the Green Book “and that it made sense to use the windfall for a number of costs, some of which could have been claimed from a range of allowances, and therefore saving on the public purse.”
92. On 21 January I wrote to Mr Barrett, saying that I thought I had taken this as far as I needed in order to conclude my work on this matter, and that I would therefore incorporate his letter in the evidence for the inquiry and in preparing the factual sections of my memorandum. 60
Rt Hon Sir Alan Beith MP
93. Sir Alan Beith wrote to me on 30 May to say that, following press and public interest in Members renting flats in Dolphin Square, he had decided to refer to me the decision he had taken in 2006-07 so that I could rule on whether it was appropriate.61 He had refused an offer from the new landlords of Dolphin Square of £28,000 (which Sir Alan subsequently corrected to £48,030) 62 to give up his tenancy either by leaving or by taking a new tenancy at a higher market rent without any security of tenure. He had decided that it would be “better value for the tax payer” if he stayed in the unmodernised flat on the protected terms, and renewed the kitchen. He was offered and accepted £5,000 to give up any succession rights that might arise under the tenancy, and set aside this money for redecoration of the flat, which could otherwise have been claimed from the allowance. He said he was not liable to capital gains tax on this sum.
94. I wrote to Sir Alan on 4 June and asked him about the particular circumstances of his Dolphin Square lease, in similar terms to my letter of the same day to Mr Barrett.63
95. In his reply of 15 June64 Sir Alan said that he must re-iterate that the Daily Telegraph article was “wholly wrong in implying that I had accepted a payment in return for giving up a favourable rent, thereby increasing costs to the taxpayer. As I indicated in my earlier letter, I rejected an offer of £48,030 which, if I had accepted it, would have had this effect. I accepted a payment of £5,000 to give up any succession rights for other members of my family: there was no public interest in retaining these rights, since the flat was rented to enable me to do my job as a Member of Parliament.”
96. Sir Alan said he had rented a flat in Dolphin Square since 22 December 1975 and had moved into his present flat in 1993. He had always claimed the rent from the Additional Costs Allowance. In October 2005 he had received an offer of £48,030 from the new owners to accept Option A. Sir Alan commented, “If I had taken this option and remained
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in the flat, the rent would have risen immediately to £22,880 per annum on a shorthold tenancy, as opposed to £14,441 per annum if I retained my then existing terms.”
97. Sir Alan drew my attention to the clear statement in that advice of the advantages of accepting Option B (and refusing the cash offer), particularly security of tenure and certainty about the rent. Because he had decided to reject the cash offer, Sir Alan said he did not explore with the Fees Office whether they would, in the event of him accepting it, recommend that it should be repaid to the House of Commons (net of Capital Gains Tax). “It appears from what is now known about other cases, and from the continued acceptance that Members can retain capital gains on property for which the mortgage interest has been claimed from ACA, that they would not have advised repayment. I did not have any wish to make a personal profit from this situation and saw no reason why I should do so, and this confirmed me in my decision to reject the cash offer and retain the below-market- rent arrangements.”
98. Sir Alan said that a separate offer of £5,000 was made to those long-standing tenants who, it was believed, might have a right to pass the tenancy on to their children. He said that there being “no conceivable public interest in my retaining that right, I was happy to surrender it and set aside the £5,000 for redecoration of the flat.” This was planned, Sir Alan said, to take place after other refurbishment was completed, in the long recess of 2008, “but unfortunately I found myself in hospital with a heart attack in July 2008 and the planning of that decoration work did not go ahead. I intend that it will be done in this year’s long recess. Under the rules as they were at the time, this redecoration work could have been claimed from the ACA, if I had not chosen to fund it from the cash payment.”
99. Sir Alan considered that the decisions he had made were in the public interest, because they ensured more favourable rent terms, and in the case of the £5,000, met a cost which could otherwise have been claimed from the allowance. He had taken the view that for him to accept the £48,030 cash offer, although it would have been in his personal interest, would have been against the public interest. Sir Alan also mentioned his wife’s involvement in funding their London accommodation. His wife [Baroness Maddock] was an active Member of the House of Lords and was able to claim an overnight allowance for those nights when she was in London in order to attend a House of Lords sitting. She “normally claims only half that allowance. Despite the fact that there is no entitlement to this allowance during August and September, we normally work on the basis that throughout the year she contributes a fixed monthly sum—currently £600—which I deduct from my rent claim.” Sir Alan said he had not asked his wife to contribute this sum during a period when she used part of her allowance to contribute to the cost of renewing the kitchen. This was, he said, at a time when there was no prospect at all of the landlord renewing the 1960s kitchen, because the policy was to concentrate on improving the vacated flats of people who had accepted the cash offer. Sir Alan continued “We have never ‘double-claimed’ from our allowance—we each claim for costs we have individually met. My wife is, of course, subject to and complies with House of Lords rules in respect of allowances she claimed.”
100. I wrote to Sir Alan again on 18 June.65 I noted from the terms of his lease dated 10 January 2006, a copy of which he had sent me, that he was required to redecorate the whole
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of the interior every seven years. I asked him when he received the £5,000; when the flat was last decorated; whether he expected that the full amount of £5,000 would be required to cover all the necessary redecoration; what was the other refurbishment to be undertaken before the 2008 summer recess, when it was carried out, and how it was paid for; whether he had any documentation or other evidence in relation to the plans he had for refurbishment in the long recess of 2008, such as builders’ quotations; whether, instead of retaining the £5,000, he had given any consideration to surrendering the money to the Fees Office and claiming for the redecoration of the flat as and when the work was carried out; and whether he had consulted the Fees Office at any stage about the options which were put before him by the new estate owners. In my letter I also noted that in return for the £5,000 he had surrendered the extended succession rights but retained the standard succession rights. I said that I assumed therefore that the surrender did not affect the rights of his wife to take over the tenancy in the event of his death, but asked him to confirm that. I also asked Sir Alan to let me know, for each financial year from 2005-06, the total outgoings on the flat which were claimable against the Additional Costs Allowance; the claims he had actually made against the ACA; and the amounts his wife had contributed towards the total outgoings.
101. Sir Alan replied on 9 July.66 In his letter he said that he had received the £5,000 in January 2005.67 The sitting room and bedroom had been previously decorated in 2001–2. The kitchen, passage, toilet, bathroom and small spare room had not been redecorated since the time that he had moved into the flat. He had expected that the full £5,000 would probably be required to cover the complete redecoration of the flat which the lease required. The other refurbishment undertaken before the 2008 summer recess involved the re-tiling of the kitchen, for which his wife paid. “Redecoration could not go ahead until this messy work had been completed.” It was redecoration, not refurbishment, of the flat which had been planned for Autumn 2008. Sir Alan had been taken into hospital unexpectedly, which had disrupted his plans to meet and obtain an estimate from the decorator. Sir Alan said he had been instructed thereafter to take at least six weeks off work, and he and his wife had left London for Northumberland as soon as he was fit to do so. He had “no reason at all to believe that the Fees Office would seek payment to them either of the £5,000 or, indeed, of the £48,030 which I had refused. It was not the House policy—and is still not the House policy—to recover capital gains on property on which mortgage interest is claimed, and I assumed that the same policy would cover these circumstances.” He had not been aware at the time of any colleague being asked for such payments (despite the cash offer arrangements being publicised) and “we now know that in at least one case where advice was sought, the retention of a much larger Dolphin Square payment and its use to part finance a mortgage was approved by the Fees Office.”
102. The £5,000 payment arose, in Sir Alan’s view, from his tenant/landlord relationship. It was important to recognise that the lease created obligations which were part of that relationship, and for which the House authorities took no responsibility. For example, Sir Alan said, a Member giving up or losing his seat could not claim from the Fees Office for the redecoration which the lease required when the flat was vacated. The lease also created
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other obligations such as carpeting and window cleaning which were no longer claimable from ACA. As to why he had surrendered the extended succession rights but had retained the standard succession rights, Sir Alan said that his first wife had died and he had re- married in the period since he had taken out the original lease on the flat. Prior to changes, it had been the practice of the Dolphin Square Trust at their discretion to allow spouses to take over a flat in the event of their partner’s death. This understanding could not be relied on under new ownership, and the Dolphin Square Trust negotiated for the company to allow joint leases for spouses already resident in the flats; Sir Alan and his wife took up the opportunity and the lease was now joint.
103. Sir Alan said he was not sure what I meant by “total outgoings on the flat which were claimable”. He could have claimed household items and other services up to the limit of the allowance. “If you mean outgoings which I actually spent but did not claim from ACA, these included, for example, bedding, household materials, re-tiling of the kitchen, re-upholstery and other items for which I have not kept records because they were not the subject of a claim. Much of this expenditure was contributed by my wife, in addition to the £600 a month towards the rent which, as I explained in my earlier letter, she has paid except during the period when she was contributing to the kitchen and refurbishment costs.”
104. Sir Alan said his actual claims were available from the Department of Resources and he gave me his authority to refer to them. He had noted one error in ACA when he unintentionally claimed twice over for a television licence, which was not picked up by the Fees Office at the time, and he had repaid this sum.
105. On 7 September, as explained above, I wrote to Sir Alan attaching my correspondence with the Department of Resources and asking for his comments.68 I also sent him a letter on 23 September with a copy of Mrs Humble’s letter of 18 September.69
106. Sir Alan replied on 14 September, expressing his concern that on several points my letter of 7 September did not reflect the information he had already submitted.70 Without seeking to prejudge my conclusions, he said that he would like to be sure that we agreed on the facts of the matter. He asked for my assurance that, before submitting anything to the Committee, I would make clear a number of points, or clarify for him where his summary could be mistaken:
• He did not “fall into category (a) of Members” whose Dolphin Square rent was fully paid from the ACA, as his earlier correspondence had made clear;
• The advice given by the Fees Office, to which I referred, was never given to him or published to Members: it was given to only two Members;
• That advice was framed in relation to Members who chose to accept monetary compensation to “buy out their existing tenancies”. He had refused the monetary compensation offer, which amounted to over £48,000, because he did not wish to have the favourable terms of his existing tenancy bought out. Because it would have led to
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higher rental costs, he believed that it would not have been in the public interest for him to do so. The only compensation he had accepted was for the loss of children’s succession rights, in which there was no public interest. Even if there were any basis for retrospectively applying advice of which he was not aware at the time, the advice would have to have been advice relating to the circumstances he had described, not the advice given to someone who intended to accept monetary compensation to have a tenancy bought out. He said it was worth pointing out that the decision he took was to preserve the terms of his existing tenancy as far as the new landlord’s offer permitted, accepting only the removal of rights which did not accord with the objective of limiting the cost to public funds;
• The correspondence from Mrs Humble provided further support for his submission that many Members, knowing that the Fees Office made no claim on the substantial capital gains which Members could make through the use of ACA to pay mortgage interest, did not believe that the Fees Office would seek the reimbursement of compensation paid for changes in tenancy terms. Although his own case did not fall into this category, he held the same view about the £5,000 which he had received in respect of succession rights;
• It had been and remained his intention that he should make no personal gain from any aspect of his tenancy arrangements, and the £5,000 had always been set aside to defray costs such as redecoration which would otherwise have been claimable from the ACA, or to meet liabilities arising from the terms of a tenancy whose sole purpose was to provide him with reasonable accommodation to carry out his parliamentary duties in London, since his home and constituency were over 300 miles from London.
107. On 22 September I wrote to the Director of Operations in the Department of Resources, enclosing Sir Alan Beith’s letter of 14 September and my letter of 7 September. 71I asked the Director for his comments on Sir Alan’s letter, and in particular on Sir Alan’s view that the Department’s advice to Dolphin Square tenants, described in the Director’s letter of 14 August, was framed exclusively in relation to Members who chose to accept monetary compensation to buy out their existing tenancies. I noted Sir Alan’s remark that the advice did not relate to his circumstances since he had accepted only compensation for loss of children’s succession rights in which, in his view, there was no public interest. I asked the Director whether he considered that the Department’s advice encompassed the £5,000 received by Sir Alan in recognition of him giving up his children’s succession rights or whether he considered that different considerations should have applied. I also drew the Director’s attention to Sir Alan’s remark that he did not fall into the category of Members whose Dolphin Square rent was fully paid from the ACA. I said I took this to be a reference to the arrangements described in his letter to me of 15 June, which set out the involvement of Sir Alan’s wife in funding the Dolphin Square accommodation, it would seem partly at least from her allowances from the House of Lords. I noted that in that letter, Sir Alan said that he and his wife normally worked on the basis that she contributed a fixed monthly sum—currently £600—which he deducted from his rent claim. I asked the Director if he could tell me whether, and to what extent, Sir Alan’s claims against the ACA had been abated to reflect the contribution made by his wife and whether he considered that this
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would have affected the category in which Sir Alan’s circumstances would seem to fall in respect of his rented property, namely moving him from category (a) to category (b) or indeed to a new category and to different advice.
108. The Director of Operations in the Department of Resources responded to some of Sir Alan’s points in his letter of 9 November.72 The Director said that, in respect of Sir Alan’s ACA, he could confirm that adjustments to the amount claimed were made by Sir Alan. However, the precise details were “less straightforward than a monthly £600 abatement”.
109. On the more general points made by Sir Alan in his letter of 14 September,73 the Director confirmed that Sir Alan was neither given nor did he seek advice. It was also the case that the Department’s guidance was not published to Members. The Director also concurred with Sir Alan’s “fair observation that Members might well have considered the capital gain made on a property purchase funded in part through the ACA analogous to that of the tenancy compensation.”
110. In my letter of 11 November to the Director of Operations in the Department of Resources, I asked the Director to provide me with further clarification about how the ACA claims for Sir Alan had been abated to reflect his wife’s share.74 I said that I was principally interested in the rental payments. I asked the Director, if it was not a simple 50– 50 split, for a brief explanation of how the costs were apportioned, and to know whether the apportionment varied over time.
111. On 11 November I wrote to Sir Alan, enclosing an extract of the Department’s letter of 9 November, which responded to the points Sir Alan had made.75 I said that I was asking the Department to let me know the source of the instructions to use the guidance on the offer, to which the Director had referred in his letter, 76 and that I was also asking them for clarification about the rental abatement to reflect the share held by Sir Alan’s wife.
112. Sir Alan wrote to me on 18 November, saying that he could provide me with details, should I require them, of his wife’s contributions to the rent of the flat, which had varied over the period since they were married but had, over the whole period, worked out at an average of around 30%.77 Sir Alan said that the share held by his wife was a tenancy, not a mortgage on a property, so there had been no question of a share being held. Sir Alan said the contributions were made voluntarily “because it seemed reasonable to us that my wife’s allowances for attending the House of Lords should make some contribution to the costs of the flat which we share, whether rental or other costs.” Although Sir Alan’s wife had begun contributing soon after they had married, she did not become a joint tenant until the new lease was agreed in 2006.
113. Sir Alan and his wife had taken up the offer to make the tenancy joint at no cost because, in the event of Sir Alan’s death, his widow could otherwise have faced eviction
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from the flat. This had not been the case under the Dolphin Square Trust tenancy, because the Trust’s declared policy was to grant continuing tenancies to widows in such circumstances. Sir Alan reiterated that the approach of him and his wife to these matters was “guided by our desire to keep down the cost to public funds of having adequate accommodation for our duties in London. We refused a very large cash benefit, which we could have kept under the then prevailing rules and interpretations, in order to retain very favourable rental terms.” The cash offer was made because the new landlord knew that a much higher rent could be charged on Dolphin Square flats in the market conditions at the time.
114. Sir Alan and his wife had set aside the £5,000 “succession” compensation to meet costs incurred under the lease such as decorating which, at the time, could otherwise have been claimed from allowances. In both decisions, therefore, they had been motivated by a desire to keep down the cost to public funds, and this they had achieved. He continued, “Each of us, as a result, has been able to limit our accommodation expenses to well below the permitted level taking the relevant period as a whole.”
115. Sir Alan then said: “I think it is important to stress that any conclusion which treated the £5,000 as a capital gain and sought recovery of it would have to be applied consistently in all cases where any kind of capital gain had been realised, including gains from the sale of a property on which mortgage interest had been paid out of the ACA.”
116. At his request, I interviewed Sir Alan on 24 November.78 Sir Alan began by reading out a statement. In this he said that he had voluntarily referred to me the terms on which he retained his rented Dolphin Square flat when his integrity was called into question in a “seriously misleading newspaper article”, and he had chosen to submit to me his belief that he had acted properly, in the public interest, without any intention or outcome of personal gain. Sir Alan described as “completely false” the allegations that were the subject of my inquiry.
117. Sir Alan said it was important to recall the context of his decision over the Dolphin Square offer. After a long period of serious uncertainty about the future of Dolphin Square, the new landlords had made offers which gave him the following options:
• to give up the flat, receive a payment of £48,030, and (he said) use the money towards a mortgage on a flat elsewhere. He had always been opposed to the system under which the House paid mortgage interest, which was why he had relied on rented accommodation for the whole of his 36 years as a Member of Parliament. “If I had wished to make personal profit, I would obviously have been able to do so if I had used the mortgage system over a very long period of rising property prices.” An alternative version of that option would have been to give up the flat, receive the £48,030, and find another rented flat. Given that he had a secure tenancy with a below-market rent (which included heating and water rates), he could not have obtained such accommodation without “significant extra costs”;
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• to accept the £48,030 and a new tenancy of the flat. This would have been an insecure shorthold tenancy, with an immediate rent increase from £13,82579 to £22,880 per annum; that would have had the effect of favouring his personal interest while adding substantially to his ACA claims;
• to retain the very advantageous secure tenancy and below-market rent, thereby keeping costs down to the taxpayer, while accepting the £5,000 for revocation of succession rights—in Sir Alan’s case his children’s succession rights—to use for the costs of redecoration, which was an obligation under the tenancy. There was no public interest in his retaining succession rights, and no loss to the taxpayer in his decision to give them up. This was the option he had taken.
118. A further possibility would have been to take the third option—accepting the payment for revocation of succession rights—but to make a payment to the Fees Office of the £5,000, less an amount to recognize his wife’s contributions to the rent, and a further amount for the periods in which general elections had taken place. Sir Alan told me “I had no reason whatsoever to believe that the Fees Office would have expected such a payment, and I knew that many Members had decided to accept sums even larger than the £48, 030 I had been offered, and used the money to take up a mortgage.” Sir Alan said that other Members had made very substantial capital gains on properties financed by the payment of mortgage interest, without being asked to make any payment to the House authorities. My correspondence with the Director of Operations confirmed, in Sir Alan’s view, that no advice was given generally to Members on this matter, and that the advice which was formulated, but not circulated, related to tenants who had accepted payment for their tenancies to be bought out. Sir Alan said that he had not been in that category. Mrs Humble’s evidence showed, Sir Alan said, that some Members received different advice on the issue.
119. Sir Alan considered that if it were to be concluded that the £5,000 payment was a payment which the Fees Office were entitled to recover in part, then the same principle would have to be applied to all those who had accepted larger payments to give up their tenancies, and to all those who had made capital gains from the sale of properties on which mortgage interest had been paid from the ACA. He continued, “It seems obvious that the House authorities had no expectation that such payments would be made or would be required. The Report of the Committee on Standards in Public Life has since excluded the possibility of recovering such capital gains on mortgaged property prior to the date of its report.”
120. Sir Alan said that he very much welcomed the recommendation of the Kelly Committee to end the system of payment of mortgage interest to finance accommodation for Members. “My whole approach to my own case has been governed by my opposition to that system.”
121. Concluding his statement, Sir Alan said that, in his decision to remain at Dolphin Square on a secure tenancy and at below-market rent, refusing a large cash offer to give up
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the tenancy and retaining a small payment for succession rights to pay for redecoration, he had kept down the costs to the ACA, prevented unnecessary additional cost to the taxpayer, and did not in any way favour his personal interest over the public interest.
122. Sir Alan then confirmed that he had been a tenant in Dolphin Square since December 1975 and had been in his current flat since 1993. He confirmed that his wife, Baroness Maddock, had, for the past 10 years or so, contributed an average of 30 per cent of the rent charged, from House of Lords allowances, and that he had claimed for the rent from House of Commons allowances: “we both met the costs”. On one or two occasions Baroness Maddock did not contribute to all the rent. “For example, at one time my wife’s contributions were dedicated to the refurbishment of the flat—an option which was not available from the landlord. And she did not contribute in the quarter which included the General Election. But otherwise I always deducted her contribution from my claim.” Sir Alan said his wife’s current contribution was £600 a month, representing 40–50 per cent of the rent.
123. Sir Alan said that if he had accepted the principal payment offered, which was £48,030, the rent overall would have increased substantially, initially from £14,441 a year to £22,880 a year. Sir Alan also confirmed that he had been offered £5,000 to buy out the succession rights of his children. He had accepted this offer and received the payment in January 2006. It was Sir Alan’s view that there was no public interest in retaining these succession rights and that they related to the tenant/landlord relationship which created obligations for which the House took no responsibility. Sir Alan said that he had set aside the sum he had received to meet the cost of redecorating his flat, which otherwise he could have claimed at the time on his allowances. Sir Alan confirmed that he planned the redecoration for the summer of 2008, after tiling work on the kitchen, but that his health problems meant that his redecoration plans had to be deferred to the long recess just passed. This redecoration, Sir Alan said, “…is the sort of task you do in the long recess, because it would be difficult to sleep in the flat while the work was taking place.”
124. Sir Alan said that he had not consulted the House authorities in advance of accepting the £5,000. He believed that the position was analogous to Members making capital gains on the sale of their ACA-funded properties. I asked Sir Alan why he believed that accepting the principal offer (in his case, about £48,000) was not in the public interest. He replied that it would have led directly to a very large increase in rent. The tenancy would have become insecure: he would have transferred to a shorthold tenancy with the duration at the landlord’s whim. “But the primary reason was that there would have been a very large increase in rent—and to what end? So that I could receive a very large sum of money. That would have been exactly the case to which the allegations were directed.”
125. Asked whether it would have been different if acceptance of the money had led to no extra call on public funds, Sir Alan said “That possibility had not occurred to me. It is not what happened.” As to whether it would have been different if he had left the flat and found somewhere else to stay at the same rent, or lower, Sir Alan said that he was being asked to make a judgement about circumstances that did not exist. He told me “The public interest is primarily engaged by the financial detriment. It is engaged by the fact that I could get a financial gain by imposing a detriment on the taxpayer or on the House. That exacerbated
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the case. It would not only have led to higher costs but to personal enrichment for myself. It was blatantly and manifestly contrary to the public interest, which was why I didn’t do it.”
126. Sir Alan said that he saw “some force” in the argument that accepting the principal offer was not in the public interest because the Member would have benefited from a payout which came to them only because of a tenancy sustained by rental payments made from the public purse. “But it would have to have been applied to the gains on a mortgaged property too. It was open to the House to decide in both categories what was in breach and what was in the spirit of the rules. What both have in common is that the financial gain is created by the payment of rent or mortgage interest.”
127. The succession payment (of £5,000) did not, in Sir Alan’s view, raise any issues of public interest because no additional costs would have arisen. The sum was such, Sir Alan said, as could be applied to maintaining the flat. Most of this could have been claimed from the allowances, until the new rule on redecoration was introduced. The Dolphin Square lease required tenants to redecorate every seven years. “The £5,000 helped me to deal with those obligations.” Asked whether it would have still been acceptable if he had been offered much more for the succession rights, Sir Alan said that it would be difficult to maintain that, say, £20,000 was the right figure. But £5,000 was, he said, close to the cost of redecorating the flat over that period, rendering it clean at the end of the tenancy, and ensuring the existing rooms were carpeted. These things were part of the conditions of tenancy. He had never claimed against parliamentary allowances for carpets, but could have done so.
128. Sir Alan acknowledged that one could argue that, like the offer to relinquish succession rights, the principal offer to Dolphin Square tenants related to the tenant/landlord relationship, which created obligations for which the House held no responsibility. But, Sir Alan said, “…set against it there would be the detriment of the greatly higher rent, and the scale of the payment in the principal offer, which was beyond what could be absorbed by the maintenance and other decorative costs I was talking about.”
129. Sir Alan acknowledged that since the House paid the rent, the public interest was “in a sense” engaged, in that he would not have had or needed the flat but for the fact of being in the House and representing a distant constituency. Sir Alan said that he would not have had the finance to take on the flat otherwise. “But if the tenancy was not there, the obligations would not exist. It is a fairly remote argument. I rest my argument on the fact that the sum of money relates closely to the obligations I had to meet, which in turn generated costs some of which could be met from the allowances.”
130. I asked if he thought there was a distinction between a rented property - where the person had no interest in the capital value of the property and where the only contribution to the capital value was through the rent which was being paid—and an owned property— where the person had an interest in the capital and had contributed to that value either through their initial deposit or through their mortgage repayments, or both. Sir Alan replied that the latter could be recognised as a capital gain arising from public funds.
131. Sir Alan said that if he had bought a property in his early days at the House, with say a mortgage of £25,000 and a deposit of £4,000, as he had had the opportunity to do, his mortgage interest would have been paid throughout the period and by now he would have
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paid off the mortgage. He would, he said, have a property “vastly in excess of the debt I held.” The increase in the value of his deposit could, in Sir Alan’s view, be computed—but the rest was only there because the House paid interest on the loan.
132. By contrast Sir Alan said he had received a very small payment from the tenancy. No rights were surrendered. It would be “perverse” to ask for repayment if repayment was not required on very large capital gains on property for which the House had funded mortgage interest. “You would have to take account of any rent not paid from public funds in calculating liability to repay.” Sir Alan later commented on this section of the note of the meeting: “The public purse did benefit, potentially, because of the use of the money for costs which could have been met from the ACA.” Sir Alan did not feel uncomfortable with accepting the £5000, for the reasons he had given me. He said, “Some people were given advice from the House authorities that they were right to accept the payments. And some people were taking large sums as a basis for setting up a mortgage. So there was no basis to feel uncomfortable.”
133. Sir Alan said that he had explained why it seemed right to him to take the £5,000. He was not enunciating a general principle. It seemed to Sir Alan a proper use of money to carry out obligations which could be met by further claims on the allowances. He said he was satisfied that this was a good purpose to use it for. The £5,000 Sir Alan received in January 2006 in respect of his flat was “still there. It is not in a separate account.”
134. Sir Alan explained that he had been unable to carry out the work to his flat in the summer of 2008. He had been taken to hospital from the flat in the week before he was due to see the decorator. After 2008, Sir Alan said, the next opportunity to do the work had been in the long recess of 2009. Sir Alan and his wife had had the decorator in to do the bedroom, bathroom, toilet and passageway to the kitchen. That left the sitting room and small bedroom or storeroom. It had cost £2,765, leaving some for the remaining redecoration. If the rest of the £5,000 was not used up on that work, Sir Alan said, he would renew the toilet floor covering.
135. Asked why he had not carried out the work on the flat before 2008, Sir Alan said that it would have been “pointless” to decorate before the kitchen refurbishment in the summer of 2006. It would have damaged the decorations. Asked why he had not done the work in 2006 and 2007, Sir Alan said it was not material to the issue of principle. Sir Alan and his wife had retiled the kitchen in 2006 and replaced the 1960s cupboards. But, Sir Alan said, there were long periods of uncertainty about the property.
136. Sir Alan said that he could not have done the decoration in the same year as the retiling if he had charged it to his ACA. “But most years I claimed a lot less than I could have done.” Sir Alan said that, since he had intended all along to meet the redecoration costs out of the £5,000, his argument was not affected by the fact that since July 2009 he would have been unable to claim for that redecoration on the PAAE. He told me, “it made no difference to me.” Sir Alan described as “an ex post facto argument” the point that, by the time he had this work done, the rules did not allow for such claims. Sir Alan said he did not know that the House would later come to that judgement. He had used the Dolphin Square £5,000 to meet a combination of obligations which could have been met from the allowances and those that could not. Those included the cost of decoration which arose
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from having the property. Sir Alan said “it is difficult to use this argument [about the impact of the changes to the rules on redecoration] when other Members were allowed to use money received from surrendering the tenancy to enable them to take out a mortgage. That requires a leap of imagination.”
137. Sir Alan said he found the suggestion that “you should draw on the ACA just so that people can see how you spend your money” very odd. Using the ACA for the redecoration would, Sir Alan said, have been “perverse and resulted in a higher cost to public funds.” The allegation against him was that he had claimed costs which were not necessarily incurred, or favoured his personal interest above the public interest. Using the ACA for these works “would have had the effect alleged.” He said it would be “straining [the] argument” to advocate giving the £5,000 to the House authorities and still having the work done.
138. I recalled that Sir Alan had said earlier that if there were a requirement to repay, it would have to take account of any rent which was not claimed from public funds. I asked Sir Alan to clarify for me whether that would apply to his wife’s contribution which was from the House of Lords allowances. Sir Alan said he could not, and “Neither you nor I can adjudicate on House of Lords allowances.” Sir Alan then commented on the idea that the full rent for the flat was indeed met from parliamentary allowances, although not wholly from the House of Commons. He said, “If you were to assert that principle, it ought to be applied to a wide range of capital gains including payments when a tenancy was bought out or the profit from a mortgage funded by the House… Even the House cannot make claims on sums which it didn’t generate or cause to be paid.”
139. Sir Alan said that he had not seen the guidance on this matter prepared by the House authorities until I had sent it to him with the Director of Operations’ letter of 14 August. He observed that only two Members had received it at the time, and it dated from the end of 2005. No-one, Sir Alan said, had seen that guidance until I had found it. He had refused monetary compensation to buy out his tenancy. “If I had seen it [the guidance] at the time I would have asked what advice it provided to Members in my very different position.” Sir Alan said that when he had read it “…I thought that it took insufficient account of costs, of the need to keep down the costs of parliamentary allowances. It was addressing quite large gains made by giving up the tenancy which is not what I was doing. I assume that is because whoever wrote it knew the sums around at the time. I cannot say what was in the minds of the people who wrote it, but they did not communicate it to me.”
140. Sir Alan said that, in respect of the charge that his accepting the payment may have led to claims on the allowances which were not necessarily incurred or may otherwise have favoured his personal interest over the public interest, “…that is demonstrably not the case. The money I received was a payment, not a repayment to the Fees Office. The money was legitimately received and I took a voluntary course of action in the way I used it. There was no loss to public funds.” Sir Alan regarded as “not persuasive” the argument that he was only put in the position of receiving the payment because of the rent payments which he claimed from the House. “At the time the costs of the redecoration could have been met from my allowances.” Sir Alan said that he had accepted the payment on the understanding that it could be used to pay for things he could have claimed, and that “There was no loss to public funds.”
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141. Sir Alan wrote to me on 25 November following the interview, providing more precise details of the timing of the work on the flat, “…although it is my view that the timing has no bearing on the issue, which, is, as you stated, whether my actions may have led to claims on the Allowance which were not necessarily incurred or may have favoured my personal interest over the public interest.”80
142. Sir Alan said that he and his wife had commissioned the main part of the work on the kitchen in May 2006, but it was not carried out until autumn 2006. This was followed by the tiling of the kitchen, which was done in spring 2007. In May 2007 his wife and he were “heavily engaged” in local elections, and his wife was elected to the Borough Council as well as serving on the County Council and serving as a Member of the House of Lords. At the same time Sir Alan was serving not only as Chairman of the Justice Committee (of the House of Commons) but also as a member of the Intelligence and Security Committee “both of which were very time consuming”. This meant that “…for a period we simply did not have time to get estimates and organise the redecoration that summer, and there was no urgent need to get the work completed that year. Therefore we planned to get the decorating done the following summer, a plan which was disrupted by my admission to hospital.”
143. The timetable, Sir Alan said, would only become relevant to the issue if I were seeking to adduce it as evidence that, contrary to what he had stated, he did not intend to use the £5,000 for decorating and other costs arising from the tenancy. Sir Alan continued: “I trust that you accept my evidence on this point, and the fact that the greater part of the decorating has been done.”
144. Sir Alan wrote to me on 2 December about what he said was a procedural issue arising from our meeting on 24 November.81 This was that during our discussion, Sir Alan said, I had invited him to answer two propositions which were different from the ones originally referred to me, and did not lead to claims on the allowance which were unnecessarily incurred or to the favouring of his personal interest over the public interest. The two propositions were, Sir Alan said, also mutually exclusive.
145. He suggested that the first proposition had been that he should have claimed the decorating costs from the allowance in the interests of transparency, having first remitted a share of the £5,000 to the Fees Office. This would not, in Sir Alan’s view, have benefited public funds, and the fact that he did not choose or even think of this option clearly did not mean that he was favouring his personal interest over the public interest. “My concern at the time related to what was proper and justifiable.”
146. The second proposition, Sir Alan said, was that he should have changed his 2006 decision in 2009, to reflect the fact that the House decided in 2009, as part of the interim provisions prior to the report of the Committee on Standards in Public Life, not to fund redecoration expenses. Sir Alan continued: “Had I known that three years earlier, I could have chosen to decline the £5,000, kept the succession rights, and claimed the decorating costs from ACA. There would be no justification at all for requiring me not to use the money for redecoration in 2009 because of the choice I made in 2006 on the basis of what I knew then. It
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was, of course, impossible to reverse the original decision on succession rights three years later.”
147. On 3 December I wrote to Sir Alan, noting his suggestion that the propositions I put to him at our interview raised a procedural issue since the two propositions were, in Sir Alan’s view, different from the allegation which I summarised in my letter to Sir Alan of 4 June.82 I said that the reason I had put these propositions to him was on account of the evidence which he had given to me in response to the allegation summarised in my letter of 4 June.83 Where a Member provided such a response, I said that I believed it was reasonable for me to ask questions relating to that response which may be seen as relevant to my inquiry.
148. In his letter of 17 December the Director of Operations in the Department of Resources noted that in his letter of 9 November he had been able to confirm that Sir Alan had abated many of his Additional Costs Allowance (ACA) claims to take account of a contribution to the rent made by his wife, Baroness Maddock.84 The Director said that, in each of the years 2004–05, 2005–06 and 2007–08, the Department’s records showed that Sir Alan claimed approximately £5,000 below the Dolphin Square rent. In 2008–09, he said, Baroness Maddock’s contribution would appear to have increased to some £7,200. However, for 2006–07 Sir Alan’s Dolphin Square rent of £14,441 was paid in full from his ACA.
149. The Director provided me with two tables.85 The first summarised Sir Alan’s annual rental claims, the rent payable and the total ACA claimed, noting that the Dolphin Square agreement would seem to run from July to June, whereas the allowances year was April to March. The second table detailed the individual payments made and any annotations on the claims themselves. The Director said that “Without further information available to me, I am unable to answer the question posed in your letter of 22 September 86 whether Sir Alan’s circumstances were such that he fell into category (a) or (b) as identified in my letter to you of 14 August.” 87
150. As noted above (paragraph 41) on 7 January I wrote to Sir Alan, copying to him the above letter among other items.88
151. On 14 January Sir Alan replied, saying that the Director of Finance and Administration’s memorandum of 1st November 2005 “…makes clear beyond any doubt that it is advice relating to tenants who accepted an offer to buy out their leases, leading to shorthold tenancies at higher rents: as you know I received an offer of £48,030 to do this, and declined it.”89 Sir Alan said that even though the advice was not relevant to the decision he had taken he remained “surprised” that no effort was made to circulate it to Members who
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were Dolphin Square tenants, since the Fees Office knew which Members had made claims relating to Dolphin Square addresses. He noted that it was not published to Members in any form, and that the Director of Operations had written that “it was not to be promulgated, other than on request”.
152. Sir Alan said he presumed that the correspondence about how much his wife contributed to the rent arose from my wish to confirm what he had told me in his letter of 14 September,90 and in earlier correspondence, to the effect that he did not fall into category (a)—those Members whose rent had been paid wholly from the Additional Costs Allowance (ACA). He continued: “I should make clear that I was never asked or advised about sharing the costs of the flat: the decision to do so, and the decisions on amounts contributed by my wife, were entirely our own—this was a voluntary arrangement we made because it seemed to us to be the correct thing to do. I should also point out that in the year 2006–7, my wife made her contribution by paying half the cost of refurbishing the kitchen, instead of contributing to the rent.”
153. I replied to Sir Alan on 18 January, telling him that I thought I had now taken this as far as I needed, and that I would incorporate his letter in the memorandum I was preparing for the Committee on this inquiry.91
Rt Hon Sir Menzies Campbell MP
154. Sir Menzies Campbell wrote to me on 1 June92 He said that in 2006 he had been offered the sum of £38,000 by the Dolphin Square holding company to relinquish his lease. He had declined that offer and retained the protected tenancy and protected rent to which he was entitled until 2034. Had he accepted the offer “there would have been a substantially increased charge to public funds from the Additional Costs Allowance.” Thereafter he had been offered £5,000 to relinquish the inheritance rights of his spouse in his lease. He had accepted that sum and had used it to offset costs which he had incurred in respect of his parliamentary duties during and after his period as Leader of the Liberal Democrats. Sir Menzies concluded, “In the light of the public interest there is with regard to the way Members of Parliament have used their allowances, I would be grateful if you would consider this a formal request for consideration of the circumstances outlined and whether or not my decisions were appropriate to my role as a Member of Parliament.”
155. I wrote to Sir Menzies on 4 June and asked him about the particular circumstances of his Dolphin Square lease, in similar terms to my letter of the same day to Mr Barrett.93
156. With his reply of 24 June94 Sir Menzies enclosed a copy of his lease from the landlords of Dolphin Square, together with the documentation relevant to the compensation offered by them in return for discharging certain rights. He pointed out that he had been offered and had declined the sum of £38,000 to relinquish his protected tenancy and protected rent as a long standing tenant. Sir Menzies said he had declined that offer because an inevitable
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consequence of doing so was that his reliance on public funds from the Additional Costs Allowance would increase, either because he would require to seek new premises at an increased rent, or if he remained in Dolphin Square, he would require to pay an increased rent reflecting not protected status but market value. A third option which Sir Menzies said he had rejected was to accept the sum of £38,000 and use that amount as a deposit for the purchase of a property with a mortgage which seemed likely to be in excess of his protected rent. Sir Menzies said he had done this last because, although he understood this then to be and still to be within the rules, he had always had “personal reservations about the notion of a capital gain arising in such circumstances”.
157. Sir Menzies said he was offered and accepted the sum of £5,000 in return for the discharge of certain rights to succession mainly in favour of his wife and arising out of his protected tenancy. No increased charge to public funds arose as a result of that decision, Sir Menzies said. He had taken the view that this was a discharge of a personal legal right at market value which accrued to him personally as a result of the tenant/landlord relationship. The right had arisen irrespective of the funding of rent and from a contractual relationship containing mutual obligations. “If, for example, Parliament were to determine that MPs should no longer receive financial support for rent I would still be personally bound by the terms of the lease and obliged to implement the tenant’s obligations under it...”
158. Sir Menzies said he had been a tenant of “what is effectively a bedsit apartment since approximately 1989” and during that period had made appropriate claims for the full rent paid during that period from the ACA. Apart from occasional visits by his wife no other person had occupied the premises but himself since then. The rent payable was contained in the documentation now released by Parliament and at that date amounted to approximately £700 per month.
159. Sir Menzies had given “careful consideration to the offer and in particular the fact that my acceptance of it did not result in any increase in the charge to public funds. My analysis was as set out above i.e. that this was a personal right arising out of the mutual obligations between landlord and tenant. I did not feel it necessary to consult the House authorities nor did I supply them with any documentation.” He had taken the view on the foregoing analysis that there was no conflict between public and personal interest and that he had been entitled to view this matter as he did “since there was no increased charge to public funds and the discharge of rights was at what I understood and accepted was market value.” Sir Menzies told me he had used the sum received to defray expenses which might otherwise have been charges against other allowances. He was “confident that I have made no profit from the sum of £5,000 since it was received.”
160. I wrote to Sir Menzies on 29 June95 and asked him whether he had seen the advice from solicitors which was prepared for residents of Dolphin Square in connection with the offer from the new landlord and, if so, what account he had taken of it. I also asked for a more detailed indication of the items (and their value) which he considered he might have claimed for against parliamentary allowances but which he had chosen to purchase out of the payment of £5,000 without making such a claim, together with any receipts, and what claims he had actually made against the ACA in each of the financial years in which he had
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deployed the payment of £5,000 for items he would otherwise have claimed from that allowance.
161. Sir Menzies replied on 15 July.96 He told me that he had searched his papers but did not appear to have any relevant documents other than those he had already supplied to me. If advice from solicitors was sent to all Dolphin Square tenants in connection with the offer from the new landlords it was a “reasonable inference” that he had seen it. Sir Menzies could not now recollect the terms of any such written advice in the absence of a copy of it. He said that since the landlord’s offer of 3 October 2005 superseded any prior exchanges it might be that he had disposed of the advice once he had received and accepted the offer, but Sir Menzies said that this was “supposition” on his part.
162. Sir Menzies said that he had no receipts for expenditure incurred in respect of items which might have been claimed against parliamentary allowances but which he had chosen to pay for out of the £5,000 Dolphin Square payment. He had not, he said, anticipated a requirement to produce them. But he had avoided making claims for items which would under the rules then applicable have been allowable. For example, Sir Menzies had made no claim for petty cash for his offices either in London or his constituency. He had claimed only once in the four years for which claims had now been published for a TV licence. He had rarely claimed for window cleaning, and never for the cost of cable television supplied to his flat. “There were occasions at night after the House rose when I took taxis to Dolphin Square but did not claim for them.”
163. Sir Menzies attached a schedule showing his ACA claims in the four years for which publication had now been made, together with the provisional figures for 2008–09 which had not yet been published. He observed that with the exception of 2007–08 he had “consistently claimed well below the maximum allowable. I hold the unredacted claim forms and supporting documentation and I should be happy to make these available to you.” His ACA claims had been as follows:
Year ACA claim % of maximum Ranking out of all Members 2001–02 £13,686 76 463rd 2002–03 £12,098 61 570th 2003–04 £16,450 81 423rd 2004–05 £15,071 71.6 487th 2005–06 £10,963 50.7 n/a 2006–07 £16,667 75.4 475th 2007–08 £22,570 98 258th
164. I sent Sir Menzies on 16 July97 a copy of the solicitors’ advice. Sir Menzies wrote back on 21 July98 to say that having read it he now recalled having seen it at the time. He had no immediate comment to make on its relevance to his decision. He noted that the advice confirmed his previously expressed view that that the lease between himself and the landlords contained mutual rights and obligations on both parties which subsisted irrespective of whether parliamentary allowances were paid or not.
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165. On 7 September, as explained above, I wrote to Sir Menzies attaching my correspondence with the Department of Resources and asking for his comments.99 I also sent him a letter on 23 September with a copy of Mrs Humble’s letter of 18 September.100
166. At his request, I interviewed Sir Menzies on 10 November.101 He made an initial statement in which he began by saying he wanted to look me “straight in the eye and explain that [he] had acted in good faith.” He said that the explanation he had produced in his letter of 15 July was not “ex post facto”. When the issue of the Dolphin Square payment arose he had considered all the aspects and had come to “a considered and careful conclusion.” Sir Menzies said he had felt that there was no additional charge to public funds; he had turned down £38,000 but regarded the smaller payment as a part of the contract between himself and the landlord, which arose irrespective of the nature of funding. If the House of Commons had resolved that no further support for claims for second homes would be offered, Sir Menzies said that he would still have had rights and obligations as set out in his rent agreement.
167. Sir Menzies said that the money went into his account and that it was used up in whole or in part by not making claims for elements that were at the time legitimate, such as petty cash in London and in the constituency. £250 per month was allowed for petty cash, but Sir Menzies said that he had never made claims for this. Sir Menzies added that there was also: his TV licence, for which he claimed only once in four years; window cleaning, then a condition of his tenancy, but for which he only claimed once or twice; his home phone, for which he did not claim; his office in his home, for which he never claimed for the heat and light; and taxis: “I often did not claim for these, in effect through indolence”.
168. Sir Menzies referred me to the schedule showing the level of his claims.102 “You will see that I am rarely above number 400 in the ‘league table’—except when I had substantial renovations made to my flat. After twenty years I thought these were justified. I had the authority of the Fees Office to proceed.” He explained that the succession right on his flat was a personal right he was giving up. There was no question, he said, of an additional charge on public funds. The money released was applied to expenses which he was otherwise able to claim for.
169. Sir Menzies told me that he had seen Mrs Humble’s letters and had no reason to doubt her account. “It was credible and consistent with the sort of advice that was being given. If I had made an enquiry it is reasonable to suppose that I might have been given the same advice. But there were large numbers of Members in Dolphin Square and no effort was made to issue general advice on this.”
170. Sir Menzies said that he had accepted the £5,000 “because it was the discharge of a personal right. A parallel might be the capital gain from the sale of a property.” Concluding his opening remarks, Sir Menzies noted that Sir Thomas Legg had not sought the refund of this payment, nor had the Speaker authorised him to do so.
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171. Sir Menzies confirmed to me that, in the autumn of 2006, he had been offered £38,000 by the new Dolphin Square holding company to relinquish his lease on his flat there. He declined that offer and so retained his protected tenancy: his own tenancy and rent were protected until 2034. But Sir Menzies had accepted £5,000 to relinquish the inheritance rights of his spouse. He had acted in this way because he considered this a private matter with no detriment to the public purse, and because it gave rise to no increased charge on public funds. Sir Menzies had used the sum he received to defray expenses which he could otherwise have claimed against other allowances. He did not think it necessary to consult the House authorities and so was unaware of their views on this matter. Sir Menzies enjoyed a personal right which he had been invited to discharge in return for market value, the value which the landlord placed on that right.
172. When asked whether that argument also applied to the principal offer which he had rejected, Sir Menzies replied: “That offer was for a substantially greater sum. That would have resulted in an increased charge to public funds. If I had accepted the payment I would have had to pay a market rent in Dolphin Square; or I could have moved to another rented property or I could have used it to pay for a deposit on a property. I would have received a much larger sum of money.”
173. Sir Menzies continued that the right to compensation did not exist at law. Nothing in his lease, he said, entitled him to £38,000. It had been, in his view, compensation for giving something away, not for the discharge of a legal right. It was designed to persuade people to give up something they could have held on to.
174. Outlining the background, Sir Menzies said: “The premises had begun to show their age, but in view of the tenants they had I was not surprised that the terms offered by the trustees contained protection of that kind for them. Some of the tenants had limited means.”
175. Sir Menzies agreed that the principal offer raised the question of a conflict between his public and personal interest. There could, he said, have been three possible consequences of the payment of the principal offer sum, each of which would have increased the charge on public funds. Sir Menzies could have stayed but paid a market rent; he could have moved to a flat elsewhere and paid more, or he could have used the reimbursement of mortgage interest to acquire a property.
176. On the question of the principle involved, Sir Menzies told me “Let us say that if there is no public loss, that is persuasive that no public interest is involved.” He had never considered taking the £38,000 in the principal offer and trying to move to a cheaper flat. “It would have been impossible to get a cheaper flat. I doubt I would get even a bedsit in SW1 for less. I have just one room plus a bathroom and kitchen.”
177. Sir Menzies recalled that he had been in the House since 1987. If he had had a 20-year mortgage with interest paid by the taxpayer, it would have been paid off by now. “If I had been inclined to maximise value for my personal financial benefit then I could have done so. But renting was convenient and Dolphin Square was convenient. It suited me. My room is the size of a small hotel bedroom, but that is all right because my wife came down only a little.”
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178. It would, in Sir Menzies’ view, have been wrong to decide to take the opportunity to move elsewhere in London and pay more for that flat, although the ACA would have allowed him to put in a larger claim within the ceiling. He said that there would in that case have been additional cost to the public purse which was not justified. This relationship between landlord and tenant was, said Sir Menzies, either a private matter, “in which case it is no business of the House; or in the alternative, if it is not, I say that I am serving the public interest.” He said he had been offered the £5,000 because of his status as a tenant. The funding he had received from the House could have been withdrawn at any time. If he had lost his seat the mutual rights and obligations of landlord and tenant would have continued. “The House was not in the position of tenant; the House had no interest in the lease and the House would not have stood behind me.”
179. Sir Menzies said he had obtained value for the discharge of a legal right. If he had kept the right, he would have retained an advantage. “The succession rights were personal to me. They did not belong to the House. I paid rent on the basis of the agreement I had entered into.” Sir Menzies had assumed the £5,000 was market value, but he could not ask around to find out. “I suppose I could have held out for £10,000 or £15,000—but there were no comparables.”
180. In Sir Menzies’ opinion, he told me, it would be incongruous if the gain from a mortgage were to be permissible but not that from this secondary right. “I started with the inhibition that I would not take out a mortgage. I did not want to enter the property market in this way. It was my inhibition—not that of others.” It was “incongruous that this is where it has brought me, while others have acquired valuable assets in a rising property market.”
181. Sir Menzies said that he did not think he could see any distinction between a Member benefiting financially from a property on which parliamentary funds had met the rent and in which they had invested no capital, and a Member benefiting financially from capital appreciation, having had their mortgage interest paid but having themselves made a capital contribution to the property.
182. Neither would it make a difference, Sir Menzies told me, whether the rent had been paid in part or in full from public funds. Asked whether payment of rent from public funds should make a difference, Sir Menzies said: “Perhaps I spoke hastily. It was a novus actus. I was influenced by the relative size of the sums. I can’t remember my thought process very clearly, but I thought £38,000 was too much and £5,000 was not enough to raise a question. The payment was for a discharge of my right under the lease.”
183. On the question of the Department’s advice, Sir Menzies observed that there was a “conflict with the credible accounts given by Members about the advice received, and what the Director says would have happened had I asked for advice. Let us remember that the performance of the Fees Office has been under review. It may be that the individual Mrs Humble spoke to decided to go his own way.”
184. Sir Menzies then said that Dolphin Square was spoken of as if it were “a luxurious block. It is not. It is a 1930s Cubitt building—it doesn’t compare with luxury apartments in other parts of London.”
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185. Asked why he had not claimed against his allowances for the costs on which he spent the £5,000, Sir Menzies replied: “I didn’t keep receipts. I am not very good at writing everything in a notebook. It was more convenient to do it this way. For example, if I was taking account of the use of the phone at home I would have to have had two bills.” When asked whether it was not a disadvantage that there was no audit trail to show how the money was spent, Sir Menzies said: “Well, it depends if you accept my word.” There were, he said, quite a few expenses directly relevant to being an MP which never appeared among the published expenses. “We are down here for 30 weeks of the year; we are not just sent here for three days at a time. Many people do not understand that.”
186. Sir Menzies denied that he had used some of the £5,000 to defray some of the costs of the office of Leader of the Liberal Democrats, but he said that “…whereas the Leader of the Official Opposition has a car and so on, the Leader of the Liberal Democrats has no salary above his salary as an MP. Chairs of Select Committees get more: about £14,000. We rely on Short money to fund the office. I didn’t use the money to pay for the Liberal Democrat leadership, but I had greater parliamentary expenses.” He did not personally profit from the £5,000. It was legitimately spent on things he could have claimed. MPs had other expenses which they incurred in the course of their work but for which they could not claim. “For example, we are at the top of every charity subscription list. Other expenses are paid but not these. Some expenses are 50:50 parliamentary/party political. The distinction is not always clearly drawn. For example, the Communications Expenditure. We are preparing an Annual Report in my office just now. It can be hard to see where the line is drawn.”
187. Asked for his view of the argument that since it was solely his parliamentary allowances that generated this payment, he could properly be reproached for not having paid it over to the Fees Office, Sir Menzies responded: “I accepted it in good faith. I was offered the payment because I was a tenant. The funding of the rent was a different matter in my view.” He continued that there was “an incongruity”. It was “no secret that substantial numbers of Members were living in Dolphin Square, and only six referred themselves to you. It would have been straightforward for the Fees Office to ascertain who was in Dolphin Square at the material time and to take the opportunity to issue general advice.”
188. As noted above (paragraph 41) on 7 January I wrote to Sir Menzies, copying to him correspondence relating to the source and nature of the instructions received by the Directorate of Finance and Administration about the Dolphin Square offers.103
189. Sir Menzies replied on 21 January, saying that the letter sent to two Members of the House on 22 November 2005 clearly dealt only with the situation where monetary compensation has been offered to “buyout existing tenancies”, and did not appear to cover the situation where a sum had been tendered to compensate for the discharge of legal rights, which was the position in his case.104 He also said that the Director of Finance and Administration’s memorandum of 1 November 2005105 was consistent with the letter to
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two Members of 22 November 2005,106 in that it referred to the buying out of tenancies “and makes no reference to legal rights.”
190. Sir Menzies also observed that “no explanation is offered as to why the purported advice was not circulated to all Members who were known to the Fees Office to be Dolphin Square tenants as would have been clear from their claims against the ACA. If this matter was thought significant it is difficult to see why this was not done.”
191. I wrote to Sir Menzies on 25 January 2010, telling him that I thought I had taken the matter as far as I needed and that it would be right to bring it to a conclusion.107 I said that I would now, therefore, include his letter in the Memorandum I was preparing for the Committee on Standards and Privileges.
Ms Sandra Gidley MP
192. In her letter, which I received on 8 June,108 Ms Gidley said that in 2006 she had been offered approximately £18,000 from the Dolphin Square holding company to relinquish her lease. Ms Gidley said that she had accepted this sum, declared it to the Inland Revenue and used a proportion of the money to cover moving costs and pay deposits on her next flat. It had been clear that the rent on the Dolphin Square flat would rise to an unaffordable level and there was no option to move to a smaller flat within Dolphin Square. Ms Gidley said that she had moved to a rented, furnished flat with a lower rent which was more sustainable in the long term. Her thinking at the time was that, “…if I kept the money, I was acting no differently to those MPs who had bought property, used ACA to pay mortgage interest, and then sold at a profit and kept said profit.” Ms Gidley asked me if I would consider her letter a formal request for consideration of the circumstances outlined and whether or not her decisions were appropriate to her role as a Member of Parliament.
193. I wrote to Ms Gidley on 8 June and asked her about the particular circumstances of her Dolphin Square lease, in similar terms to my letters of 4 June to other Members.109
194. In her reply of 29 June110 Ms Gidley said that these events occurred in 2006 and she had since discarded some of the paperwork she had at the time, as she had regarded the matter as a closed one. Ms Gidley noted that my letter quoted from the Green Book. Unfortunately, she said, “whilst the Green Book covers what is permissible under the expenses rules it does not deal with the situation that inhabitants of Dolphin Square found themselves in when offered a payment to surrender their tenancies.”
195. The background to Ms Gidley’s particular set of circumstances, she said, was that she had first moved into Dolphin Square in July 2000. The first flat was, she said, “very tiny and noisy so I moved to a larger, better located flat in October 2002. During the final year I was there my rent was £4,625 a quarter (equivalent to a monthly rent of £1,542) and I felt that this was at the upper limit of what was affordable. The full rate was claimed against the
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ACA.” Ms Gidley recalled that “had I stayed, and not accepted any payment, the rents would still have risen at a rate greater than inflation. From memory, the ‘fair rent’ scheme did not apply to my tenancy and the landlord would be entitled to apply for an immediate update and this could be reviewed every two years. Whilst there was some protection with staying in the Square and signing something called Option B the projected rents still represented a significant increase on what I had been paying.”
196. Ms Gidley said that as she felt that this was “unsustainable” she rang the Main Office at Dolphin Square and asked whether there was any chance that she could move to a smaller flat within the complex. “I had always found Dolphin Square very convenient as a number of colleagues lived there and it was handy for sharing taxis after a late vote etc. I was told that moves had been frozen and the only way that I could proceed was to go through the offer process and then move.” At the time, Ms Gidley told me, they made it very clear that there was no option to keep her protected lease and then move within the Square at a later date unless she was prepared to pay the higher rents that would then be in operation. Ms Gidley said that she had then decided to investigate other rental options in order to compare rents and see what was available as there “seemed to me to be little point in moving if I could not find an acceptable flat at a lower rent. Ultimately I moved to a slightly smaller flat half a mile away in … The rental for this was £1,517 per calendar month.”
197. Ms Gidley said that this might not immediately seem like a large saving but there were a number of points that needed to be borne in mind: “The rental agreement was fixed for two years and over a period of time this represented a substantial saving; the flat was furnished, so the only extra expenses I would have to incur would be rates, utility bills etc.; the flat also had its own laundry facilities so I did not have to incur laundry bills; the flat was also on good public transport networks. This reduced the cost to the public purse as there is little need to use taxis when attending engagements.”
198. In effect, “because of the future financial implications of staying at Dolphin Square”, Ms Gidley felt she had “little choice” but to accept the offer of £18,751 to surrender her tenancy. In effect she had to sign a Deed of Surrender, relinquishing the rights to her tenancy and she also had to offer full vacant possession.
199. Ms Gidley said that other options available at the time included Option B which was to stay in Dolphin Square. She believed that there was also another option which would have enabled her to stay for an extra year but would have offered her a similar cash amount for leaving after a year. As her rent would still have increased in the short term she did not feel that this “was an option that was open to me”. Ms Gidley said that the Fees Office were aware of the move because she had to provide a new rental agreement, but no moving costs were borne by the tax payer. She had had to put down various deposits for the flat she was moving into, and this was approximately equivalent to 10 weeks rent. Ms Gidley had funded this herself and also the purchase of a few small items she needed for the flat when she moved in. The only claims she had made for the new property were rent and utility bills.
200. Ms Gidley said that “the offer was obviously the subject of much discussion with colleagues and the consensus seemed to be that this payment was a property related offer, payable for giving up certain rights as a tenant. I certainly believed that there was no
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difference between taking money under these circumstances [and] a Member of Parliament downsizing his ACA funded flat and using the profit for whatever purpose. In short, the rules do not deal with this sort of situation.”
201. Ms Gidley said that in effect the public, and what could be perceived as private interests, did not conflict as the rent paid for under the ACA had actually decreased and she had funded the costs of the move and the deposits. Ms Gidley said that there had been no mechanism for paying money back and if this money should have been returned to the Fees Office she believed there would then be a “question mark over every MP who has made a personal profit on an ACA-funded property transaction and questions would need to be asked whether it is a matter of public interest that those monies should be returned. Indeed, if I had left Dolphin Square and refused the payment the taxpayer would have borne some of the moving costs.”
202. It was almost impossible, Ms Gidley told me, for her to say how she deployed the money from Dolphin Square. She had paid the moving costs and deposits and the rest of her money went into the bank. “I did not account for it in a separate credit line! I can also recall buying a new computer and camera at the time—which are used for parliamentary purposes but were not claimed against any allowance.” Ms Gidley said that “In reality I regard this as an entirely separate matter but it is the case that there have been a number of parliamentary related costs, over the years, that I have funded from my own purse.”
203. Ms Gidley listed some of the costs. She had moved office in 2002 and the IEP ran out in January of that year. For two months she had paid all the office costs out of her own purse—”to the tune of over £2,000.” During the 2005 election Ms Gidley had had to fund her rent out of her own pocket; the Dolphin Square tenancy agreements were not such that Members could easily end and restart a tenancy when there was an election. This sum had been over £1,500. During the years 2006–07 and 2007–08 Ms Gidley had paid over £330 per month, out of her own salary, into her staffing budget. The total had been nearly £8,000. Ms Gidley frequently paid staff intern costs out of her own pocket. She had funded the costs of defending a politically motivated legal case in 2005. This had cost her over £3,000. In addition she regularly supplemented budgets for office stationery etc. There were also “a number of incidental expenses related to being an MP” of £100 to £200 a month.
204. I wrote again to Ms Gidley on 1 July111 enclosing a copy of the legal advice prepared for tenants, and asked whether she had seen that advice and considered it at the time, and whether Option A: Cash and Go was the offer she had accepted. I asked, in view of her statements that the “fair rent” scheme did not apply and that under Option B the projected rents represented a significant increase on what she had been paying, whether the offer made to her under Option B was materially different from that made to other Dolphin Square tenants. I also asked whether she had consulted the Fees Office about the offer which was made to her by the new estate owners before she decided to accept it, and if so, with what result.
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205. Ms Gidley replied112 on 14 July. She said she could recall seeing a copy of the Report to the Residential Tenants of Dolphin Square produced by the advisers. She said that some of the information therein was duplicated in the offer booklets which were later produced. She said that she did not read the document fully and that the reason for this was worth putting into context. “Over the period of several months Dolphin Square Tenants had received many large documents from a range of interested parties and it was impossible to keep up with them and the day job.”
206. Ms Gidley had taken the Cash and Go option. She had wanted to reduce her rent and had not been allowed to move to another flat in the Square. She said she believed she had also been made an offer under option B. The terms would have been similar but the financial breakdown I had provided seemed to be for a flat with a lower rent. Ms Gidley said that there had been a wide range of properties in Dolphin Square and about 24 pricing bands and her rent had been in one of the most expensive bands. Ms Gidley said “I did not consult the Fees Office about the offer itself. As I said in my earlier letter I did not see any difference between taking the money from this offer and a colleague with an ACA funded mortgage profiting from a property move.”
207. On 7 September, as explained above, I wrote to Ms Gidley attaching my correspondence with the Department of Resources and asking for his comments.113 I also sent her a letter on 23 September with a copy of Mrs Humble’s letter of 18 September.114
208. Ms Gidley wrote to me on 12 October, saying that she had no reason to doubt Mrs Joan Humble’s account of events and that she believed Mrs Humble “would have made a different decision if she had been given the advice which the Fees Office claims was issued.” 115 Ms Gidley reiterated her view that “I regarded this unexpected payment as falling into the same category as a Member profiting from a property sale. Given that the advice from the Fees Office has significant implications on all MPs with a mortgage (if followed through to a logical conclusion) I am surprised that the advice was not issued more widely at the time.” Ms Gidley said that the Director of Operations in the Department of Resources had not answered my question with regard to whether any consideration was given to making the advice more widely available. Neither did the Director comment on the analogies that were drawn between this payment and profit from a house sale, the mortgage interest of which had been paid by the ACA. “There cannot be one rule for rentals and one for house owners.”
209. Ms Gidley said that the Director of Operations had claimed he was confident that no advice was offered by the Department other than that he outlined. Ms Gidley said the Director’s “confidence appears to be misplaced and he has not outlined which members of staff the information was communicated to, how it was communicated and what mechanism was in place to make sure the staff had actually read it. Shouldn’t there be an audit trail available for this?”
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210. Ms Gidley said that the situation was somewhat ironic “as I intentionally rented a flat as I was uncomfortable with the idea of personally profiting from a property funded by the taxpayer. The Dolphin Square offer caused me a personal dilemma as I had planned to move anyway.” As part of the money had been paid in tax and part of the money was used to fund her move to a lower rental flat Ms Gidley had felt that the overall burden on the taxpayer was lessened. If she had refused the payment or stayed in her flat either of these options would have cost the taxpayer several thousand pounds more overall.
211. On 19 October, I wrote to Ms Gidley, saying that in view of the references in her 12 October letter to the Department of Resources, I was copying it to them for any comments they might wish to make.116 The same day I wrote to the Director of Operations in the Department, enclosing a copy of the letter of 12 October from Ms Gidley and noting that she had raised the following issues: why the advice from the Department had not been made more widely available; the analogies drawn between these payments and profits from house sales; and the suggestion that there should be an audit trail for the dissemination in the Department of the advice that the Department had prepared.117
212. Ms Gidley sent me an email on 3 November, referring to “the advice ‘given’ by the Fees Office.” She said that she “had not appreciated that this advice was only issued on the 22nd of November, which was only three days before the final deadline for making a decision with regard to the lease” 118 Ms Gidley continued, “Some MPs may well have made a decision and already signed by that date although I have to say that I waited until the final day before signing,”
213. I wrote to the Director of Operations in the Department of Resources on 4 November, enclosing the email of 3 November from Ms Gidley.119 I asked the Director to take account of Mrs Gidley’s latest point in relation to the timing of the guidance the Department prepared in responding to the various comments made by Members.
214. In his letter of 9 November, the Director of Operations in the Department of Resources said that Mrs Gidley appeared not to have contacted the Department in 2005 about this matter.120 However, he confirmed that the managers of the relevant sections were aware of the position on the Dolphin Square offers “and an ‘audit trail’ is available.”
215. On 11 November I wrote to Ms Gidley, enclosing an extract of the Department’s letter of 9 November, which responded to the points Ms Gidley had made.121 I said that I was asking the Department to let me know the source of the instructions to use the guidance on the offer, to which the Director had referred in his letter . 122
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216. As noted above (paragraph 41) on 7 January I wrote again to Ms Gidley, copying to her the Director’s response to my questions about the instructions received on the Dolphin Square offers.123
217. Ms Gidley replied by email on 21 January, noting the memorandum from the Director of Finance and Administration and the Director of Operations’ remark that it was his “very clear recollection that the instruction to my staff and me was that the guidance was to be made available to Members who sought advice: it was not to be promulgated other than on request”.124
218. Ms Gidley said that she was “surprised that this instruction was not also in writing and was communicated verbally and I am very curious to know the reasoning behind this decision.” Ms Gidley then noted that the 22 November 2005 letter to the two Members referred to the “potential awkwardness” of the situation whereby public money (ACA) had been used to meet past rental costs either in part or in full, as well as stating that “it would be inappropriate to gain a personal benefit when the rent has been paid wholly from the public purse”.
219. Ms Gidley commented that “It would be difficult to quibble with this statement were it not for the fact that it is/was widespread custom and practice for Members to purchase a property using an interest-only mortgage. In these cases there have never been any perceived problems with Members trading down and realising equity in their property. I struggle to see the philosophical difference between the two situations.”
220. Ms Gidley then noted the statement in the Director of Finance and Administration’s memorandum about the propriety of Members taking the cash in circumstances where the rent had been paid wholly from the ACA. Ms Gidley commented: “If this principle is all important I do feel that all Members should have been issued with this general guidance as the ‘judgement’ affects a much wider cohort of MPs than those who lived in Dolphin Square. The only difference between Members profiting from a property funded by a mortgage paid for using ACA and Dolphin Square tenants accepting the payments is that Members with a mortgage made their arrangements in the full knowledge that they would directly, financially benefit from a future property sale. Dolphin Square tenants could not have foreseen the potential payout. I therefore do not see why they should be subjected to a different set of principles, compared to those who have, with the approval of the House, profited from a taxpayer-funded mortgage.”
221. I replied to Ms Gidley on 25 January, telling her that I thought I had taken this as far as I needed and that it would be right to bring this matter to a conclusion.125 I said that I would include her email in the Memorandum I was preparing for the Committee on Standards and Privileges.
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Mr Paul Holmes MP
222. I received a letter from Mr Holmes on 10 June.126 He said that in 2006 Westminster Council had brought to an end the 70-year-old Housing Trust at Dolphin Square by selling its share to an American property development and management company. Mr Holmes said that “This commercial company set about turning the 1,000 flats into a commercial venture and offered all tenants varying degrees of compensation.” The company also reduced maintenance and security staffing, and increased rents to commercial levels. Mr Holmes had accepted £9,440, upon which he had immediately paid Capital Gains Tax.127 Mr Holmes said that he had then moved out of Dolphin Square to a cheaper temporary let some miles away across London. “After six months—and having found nowhere cheaper in the vicinity of Westminster—I moved back to a smaller, cheaper flat at Dolphin Square. Only in 2008–09 has the rent I pay begun to approach commercial levels for the first time in the eight years I have been an MP.”
223. Mr Holmes observed that ACA rules allowed MPs to use the money to pay interest on a mortgage and later sell that property “at great personal profit.” He said that he had never, in eight years, set out to do this. “No one in 2001 knew that a 70-year-old Housing Trust would be closed down some years later by the actions of Westminster Council. The windfall payment from an American Property Company seemed to me to be exactly the same as the windfall payments I received many years ago when the Halifax Building Society turned itself into a bank and paid money out to its members.” Mr Holmes said he would be grateful if I would consider his letter a formal request for consideration of the circumstances outlined and whether or not his decisions were appropriate.
224. I wrote to Mr Holmes on 10 June and asked him about the particular circumstances of his Dolphin Square lease, in similar terms to my letters of 4 June to other Members.128
225. In his reply of 3 July129 Mr Holmes said that in March 2006 he had been renting a one bedroom flat in Dolphin Square, at a monthly rental of £1,198. “I had occupied this flat since October 2001. Dolphin Square had been built and run as a Housing Trust since the 1930s, offering lower cost rented accommodation than would otherwise be found in Central London/the Westminster area, for those who had to work in the area. For me it was very convenient as it was 20 minutes walk from Parliament and I was able to move in quickly as a complete stranger to London.”
226. Mr Holmes said that by the time he became a tenant, rents were still lower than the usual market rents in the area, but were nearer to commercial prices than they had been for earlier or longer standing tenants. Tenancy agreements by 2001 were he understood different in other ways to earlier ones—not including for example the right to pass tenancies on to children and including a requirement that the flat was not the tenant’s main residence but only occupied for a limited number of nights or days per year. The flats were very basic; kitchen and bathroom fittings in his flat were for example basic and
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elderly. Communal corridors and access ways were shabby and in need of decoration and recarpeting. He could of course, at any time in 2001, 2002, 2003, 2004, 2005 and 2006 have moved to higher rental, more upmarket flats in the Westminster and wider area. He did not do so and thereby cost the taxpayer between £2–3,000 less per year (£10-15,000 over 5 years) in rental than he could have chosen to do so. He could, alternatively, at any time have bought a property (using ACA to pay mortgage interest, legal fees, moving fees and so on), a property which he would later be able to sell at a large personal profit. Mr Holmes commented that “The majority of MPs follow this option.”
227. However by 2006 Westminster Council had sold out its share in the Housing Trust to a USA based Property Development Company. This ended a 70 year old Housing Trust— an eventuality which no one could have foreseen when he had moved to Dolphin Square in 2001. Mr Holmes said: “This company came with a ‘bad press’ about their intentions and what they had done when they took over a similar block of flats in Paris. They offered a payment to all tenants to either leave or to stay but with rents increasing to commercial levels. A third alternative was to stay with rents at a lower than commercial level for 10 years (and, as I say, tenants of longer standing than I, had much more favourable rents and tenancy agreements).” The company, said Mr Holmes, had reduced staffing, maintenance and security, and they did he commented, “try to further change the ownership arrangements for the flats (allegedly so they could start to sell rather than rent them), a legal move they abandoned only very recently immediately prior to a court case.”
228. Mr Holmes said that the company had reduced “casual parking” to seven places for 1,000 tenants and visitors and doubled the charge. He said, “Their payout was therefore also compensation for considerable inconvenience to existing tenants, changes in tenancy agreements, reductions in staffing, security and maintenance, as well as to allow for future more commercial rent levels.” Mr Holmes said he had decided that the takeover by the company in 2006 was “a good time to move to more satisfactory accommodation”. He accepted their terms (£9,950 on which he paid £460 Capital Gains Tax) and moved out “with no intention of returning.”
229. From April 2006 to September 2006 Mr Holmes took a temporary short term let at another location in London at £1,000 per month. Mr Holmes said that this saved a total of £1,188 over six months, compared to his previous rent level at Dolphin Square. However having spent the summer of 2006 looking at alternatives that were close to Westminster Mr Holmes could find nowhere that was as convenient and/or not at a much higher rent. With his temporary let running out and the new Parliamentary year approaching he said he therefore moved back to a smaller and cheaper flat at Dolphin Square. From September 2006 to September 2007 Mr Holmes rented a smaller one bed flat at Dolphin Square, for £1,083 per month. He said that this saved £1,280, plus rent inflation, over 12 months, compared to his previous rent level at Dolphin Square.
230. From September 2007 to September 2008 Mr Holmes’ rent at Dolphin Square increased to £1,245 per month, “which with normal rent inflation was more or less exactly where it would have been had I still been at [the original flat at Dolphin Square] on the old rental terms.” Over two and a half years following moving out of his original Dolphin Square flat, Mr Holmes said he therefore paid approximately £2,500 less rent than if he had stayed at the original flat. Mr Holmes calculated that there were removal and legal costs
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which would not otherwise have been incurred, which totalled £688.06 in all, reducing the rent ‘saving’ to about £1,800. There were also rent overlaps between moving out and into the other location in London in April 2006 (£439) and back in September (£830) reducing the “saving” on rent from April 2006—September 2008 to about £530. “Only since October 2008, some two and a half years later, has my rent increased beyond the old level I was paying at [the original Dolphin Square flat]. However even if I had been paying higher rent from April 2006 I would reiterate that I and any other MP could—legitimately and entirely within the ACA rules—have moved to a more expensive rental at any point in any year from 2001 to June 2008.”
231. Mr Holmes said, “…I clearly never set out to use the ACA in order to make a personal profit. I have only ever used it for the purposes prescribed—to allow me to live in London while discharging my duties as an MP.” He had not sought advice about the landlord’s offer in 2006 as it seemed clear to him that:
“a) Taxpayers’ money was not involved. I received an ‘unexpected and unplanned for windfall gain’ from an international property developer in exactly the way I had received a ‘windfall gain’ many years earlier when the Halifax ceased to be a mutual and became a bank, paying out to private mortgage holders and depositors like myself as a result. This unexpected gain had not been planned for in the way that those MPs, legitimately, using ACA to pay a mortgage plan to make a personal gain upon sale of that property.
“b) I moved out to a cheaper flat and then, through force of circumstance, back to an initially cheaper flat at Dolphin Square.”
232. Mr Holmes enclosed documents relating to the money he had received from the new owners, along with other documents relating to his moves. He described how he had deployed the £9,439 that he received from the new owners. “I paid this into my bank account where it largely cleared my overdraft, an overdraft that included approx £6,200 I had to personally pay (over and above IEP), to set up my constituency office from scratch in 2001–02—including installing security measures as recommended by the police; which also included the nearly £1,000 I had to pay on a useless and empty Dolphin Square flat during the 2005 General Election, when ACA cannot be used even though the flat only exists purely and simply to allow me to carry out my parliamentary duties in London. An overdraft which also included various utility, phone bills and other running costs, which I have had to pay out of my own pocket in various years when the IEP provision has run out around Feb/March leaving a shortfall on the running costs of my very busy constituency office in Chesterfield.”
233. Mr Holmes also noted that during 2009–10 he would have to pay out the best part of another month’s rent on his London flat during the next General Election, “even though Parliament is not sitting and I will be campaigning in Chesterfield whilst the London flat I only rent because of being an MP sits empty and useless!”
234. I wrote again to Mr Holmes on 8 July130 enclosing a copy of the legal advice prepared for tenants,131 and asked whether he had seen that advice and considered it at the time, and
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whether Option A: Cash and Go was the offer he had accepted. I asked whether Mr Holmes had any documentary or other evidence to help substantiate his recollection that the payment offered reflected a reduction in service levels. I also asked him whether in his judgement, had he chosen to remain in Dolphin Square rather than accept the offered payment and move out, the rental payments which he would have paid for his apartment would have been more than those he had actually incurred. In that context I drew his attention the solicitors’ advice that a new lease under Option B was the most advantageous offer for tenants who saw themselves continuing to live in Dolphin Square for the medium to long term.
235. Mr Holmes replied on 20 July.132 He said that as far as he could recall the documents I had copied to him may well have been the same as the ones he was originally sent at the time. Mr Holmes said he did not see himself staying at Dolphin Square for the “medium to long term” as referred to in the Option B lease offer. His permanent home, and his family, were in Chesterfield. Accommodation in London was purely to provide him with somewhere to live whilst he was an MP. Whilst a convenient 20 minutes walk from Westminster, the flat was very basic, the communal areas to the flats were shabby, the view from his window was of the back of another block of flats and of a “concrete canyon” side road. “This side road acted as a sound funnel from the main road by the River Thames so that whenever my window was open there was a constant roar of traffic—even in the early hours of the morning.”
236. Having visited the flats of other colleagues which were in more modern blocks and even closer to Westminster, he had been thinking of moving after he was re-elected in 2005. The proposed takeover by the new owners, “who were heralded by a bad press from both the media and the newsletters circulated by the Dolphin Square Residents Association, prompted me to indeed move in April 2006, under the Option A: Cash and Go terms.”
237. However, having moved to a temporary let, Mr Holmes told me, he had been unable to find anywhere close to Westminster and as affordable by the end of that summer and so he moved back in September 2006 to a smaller, cheaper flat “but with a better view and masked from road noise” at Dolphin Square. If he had in fact “seen [himself] staying” at Dolphin Square for another two or three years, then he could simply have taken the Option A: Cash and Stay offer. He would have received the same windfall of money from a private company but without the inconvenience of moving out. He noted that in the advice document to tenants it stated that “In some respects [the new owners’] AST tenancy is onerous and quite different to what you have been used to in Dolphin Square.” Also whilst the new owners “did not openly state that they would reduce service levels for all tenants, by reducing Porter/Security staff from approx 12 to 2, reduce the hot water temperature, reduce internal and external maintenance, all but completely remove casual parking facilities etc etc—this is nonetheless what they have done and what was predicted of them …”
238. For 18 months after leaving the original Dolphin Square flat he said he had paid less rent than if he had stayed in that flat. For another 12 months he said, he paid a rent level that was virtually identical to what he was paying back in March 2006, even allowing for
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the usual annual increase that would have been levied on his original flat at Dolphin Square. “For two and a half years therefore I paid less or equal to what I would have paid had I stayed in [the original Dolphin Square flat]. Only since October 2008 has my rent increased beyond the original March 2006 level.”
239. Mr Holmes said that there had never been any requirement that he or any other MP stay in a rented property that they first occupied because it was cheaper than moving elsewhere. “…in any and every year from 2001 to May 2009 I could have moved to a more expensive (larger, better fitted, nearer to Westminster etc), rented property. Similarly in any and every year from 2001 to 2009 I could have chosen to use my maximum allowance to pay the mortgage interest on a property I could later sell at a large personal profit. But I never chose either of those options.”
240. On 7 September, as explained above, I wrote to Mr Holmes attaching my correspondence with the Department of Resources and asking for his comments.133 I also sent him a letter on 23 September with a copy of Mrs Humble’s letter of 18 September.134
241. Mr Holmes replied to me on 8 October, saying that, like Mrs Humble in her letter of 18th September, “I simply do not understand how [the Director of Operations in the Department of Resources’] private, unpublished and therefore unknown guidance to those who rented, can possibly be reconciled with the clear, public and still standing policy of his Department, that the great majority of MPs are allowed to ‘gain a personal benefit’ from the use of public funds.” 135 This, he said, was the case even where their purchase of a second home or property had entirely or in part been financed by the deliberate and planned use of the ACA with the full knowledge and co-operation of the Department.
242. Mr Holmes said he could also not understand why, having formulated this private opinion (which applied one unpublished rule to the minority who rent and another, public, rule to the majority who buy), the Director did not circulate it to all the MPs who rented at Dolphin Square. “This is a considerably larger number than the six who have self referred to you, but it would have taken little more than half an hour to skim through the records to see who they all were.”
243. He then said he repeated his previously made points. It never occurred to him to “seek advice” as this buy out/compensation package involved funds from an American property development company, not the taxpayer. The new landlord’s tenancy conditions were, he said, as the advice to tenants noted at the time, “more onerous and quite different to what you have been used to in Dolphin Square.” The new owners, he said, had indeed “drastically reduced porters and security staff numbers, reduced grounds and flat maintenance, sold off car parking spaces and so on.” As the majority of MPs were “openly allowed to make a very large personal profit … out of using ACA to help buy a property, it seemed clear that there was no restriction on my accepting a compensation package of this kind.”
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244. Mr Holmes said he had never set out to make a personal profit from the use of ACA— as shown by virtue of the fact that he had rented a flat in London for the eight years he had been an MP, “rather than indulging in taxpayer assisted property speculation.” No one could have foreseen in 2001, when he began to rent at Dolphin Square, that a few years later Westminster Council would end a 70-year-old Housing Trust by selling out their stake to a commercial property developer. He had moved from his original Dolphin Square flat and into a cheaper flat and then to another cheaper flat. For some two and a half years after he moved out of the original Dolphin Square flat he had been paying less (18 months) or the same (12 months) rent as a result of moving. “There is in any case absolutely no rule regarding use of ACA which states that once renting a property an MP cannot move to a more expensive one, as long as they keep within the ceiling allowed for in the ACA.”
245. On 12 October I wrote to the Director of Operations in the Department of Resources, enclosing the letter of 8 October from Mr Holmes.136
246. In his response of 9 November, the Director of Operations in the Department of Resources noted Mr Holmes’ suggestion that the guidance itself was ‘private’ and ‘unknown’.137 The Director said that it was neither. He said: “Four years have passed but the Department still holds internal correspondence on this matter.” The Director recalled that two Members had requested and received this guidance as reproduced “word-for-word” in the Director’s letter to me of 14 August. He noted that Mr Holmes had later pointed out that “it never occurred to [him] to seek advice”.
247. On 11 November I wrote to Mr Holmes, enclosing an extract of the Department’s letter of 9 November, which responded to the points Mr Holmes had made.138 I said that I was asking the Department to let me know the source of the instructions to use the guidance on the offer, to which the Director had referred in his letter.139
248. As noted above (paragraph 41) on 7 January I wrote to Mr Holmes, copying to him correspondence relating to the source and nature of the instructions received by the Directorate of Operations in the then Department of Finance and Administration about the Dolphin Square offers.140
249. Mr Holmes responded to me when I sent him the factual sections of my draft memorandum, asking him to comment on their factual accuracy.141 He confirmed that my summary was an accurate factual account of our correspondence, and then continued: “However with reference to the Department of Resources’ point … that “it never occurred to me to seek advice”....no of course it did not … There was no doubt in my mind — and absolutely nothing in the Green Book in 2005 or 2006 to say otherwise, as the Director of Operations admits … Neither was there anything to say otherwise in the Green Book in an edition as late as the revised edition of July 2009 ! … I accepted an entirely unforeseen windfall from a property company and moved to a cheaper flat. It was two and a half years
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before my rent increased beyond what I was paying in my original flat. … Nothing in the published guidance and common practice of the ‘Green Book’ led me to believe that I should not accept this windfall and only your research four years later has uncovered the secret and highly contradictory ‘advice’ on this.”
Mr Richard Younger-Ross MP
250. Mr Younger-Ross wrote to me on 29 May 2009.142 He said he had been offered and accepted £9,000 from the Dolphin Square holding company to relinquish all future claims on his tenancy. He had used that sum to offset costs he had incurred in respect of his parliamentary duties. Mr Younger-Ross asked if I would consider his letter a formal request for consideration of the circumstances outlined and whether or not his decisions were appropriate to his role as a Member of Parliament.
251. I wrote to Mr Younger-Ross on 9 June and asked him about the particular circumstances of his Dolphin Square lease, in similar terms to my letters of 4 June to other Members.143
252. On 30 June Mr Younger-Ross replied to me.144 He said he would answer my questions as best he could. However, he said, proof of some items was difficult as he had not kept all documents to which I referred, as they did not relate to IEP or other parliamentary claims. Mr Younger-Ross said that he had not used any parliamentary allowances for personal purposes. All expenses claimed in respect of Dolphin Square were permitted by the rules. He had moved into his current flat in August 2001, and the rent for the first year was £12,870 including heating and hot water. The term was for three years, renewable. The Trust had a restricted rent policy which he had understood would be maintained until 2034. Dolphin Square was very popular with MPs, and its low rents had been and continued to be of particular benefit to Members who wished to remain working in London after leaving the House or who hoped to be elevated to the Lords. This benefit, he said, had been accepted for a long time by the House authorities. His lease agreements were lodged with the House authorities; he took this as acceptance of that benefit and his rights in it, which could potentially last long after he had left Parliament. His tenancy was renewed in June 2003, and under this his combined rent and service charges were:
2001–02: £12,870
2004–05: £13,771
2005–06: £14,203
In 2006–07 this had been due to increase to £14,678.
253. He received a total sum for giving up his various rights associated with the tenancy of £8,031, on which he paid Capital Gains Tax. A new lease was then agreed with the new company on 24 November 2005, which set the rent and service charge at £14,820 for 2006–
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2007, rising to £15,561 for 2007–2008 and around £18,700 for 2008–2009. He considered this a breach of the understanding he had been given on future rent rises, but with the General Election less than a year away, he felt that the cost and disruption of a move to alternative accommodation would be excessive. However for 2009–10 he refused to pay a 3.5% rise and secured the rent/service charge at £19,140. The increase in the rent was agreed and paid by the Fees Office.
254. In considering the offer he had looked at the Green Book and spoken to a number of people “including parliamentary colleagues at both ends of the House”, but he could not recall any specific conversation with the Fees Office. He had spoken with an official in the Department with whom he would usually discuss any issues. Mr Younger-Ross said the official “could not recall whether or not we spoke on this matter, but does recall discussing the matter with other MPs and referring the matter ‘up the line’ for a policy decision. He has emailed [the Assistant Director] to ask if a record of such a decision exists. I will come back to you as soon as I have a reply. Certainly I was never informed of any guidance on the issue.”
255. In his reasoning at the time Mr Younger-Ross said he had taken into account that MPs were permitted to use the ACA to pay interest on mortgages, though capital repayments were stopped in 2001. “MPs also can and do take out interest only mortgages in the certainty that over time prices will rise and they may keep the profit. This the House has and does allow them to do and it is considered entirely legitimate.” MPs had also to his knowledge moved homes and kept the profit. They had also sold up, moved, re-mortgaged and then claimed more from the ACA.
256. Mr Younger-Ross continued, “If all of this is accepted, as I understood it to be when I was considering this decision, then giving up the benefits associated with a rental agreement for a cash payment must also logically be accepted. Certainly there was no intent to make a profit.” If it was not acceptable, he said, then the profit from any property bought using the ACA must also be repayable, as indeed must any extra value to any property due to ACA payments being used to refurbish or modernise a property. He had received a total sum of £8,031, on which he paid Capital Gains Tax, for giving up his various rights associated with the tenancy. In considering his decision he also considered the increased level of rent he would be asked to pay. In deciding whether to give up his rights he had first considered whether he wanted to remain in Dolphin Square. “I was not convinced that I would like the new regime and the changes it would bring. I decided I would want to move, which meant I considered that the rent increases would not be of significance.”
257. However, his intention to move was “very sadly frustrated.” In July 2006 his mother died, followed within four months by his wife’s mother and father. Early 2007, therefore, was not an easy time and Mr Younger-Ross’ wife and he could not face the strain of a move. “It was therefore my intention to move to a more modern property, certainly with more space, and therefore at a higher rent, but still within the guidelines and limits. Such moves are accepted by the Fees Office. The only criterion that guides us is the sum of the allowances.” What proportion Members spend on rent or mortgage was “entirely a matter for us.” Paying 100% of the allowance on mortgage or rent had clearly been deemed “beyond reproach”. Another consideration at the time was the amount of money he had necessarily been spending over and above the IEP limit on maintaining his parliamentary
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offices. Many MPs he knew dipped into their own pockets to subsidise their offices, although some did not.
258. Mr Younger-Ross said he was “100% committed to providing the best service I can for my constituents. I try to cover nine surgeries a month touring Teignbridge, and I encourage people to seek my help. I have over 13,000 names now on my database as having asked for my help. I also have the fourth largest constituency by voters spread over 660 square miles, making it also geographically large.” In round terms, Mr Younger-Ross believed he had spent around £15,000 of his own money over the last eight years supporting his work, and “some of this has been set against tax.” This £15,000 was in addition to other costs he regularly incurred, such as “support for volunteer helpers, my annual Christmas card, contributions as the MP to local events causes or charities, entertainment of constituents etc. None of these have been claimed for or set against tax. In my work, and in taking the lease on Dolphin Square I do not act in the hope of making a profit; I would have bought a flat had that been my intent.”
259. His considerations and discussions with peers had led him to believe that he could “with honour keep the payment from Dolphin Square. It was not a payment from the taxpayer, and in taking it I was conscious that it would help me maintain a high level of service for my constituents.” He had concluded that there would be no additional cost to the taxpayer over and above what he was entitled to claim for living costs wholly exclusively and necessarily incurred, but that he could use the developer’s money “for the good of my constituents”.
260. On 8 July I wrote to Mr Younger-Ross enclosing a copy of the solicitors’ advice prepared for tenants on the various options open to them at that time.145 I asked him whether he saw this advice and considered it at the time; whether Option A: Cash and Stay was the offer made to him which he decided to accept. I also asked him to provide the documents on which he based his estimates of the combined rent and service charge for 2007–08 and 2008–09. In addition I asked him to confirm that he did not use the £8,031 from the Dolphin Square holding company on items which otherwise he would have claimed from his parliamentary allowances.
261. On 27 July Mr Younger-Ross replied,146 confirming that he had seen the solicitors’ advice to tenants and that he had opted for Option A: Cash and Stay, which the advice had said might be attractive to tenants leaving after the spring of 2007. He said that the initial rent under the new arrangement was an 0% increase on the predicted Dolphin Square Trust rent for 2006–07 and only 5% for 2007–08, which proved the advisers’ point. The figures he had given for 2007–08 and 2008–09 were based on actual rent paid and not on forecast.
262. Mr Younger-Ross said that none of the costs he had referred to in his 30 June letter were claimed on ACA; there would not have been sufficient capacity in his ACA to do so. He hoped that it would be confirmed to me that at least one MP was told by the Fees Office they could keep this payment. “However, even if this is not the case, I have had it confirmed
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from the Fees Office that profits from a property sale could be kept and that this advice has not changed, and that a new mortgage could be taken out and increased payments for interest claimed. This is certainly what I was advised when first elected in 2001.”
263. Mr Younger-Ross said that the Dolphin Square payment however was not a simple “profit” as it was received for giving up benefits that were personal to him, not to the House, and the acceptance of liabilities such as a twelve month lease, which again was personal to him. “An election in June 2007 would have cost me over £11,000 in rent for a flat I may not have had a use for if I had lost that election!”
264. Mr Younger-Ross asked, if “such payments should not have been accepted, why did no one advise MPs known to be accepting the offer? The Fees Office certainly had knowledge of the new leases, as I sent them mine in 2006. They would also certainly have known the payment I received, as my details were included in an article in the Mail on Sunday that year!”
265. On 7 September, as explained above, I wrote to Mr Younger-Ross attaching my correspondence with the Department of Resources and asking for his comments.147 I also sent him a letter on 23 September with a copy of Mrs Humble’s letter of 18 September.148
266. Mr Younger-Ross wrote to me on 30 October, saying that he found the Director of Operations’ letter of 14 August “very surprising and flawed.”149 With regard to paragraph a) of the letter, Mr Younger-Ross said that no Member elected before 2005 would have wholly paid for the rent from ACA, for all Members with flats in Dolphin Square paid for the period of the 2005 election. He did not see how “paying the money to the House of Authorities for them to add this to a members’ ACA is significantly any different than accepting the payment, if that payment is then used for interest payments on a mortgage or even for furniture that becomes the property of the member with no tax paid on it.”
267. Mr Younger-Ross then asked why the Director did not explain why his department said that an MP selling the ‘lease’ on a property he bought was substantially any different from a Member being paid for giving up a ‘lease’. The Department had “consistently said that the former is acceptable. Why does his letter not confirm this? I have asked his department this question and I have received no reply.” Mr Younger-Ross noted that the Director had said that two Members sought and were given advice. Mr Younger-Ross said the Director “ provides no evidence of this. Has he advised you who those Members were and have you been able to confirm with them what [the Director said] to them?”
268. Mr Younger-Ross said that Mrs Humble had “clearly contradicted what [the Director] said in his penultimate paragraph [of the 14 August letter]. I understand at least one other Member was given this advice, that it was ‘their’ money. As Members rely on the advice given from their colleagues, this advice would have become the perceived view of the Fees Office. This would be taken as it logically fits with what MPs with mortgages were told.” The Director’s letter of 14 August, Mr Younger-Ross observed, also made no reference to an
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MP giving up rights. Mr Younger-Ross said he had given up the right to keep the flat until 2034. If he had stood down at the next election, this would have been of great benefit to him. The Director did not explain why other Members who told the Department they had decided to take up the offer were not given the advice given to two Members.
269. Mr Younger-Ross said that in the Director’s second letter (of 3 September) the Director had stated that, “I am clear that the advice referred to above was promulgated to staff in the Department who dealt directly with Members”. Mr Younger-Ross asked, “If this is the case why was a member of his [the Director’s] staff unable to clearly recall this advice when I spoke to him in May this year? He had to ask.”
270. Mr Younger-Ross said that the Director had said that “this ‘authoritative’ advice would have been given to Members from November 2005 onwards. However Members knew of a proposed offer months before as the Trustees and Tenants Association kept tenants abreast of developments to sell the leasehold of the Square, indeed the proposal for a buy out was known before the summer recess. The [solicitors’] ‘Report to the residential tenants’ was sent to residents in early October. This detailed the options.” The offer document was dated October 3rd 2005 and he had to return it by November 24th 2005. Although he had “no clear recognition of speaking directly to the Fees Office”, it was in Mr Younger-Ross’s view “highly likely that some MPs discussed this with the Resource Centre staff before the November ‘guidance’.”
271. Mr Younger-Ross noted that the Director had said in his 3 September letter that “the offer to Dolphin Square tenants became known to staff of the House around October 2005.” Mr Younger-Ross said that the Director did not say “how this became known to them. I assume that it would be through a Member. If so who was that Member and are they one of the two written to on November 22? Why, when Members sought to change the lease in early 2006, was the ‘advice’ not given then?”
272. Finally, Mr Younger-Ross said that “…it is said that by raising our rent we have cost the exchequer more than if we had stayed.” Mr Younger-Ross had, he said, indicated in his earlier letter that he had intended to move. “What I should have added at that time is that had I stayed on the lower rent, I would have used that allowance over a few years to replace the fitted carpets that came with the flat in 2001 and to improve both the inadequate bathroom and kitchen, the latter of which is very poor. All this would have been a reasonable use of the allowance under the Green Book at this time.”
273. In my letter of 2 November to the Director of Operations in the Department of Resources, I invited the Director’s comments on issues covered in Mr Younger-Ross’s letter, including the analogies Mr Younger-Ross drew with a Member selling a lease on a property and the advice which the department may have given to Members in relation to the Dolphin Square offer.150
274. In his letter of 9 November, the Director of Operations in the Department of Resources confirmed that Mr Younger-Ross had recently sought answers to certain
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questions from staff of the Department.151 But the Director said that “with your investigation ongoing it would have been wrong for them to have responded.” He recalled that the Department had records going back to 2005 of its actions on this matter. He said however that he was “not at all surprised that very recently a member of my staff on the telephone helpline ‘was unable to clearly recall’ the Dolphin Square guidance available four years ago. Dolphin Square was an isolated and complex matter that applied only to a very small number of Members and the advice itself promulgated only to two Members.”
275. The Director continued that he had checked the Department’s telephone line database and no calls had been recorded from Mr Younger-Ross during the relevant period about his Dolphin Square tenancy. The Director said that this was not conclusive as the Department did not log all calls, “but it supports [Mr Younger-Ross’s] recollection that he did not contact the Department.” The Director noted that Mr Younger-Ross had mentioned discussions that he (Mr Younger-Ross) believed others had had with “Resource Centre” staff. The Director said: “If by this he means at the Members’ Centre in Portcullis House, I must respectfully point out that this did not open until 2008.”
276. On 11 November I wrote to Mr Younger-Ross, enclosing an extract of the Department’s letter of 9 November, which responded to the points Mr Younger-Ross had made.152 I said that I was asking the Department to let me know the source of the instructions to use the guidance on the offer, to which the Director had referred in his letter. 153
277. Mr Younger-Ross wrote to me on 17 November, saying that with regard to the answers he had sought from the Department, “not only have they not replied but they have not even acknowledged my enquiry.” 154 Mr Younger-Ross noted that the Director had said that the Director was “not at all surprised” that a member of his staff could not “clearly recall” the advice given at the time. Mr Younger-Ross said that he found this “surprising as the issue was clearly aired in the Mail on Sunday at the time, October 2006 if I recall.”
278. Mr Younger-Ross questioned the Director’s “assertion that the lack of a phone log ‘supports [the Director’s] recollection that he [Mr Younger-Ross] did not contact the Department’”, as the Department “did not log calls.” Other Members, said Mr Younger- Ross, “clearly do remember speaking to his Department and that [the Director] seems unable to answer.”
279. As noted above (paragraph 41) on 7 January I wrote to Mr Younger-Ross, copying to him correspondence relating to the source and nature of the instructions received by the Directorate of Finance and Administration about the Dolphin Square offers.155
280. On 15 January 2010 Mr Younger-Ross sent me a letter, noting the 1 November 2005 memorandum from the Director of Finance and Administration and saying that he (Mr
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Younger-Ross) found it “hard to believe that the Speaker approved their [the Department’s] actions. He [the Speaker] would have known how MPs profited from their mortgages.” 156
281. Mr Younger-Ross observed that the Department had said “that it would appear inappropriate to gain a personal benefit when the rent has been paid wholly from the ACA”. Mr Younger-Ross said, “However, many Members, if not most elected since ‘97, have interest-only mortgages. Therefore the benefit they will receive on selling the property will have been gained `wholly’ from payment of ACA. In fact it is worse because they may have used ACA to improve the property as well!”
282. Referring to the 1 November 2005 Memorandum’s reference to “a personal windfall entirely attributable to rights earned with public money”, Mr Younger-Ross commented: “Is this not the case with a mortgage? It is not, however, the case with the buy out, for the buy out was for rights until 2034, given on taking up the tenancy. This is not directly related to the ACA payment. Nowhere in the memo does he [the Director of Finance and Administration] say do not tell Members unless they ask.”
283. I wrote to Mr Younger-Ross on 18 January, telling him that I had noted the points he had made and that I thought I had now taken this as far as I needed and that it would be right to bring this matter to a conclusion.157
Findings of Fact Dolphin Square: the Background
284. A number of Members lived in flats at the complex known as Dolphin Square SW1. The head lease of Dolphin Square was owned by Westminster City Council until 2005, when it was sold to new owners. The Members who are the subject of this inquiry (all of whom referred themselves to me) were tenants of Dolphin Square in the autumn of 2005. At that time they had lived in Dolphin Square flats for periods ranging up to 30 years. The rents had been from the beginning of their tenancy either completely or partly (in the case of Sir Alan Beith) paid out of the Members’ Additional Costs Allowance, with the exception of periods when the House was dissolved.
The offers made to Dolphin Square tenants
285. During the autumn of 2005 all Members subject to this inquiry received offers of a payment from the new owners of the Dolphin Square head lease, in return for which they would give up certain rights as tenants of their flats. As existing tenants of Dolphin Square they each received formal offers and legal advice on their options.
286. One of the offers would involve tenants, in return for a lump sum payment, surrendering their current tenancy of the flat and giving the new owners of Dolphin Square full vacant possession of the flat. This was described in a report from a firm of solicitors retained to provide advice to tenants as Option A: the Cash and Go version.
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287. Another of the offers would involve tenants, in return for a lump sum payment, surrendering their current tenancy of the flat and immediately being granted a new lease. This was described in the report from the firm of solicitors as Option A: the Cash and Stay version. The solicitors’ report observed that this lease would be at a higher rent, with no security of tenure on expiry of the fixed term.
288. The lump sum which was offered varied according to the length of each person’s tenancy.
289. There was also another offer, which was described in the solicitors’ report as an Option B Lease. The report said that this would involve tenants receiving a fixed term lease that would run until June 2034, starting with a rent the same as the current rent but gradually increasing year on year. There would be no lump sum payment to tenants.
290. Tenants who enjoyed rights of succession to various family members were simultaneously but separately offered £5,000 by the new owners to relinquish those rights.
291. The solicitors’ advice on Option A: the Cash and Go version included the comment that “If you are looking to leave Dolphin Square within the first few months of 2006, this could be attractive to you. Beware however that if you accept this offer, you may not change your mind or accept a different offer later, unless [the new owner] gives you permission.”
292. The solicitors’ advice on Option A: the Cash and Stay version included the comments that “If you were looking to leave the Square in around Spring 2007 this offer may be attractive to you” and that “In some respects the [the new owners’] AST tenancy is onerous and quite different to what you have been used to in Dolphin Square” and that “If you were looking to move out of the Square after, say, Spring 2007, this still might be an attractive offer for you.”
293. The solicitors’ advice on the Option B Lease included the comment that “In our view there is no doubt that for those of you who see yourselves continuing to live in Dolphin Square for the medium to long term, this is the most advantageous offer for you to accept. It gives you the right to live in your flat with certainty until June 2034, and possibly beyond … In terms of security of tenure and certainty over future rental levels, the Option B Lease is a considerable improvement on your current tenancy rights.”
Advice to Members from the House authorities
294. Neither the Green Book nor any other available guidance specifically gave advice on offers of the sort made to Dolphin Square tenants. None of the Members who are the subject of this inquiry sought the advice of the then Department of Finance and Administration about whether they should take up the offers.
295. In early November 2005, a decision was taken by the House authorities that Members who approached the Department of Finance and Administration about the offers would be offered guidance in writing. This guidance was based on a memorandum produced by the then Director of Finance and Administration on 1 November 2005 following consultation with the Clerk of the House and the Speaker. The memorandum was based on the offers to buy out a Member’s tenancy rights. It made no reference to any offer in respect of buying
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out a Member’s succession rights. The memorandum noted that: “On grounds of propriety it would not seem to be appropriate for Members to accept cash and keep it personally in circumstances where the rent had been paid wholly from the ACA. It would amount to a personal windfall entirely attributable to rights earned with public money.” The guidance which was produced from this memorandum included a warning about the “potential awkwardness of the situation whereby public money (Additional Costs Allowance) has been used to meet past rental costs either in part or in full.” The nature of the guidance depended on the individual circumstances of the Member involved. In cases where the rent had been paid wholly from the Additional Costs Allowance (ACA), the guidance said that Members were to be “advised against taking the cash offer and retaining the proceeds because it would be inappropriate to gain a personal benefit when the rent has been paid wholly from the public purse.” The guidance continued, “If a Member does want to accept the cash offer and pay it over to the House, or set it against future rental payments in the current financial year, this can be arranged.” The guidance made no specific reference to cases where the existing tenancy terms were retained.
296. The House authorities did not circulate this guidance generally to Members, or specifically to Members who were known to be tenants in Dolphin Square at the time. On 22 November 2005, however, in response to specific requests, letters containing the guidance were sent to two Members living in Dolphin Square, neither of whom is the subject of this inquiry.
Individual Members: the Arguments
297. The details of the arrangements of each of the six Members subject to this inquiry are set out above, beginning at paragraph 46. Below I outline the arguments made to me by each of them.
Mr John Barrett MP
298. Mr Barrett accepted an offer of £11,234 from the new owners to give up his rights to a short assured tenancy in Dolphin Square. He had accepted the Cash and Stay offer. In the summer of 2006 he moved to an improved flat in Dolphin Square, before moving out of the complex in the summer of 2008. The rent for his protected flat in Dolphin Square had been £13,462 a year in 2004. The rent for the flat he moved to after accepting the Cash and Stay offer was £18,456 a year in 2006. The rent on his flat in 2008 was £19,942 a year.
299. Mr Barrett argues that he appropriately used his payment from the new owners to meet a range of costs which he had incurred as a result of becoming a Member, but which could not be claimed against allowances, such as the cost of furnishing the flat in 2001, and rent while Parliament was dissolved. He had, he said, also used it to meet costs he could have claimed against allowances but did not, such as food and subsistence costs for staying in London and mileage for using his car in his constituency in the last two years. Mr Barrett also says that he used the money to cover a number of other significant costs, including work related phone calls from his mobile phone and land line, and the costs of keeping one room in his constituency house as an office, for which he has made no claims since being elected in 2001. Mr Barrett calculates that the cost of these items totalled over £13,000. He believes that these details of costs are important as they prove there was no personal benefit from the transaction.
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300. Mr Barrett says that he believes his position in accepting the money from the new owners was the same as that of a Member who made a capital gain on a property where the mortgage interest had been met from parliamentary allowances. He believes that what MPs in Dolphin Square did was to sell a lease for a property in the same way that many property sales in England are in fact the result of leases being sold, rather than the freehold. This would, in his view, place those who sold their lease in a very similar position to the many MPs who have sold properties over the years, when that property was leasehold, rather than freehold.
301. Mr Barrett says that his understanding is that the advice from the House was that the new owners’ offer was a private matter between the landlord and the tenant and that Members had to make their own judgment as to what to do. The Department had confirmed that everything was in order every time he submitted a new lease for approval. Mr Barrett argues that the Department should have provided its advice on the offer to all Members living in Dolphin Square at that time, and not just those who contacted the Department. Mr Barrett contends that much of the information on allowances provided by the Department has been incorrect.
302. The Director of Operations at the Department notes that Mr Barrett had not contacted the Department about this matter and says he is “puzzled” by Mr Barrett’s remarks about the Department’s advice.
Rt Hon Sir Alan Beith MP
303. Sir Alan Beith refused an offer of £48,030 from the new owners of Dolphin Square to give up his tenancy in return for a lump sum payment. Sir Alan considers that to have accepted that offer would have been in his personal interest but against the public interest, because it would have led to substantially greater costs to be met by the ACA. Sir Alan says that he decided that it would be better value for the taxpayer if he stayed in the unmodernised flat on the protected terms, and renewed the kitchen. He was offered and accepted £5,000 to give up his children’s succession rights to the tenancy, and says that he set aside this money for redecoration of the flat, which had been required in his lease. Sir Alan’s evidence is that this work was delayed by his illness in 2008. In the summer of 2009 redecoration was carried out in parts of the flat at a cost of £2,766. He plans to use the remainder of the £5,000 on further redecoration and other work to his flat.
304. Sir Alan’s view is that there was no public interest in his retaining the succession rights. The public interest, in Sir Alan’s view, is in these circumstances primarily engaged by financial detriment to the public purse.
305. Sir Alan also points out that his wife Baroness Maddock, an active Member of the House of Lords, makes contributions to the costs of the flat out of her overnight allowances for attending that House, and a fixed monthly sum is deducted from Sir Alan’s ACA rent claim. These contributions are, Sir Alan says, made voluntarily because it seems reasonable to Sir Alan and his wife that such allowances should make some contribution to the costs of the flat which they share, each claiming for costs they have individually met.
306. Sir Alan also argues that the payment arose from his tenant-landlord relationship, which included obligations for which the House authorities took no responsibility. Sir Alan
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notes that others had made very substantial capital gains on properties financed by the payment of mortgage interest, without being asked to make any payment to the House authorities. He also contends that the advice on Dolphin Square drawn up by the Department of Finance and Administration in the autumn of 2005 was framed for the guidance of Members who chose to accept monetary compensation to “buy out their existing tenancies”, rather than those who were offered payments to give up succession rights, as he was.
307. The Department confirms that the guidance was not published to Members, and concurs with Sir Alan’s “fair observation that Members might well have considered the capital gain made on a property purchase funded in part through the ACA analogous to that of the tenancy compensation.”
Rt Hon Sir Menzies Campbell MP
308. Sir Menzies Campbell refused an offer of £38,000 from the new owners of Dolphin Square to give up his tenancy in return for a lump sum payment. In Sir Menzies’ view, if he had accepted the offer, that would have led to a substantially increased charge to public funds through the ACA, providing him with a benefit to the detriment of the public purse.
309. Sir Menzies accepted £5,000 for surrendering his wife’s extended succession rights to his flat, and says that he used the sum to defray expenses which he had incurred in respect of his parliamentary duties. He says that the sum went into his account and was used up in whole or in part by not making claims for costs that were at the time legitimately chargeable to the House.
310. Sir Menzies argues that no increased charge to public funds arose as a result of his decision. He contends that, had he been inclined to maximise value for his personal financial benefit, then he could have done so, but chose not to. Sir Menzies says he had taken the view that his acceptance of the £5,000 was a discharge of a personal legal right at market value which had accrued to him personally as a result of the tenant-landlord relationship. Sir Menzies’ view is that the lease between himself and the landlords contained mutual rights and obligations on both parties which subsisted irrespective of whether parliamentary allowances were paid or not. Sir Menzies argues that either his acceptance of the £5,000 is a private matter, in which case it is no business of the House; or if it is not, he has served the public interest.
Ms Sandra Gidley MP
311. Ms Gidley accepted the new owners’ offer of £18,751 to surrender her tenancy at Dolphin Square. She had accepted the Cash and Go option. In 2005 she was paying £18,501 a year for her flat as a protected tenant. She moved to a flat elsewhere in Westminster, at a rent of £18,204 a year, plus utility bills.
312. Ms Gidley does not believe that the Green Book dealt with the situation in which she had found herself. Ms Gidley argues that her thinking at the time had been that, if she kept the money, she was acting no differently from those Members who had bought property, used the ACA to pay the mortgage interest, and then sold at a profit and kept the profit. Ms Gidley considers that the consensus among colleagues had been that the payment was a
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property-related offer, payable for giving up certain rights as a tenant. She contends that there was no conflict between public and private interests as a result of her acceptance of the money from the new owners, because the rent claimed from the ACA had decreased when she moved out of Dolphin Square and she had herself paid the moving costs and the deposits.
313. Ms Gidley expresses surprise that the Department’s advice on the offer had not been issued more widely at the time.
Mr Paul Holmes MP
314. Mr Holmes accepted £9,950 from the new owners in return for surrendering his Dolphin Square tenancy. He had accepted the Cash and Go option. In March 2006 he was paying £14,376 a year for his flat as a protected tenant. In April 2006 he moved to a flat away from Dolphin Square on a six-month temporary let for the equivalent of £12,000 a year. From September 2006 he moved back to Dolphin Square for a first-year rent of £12,996 and a second-year rent of £14,940.
315. Mr Holmes observes that ACA rules allowed for MPs to use the money to pay interest on a mortgage and later sell that property “at great personal profit.” He says that he has never, in eight years as an MP, set out to do this. Mr Holmes contends that the payment from new owners appears to be exactly the same as the windfall payments he received many years ago when his building society became a bank and paid money out to its members. He says that he does not understand how the Director of Operations’ “private, unpublished and therefore unknown guidance to those who rented”, can possibly be reconciled with the clear, public and still standing policy of his Department, that the great majority of MPs are allowed to “gain a personal benefit” from the use of public funds.
316. The Department of Resources disputes Mr Holmes’ contention that the guidance for Members on the Dolphin Square offers was “private” and “unknown”. The Director reports that two Members requested and received this guidance, noting that Mr Holmes had later pointed out that “it never occurred to me (Mr Holmes)” to seek advice.
Mr Richard Younger-Ross MP
317. Mr Younger-Ross accepted £8,031 to surrender his rights to his Dolphin Square tenancy. He had accepted the Cash and Stay option. In 2005–06 he was paying £14,203 a year for his flat as a protected tenant. His rent and service charge was £14,820 for 2006–07 (£142 more than the projected increase as a protected tenant); rising to £15,561 in 2007–08, to £18,700 in 2008–09, and £19,140 in 2009–10.
318. Mr Younger-Ross says that he reasoned at the time of the Dolphin Square offers that he was taking a cash payment in return for giving up the benefits associated with a rental agreement, which he argues must logically be accepted by the House; Members were for instance permitted to use the ACA to pay interest on mortgages. Mr Younger-Ross questions what he takes to be the Department’s view that an MP selling the ‘lease’ on a
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property he bought was substantially different from a Member being paid for giving up a ‘lease’.
319. Mr Younger-Ross estimates that he has spent around £15,000 of his own money over the last eight years in supporting his work as a Member. The payment in relation to the Dolphin Square lease, which was not a payment from the taxpayer, would, he argues, help him maintain a high level of service for his constituents.
320. Mr Younger-Ross comments that he had never been informed of any guidance on the issue of the Dolphin Square offers. Mr Younger-Ross notes that the Director of Operations said in his 3 September letter that “the offer to Dolphin Square tenants became known to staff of the House around October 2005”. Mr Younger-Ross asks why, when Members sought to change the lease in early 2006, this advice was not given to them by the Department at that stage.
The Members’ Arguments—a Summary
321. The Members have put forward a number of arguments in support of their decisions to accept payments in return for giving up certain rights as tenants. In summary, the essence of these arguments is that:
• this was a private matter between the tenant and the landlord in which the House had no interest. (This argument was put to me by Mr Barrett, Sir Menzies Campbell, Ms Gidley, Mr Holmes and Mr Younger-Ross);
• the succession payment was for the discharge of a personal legal right arising from a tenant-landlord relationship which included obligations for which the House took no responsibility. (This argument was put to me by Sir Alan Beith and Sir Menzies Campbell);
• the payments did not in fact necessarily increase the call on public funds, either because Members refused the principal offer, acceptance of which would have incurred a higher rent (as in the case of Sir Menzies Campbell and Sir Alan Beith) or because they made alternative arrangements which did not lead to a real-terms increase in the rent they were paying in the initial years (as argued by Ms Gidley and Mr Holmes);
• Members who owned properties on which they claimed mortgage interest were allowed to benefit from any capital gain when they came to sell their property. This was analogous to the capital gain made by Members who accepted an offer from the landlords at Dolphin Square. (This argument was put to me by each of the six Members);
• the money was used either for items which could otherwise have been claimed from parliamentary allowances (as argued by Sir Alan Beith), or for that purpose and to meet other costs incurred as a result of being an MP but which could not be claimed from the allowances. (This argument was put to me by Mr Barrett, Sir Menzies Campbell, Mr Holmes and Mr Younger-Ross.)
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Conclusions
322. The issue I have been asked to resolve is whether the Members who have referred themselves to me acted within the Code of Conduct for Members of Parliament in accepting payments from the new landlords of the complex in which they rented apartments in return for giving up certain of their rights as tenants.
323. While six Members, all from the Liberal Democrat Party, referred themselves to me, I am aware that many more Members of Parliament live in Dolphin Square and, if they were living there in 2005, will have received similar offers from the landlords. My findings from this inquiry could have significant implications for any who accepted offers from the new landlords.
324. The rules in relation to Members’ expenses deal primarily with the propriety of Members’ claims against the relevant expenses category or allowance. None of these Members was making a claim against their allowances by accepting the offers they received from the landlords. The rules in relation to claims against these allowances are not, therefore, readily applicable, as two Members have pointed out (Mr Barrett and Ms Gidley).
325. Mr Speaker Martin’s introduction to the 2005 Green Book, however, makes clear that: “Members themselves are responsible for ensuring that their use of allowances is above reproach.” The question I have considered is whether the Members’ use of allowances which resulted in them receiving a financial benefit from the landlord was consistent with the Speaker’s injunction. I have also considered whether accepting and retaining the offers they were made was a breach of the Code of Conduct, in that in doing so Members put their personal interest above the public interest.
326. While not part of the allegations against the Members, I have considered whether acceptance of these offers created an obligation on the Members to register the sum received in the Register of Members’ Financial Interests. I accept the Registrar’s advice that because such a payment was available to all eligible tenants of Dolphin Square, there was not a registrable interest.
327. The question of whether or not the Members should have accepted the offer made to them as tenants of Dolphin Square and kept the proceeds is primarily an ethical rather than a technical question. On that, I agree with the Director of Operations in the Department of Resources. The Members have put a series of arguments to me, which I shall address in the following paragraphs. But none seems to me to obscure or detract from the clear overriding point of principle. It was the choice of each Member whether to rent an apartment in Dolphin Square. Once they had made that decision, the rental costs for each Member were met in full by parliamentary funds, through their claims against the Additional Costs Allowance (or in Sir Alan Beith’s case partly through House of Lords allowances contributed by his wife). The payment hiatus on the Dissolution of Parliament was well known to all Members in advance. The key point, I believe, is that it was the payments from parliamentary resources, sometimes over many years, which put each Member in the position of being offered a sum of money, in effect, to buy out their rights as protected tenants, or, in two cases where they did not accept that offer, to buy out their succession rights.
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328. The Members were, therefore, only in a position to receive those offers because they were existing tenants of Dolphin Square. That tenancy had been enabled by rental payments which had been met from parliamentary allowances. In my judgement, public funds should have benefited from the acceptance of any offer arising from these rental payments. And, in my judgement, public funds should have benefited to the full. Since none of the six Members referred to me did pass that money on to the Department of Resources, I consider that their use of the allowances which enabled them to be made those offers was not above reproach and was thus inconsistent with the Speaker’s injunction. And I consider that they were in breach of the Code of Conduct because the decision of each Member to accept and keep these financial offers had the effect of putting their personal interest above the public interest, contrary to the Code of Conduct for Members of Parliament. I have no evidence that any Member did this deliberately. It was a consequence of the actions which they took.
329. Two of the Members (Sir Alan Beith and Sir Menzies Campbell) recognised the detriment to the public interest from the principal offer and so rejected it. But they accepted a lesser benefit. While that did not result in any increased burden on public funds, nor did it result in any increased benefit to those funds, as, in my judgement, it should have done. Instead, the sum was retained by them to use as they judged best. I consider that this decision had the effect of putting their personal interest above the public interest, although clearly to a much lesser extent than the other Members. That was because the sums were less and, more significantly, because there was no prospect of an increased burden of rent falling on public funds.
330. I turn now to the particular arguments which were put to me in the course of my inquiry. They can be briefly summarised as follows:
i) This was a private matter between the tenant and the landlord in which the House had no interest. I accept that the terms of the lease were a private matter in the sense they were a matter between the Member and the landlord. The offer from the new owners was made to these Members because, like others, they were tenants in Dolphin Square, not because they were Members of Parliament. The House authorities were not a party to the leases. The Members, therefore, carried certain obligations for which they were responsible. These were obligations freely entered into in signing the lease. That was their decision—it was not the House’s. But it does not, in my judgement, follow that the House had no interest in the arrangement, simply because the House was not a signatory to the lease. Nor does it follow that the House had no interest when Members decided to accept an offer made to them by their landlord. Parliament provided the funds which wholly or substantially enabled the Member to live in his or her rented property. The parliamentary authorities should, in my judgement, have benefited from any payments made to a Member as a result of a tenancy which was dependent on parliamentary funding.
ii) The succession payment was for the discharge of a personal legal right which included obligations for which the House took no responsibility. I recognise the distinction Sir Menzies Campbell has drawn between the principal cash offer, which in his view was compensation for a right which did not exist at law, and the succession payment which, he has argued, was for the discharge of a legal right. I recognise,
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too, his view, and that of Sir Alan Beith, that the succession right was a personal legal right in respect of the relationship between a tenant and landlord which would continue even if public funds no longer supported the rental payments. The continuing obligations under the lease were also pointed out by other Members. I consider that this argument, however, fails to give sufficient weight to the reasons why any such rights and obligations came about. They arose from each individual being willingly elected as a Member of Parliament and each entirely properly exercising their choice on the arrangements for the accommodation they would need, and for which they would be reimbursed, in the exercise of their parliamentary duties. They knew their continuing obligations when they took on the tenancy in Dolphin Square. They had no expectation of the windfall payments. The payments only came about because of the rental payments which—except at Dissolution—were met from public funds. Any legal right of succession only came about because public funds supported the Member in their choice of accommodation. I consider that all the Members should have recognised that the offers were a potential benefit which had become available to them only because of the payments of their rents from public funds. The benefit, however small or large, and whatever the cause, should, if accepted by the Member, have been made over to the public purse.
iii) The payments did not in fact necessarily increase the call on public funds, either where the Member refused the principal offer (as in the case of Sir Alan Beith and Menzies Campbell) or because they made alternative arrangements which did not lead to a real-terms increase in the rent they were paying (as argued by Ms Gidley and Mr Holmes). I fully accept that the decision taken by Sir Alan Beith and Sir Menzies Campbell to refuse the principal offer protected their tenancy and prevented their rents rising higher than would have been the case under an unprotected tenancy. Parliamentary resources were therefore protected from those increases on which they could have claimed. But equally, because they retained the payments, there was no benefit given to parliamentary funds. In my judgement, and for the reasons explained above, there should have been. The position was not the same, however, with the other Members. Ms Gidley managed largely to retain the rental level (although the sum is complicated by the fact that, while her Dolphin Square flat was unfurnished and its utility costs were largely covered by the rent, her replacement flat was furnished and she had to meet the utility costs). The evidence suggests that, while Mr Holmes’s costs were kept down for the first two and a half years, they were after that likely to be increasing at a faster rate than would otherwise have been the case. It is clear from the evidence that, having accepted the principal offer, three of the Members (Mr Barrett, Mr Holmes and Mr Younger-Ross) ended up paying—and claiming for—a higher rent than they would have had to pay had they stayed put. This was the predicted consequence of accepting the cash. Market rents would increase, and continue to increase, at a faster rate than rents under a protected tenancy. It was open to any of these Members—as to any other Member—to move flat, pay a higher rent and claim for that rent, provided that it did not exceed their allowance ceiling. But these four Members also had a cash benefit. I consider that, in retaining the cash payments, these four Members put their personal interest over the public interest.
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iv) Members who owned properties on which they claimed mortgage interest were allowed to benefit from any capital gain when they came to sell their property. This was analogous to the capital gain made by Members who accepted the offer from the landlords at Dolphin Square. I recognise the argument, which the six Members have put very firmly to me. But I do not accept that the analogy is sufficiently close to justify the Members keeping the payments from the Dolphin Square landlords. Each of the Members whose cases I have considered and who rented from Dolphin Square had their full rent met from parliamentary resources. In Sir Alan Beith’s case, part of the rent was met from the House of Commons allowances, and part from the House of Lords allowance provided to his wife, Baroness Maddock. I am not competent to judge on a House of Lords matter, but I believe that it is right in this case to note that the rent was paid from allowances made available from both Houses. The full cost of the rent was, therefore, met by the parliamentary authorities, not by the Member. In contrast, Members who buy a property— whether freehold or leasehold—will normally have some interest in the equity of their property, either because of their initial capital outlay, or because of the payments they have made to the capital element of their mortgage, or both. Those with interest-only mortgages must still themselves at some stage find the capital to repay the loan. The equity in the property is, therefore, held by the Member. There is no such equity in a rented property. In addition, the size of the rent might be assumed to take account of the capital investment of the landlord. If so, the cost of servicing that investment would normally be included in the rent. And in these cases, the rent was met in full from parliamentary resources. Given that the full rental costs (excluding those for the Dissolution period) had been met by the House, any financial benefit should, in my judgement, have been returned to it. I do not seek or need to come to a view on the propriety of the practice of Members making capital gains on the sale of their parliamentary-funded homes, and I would not wish to defend it. That is a matter now for the Independent Parliamentary Standards Authority and the House. But I do not believe that the analogy is so close as to require the same treatment to be applied to the tenants of Dolphin Square. v) The money was used, either for items which could otherwise have been claimed for from parliamentary allowances, or to meet other costs incurred as a result of being an MP but which could not be claimed from the allowances. While it is clearly relevant that most Members have argued that the money went on their parliamentary responsibilities, that does not, in my view, absolve the Member from the responsibility of instead making the payment from the landlord over to the House. The Green Book sets out what a Member may claim against parliamentary allowances, and the procedures which they must follow in order to do so. The informal arrangements which Members followed in this case—in effect, in most cases deeming that their expenditure could have been set against parliamentary allowances—were neither transparent nor sufficient to establish an audit trail which could subsequently be checked. Where Members spent or intended to spend the money, or some of the money, on their expenses as a Member which could not be claimed from their allowances, as did Mr Barrett, Sir Menzies Campbell and Mr Younger-Ross, then they were, in effect, adding an additional category to their own entitlement which was not available through the Green Book to other Members. I do not believe that was their intention.
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331. While, therefore, I recognise the force of the Members’ arguments, separately and together, I do not believe that they are such as to enable me to set aside my principal conclusion that the acceptance of these offers was inconsistent with their obligations under the Code of Conduct, and that their use of allowances to receive and keep these offers was not above reproach.
332. I add the following concluding points:
i) It would have been wise of the Members to have recognised that the House did have an interest in these offers flowing from the payment of their rents from parliamentary resources. They should have consulted the House authorities in advance. The offer was, anyway, unusual and that alone should have been enough to lead each Member to seek advice. It is unfortunate that the offers were apparently the subject of much discussion among Members, but only two appear to have consulted the Department at the time. I am satisfied that the Department did prepare guidance against the possibility that Members would consult them, and that that guidance was not to accept the principal offer. I accept that the advice did not specifically cover the case of the two Members who rejected the principal offer but accepted a payout of £5,000 in return for the succession rights. But I think the guidance was sufficiently clear on the principle involved. The overriding principle which I consider applies also to these payouts was, to quote the guidance, that “it would be inappropriate to gain a personal benefit when the rent has been paid wholly from the public purse.” I have noted that one Member not subject to this inquiry, Mrs Joan Humble, the Member for Blackpool North and Fleetwood, gave evidence to me that she received contrary advice. I note her evidence that that advice was given after the date when Members should have made their decision. In any event, it did not affect the decisions made by any of the Members subject to this inquiry.
ii) It is deeply unfortunate that the Department did not contact each of the Members who rented in Dolphin Square at the time and give them their advice in advance of the Member deciding on the offer. Even belated advice would have enabled the Member to pay the money over to the House. I understand the view that each Member is responsible for their own decisions and, in the way that business was conducted at the time, it may have been thought unnecessary for the Department to offer advice which had not been asked for. I have not received clear evidence of how such a decision not to give out the advice was made. But the result has been that these Members, and probably others, have made a decision which I (and the Department) consider to be contrary to the Code and the rules. I consider that most regrettable.
iii) Two Members, Sir Menzies Campbell and Sir Alan Beith, refused the principal offer, but accepted the much lower offer to buy out their succession rights. I consider that they made the right decision in declining the principal offer. Their acceptance of the lesser offer for succession rights had no effect on their rent. The sums they received were very significantly less than if they had accepted the principal offer. Both gave evidence that, as with other Members, they used it in support of their parliamentary work. But, nevertheless, the benefit to them accrued because of Parliament having paid their rent, and, in my judgement, they should have passed that benefit back to the House.
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iv) The legal advice which each Member as a tenant of Dolphin Square received was only to accept the principal offer if they intended to move within the following 12 months. While I need form no view on the explanation which some Members (Ms Gidley and Mr Holmes) have given for moving on receipt of the payment, that advice should at least have alerted the Member to the potential poor value for money for the public purse in accepting the money and either staying in Dolphin Square or moving when there was no pressing reason for them to do so.
333. I conclude, therefore, that each of the Members was in breach of the rules of the House in accepting offers of payment from the new landlords of Dolphin Square in 2006 without first consulting the then Department of Finance and Administration, because the payments they accepted were the consequences of their rents having been met for a number of years from parliamentary resources.
334. Since parliamentary funds had met the cost of the rent (albeit in Sir Alan Beith’s case from two different sources and accepting that Members cannot claim for costs during the Dissolution of Parliament), in my judgement, parliamentary funds should have benefited in full from any offer which was accepted. The Members’ use of these allowances was, therefore, not above reproach. The effect of Members not making over these payments to the House was to put their private interest above their public interest, contrary to the Code of Conduct for Members of Parliament.
335. I consider that the acceptance of the principal offer was a serious misjudgement, a misjudgement which may well have been made by substantially more Members than the four who referred themselves to me. I do not consider that the various reasons the four Members gave and the uses to which they put the funds should override the seriousness of the misjudgement. The two Members who refused the principal offer did so, in my judgement, commendably in the public interest. That principled refusal must mitigate what I judge to be a lesser misjudgement in accepting and retaining much smaller sums to buy out their succession rights. It was unfortunate that none of these Members sought the guidance of the House authorities. They were not alone in that. But had they done so, these misjudgements could well have been avoided. Equally, had the House authorities sent their guidance to all Members who were at the time tenants of Dolphin Square, then all those Members should have been able to avoid the difficulties which have now come to light.
17 February 201 John Lyon CB
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Written and Oral Evidence received by the Parliamentary Commissioner for Standards
1. Extract from article in the Daily Telegraph, 30 May 2009
At least 13 MPs have received windfalls worth thousands of pounds to give up their right to cheap rent in a deal that led to taxpayers paying substantially more for their second homes.
The Dolphin Square estate in Westminster—originally owned by the Council—had for many years provided low-cost accommodation for dozens of MPs. However, after the estate was bought by a private company, all tenants were offered a lump sum in exchange for either moving out, or paying a higher rent.
Many MPs accepted the windfalls and stayed in the flats while the taxpayer picked up their higher rental bills.
Others took the money and used it as a deposit to buy another taxpayer-funded property, while some refused the money as a matter of principle and preserved the lower rental claims.
Yesterday, 41 MPs were approached by the Daily Telegraph and asked whether they had accepted the payout.
Thirteen admitted they had taken the money, including Tony Wright, the Labour MP for Great Yarmouth, Joan Humble, the Labour MP for Blackpool North and Fleetwood, and David Wright, the MP for Telford.
All the Liberal Democrat MPs who received payments referred themselves to the Parliamentary Commissioner for Standards yesterday, while the Conservative David Lidington paid the money back to the Fees Office. Five failed to respond, and 22 said they rejected the money.
The payouts were offered after Dolphin Square, a large apartment complex, was sold to a US company … four years ago. It also offered £5,000 to give up the right to pass the tenancy on to family.
At least one MP is said to have taken a “six-figure sum” to move out.
…
30 May 2009
2. Letter to the Commissioner from Mr John Barrett MP, 29 May 2009
As a former resident of Dolphin Square, I received a sum of money from the owners of the building in order to give up certain rights on my lease.
The gross amount was £11,234, which was paid to me in 2006. I have allocated this sum to pay amounts directly related to my position as an MP and can supply full details of this. In the light of current interest in all financial issues relating to MPs, I would like you to look into my own position and I am writing to refer this matter to your office.
29 May 2009
3. Letter to the Commissioner from Mr Richard Younger-Ross MP, 29 May 2009
In 2006 I was offered the sum of £9,000 by the Dolphin Square holding company in order to relinquish all future claims on the tenancy. I accepted this sum and have used it to offset costs I have incurred in respect of my parliamentary duties.
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In the light of the public interest there is with regard to the way Members of Parliament have used their allowances, I would be grateful if you would consider this a formal request for consideration of the circumstances outlined and whether or not my decisions were appropriate to my role as a Member of Parliament.
Please do not hesitate to contact me if you require any further details.
29 May 2009
4. Letter to the Commissioner from Rt Hon Sir Alan Beith MP, 30 May 2009
Following press and public interest in Members renting flats in Dolphin Square, I have decided to refer to you the decision I took in 2006/7 so that you can rule on whether it was appropriate. I will be happy to give whatever further details and information you may require, and to check figures which at this stage I am quoting from memory without having had chance to refer to the documents.
I refused an offer from the new landlords of Dolphin Square of £28,000 to give up my tenancy either by leaving or by taking a new tenancy at a higher market rent without any security of tenure. I decided that it would be better value for the taxpayer if I stayed in the unmodernised flat on the protected terms, and renewed the kitchen; I was offered and accepted £5,000 to give up any succession rights that might arise under the tenancy, and set aside this money for redecoration of the flat, which could otherwise have been claimed from the allowance. I was not liable to capital gains tax on this sum.
30 May 2009
5. Letter to the Commissioner from Rt Hon Sir Menzies Campbell MP, 1 June 2009
In 2006 I was offered the sum of £38,000 by the Dolphin Square holding company to relinquish my lease. I declined this offer and retained the protected tenancy and protected rent to which I am entitled until 2034. Had I accepted the offer there would have been a substantially increased charge to public funds from the Additional Costs Allowance. Thereafter I was offered £5,000 to relinquish the inheritance rights of my spouse in my lease. I accepted that sum and have used it to offset costs which I have incurred in respect of my parliamentary duties during and after my period as Leader of the Liberal Democrats.
In the light of the public interest there is with regard to the way Members of Parliament have used their allowances, I would be grateful if you would consider this a formal request for consideration of the circumstances outlined and whether or not my decisions were appropriate to my role as a Member of Parliament.
Please do not hesitate to contact me if you require any further details.
1 June 2009
6. Letter to the Commissioner from Ms Sandra Gidley MP, received 8 June 2009
In 2006 I was offered the sum of approximately £18,000 by the Dolphin Square holding company in order to relinquish my lease. I accepted this sum, declared it to the Inland Revenue and used a proportion of the money to cover moving costs and pay deposits on my next flat. I would add that it was clear that the rent on my Dolphin Square flat would rise to an unaffordable level and there was no option to move to a smaller flat within Dolphin Square. I moved to a rented, furnished flat with a lower rent which was more sustainable in the long term.
My thinking at the time was that, if I kept the money, I was acting no differently to those MPs who had bought property, used ACA to pay mortgage interest, and then sold at a profit and kept said profit.
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In the light of the public interest there is with regard to the way Members of Parliament have used their allowances, I would be grateful if you would consider this a formal request for consideration of the circumstances outlined and whether or not my decisions were appropriate to my role as a Member of Parliament.
Please do not hesitate to contact me if you require any further details.
Received 8 June 2009
7. Letter to the Commissioner from Mr Paul Holmes MP, received 10 June 2009
In 2006 Westminster Council brought to an end the 70-year-old Housing Trust at Dolphin Square by selling its share to an American property development and management company. This commercial company set about turning the 1,000 flats into a commercial venture and offered all tenants varying degrees of compensation for completely accepting [sic] the existing tenancy agreements, reducing maintenance and security staffing, increasing rents to commercial levels, and so on.
I accepted £9,439.80, upon which I immediately paid. I moved out of Dolphin Square to a cheaper temporary let some miles away across London. After six months—and having found nowhere cheaper in the vicinity of Westminster—I moved back to a smaller, cheaper flat at Dolphin Square. Only in 2008–09 has the rent I pay begun to approach commercial levels for the first time in the eight years I have been an MP.
ACA rules allow for MPs to use the money to pay interest on a mortgage and later sell that property at great personal profit. I never, in eight years, have set out to do this. No one in 2001 knew that a 70-year-old Housing Trust would be closed down some years later by the actions of Westminster Council. The windfall payment from an American property company seemed to me to be exactly the same as the windfall payments I received many years ago when the Halifax Building Society turned itself into a bank and paid money out to its members.
In the light of the public interest there is with regard to the way MPs have used their ACA, I would be grateful if you would consider this a formal request for consideration of the circumstances outlined and whether or not my decisions were appropriate.
Received 10 June 2009
8. Letter to the Commissioner from Rt Hon Sir Alan Beith MP, 2 June 2009
Further to my letter of 30th May [WE 4], my memory was indeed at fault. Having traced the documents, I have established that the sum I refused to take was actually £48,030.
2 June 2009
9. Letter to Mr John Barrett MP from the Commissioner, 1 June 2009
Thank you for your letter of 29 May asking me to institute inquiries into whether the arrangement you made in respect of the lease of a property in Dolphin Square was within the rules of the House.
Under the rules of the House, I can only accept a Member's self-referral in exceptional circumstances and with the authorisation of the Committee on Standards and Privileges.
I will, therefore, be considering your request and will be referring it to the Committee. I will let you know the outcome.
1 June 2009
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10. Letter to Rt Hon Sir Alan Beith MP, from the Commissioner, 4 June 2009
I am writing to let you know that the Committee on Standards and Privileges has authorised me to undertake an inquiry in response to your letters of 30 May and 2 June referring yourself to me in respect of the allegations made in the Daily Telegraph of 30 May about certain payments you received from the landlords while a tenant in Dolphin Square.
In essence, the allegation is that you received a payment or payments from the landlords of Dolphin Square in return for giving up certain rights as a tenant; that you received this benefit on account of a tenancy supported by rental payments which were in whole or in part paid from the Additional Costs Allowance; that this arrangement may, as a result, have led to claims on that Allowance which were not necessarily incurred or may otherwise have favoured your personal interest over the public interest.
I enclose a copy of the Daily Telegraph article of 30 May which, I believe, was the basis of your self-referral.
The Code of Conduct for Members of Parliament provides in Paragraph 9 as follows:
“Members shall base their conduct on a consideration of the public interest, avoid conflict between personal interest and the public interest and resolve any conflict between the two, at once, and in favour of the public interest.”
And in Paragraph 14:
“Members shall at all times ensure that their use of expenses, allowances, facilities and services provided from the public purse is strictly in accordance with the rules laid down on these matters, and that they observe any limits placed by the House on the use of such expenses, allowances, facilities and services.”
The relevant rules would appear to be those set out in the Green Book published in April 2005. Mr Speaker, in the introduction, noted the following:
“Members themselves are responsible for ensuring that their use of allowances is above reproach. They should seek advice in cases of doubt and read the Green Book with care. In cases of doubt or difficulty about any aspect of the allowances or how they can be used, please contact the Department of Finance and Administration. The Members Estimate Committee, which I chair, has recently restated the Department's authority to interpret and enforce these rules.”
Arrangement for the Additional Costs Allowance are set out in Section 3 of the Green Book. The scope of the Allowance is set out in Paragraph 3.1.1 as follows:
“The additional costs allowance (ACA) reimburses Members of Parliament for expenses wholly, exclusively and necessarily incurred when staying overnight away from their main UK residence (referred to below as their main home) for the purpose of performing Parliamentary duties. This excludes expenses that have been incurred for purely personal or political purposes.”
Paragraph 3.6.1. deals with the documentation to be supplied by Members. This includes:
“Any documentation relating to changes to these arrangements”.
Paragraph 3.8.2 deals with allowable expenditure as follows:
“Subject to paragraphs 3.1.1. to 3.10.1. you can claim reimbursement for the expenses listed provided that they are wholly, exclusively and necessarily incurred in the course of your Parliamentary duties.”
I am grateful for the information you have sent me. I would, however, welcome your comments in the light of this summary of the relevant rules, and, in particular, it would be helpful to know:
1. the particular circumstances of your Dolphin Square lease, including the time you resided or have resided there, whether and, if so, when you have moved accommodation within the Square, the amount of your rent at the time when the landlord made this offer, the period over which you have made claims
118 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
for this property against the Additional Costs Allowance, and whether you claimed for the full cost or a proportion of the cost of the rent over that period;
2. the offer which the landlord made to you, including the nature of any rights you were asked to forego, and the options open to you in responding to that offer, together with any documentary evidence you may have about the offer;
3. the consideration you gave to the offer, whom you consulted (including the House authorities), what advice you received, what decision you came to and what payments you received, together with any documentary evidence in relation to this, and whether you supplied to the Department of Finance and Administration documentation in relation to any changes in your arrangements;
4. why you considered that your decision was in the public interest as opposed to your personal interest;
5. if you accepted a payment from the landlord on entering a new arrangement with an increased rent, whether you claimed against the allowances for the increased rent and if so whether you consider that you claimed for expenses that were not wholly, exclusively, and necessarily incurred;
6. if you accepted a payment from the landlord in return for giving up succession rights, what you did with it.
Any other points you would like to make to help me with this inquiry would, of course, be very welcome.
I attach a note which sets out the procedure I follow (although in this case, of course, there is no identified complainant). I hope it would be possible to let me have your response within the next three weeks. If there is any difficulty about that, or you would like to discuss any aspect of this matter, please contact me at the House.
I look forward to your help on this matter.
4 June 2009
11. Letter to Mr John Barrett MP from the Commissioner, 4 June 2009
I am writing to let you know that the Committee on Standards and Privileges has authorised me to undertake an inquiry in response to your letter of 29 May referring yourself to me in respect of the allegations made in the Daily Telegraph of the following day about certain payments you received from the landlords while a tenant in Dolphin Square.
In essence, the allegation is that you received a payment or payments from the landlords of Dolphin Square in return for giving up certain rights as a tenant; that you received this benefit on account of a tenancy supported by rental payments which were in whole or in part paid from the Additional Costs Allowance; that this arrangement may, as a result, have led to claims on that Allowance which were not necessarily incurred or may otherwise have favoured your personal interest over the public interest.
I enclose a copy of the Daily Telegraph article of 30 May which, I believe, was the basis of your self-referral.
The Code of Conduct for Members of Parliament provides in Paragraph 9 as follows:
“Members shall base their conduct on a consideration of the public interest, avoid conflict between personal interest and the public interest and resolve any conflict between the two, at once, and in favour of the public interest.”
And in Paragraph 14:
“Members shall at all times ensure that their use of expenses, allowances, facilities and services provided from the public purse is strictly in accordance with the rules laid down on these matters, and that they observe any limits placed by the House on the use of such expenses, allowances, facilities and services.”
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 119
The relevant rules would appear to be those set out in the Green Book published in April 2005. Mr Speaker, in the introduction, noted the following:
“Members themselves are responsible for ensuring that their use of allowances is above reproach. They should seek advice in cases of doubt and read the Green Book with care. In cases of doubt or difficulty about any aspect of the allowances or how they can be used, please contact the Department of Finance and Administration. The Members Estimate Committee, which I chair, has recently restated the Department's authority to interpret and enforce these rules.”
Arrangement for the Additional Costs Allowance are set out in Section 3 of the Green Book. The scope of the Allowance is set out in Paragraph 3.1.1 as follows:
“The additional costs allowance (ACA) reimburses Members of Parliament for expenses wholly, exclusively and necessarily incurred when staying overnight away from their main UK residence (referred to below as their main home) for the purpose of performing Parliamentary duties. This excludes expenses that have been incurred for purely personal or political purposes.”
Paragraph 3.6.1. deals with the documentation to be supplied by Members. This includes:
“• Any documentation relating to changes to these arrangements”.
Paragraph 3.8.2 deals with allowable expenditure as follows:
“Subject to paragraphs 3.1.1. to 3.10.1. you can claim reimbursement for the expenses listed provided that they are wholly, exclusively and necessarily incurred in the course of your Parliamentary duties.”
I am grateful for the information you have sent me. I would, however, welcome your comments in the light of this summary of the relevant rules, and, in particular, it would be helpful to know:
1. the particular circumstances of your Dolphin Square lease, including the time you resided or have resided there, whether and, if so, when you have moved accommodation within the Square, the amount of your rent at the time when the landlord made this offer, the period over which you have made claims for this property against the Additional Costs Allowance, and whether you claimed for the full cost or a proportion of the cost of the rent over that period;
2. the offer which the landlord made to you, including the nature of any rights you were asked to forego, and the options open to you in responding to that offer, together with any documentary evidence you may have about the offer;
3. the consideration you gave to the offer, whom you consulted (including the House authorities), what advice you received, what decision you came to and what payments you received, together with any documentary evidence in relation to this, and whether you supplied to the Department of Finance and Administration documentation in relation to any changes in your arrangements;
4. why you considered that your decision was in the public interest as opposed to your personal interest;
5. if you accepted a payment from the landlord on entering a new arrangement with an increased rent, whether you claimed against the allowances for the increased rent and if so whether you consider that you claimed for expenses that were not wholly, exclusively, and necessarily incurred;
6. if you accepted a payment from the landlord in return for giving up succession rights, what you did with it.
Any other points you would like to make to help me with this inquiry would, of course, be very welcome.
I attach a note which sets out the procedure I follow (although in this case, of course, there is no identified complainant). I hope it would be possible to let me have your response within the next three weeks. If there is any difficulty about that, or you would like to discuss any aspect of this matter, please contact me at the House.
120 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
I look forward to your help on this matter.
4 June 2009
12. Letter to Rt Hon Sir Menzies Campbell MP from the Commissioner, 4 June 2009
I am writing to let you know that the Committee on Standards and Privileges has authorised me to undertake an inquiry in response to your letter of 1 June referring yourself to me in respect of the allegations made in the Daily Telegraph of 30 May about certain payments you received from the landlords while a tenant in Dolphin Square.
In essence, the allegation is that you received a payment or payments from the landlords of Dolphin Square in return for giving up certain rights as a tenant; that you received this benefit on account of a tenancy supported by rental payments which were in whole or in part paid from the Additional Costs Allowance; that this arrangement may, as a result, have led to claims on that Allowance which were not necessarily incurred or may otherwise have favoured your personal interest over the public interest.
I enclose a copy of the Daily Telegraph article of 30 May which, I believe, was the basis of your self-referral.
The Code of Conduct for Members of Parliament provides in Paragraph 9 as follows:
“Members shall base their conduct on a consideration of the public interest, avoid conflict between personal interest and the public interest and resolve any conflict between the two, at once, and in favour of the public interest.”
And in Paragraph 14:
“Members shall at all times ensure that their use of expenses, allowances, facilities and services provided from the public purse is strictly in accordance with the rules laid down on these matters, and that they observe any limits placed by the House on the use of such expenses, allowances, facilities and services.”
The relevant rules would appear to be those set out in the Green Book published in April 2005. Mr Speaker, in the introduction, noted the following:
“Members themselves are responsible for ensuring that their use of allowances is above reproach. They should seek advice in cases of doubt and read the Green Book with care. In cases of doubt or difficulty about any aspect of the allowances or how they can be used, please contact the Department of Finance and Administration. The Members Estimate Committee, which I chair, has recently restated the Department's authority to interpret and enforce these rules.”
Arrangement for the Additional Costs Allowance are set out in Section 3 of the Green Book. The scope of the Allowance is set out in Paragraph 3.1.1 as follows:
“The additional costs allowance (ACA) reimburses Members of Parliament for expenses wholly, exclusively and necessarily incurred when staying overnight away from their main UK residence (referred to below as their main home) for the purpose of performing Parliamentary duties. This excludes expenses that have been incurred for purely personal or political purposes.”
Paragraph 3.6.1. deals with the documentation to be supplied by Members. This includes:
“• Any documentation relating to changes to these arrangements”.
Paragraph 3.8.2 deals with allowable expenditure as follows:
“Subject to paragraphs 3.1.1. to 3.10.1. you can claim reimbursement for the expenses listed provided that they are wholly, exclusively and necessarily incurred in the course of your Parliamentary duties.”
I am grateful for the information you have sent me. I would, however, welcome your comments in the light of this summary of the relevant rules, and, in particular, it would be helpful to know:
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 121
1. the particular circumstances of your Dolphin Square lease, including the time you resided or have resided there, whether and, if so, when you have moved accommodation within the Square, the amount of your rent at the time when the landlord made this offer, the period over which you have made claims for this property against the Additional Costs Allowance, and whether you claimed for the full cost or a proportion of the cost of the rent over that period;
2. the offer which the landlord made to you, including the nature of any rights you were asked to forego, and the options open to you in responding to that offer, together with any documentary evidence you may have about the offer;
3. the consideration you gave to the offer, whom you consulted (including the House authorities), what advice you received, what decision you came to and what payments you received, together with any documentary evidence in relation to this, and whether you supplied to the Department of Finance and Administration documentation in relation to any changes in your arrangements;
4. why you considered that your decision was in the public interest as opposed to your personal interest;
5. if you accepted a payment from the landlord on entering a new arrangement with an increased rent, whether you claimed against the allowances for the increased rent and if so whether you consider that you claimed for expenses that were not wholly, exclusively, and necessarily incurred;
6. if you accepted a payment from the landlord in return for giving up succession rights, what you did with it.
Any other points you would like to make to help me with this inquiry would, of course, be very welcome.
I attach a note which sets out the procedure I follow (although in this case, of course, there is no identified complainant). I hope it would be possible to let me have your response within the next three weeks. If there is any difficulty about that, or you would like to discuss any aspect of this matter, please contact me at the House.
I look forward to your help on this matter.
4 June 2009
13. Letter to Ms Sandra Gidley MP from the Commissioner, 8 June 2009
Thank you for your letter, which I received this morning, referring yourself to me in respect of certain payments you received from the landlords while a tenant in Dolphin Square. I am writing to let you know that the Committee on Standards and Privileges has authorised me to undertake inquiries where a Member has referred themselves to me in respect of these matters.
In essence, the allegation is that you received a payment or payments from the landlords of Dolphin Square in return for giving up certain rights as a tenant; that you received this benefit on account of a tenancy supported by rental payments which were in whole or in part paid from the Additional Costs Allowance; that this arrangement may, as a result, have led to claims on that Allowance which were not necessarily incurred or may otherwise have favoured your personal interest over the public interest.
I enclose a copy of the Daily Telegraph article of 30 May which reported these payments.
The Code of Conduct for Members of Parliament provides in Paragraph 9 as follows:
“Members shall base their conduct on a consideration of the public interest, avoid conflict between personal interest and the public interest and resolve any conflict between the two, at once, and in favour of the public interest.”
And in Paragraph 14:
122 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
“Members shall at all times ensure that their use of expenses, allowances, facilities and services provided from the public purse is strictly in accordance with the rules laid down on these matters, and that they observe any limits placed by the House on the use of such expenses, allowances, facilities and services.”
The relevant rules would appear to be those set out in the Green Book published in April 2005. Mr Speaker, in the introduction, noted the following:
“Members themselves are responsible for ensuring that their use of allowances is above reproach. They should seek advice in cases of doubt and read the Green Book with care. In cases of doubt or difficulty about any aspect of the allowances or how they can be used, please contact the Department of Finance and Administration. The Members Estimate Committee, which I chair, has recently restated the Department's authority to interpret and enforce these rules.”
Arrangement for the Additional Costs Allowance are set out in Section 3 of the Green Book. The scope of the Allowance is set out in Paragraph 3.1.1 as follows:
“The additional costs allowance (ACA) reimburses Members of Parliament for expenses wholly, exclusively and necessarily incurred when staying overnight away from their main UK residence (referred to below as their main home) for the purpose of performing Parliamentary duties. This excludes expenses that have been incurred for purely personal or political purposes.”
Paragraph 3.6.1. deals with the documentation to be supplied by Members. This includes:
“•Any documentation relating to changes to these arrangements”.
Paragraph 3.8.2 deals with allowable expenditure as follows:
“Subject to paragraphs 3.1.1. to 3.10.1. you can claim reimbursement for the expenses listed provided that they are wholly, exclusively and necessarily incurred in the course of your Parliamentary duties.”
I am grateful for the information you have sent me. I would, however, welcome your comments in the light of this summary of the relevant rules, and, in particular, it would be helpful to know:
1. the particular circumstances of your Dolphin Square lease, including the time you resided there, whether and, if so, when you have moved accommodation within the Square, the amount of your rent at the time when the landlord made this offer, the period over which you have made claims for this property against the Additional Costs Allowance, and whether you claimed for the full cost or a proportion of the cost of the rent over that period;
2. the offer which the landlord made to you, including the nature of any rights you were asked to forego, and the options open to you in responding to that offer, together with any documentary evidence you may have about the offer;
3. the consideration you gave to the offer, whom you consulted (including the House authorities), what advice you received, what decision you came to and the exact payment or payments you received, together with any documentary evidence in relation to this, why you considered that your rent on your Dolphin Square property would rise to an unaffordable level, and whether you supplied to the Department of Finance and Administration documentation in relation to any changes in your arrangements;
4. why you decided to move to a different property, the location of that property, what claims you made against the ACA in the year you moved, whether you consider that you incurred costs and made claims for your new rented property which were not wholly, exclusively and necessarily incurred, and how you deployed all the money you received from the landlords of Dolphin Square;
5. why you considered that your decisions were in the public interest as opposed to your personal interest.
Any other points you would like to make to help me with this inquiry would, of course, be very welcome.
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 123
I attach a note which sets out the procedure I follow (although in this case, of course, there is no identified complainant). I hope it would be possible to let me have your response within the next three weeks. If there is any difficulty about that, or you would like to discuss any aspect of this matter, please contact me at the House.
I look forward to your help on this matter.
8 June 2009
14. Letter to Mr Richard Younger-Ross MP from the Commissioner, 9 June 2009
Thank you for your letter of 29 May referring yourself to me in respect of certain payments you received from the landlords while a tenant in Dolphin Square. I am writing to let you know that the Committee on Standards and Privileges has authorised me to undertake inquiries where a Member has referred themselves to me in respect of these matters.
In essence, the allegation is that you received a payment or payments from the landlords of Dolphin Square in return for giving up certain rights as a tenant; that you received this benefit on account of a tenancy supported by rental payments which were in whole or in part paid from the Additional Costs Allowance; that this arrangement may, as a result, have led to claims on that Allowance which were not necessarily incurred or may otherwise have favoured your personal interest over the public interest.
I enclose a copy of the Daily Telegraph article of 30 May which reported these payments.
The Code of Conduct for Members of Parliament provides in Paragraph 9 as follows:
“Members shall base their conduct on a consideration of the public interest, avoid conflict between personal interest and the public interest and resolve any conflict between the two, at once, and in favour of the public interest.”
And in Paragraph 14:
“Members shall at all times ensure that their use of expenses, allowances, facilities and services provided from the public purse is strictly in accordance with the rules laid down on these matters, and that they observe any limits placed by the House on the use of such expenses, allowances, facilities and services.”
The relevant rules would appear to be those set out in the Green Book published in April 2005. Mr Speaker, in the introduction, noted the following:
“Members themselves are responsible for ensuring that their use of allowances is above reproach. They should seek advice in cases of doubt and read the Green Book with care. In cases of doubt or difficulty about any aspect of the allowances or how they can be used, please contact the Department of Finance and Administration. The Members Estimate Committee, which I chair, has recently restated the Department's authority to interpret and enforce these rules.”
Arrangement for the Additional Costs Allowance are set out in Section 3 of the Green Book. The scope of the Allowance is set out in Paragraph 3.1.1 as follows:
“The additional costs allowance (ACA) reimburses Members of Parliament for expenses wholly, exclusively and necessarily incurred when staying overnight away from their main UK residence (referred to below as their main home) for the purpose of performing Parliamentary duties. This excludes expenses that have been incurred for purely personal or political purposes.”
Paragraph 3.6.1. deals with the documentation to be supplied by Members. This includes:
“• Any documentation relating to changes to these arrangements”.
Paragraph 3.8.2 deals with allowable expenditure as follows:
124 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
“Subject to paragraphs 3.1.1. to 3.10.1. you can claim reimbursement for the expenses listed provided that they are wholly, exclusively and necessarily incurred in the course of your Parliamentary duties.”
I am grateful for the information you have sent me. I would, however, welcome your comments in the light of this summary of the relevant rules, and, in particular, it would be helpful to know:
1. the particular circumstances of your Dolphin Square lease, including the time you resided there, whether and, if so, when you have moved accommodation within the Square, the amount of your rent at the time when the landlord made this offer, the period over which you have made claims for this property against the Additional Costs Allowance, and whether you claimed for the full cost or a proportion of the cost of the rent over that period;
2. the offer which the landlord made to you, including the nature of any rights you were asked to forego, and the options open to you in responding to that offer, together with any documentary evidence you may have about the offer;
3. the consideration you gave to the offer, whom you consulted (including the House authorities), what advice you received, what decision you came to and the exact payment or payments you received, together with any documentary evidence in relation to this;
4. why you decided to relinquish your tenancy in Dolphin Square, what alternative arrangements you made for your overnight stays, what claims you made against the ACA as a result of your move, and whether you supplied to the Department of Finance and Administration documentation in relation to any changes in your arrangements;
5. how you spent the sum you received, whether any and if so how much was spent on things which otherwise you would have claimed for from your parliamentary allowances and for which there was sufficient available in your allowance for the relevant year, and whether you consider that you incurred costs and made claims as a result of these payments which were not wholly, exclusively and necessarily incurred;
6. why you considered that your decisions were in the public interest as opposed to your personal interest.
Any other points you would like to make to help me with this inquiry would, of course, be very welcome.
I attach a note which sets out the procedure I follow (although in this case, of course, there is no identified complainant). I hope it would be possible to let me have your response within the next three weeks. If there is any difficulty about that, or you would like to discuss any aspect of this matter, please contact me at the House.
I look forward to your help on this matter.
9 June 2009
15. Letter to Mr Paul Holmes MP from the Commissioner, 10 June 2009
Thank you for your letter dated May 2009, which I received this morning, referring yourself to me in respect of certain payments you received from the landlords while a tenant in Dolphin Square. I am writing to let you know that the Committee on Standards and Privileges has authorised me to undertake inquiries where a Member has referred themselves to me in respect of these matters.
In essence, the allegation is that you received a payment or payments from the landlords of Dolphin Square in return for giving up certain rights as a tenant; that you received this benefit on account of a tenancy supported by rental payments which were in whole or in part paid from the Additional Costs Allowance and that this arrangement may, as a result, have led to claims on that Allowance which were not necessarily incurred or may otherwise have favoured your personal interest over the public interest.
I enclose a copy of the Daily Telegraph article of 30 May which, I believe, was the basis of your self-referral.
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 125
The Code of Conduct for Members of Parliament provides in Paragraph 9 as follows:
“Members shall base their conduct on a consideration of the public interest, avoid conflict between personal interest and the public interest and resolve any conflict between the two, at once, and in favour of the public interest.”
And in Paragraph 14:
“Members shall at all times ensure that their use of expenses, allowances, facilities and services provided from the public purse is strictly in accordance with the rules laid down on these matters, and that they observe any limits placed by the House on the use of such expenses, allowances, facilities and services.”
The relevant rules would appear to be those set out in the Green Book published in April 2005. Mr Speaker, in the introduction, noted the following:
“Members themselves are responsible for ensuring that their use of allowances is above reproach. They should seek advice in cases of doubt and read the Green Book with care. In cases of doubt or difficulty about any aspect of the allowances or how they can be used, please contact the Department of Finance and Administration. The Members Estimate Committee, which I chair, has recently restated the Department's authority to interpret and enforce these rules.”
The arrangements for the Additional Costs Allowance are set out in Section 3 of the Green Book. The scope of the Allowance is set out in Paragraph 3.1.1 as follows:
“The additional costs allowance (ACA) reimburses Members of Parliament for expenses wholly, exclusively and necessarily incurred when staying overnight away from their main UK residence (referred to below as their main home) for the purpose of performing Parliamentary duties. This excludes expenses that have been incurred for purely personal or political purposes.”
Paragraph 3.6.1. deals with the documentation to be supplied by Members. This includes:
“• Any documentation relating to changes to these arrangements”.
Paragraph 3.8.2 deals with allowable expenditure as follows:
“Subject to paragraphs 3.1.1. to 3.10.1. you can claim reimbursement for the expenses listed provided that they are wholly, exclusively and necessarily incurred in the course of your Parliamentary duties.”
I am grateful for the information you have sent me. I would, however, welcome your comments in the light of this summary of the relevant rules, and, in particular, it would be helpful to know:
1. the particular circumstances of your original Dolphin Square lease, including the time you resided there, when you moved out of this property, the amount of your rent at the time when the landlord made this offer, the period over which you made claims for this property against the Additional Costs Allowance, and whether you claimed for the full cost or a proportion of the cost of the rent over that period;
2. the offer which the landlord made to you, including the nature of any rights you were asked to forego, and the options open to you in responding to that offer, together with any documentary evidence you may have about the offer;
3. the consideration you gave to the offer, whom you consulted (including the House authorities), what advice you received, and what payments you received, together with any documentary evidence in relation to this;
4. how you deployed the money you received from the landlords of Dolphin Square;
5. the circumstances of your move to a property outside Dolphin Square, the location of that property and the amount of the rent you paid, what claims you made against the ACA in respect of that property, including any claims for the move, whether you consider that you incurred costs and made claims for
126 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
your new rented property which were not wholly, exclusively and necessarily incurred, and whether you supplied to the Department of Finance and Administration documentation in relation to this change in your arrangements;
6. the circumstances of your move back to Dolphin Square, the amount of rent you paid, what claims you have made against the ACA since you moved back to Dolphin Square, including any claims for the move, whether you consider that you incurred costs and made claims for your new Dolphin Square property which were not wholly, exclusively and necessarily incurred, and whether you supplied to the Department of Finance and Administration documentation in relation to this change in your arrangements;
7. why you considered that your decisions were in the public interest as opposed to your personal interest.
Any other points you would like to make to help me with this inquiry would, of course, be very welcome.
I attach a note which sets out the procedure I follow (although in this case, of course, there is no identified complainant). I hope it would be possible to let me have your response within the next three weeks. If there is any difficulty about that, or you would like to discuss any aspect of this matter, please contact me at the House.
I look forward to your help on this matter.
10 June 2009
16. Extract from letter to the Commissioner from Rt Hon Sir Alan Beith MP, 15 June 2009
Thank you for your letter of 4th June.
To begin with, I must reiterate that the Daily Telegraph article was wholly wrong in implying that I had accepted a payment in return for giving up a favourable rent, thereby increasing costs to the taxpayer. As I indicated in my earlier letter, I rejected an offer of £48,030 which, if I had accepted it, would have had this effect. I accepted a payment of £5,000 to give up any succession rights for other members of my family: there was no public interest in retaining these rights, since the flat was rented to enable me to do my job as a Member of Parliament.
I have rented a flat in Dolphin Square since 22nd December 1975; and I moved into my present flat in 1993. I have always claimed the rent from the Additional Costs Allowance. The flats were run by the Dolphin Square Trust, a non-profit making body, which held down the rents to tenants to a level below market rents, at no cost to the taxpayer. When Westminster City Council decided to sell the head lease of the complex there began a period of several years of uncertainty about the future of our tenancies, during which it was not feasible or prudent to carry out decoration or improvement. I enclose a Dolphin Square Trust press release of 10th November 1999 and a letter from the Leader of Westminster City Council dated 1 February 2002 which give you some idea of the controversy, difficulties and uncertainty which prevailed over that period.158
When the head lease was acquired by [the new owners] after long negotiations with the trust, offers were made to tenants. The landlord's objective was, to secure vacant possession of as many flats as possible so that they would be re-let at higher rents after improvements. Where tenants wished to stay in their flats, the landlord preferred them to take new shorthold tenancies at higher rents and therefore cash offers were also made to tenants prepared to take this option. These two options were two versions of what became known as Option A.
Option B allowed tenants to remain in their flats with certainty until 2034, with rents specified in the lease and capped, based on the existing rents and the staged increases they had always included. The fact that this option was available was the result of intense negotiation by the Dolphin Square Trust.
158 Not included in the written evidence
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 127
I received an offer of £48,030 to accept Option A. If I had taken this option and remained in the flat, the rent would have risen immediately to £22,880 per annum on a shorthold tenancy, as opposed to £14,441 per annum if I retained my then existing terms. (It should be noted that Dolphin Square rents are inclusive of heating, water and service charges.)
All tenants had access to legal advice on the options from [solicitors], who were instructed on behalf of the tenants. That advice is enclosed, and I draw your attention to the clear statement on page 4 of the advantages of accepting Option B (and refusing the cash offer), particularly security of tenure and certainty about the rent.
Because I decided to reject the cash offer, I did not explore with the Fees Office whether they would, in the event of my accepting it, recommend that it should be repaid to the House of Commons (net of ). It appears from what is now known about other cases, and from the continued acceptance that Members can retain capital gains on property for which the mortgage interest has been claimed from ACA, that they would not have advised repayment. I did not have any wish to make a personal profit from this situation and saw no reason why I should do so, and this confirmed me in my decision to reject the cash offer and retain the below- market rent arrangements.
A separate offer of £5,000 was made to those long-standing tenants who, it was believed, might have a right to pass the tenancy on to their children. There being no conceivable public interest in my retaining that right, I was happy to surrender it and set aside the £5,000 for redecoration of the flat. This was planned to take place after other refurbishment was completed, in the long recess of 2008, but unfortunately I found myself in hospital with a heart attack in July 2008 and the planning of that decoration work did not go ahead. I intend that it will be done in this year's long recess. Under the rules as they were at the time, this redecoration work could have been claimed from the ACA, if I had not chosen to fund it from the cash payment.
I consider that the decisions I made were in the public interest, because they ensured more favourable rent terms, and in the case of the £5,000, met a cost which could otherwise have been claimed from the allowance. I took the view that for me to accept the £48,030 cash offer, although it would have been in my personal interest, would have been against the public interest.
I should also mention my wife's involvement in funding our London accommodation. My wife is an active Member of the House of Lords, and is able to claim an overnight allowance for those nights when she is in London in order to attend a House of Lords sitting. She normally claims only half that allowance. Despite the fact that there is no entitlement to this allowance during August and September, we normally work on the basis that throughout the year she contributes a fixed monthly sum—currently £600—which I deduct from my rent claim. I did not ask her to contribute this sum during a period when she used part of her allowance to contribute to the cost of renewing the kitchen. This was at a time when there was no prospect at all of the landlord renewing the 1960s kitchen, because the policy was to concentrate on improving the vacated flats of people who had accepted the cash offer. We have never “double-claimed” from our allowance—we each claim for costs we have individually met. My wife is, of course, subject to and complies with House of Lords rules in respect of allowances she claimed.
I hope that I have answered all the questions in your letter, and I should be grateful for you ruling on whether my decision was in accordance with the rules and in the public interest.
I enclose the following documents:
The Option A cash offers dated 31 October 2005: a) the Cash and Go offer on green paper, b) the Cash and Stay offer on pink paper, and the 'Option B' which I accepted, guaranteeing security and a fixed rent scale.
The Option B Lease, which includes the rent scale.
The document from [solicitors] which provided me with legal advice.
A press release from Dolphin Square Trust of 10 November 1999.
128 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
A letter from the Leader of Westminster City Council dated 1 February 2002.
[ … ]
Please let me know if I can be of any further assistance.
15 June 2009
17. Executive summary of solicitors’ advice to Dolphin Square tenants, October 2005
We [solicitors] have been retained to give you free, independent and impartial advice on the offers made to you by [the new owners] and which you will receive about the same time as you receive this Report.
In essence the offers are:
Option A Cash and Go
Cash and Stay, but at a higher rent, with no security of tenure on expiry of the fixed term
Option B A fixed term lease that can run until June 2034, starting with a rent the same as your current rent but gradually increasing year on year
Further detail on the offers and our advice in connection with them is set out on the following pages.
In this Executive Summary we give a brief overview of our advice on the offers which we hope might help you decide which will be the right one for you to accept.
We advise you strongly to accept one of the offers. We do not consider that it is in your best interests to do nothing or to ignore the offers. On the contrary, we think you will be seriously disadvantaged if you do nothing.
Later in this Report you will see details of Open Meetings and Drop-In Surgeries which we and […], a law firm made available by the Trust to provide legal services to you in respect of the formalities for the completion and registration of your Option B Lease, are holding and at which we shall be able to give you further advice and answer your questions on the offers and the process to complete the legal formalities.
Option A Cash and Go
The amount of the cash offered has been set by [the new owners]. We have had no advance information on the levels of the cash offers. We do not know how the cash offers have been arrived but we understand that factored into the formulae is your current rent and the number of years you have been a tenant of the Trust.
If you are looking to leave Dolphin Square within the first few months of 2006, this could be attractive to you. Beware however that if you accept this offer, you may not change your mind or accept a different offer later, unless [the new owner] gives you permission.
Also bear in mind that at the moment there is no fixed date for completion of your surrender. The target is for [the new owner] to complete its purchase of the Dolphin Square leases early in 2006. Following that [the new owner] then has 3 months to complete the surrenders for those who wish to go. [The new owner] has to give you at least 28 days prior notice of the surrender date. It cannot give notice before it completes its purchase.
You may therefore be looking to complete your surrender sometime within the first 2 to 4 months of 2006.
Option A Cash and Stay
The amount of the cash offered and the Assured Shorthold Tenancy (AST) agreement rental have both been set by [the new owner]. If you were looking to leave the Square in around Spring 2007 this offer may be attractive to you. Note that if you sign up to the [new owner’s] AST agreement you are committed to a 12
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 129
month deal. If you leave partway through that period you will still have liability for the rent to the end of it, unless you can persuade [the new owners] to accept an early surrender.
It some respects [the new owner’s] AST tenancy is onerous and quite different to what you have been used to in Dolphin Square. Read it and our detailed advice carefully before signing up. You will also want to compare the cash sum offered and the extra rent you will have to pay for the 12 months AST.
Again, at the moment there is no fixed date for completion of your surrender and the grant of your new AST tenancy agreement. [The new owner] is committed to dealing with this within 3 months of its completion of the purchase of the Dolphin Square leases. The target date for that completion is early in 2006. Following that completion [the new owner] has 3 months to complete the surrenders and grant of the new AST agreements. [The new owner] has to give to give you at least 14 days prior notice of the surrender date.
You may therefore be looking to complete your surrender and new AST agreement sometime within the first 2 to 4 months of 2006.
If you were looking to move out of the Square after, say spring 2007, this still might be an attractive offer for you. On the expiry of your new AST tenancy agreement, [the new owner] might be prepared to extend it for 6 or 12 months, but [has] no legal obligation to do so. [The new owner] can also set a new rent. Again you will have to compare the cash sum and the extra rent you may have to pay.
The position is more complicated if you were looking to leave the Square after the Summer of 2007. You will need to do the sums carefully. [There may be a case that you would be better of taking the Option B Lease. Lower rental payments payable under the Option B Lease over the next 13-24 months may exceed the cash. sum offered to you. The tenant of an Option B Lease may give one month's notice to terminate the tenancy, so there is good flexibility. Although there can be no guarantee it may be financially advantageous to [the new owner] for you to terminate your Option tenancy and there may be the possibility of negotiating with [the new owner] for it to make you a payment on you surrendering your Option B tenancy. Nothing is guaranteed. Much may depend on how many vacant flats [the new owner] has at the time. If it has more flats than it can let, it may not want to pay out to buy another one in. If however [they] consider that [they] could let your flat for a rent greater than you have to pay, [the new owners] might be willing to make you a payment to surrender your Option B tenancy. These are matters you will want to think about carefully.
Option B Lease
In our view there is no doubt that for those of you who see yourselves continuing to live in Dolphin Square for the medium to long term, this is the most advantageous offer for you to accept. It gives you the right to live in your flat with certainty until June 2034, and possibly beyond. Your starting rent will be the same as your current rent. Your rent will increase gradually over time and you know with certainty what your rent will be from now until 2018. Even after that there is a cap so that you will have some notion now of what your rent liability may be. In terms of security of tenure and certainty over future rental levels, the Option B Lease is a considerable improvement on your current tenancy rights.
You are also offered the option of nominating a spouse or permanent partner to be a joint tenant with you. Many may see this as a further significant benefit and improvement.
Apart from issues about the way in which [the new owners] may run the Square and what practical changes they may bring about, which is not something that we can speculate about, from a pure landlord and tenant legal viewpoint we have no hesitation in advising that overall the Option B Lease on offer to you is a significantly better deal for you and offers more safeguards than your current tenancy arrangements.
Further advice on the Option B Lease is set out in the following pages.
Option C—So Called
We have heard it suggested that there is an Option C for some of you who may live in flats subject to fair rent registrations at the Rent Officer Service.
It is said, we understand, that those tenants might be better off doing nothing, accepting neither Option A or Option B and staying as they are as Rent Act protected tenants.
130 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
In our view there is no Option C. Our considered view is that there are no Rent Act protected tenants within Dolphin Square.
Even if there were, we are by no means convinced that there is a clear case that a Rent Act protected tenant is better off, is more secure, has better succession rights or will pay less rent than an Option B Lease tenant. Indeed on the contrary, our view is that an Option B Lease tenant is, overall, in a better and more secure position.
More detailed advice and legal explanation on this topic is set out in the following pages.
October 2005
18. Letter to Director of Operations, Department of Resources, from the Commissioner, 30 July 2009
I would welcome your advice and comments on an inquiry I am conducting at the request of six Members of Parliament about the payments they received in 2005 as tenants in Dolphin Square.
The Members concerned are Mr John Barrett MP; the Rt Hon Sir Alan Beith MP; the Rt Hon Sir Menzies Campbell MP; Ms Sandra Gidley MP; Mr Paul Holmes MP; and Mr Richard Younger-Ross MP. I enclose the self-referral letters from each of these Members, dated between 30 May and 8 June. I attach also copies of the commissioning letters which I sent to each between 4 June and 8 July. And I attach copies of their responses which I received from 15 June to 3 July. I enclose also my follow-up letters which I sent to each of them from 15 June to 3 July and copies of their replies which I received from 9 July to 27 July.
I attach also a copy of the legal advice which Dolphin Square tenants received; and samples of the offer letters which they received from the new landlords.
I would welcome your advice and comments on this matter. It would be particularly helpful to know whether the Department received an approach about the Dolphin Square payment from these or any other Members, at the time or subsequently; what advice you gave; the reasons for that advice; and whether you considered making any such advice more widely available. Any other comments you may wish to make, either on the analogies drawn by some of the Members or on reports on the advice which they suggest other Members received, would also be welcome.
I appreciate that we are now in the recess, but if you could let me have your response to these matters by the end of August, I would be most grateful. Thank you for your help.
30 July 2009
19. Letter to the Commissioner from Director of Operations, Department of Resources, 14 August 2009
Thank you for your letter of 30 July asking for my advice on six Members who received payments in 2005 as tenants in Dolphin Square.
In the autumn of 2005 the House Service became aware that Dolphin Square tenants were being consulted on changes to their tenancies, including the offer of payments by the landlord. Discussions were held at the most senior levels. A decision was taken that Members who approached the Department for advice would be offered the following in writing:
“You recently contacted the Department for advice about changes to your tenancy agreement at Dolphin Square. I can offer guidance as set out below.
“I understand the position to be that Members who are residents of Dolphin Square have recently been offered monetary compensation to buy out their existing tenancies. You will appreciate the potential awkwardness of the situation whereby public money (Additional Costs Allowance) has been used to meet past rental costs either in part or in full. The Department has consulted the Clerk on this matter and is able to offer the following guidance to those who are considering accepting the offer:
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 131
“a) Where the rent has been paid wholly from the Additional Costs Allowance (ACA), Members are advised against taking the cash offer and retaining the proceeds because it would be inappropriate to gain a personal benefit when the rent has been paid wholly from the public purse. If a Member does want to accept the cash offer and pay it over to the House, or set it against future rental payments in the current financial year, this can be arranged.
“b) Where the rent has been paid partly from ACA and partly from private funds, we would advise Members that they could retain a proportionate part of the cash offer, if they so wish. It would be for the Member to decide on how much to keep. The House would be happy to receive the balance.
“c) Where the rent has been paid wholly from private funds, we would advise Members that it would be appropriate to keep the cash.
“d) Where a Member has in the past had rent paid from the ACA, but this has not been the case since April 2002, we consider the Member to fall into category c, above.
“This guidance is only about what is appropriate in terms of the compensation offered and the use of public money. The Department is not able to offer advice about which option is the best for Members in other respects.”
Our records indicate that two Members approached the Department and both were sent the above advice.
Unsurprisingly neither the Green Book nor any other guidance specifically covered “buy outs” of this nature. I am confident that no advice was offered by the Department other than that set out above and on request from Members themselves.
Please let me know if you require any further information.
14 August 2009
20. Letter to the Commissioner from the Director of Operations, Department of Resources, 3 September 2009
I wrote to you on 14 August about the above and the self-referral by six Members. You have subsequently sought further clarification.
It maybe helpful if I set out the sequence of events that led to guidance being given by the then Department of Finance and Administration in respect of Dolphin Square. This was outlined in my letter, but for the avoidance of doubt the position that was the offer to Dolphin Square tenants became known to staff of the House around October 2005, including to the then Clerk of the House. In early November authoritative advice became available to staff in the Department. This was in the form set out in my earlier letter to you. On 22 November, in response to specific requests, letters were sent to two Members residing in Dolphin Square with the guidance. Neither of these Members are the subject of your enquiry.
As I intimated in my letter, this matter is arguably not one for a scheme of allowance rules, which this Department has responsibility for, but rather a wider question of propriety and perhaps ethics. I am clear that the advice referred to above was promulgated to staff in the Department who deal directly with Members. No guidance other than this was offered to Members from November onward about the propriety aspects of accepting the offer from the Dolphin Square landlord. When the issue first surfaced in October a more general conversation may have taken place with one or two Members pending the clarification which arrived in early November.
I note that Ms Humble recalls a telephone conversation in March 2006 with a member of the Department during which she was told that how she responded to the landlord's offer was entirely a matter for her. We have no record of that conversation. It is not clear to me why such advice would have been given when the authoritative guidance was readily available. Some three and a half years later it is, of course, difficult to be certain of the precise exchange at the time.
3 September 2009
132 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
21. Letter to Mr John Barrett MP, Rt Hon Sir Alan Beith, MP, Rt Hon Sir Menzies Campbell MP, Ms Sandra Gidley MP, Mr Paul Holmes MP and Mr Richard Younger-Ross MP from the Commissioner, 7 September 2009
I have now heard back from the Department of Resources with their advice about my inquiries in connection with Dolphin Square.
I attach a copy of my letter to the Department of 30 July and copies of their letters of 14 August and 3 September in reply.
As you will see, the Director of Operations for the Department of Resources has told me that, after consultation at senior level, a decision was taken in the autumn of 2005 that Members who approached the Department for advice on possible changes to their Dolphin Square tenancies should be given guidance in writing. The nature of this guidance depended on the individual circumstances of the Member concerned.
My understanding is that you fall into category (a) of Members described in the advice, in that, throughout the relevant period (except during an election period), your Dolphin Square rent was paid from the Additional Costs Allowance. The advice says that:
“Where the rent has been paid wholly from the Additional Costs Allowance (ACA), Members are advised against taking the cash offer and retaining the proceeds because it would be inappropriate to gain a personal benefit when the rent has been paid wholly from the public purse. If a Member does want to accept the cash offer and pay it over to the House, or set it against future rental payments in the current financial year, this can be arranged.”
For clarification, the reference in the last paragraph of the Director of Operations’ letter of 3 September 2009 is to evidence I have received from Mrs Joan Humble MP. I enclose copies of her letters of 20 and 24 August, together with one dated 20 August from my office. Mrs Humble’s letters concerned a telephone conversation, which she recalls she had, with the then Department of Finance and Administration in March 2006. The Director reports that he has no record of that conversation and is unclear why that advice would have been given in those terms. I am showing his responses to Mrs Humble.
I should also tell you that I am minded to prepare a memorandum about this inquiry for the Committee on Standards and Privileges. You should draw no inferences from this. Once I had prepared my memorandum I would show you the factual sections so that you could comment on their accuracy. I would then add my conclusions and submit the full memorandum to the Clerk of the Committee, who would let you have a copy in advance of the Committee’s meeting for any comments you might wish to make.
I would be very grateful for any comments you may have on the Department’s advice or on any other aspect of the Director’s letter. It would be very helpful if you could let me have a response within two weeks. If you wish to give oral evidence on any aspect of this matter, please let me know.
Thank you for your continuing help on this matter.
7 September 2009
22. Letter to the Commissioner from the Director of Operations, Department of Resources, 17 December 2009
Thank you for your letters of 11, 17 and 19 November about the above. I am now able to provide the further information you are seeking. I apologise for the delay in replying.
In my letter of 9 November I was able to confirm that Sir Alan Beith had abated many of his Additional Costs Allowance (ACA) claims to take account of a contribution to the rent made by his wife, Baroness Maddock. In each of the years 2004-05, 2005-06 and 2007-08, our records show that Sir Alan claimed approximately £5,000 below the Dolphin Square rent. In 2008-09 Baroness Maddock’s contribution would appear to have increased to some £7,200. However, for 2006-07 Sir Alan’s Dolphin Square rent of £14,441 was paid in full from his ACA.
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 133
Table 1159 attached summarises Sir Alan’s annual rental claims, the rent payable and the total ACA claimed. The Dolphin Square agreement would seem to run from July to June, whereas the allowances year is April to March. Table 2 160 details the individual payments made and any annotations on the claims themselves.
Without further information available to me, I am unable to answer the question posed in your letter of 22 September whether Sir Alan’s circumstances were such that he fell into category (a) or (b) as identified in my letter to you of 14 August.
You further asked about the source of the guidance referred to in my earlier letters. I said in my letter of 14 August that discussions were held at the most senior levels, and in my letter of 3 September that the then Clerk of the House was aware of the position. On 1 November 2005 two Assistant Directors in the Operations Directorate received a memo from the Head of Department … in respect of Dolphin Square. This memo was copied to me at the time. [The Head of Department] had consulted the Clerk of the House and the Speaker in drawing up the memo. The memo included within it substantive guidance as set out in sub-paragraphs (a) – (d) of my letter of 14 August. It is also my very clear recollection that the instruction to my staff and me was that the guidance was to be made available to Members who sought advice; it was not to be promulgated other than on request.
As I have said previously, Departmental records show that two Members sought written advice after 1 November and both were sent identical letters by me on 22 November [WE23]. The text of the letters was reproduced in my letter to you of 14 August. To the very best of my knowledge, no other Members were sent such written advice and Departmental records would appear to confirm this. I hold electronic versions of both letters as well as signed photocopies.
I attach, in confidence, signed copies of the two letters as requested.
17 December 2009
23. Letter sent to two Members by the Director of Operations, Department of Finance and Administration, 22 November 2005
You recently contacted the Department for advice about changes to your tenancy agreement at Dolphin Square. I can offer guidance as set out below.
I understand the position to be that Members who are residents of Dolphin Square have recently been offered monetary compensation to buyout their existing tenancies. You will appreciate the potential awkwardness of the situation whereby public money (Additional Costs Allowance) has been used to meet past rental costs either in part or in full. The Department has consulted the Clerk on this matter and is able to offer the following guidance to those who are considering accepting the offer: a) Where the rent has been paid wholly from the Additional Costs Allowance
(ACA), Members are advised against taking the cash offer and retaining the proceeds because it would be inappropriate to gain a personal benefit when the rent has been paid wholly from the public purse. If a Member does want to accept the cash offer and pay it over to the House, or set it against future rental payments in the current financial year, this can be arranged. b) Where the rent has been paid partly from ACA and partly from private funds, we would advise Members that they could retain a proportionate part of the cash offer, if they so wish. It would be for the Member to decide on how much to keep. The House would be happy to receive the balance. c) Where the rent has been paid wholly from private funds, we would advise Members that it would be appropriate to keep the cash.
159 Not included in the written evidence 160 Not included in the written evidence
134 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
d) Where a Member has in the past had rent paid from the ACA, but this has not been the case since April 2002, we consider the Member to fall into category c, above.
This guidance is only about what is appropriate in terms of the compensation offered and the use of public money. The Department is not able to offer advice about which option is the best for Members in other respects.
22 November 2005
24. Letter to the Director of Operations, Department of Resources, from the Commissioner, 17 December 2009
Thank you for your letter of 17 December responding to mine of 11, 17 and 19 November about this inquiry in respect of payments made to certain Members renting properties in Dolphin Square.
I was grateful for this information. You refer in your letter to a memo from the Head of Department of 1 November 2005 which was copied to you at the time. It would be very helpful if you could let me have a copy of that memorandum, which I will need to show to the Members who are the subject of this inquiry.
I would be very grateful if you could let me have a copy of this in the next few days because I would like to bring this matter to a conclusion shortly. Once I receive your response, I will copy it, and the relevant parts of your letter of 17 December, to the Members concerned.
Thank you again for your help.
17 December 2009
25. Letter to Rt Hon Sir Alan Beith MP from the Commissioner, 7 January 2010
I am writing to let you have copies of some correspondence I have received from the Department of Resources in respect of the Dolphin Square offer.
I enclose:
1. a copy of my letter to the Director of Operations of 11 November, in which I ask him for some more information about the adjustments to your ACA claims. I also asked the Director to let me know the source and nature of instructions received by his Directorate about the guidance to be offered to Members;
2. a copy of the Director of Operations’ letter of 17 December which responds to my question about adjustments to your ACA claims, and also mentions the source of the guidance. I have not included copies of the 17 November and 19 November letters mentioned in the first sentence of the Director’s letter, since these relate to other Members;
3. a copy of a letter sent on 22 November 2005 by the Director of Operations at the then Department of Finance and Administration to a Member who sought advice about the Dolphin Square offer;
4. a copy of my letter to the Director of Operations of 17 December, which asks him for a copy of a memorandum of 1 November 2005 from the then Director of Finance and Administration;
5. a copy of a letter to me of 6 January 2010 from the Director of Operations; 161
6. a copy of the memorandum of 1 November 2005, which was sent to me by the Director of Operations with his letter of 6 January 2010.
161 Not included in the written evidence
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 135
I will be integrating this information in the factual section of my memorandum, which I will send you once it is drafted. If however you have any final comments relating to this correspondence I would be very grateful if you could let me have them within the next two weeks, so that I can conclude my work on this inquiry.
7 January 2010
26. Letter to Mr John Barrett MP, Rt Hon Sir Menzies Campbell MP, Ms Sandra Gidley MP, Mr Paul Holmes MP and Mr Richard Younger-Ross MP, from the Commissioner, 7 January 2010
I am writing to let you have copies of some correspondence I have received from the Department of Resources in respect of the Dolphin Square offer.
I enclose:
1. extracts from my letter to the Director of Operations of 11 November, in which I ask him to let me know the source and nature of instructions received by his Directorate about the guidance to be offered to Members;
2. extracts from the Director of Operations’ letter of 17 December which concerns the source of the guidance;
3. a copy of a letter sent on 22 November 2005 by the Director of Operations at the then Department of Finance and Administration to a Member who sought advice about the Dolphin Square offer;
4. a copy of my letter to the Director of Operations of 17 December, which asks him for a copy of a memorandum of 1 November 2005 from the then Director of Finance and Administration.
5. a copy of a letter to me of 6 January 2010 from the Director of Operations; 162
6. a copy of the memorandum of 1 November 2005, which was sent to me by the Director of Operations with his letter of 6 January 2010.
I will be integrating this information in the factual section of my memorandum, which I will send you once it is drafted. If however you have any final comments relating to this correspondence I would be very grateful if you could let me have them within the next two weeks, so that I can conclude my work on this inquiry.
7 January 2010
27. Letter to the Director of Operations, Department of Resources, from the Commissioner, 11 November 2009
Thank you very much for your letter of 9 November commenting on the responses I have sent you from Members following your advice in your letters to me of 14 August and 3 September.
I was most grateful to receive this and will pass on the relevant sections to the Members concerned in case they have any final comments to make.
You ask in your letter if I need more information about the adjustments to Sir Alan Beith’s ACA claims. I would be grateful if you could provide me with further clarification about how the ACA claims for Sir Alan Beith were abated to reflect his wife’s share. I am principally interested in the rental payments. If it was not a simple 50-50 split, then it would be helpful to have a brief explanation of how the costs were apportioned, and to know whether the apportionment varied over time.
162 Not included in the written evidence
136 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
There was one further point which, on the basis of your letter, I need to clarify with you. You say in paragraph 4 of your letter that your Directorate received instructions on the nature of the guidance to be offered. I would be grateful if you could let me know the source and nature of those instructions.
It would be very helpful if you could let me have a response to this within the next week so that I can conclude my work on this inquiry.
11 November 2009
28. Letter to the Commissioner from Ms Sandra Gidley MP, 15 July 2009
Further to my letter of 14th July: Since your letter asking whether I took advice from the Fees Office I have discussed the matter with a number of people who I knew lived in Dolphin Square at the time of the offer. None of them had taken any advice but it was clear that all had made a similar judgement call.
However, I today spoke to a Labour MP who opted for the Cash and Stay option. I was told that the Fees Office were asked about the offer and that the advice received was that this was an entirely private matter between the landlord and the tenant and had no bearing on the ACA. This was a verbal communication and, on the basis of this, the MP proceeded to accept the offer. I asked whether the MP ever received anything in writing as a result of the inquiry and was told that there was nothing at the time or later.
I often used to talk to this MP as we frequently caught the same bus. Whilst I cannot recall specific details of conversations at the time I find it hard to believe that we did not discuss the offers as everybody was talking about it and sharing information. However, it does help explain my conviction, as described in earlier letters to you, that this situation was no different to making a profit from an ACA related mortgage.
I hope that this is helpful in clarifying what was forthcoming as advice—even though I personally did not receive this directly.
15 July 2009
29. Letter to Ms Sandra Gidley MP from the Commissioner, 16 July 2009
Thank you for your further letter of 15 July about advice in respect of the Dolphin Square offer.
It was helpful to have this further information. Could I ask you to let me know the name of the Labour MP? It may be helpful if he or she could give me witness evidence about that Member’s discussion with the Fees Office.
I look forward to hearing from you.
16 July 2009
30. Letter to the Commissioner from Mrs Joan Humble MP, 20 August 2009
I am writing to you following a conversation with Ms Sandra Gidley MP about advice given by the House of Commons Fees Office to Members of Parliament who were tenants at Dolphin Square, Westminster when the ownership of the block of flats changed hands. I understand that you are looking at the advice given to MPs at the time.
I explained to Sandra that I had sought advice from the Fees Office about the offer made by the new owners to all the existing tenants of Dolphin Square. I was told in a telephone conversation that any renegotiation of my lease, including the offer of a buy out from my previous tenancy agreement, was an entirely private matter between me and the new landlord. I asked for confirmation that the arrangement had nothing to do with the Fees Office and my claims under the Additional Costs Allowance. Again I was told that it was an entirely
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 137
private matter and the analogy was used with MPs who moved to other flats or sold homes, made a profit on the sale, and bought new properties using the allowances available. I then acted based upon that clear advice from the Fees Office.
I hope this information is helpful.
20 August 2009
31. Letter to Mrs Joan Humble MP from the Office of the Commissioner, 20 August 2009
The Parliamentary Commissioner for Standards, who is currently out of the office, has asked me to thank you for your letter of today’s date.
The Commissioner appreciates that your conversations with the Fees Office happened several years ago but he has asked whether you are able to recall who gave you the advice to which you refer, and (even approximately) the date when the conversation took place.
I enclose a note which sets out the procedures which the Commissioner follows. As you will see, this correspondence is confidential to the inquiry and subject to parliamentary privilege. It should not be disclosed to others. If the Commissioner decides that he needs in due course to prepare a memorandum for the House of Commons Committee on Standards and Privileges, then he may include your response with his memorandum as evidence. Then he would expect it subsequently to be published by the Committee with any report that it produces. If he decides not to prepare a memorandum, then he would retain your response for his records.
The Commissioner has asked if you could let him have a response to this request within the next three weeks. He would be most grateful for your help.
20 August 2009
32. Letter to the Commissioner, from Mrs Joan Humble MP, 24 August 2009
Thank you for your letter dated 20th August 2009. In answer to your two questions:
1) I do not recollect being given a name by the man I spoke to in the Fees Office about my lease at Dolphin Square. I simply rang the number for enquiries and advice and spoke briefly to man who seemed to be already aware of the issue and who stated very clearly that it was a private matter.
2) I believe that I spoke to this individual two or three weeks before signing the new lease. This lease began on 19th April 2006 and so I assume the conversation took place towards the end of March 2006.
I hope this is helpful.
24 August 2009
33. Letter to the Commissioner from Mrs Joan Humble MP, 18 September 2009
Thank you for your letter of 7 September and the copies of replies from the Department of Resources.
I note that [the Director of Operations] acknowledges, given the passage of time since my conversation with a member of his staff, that “it is, of course, difficult to be certain of the precise exchange at that time”. Hardworking officials in the Fees Office deal with many enquiries every day, but for me this conversation was unique and the detail important in helping me reach a decision.
I was told very clearly that my dealings with my new landlord were entirely my own private concern. As [the Director] himself states “this matter is arguably not one for a scheme of allowance rules.”
138 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
At no time did I receive any other advice on the rules, their interpretation or guidance of a more general nature.
I do wonder how the written guidance referred to in [the Director’s] letter sits with the long-standing practice of Members of Parliament claiming mortgage interest payments from the Additional Costs Allowance, then selling these properties and keeping all the profits from the sale.
18 September 2009
34. Letter to Mrs Joan Humble MP from the Commissioner, 23 September 2009
Thank you for your further letter of 18 September responding to mine of 7 September with copies of replies from the Department of Resources.
I am now copying your letter to the Department for any comments they may wish to make. I am also copying it to each of the Members who have referred themselves to me.
I would expect to include your letters as evidence for my inquiry in any memorandum I prepare on it for the Committee on Standards and Privileges. You could expect these to be published along with the Committee’s report. If I decide not to prepare a memorandum, I shall retain your letters for my files.
Thank you again for your help with this.
23 September 2009
35. Letter to Mr John Barrett MP, Rt Hon Sir Alan Beith MP, Rt Hon Sir Menzies Campbell MP, Ms Sandra Gidley MP, Mr Paul Holmes MP and Mr Richard Younger-Ross MP from the Commissioner, 23 September 2009
I am writing to let you have a copy of a further letter I have received from Mrs Joan Humble about her reported contact with the Department of Resources in respect of the Dolphin Square offer.
I wrote to you on 7 September about the advice provided by the Department of Resources in relation to Dolphin Square. In that letter I referred to evidence I had received from Mrs Humble in respect of a telephone conversation she recalled having about the Dolphin Square payments in 2006 with the then Department of Finance and Administration.
Mrs Humble has now responded to the Department of Resources’ letters of 14 August and 3 September on this matter. I enclose her letter of 18 September.
I am copying this letter to you primarily for information, but if you wish to comment on it, please do so, perhaps as a further response to my letter of 7 September.
23 September 2009
36. Letter to Director of Operations, Department of Resources from the Commissioner, 23 September 2009
I have received a further letter from Mrs Joan Humble MP about the telephone conversation she reports she had with the Department in March 2006 about the renegotiation of her lease in Dolphin Square.
As you know, our office copied her letters of 20 and 24 August to you on 26 August and you included a response to this in your letter to me of 3 September.
Having shown Mrs Humble a copy of your letters of 14 August and 3 September, she has sent me the attached letter of 18 September.
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 139
I thought you would want to see this letter primarily for information. If you wished, however, to let me have any further comments about the reported conversation, that would be very welcome. It might also be helpful if you could let me have any views you may have on the comparison which Mrs Humble makes between the written guidance referred to in your letter of 14 August and the practice of Members’ retaining profits on the sale of houses whose mortgage interest has been paid for from the Additional Costs Allowance.
It would be very helpful if you could let me have any response to this letter within the next three weeks.
23 September 2009
37. Letter to the Director of Operations, Department of Resources from the Commissioner, 2 November 2009
I attach a letter of 30 October from Mr Richard Younger-Ross MP commenting on the advice which you sent me on 14 August and 3 September to assist me in this inquiry.
As you know, I have subsequently sent you a number of letters commenting on your advice, namely from Mr Paul Holmes which I sent you on 12 October; letters from Mr John Barrett which I sent you on 8 October, 12 October, 19 October and 29 October; and Ms Gidley’s letter which I sent you on 19 October.
I would welcome your comments on Mr Younger-Ross’s letter, including the analogies he draws with a Member selling a lease on a property and the advice which the department may have given to Members in relation to the Dolphin Square offer.
It would be very helpful if you could respond to these points either separately or when replying to the previous letters I have sent you.
Thank you for your help.
2 November 2009
38. Letter to the Commissioner from the Director of Operations, Department of Resources, 9 November 2009
You have passed to me for comment a number of letters from Members who have referred themselves to you for investigation in respect of certain payments made to them as tenants of Dolphin Square. The various correspondence dates from 14 September through to 3 November. The Members’ letters all comment on my letters to you of 14 August and 3 September.
In respect of Sir Alan Beith’s ACA, I can confirm that adjustments to the amount claimed were made by him. However, the precise details are less straightforward than a monthly £600 abatement. Please let me know should you require more information.
You have also sought further advice on the more general points made by Sir Alan in his letter of 14 September. I am very happy to confirm sub-paragraph (2) of his letter, that Sir Alan was neither given nor did he seek advice. It is also the case, as you know, that our guidance was not published to Members. I would also concur with Sir Alan’s fair observation that Members might well have considered the capital gain made on a property purchase funded in part through the ACA analogous to that of the tenancy compensation. I am unable to comment on Sir Alan’s points in his sub-paragraphs (1), (3) and (5).
I turn now to the various comments made by Mrs Gidley, Mr Younger-Ross, Mr Holmes, Mr Barrett and Mrs Humble. In the main I can only reiterate the instructions, set out in my earlier letters to you, that my Directorate received on the nature of the guidance to be offered and the manner in which it should be disseminated.
Mr Holmes suggests that the guidance itself was “private” and “unknown”. It was neither. Four years have passed but the Department still holds internal correspondence on this matter. As I have said, two Members requested and received this guidance as reproduced word-for-word in my letter to you of 14 August. I note that Mr Holmes later points out that “it never occurred to me to seek advice.”
140 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
Mr Barrett’s comments about inconsistent guidance are perhaps covered in the third paragraph of my letter of 3 September. His opinion about a failure of communication is explained above and in my earlier correspondence. I note Mr Barrett did not contact the Department about this matter. In this context, I must confess to being puzzled by the final paragraph in his letter of 28 October. If I understand it correctly, information from the Department is often incorrect such that Members, like himself, rely on advice received “second-hand” from other Members.
I acknowledge Mrs Humble’s letter of 18 September and her points are very fair.
Ms Gidley’s letter covers much of the same ground as dealt with above. Since Mrs Gidley appears not to have contacted the Department in 2005 about this matter her sub-paragraph 5 would appear otiose. However, I am happy to confirm that the managers of the relevant sections were aware of the position and an “audit trail” is available.
In respect of Mr Younger-Ross’s letters, I can confirm that he has recently sought answers to certain questions from staff of the Department, but you will understand that with your investigation ongoing it would have been wrong for them to have responded. As I have indicated above, the Department has records going back to 2005 of its actions on this matter. However, I am not at all surprised that very recently a member of my staff on the telephone helpline “was unable to clearly recall” the Dolphin Square guidance available four years ago. Dolphin Square was an isolated and complex matter that applied only to a very small number of Members and the advice itself promulgated only to two Members.
I have checked our telephone line database and no calls are recorded from Mr Younger-Ross during the relevant period about his Dolphin Square tenancy. This is not conclusive as we do not log all calls, but it supports his recollection that he did not contact the Department. In a later reference Mr Younger-Ross mentions discussions that he believes others had with “Resource Centre” staff. If by this he means at the Members’ Centre in Portcullis House, I must respectfully point out that this did not open until 2008.
Finally, I can report that I have checked our telephone log for all the self-referred Members and there are no records of any conversations about the Dolphin Square tenancy buy out. This supports the thrust of the evidence submitted by them, subject to the points made above.
9 November 2009
39. Letter to the Director of Operations, Department of Resources, from the Commissioner, 17 November 2009
I attach two letters, both of 12 November, from Mr John Barrett MP responding to relevant extracts of the advice you sent me on 9 November about my inquiry into Dolphin Square.
I enclose a copy of both Mr Barrett’s letters, together with a copy of my reply of 17 November.
As you will see, I do not propose to ask you to comment on what Mr Barrett says about the discussions he had with the Department about his current lease. In respect of the advice you have told me you gave to two Members which was in accordance with the formal guidance you prepared, I do not propose to take evidence from those Members since I have no reason to doubt what you have told me. It would, however, be helpful if you could confirm your statement and, if it is available, let me have any record the Department holds of that advice having been given.
If you could let me have this confirmation within the next two weeks, that would be most helpful in allowing me to conclude my work on this inquiry.
17 November 2009
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 141
40. Letter to the Commissioner from Mr John Barrett MP, 22 June 2009
With reference to your letter of 4th June regarding my self referral in relation to Dolphin Square, the following reply is in answer to the points you raised.
You also asked for my comments on your summary of the relevant rules as detailed in the introductory paragraphs of your letter.
I would only comment, that while the sum paid for expenses and allowances to Members must always clearly be used in accordance with the rules, the sum paid to me and others in similar circumstances, from the developer, was not an allowance or expense and the use of such sums is not clearly defined in the rules. At all times I believe I have acted within the spirit of, and fully complied with the rules and will set this out in more detail in this letter.
I moved into an unfurnished flat in Dolphin Square in 2001, the year I was elected to Parliament. During the following six years I stayed in a flat that did not receive any improvement, decoration, modernisation or upgrading. I did not claim for, or spend any amount on redecoration, upgrading or improvements. At the end of this time, and after I had been re-elected for a second term, I started to look around, as I planned to move into a flat which had been decorated or upgraded. As well as looking at flats outside the Square, the landlord indicated there were other flats in a better condition that I could move to, at an increased rental level.
I have always claimed the full amount of rental, except for the period during which time Parliament is dissolved, when this cannot be claimed.
When the ownership of the property changed hands I was offered a lump sum in exchange for giving up my rights to my short assured tenancy and I accepted this offer. The gross amount paid was £11,234 and the net amount received was £8,174.74 in May 2006.
This was after the deduction of one month’s rent, a deposit and other small charges connected to producing the inventory. The rent was reclaimed and the deposit returned when I left the flat.
In the summer of 2006, I moved to an improved flat in Dolphin Square and continued to charge the full rental level. The rental level of the new flat was not related to the lump sum I received in May of that year. I stayed there until the summer of 2008, when the landlord informed me that a new increased rental level would in fact be well above the level of allowances provided by Parliament. I therefore moved out to my present address, where I have lived since then.
I considered the offer carefully and discussed this with my wife. I took no professional advice and did not consult the House authorities. I received the payment previously mentioned and informed the Department of Finance and Administration that I would be moving address and supplied them with a copy of my new lease.
My decision to move was made before the payment was received as I had planned to leave my original flat, and move into slightly better accommodation. The accommodation I have always lived in, in London, is relatively basic compared to my family home and after six years, my decision to move was based on the desire to live in a flat which was not so run down. Had there been no windfall I would still have moved.
When I received the windfall I decided to use it for a range of payments and costs, which I have incurred as a direct result of becoming an MP. This includes additional living costs in London, which are either not covered by expenses and allowances, or which were covered, but were not claimed for. Over the eight years, since being elected, I have estimated these costs to be on average about £2,000 per year and after paying capital gains tax of £1,475 on the windfall, I used the remainder of the payment to cover some of these costs.
These included approximately £1,000 for furniture for the flat, which was not reimbursed by Parliament in 2001, the year the flat was first furnished, as the allowances would not cover the initial costs of furnishing a one bedroom flat and rent, council tax, insurance, utility bills etc.
When Parliament was dissolved there was a £1,300 payment for rent which was not reimbursed, as the allowances do not cover this, but this rent was only due because I was an MP and there was no option but to pay. When the next election is called the payment will be £1,600 and I have set aside an amount for this.
142 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
I have not claimed food or subsistence costs for staying in London in the year 2008/9. In previous years this was over £2,000 per year and I am not currently claiming the £25 subsistence allowance, which again would be over £2,000 for the current year.
I no longer claim the mileage cost for using my car on Parliamentary duties in the constituency and have used the windfall for this. This amounts to £750—£1,000 each year for the last two years.
Other costs, which are as a direct result of being an MP and are not claimed by me include the fee I pay to an accountant each year to deal with returns which are exclusively as a result of being employed as an MP. This has been in the region of £300 per year over the last eight years. There are a number of other similar costs and I have used the windfall from the developer for this purpose.
The items detailed above total over £13,000 and I would not have incurred any of these costs had I not been an MP. I did not take professional advice and assumed that the windfall was exactly the same as for those MPs who have sold properties purchased using the allowances to pay their mortgage interest under the allowances scheme. My understanding was that their windfall was subject to capital gains tax and they would then use their own judgement as to what they would spend the balance on.
In my judgement, it was reasonable to use the windfall to cover some of the costs that I had to pay because of my job as an MP and that to use the developer’s money (instead of taxpayers’ money in some cases) was the right thing to do.
Some of the figures I have quoted are estimates, but they are all conservative ones and the amount I quoted earlier of £2,000 per year over the last eight years, a total of £16,000 is, I believe fair and accurate.
I hope this gives you a full and detailed explanation as to my own set of circumstances and I would be happy to supply any other information, should it be required.
If I can be of any further assistance, please do not hesitate to contact me.
22 June 2009
41. Letter to Mr John Barrett MP from the Commissioner, 25 June 2009
I am grateful for your letter of 22 June in reply to mine of 4 June, and for the information you have provided.
It would be very helpful in moving forward this matter if you could let me have the following further information:
1. the amount of rent you were paying for the unfurnished flat you took on in 2001, and the amount of rent you subsequently paid for the improved flat to which you moved in 2006;
2. the exact nature of the rights which you surrendered in return for the payment from the landlord— including any information you were given about the new rent which would be charged on the flat against which the offer was made;
3. whether there was any connection at all between the offer made for the surrender of your shorthold tenancy rights, which I understood was made in October 2005, and you considering a move to another flat in Dolphin Square—or was the timing coincidental?
4. a more detailed indication of the items for which you consider you might have claimed against parliamentary allowances but which you chose to purchase without making a claim; if there were any receipts for these items that would be helpful;
5. the claims you actually made against your ACA in each of the financial years in which you deployed your “windfall” for items you would otherwise have claimed from this allowance;
6. whether you were aware of any advice from solicitors prepared for residents of Dolphin Square in connection with the offer from the new landlord; if so, whether you acted on the advice it offered to
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 143
tenants in your position; if you did not act on that advice, why not? (I have seen advice from [solicitors] apparently provided in September 2005 to residential tenants of Dolphin Square.)
Any other points you would like to make to help me with this inquiry would, of course, be very welcome.
I hope it would be possible to let me have your response on these matters within the next three weeks.
Thank you for your help on this.
25 June 2009
42. Letter to the Commissioner from Mr John Barrett MP, 16 July 2009
With reference to my letter of 22 June and your reply of 25 June, regarding my self referral in relation to Dolphin Square, I am writing with as much information as I have been able to obtain. I do have some older documents in store in Edinburgh and if there are any gaps in the information you require I will search through those older documents.
In answer to your first question about the rent I was paying when I first moved into [the original Dolphin Square flat] in 2001, I received this information today from the Department of Finance and Administration, which is as follows.
On 9th August 2001 I started to lease the unfurnished flat at a rate of £12,780 per year. This increased by £325 in the second year and another £357 in the third year. In 2006 I moved into […] Dolphin Square. This cost £1,538 per month. This was a larger and much nicer flat. I left when they informed me the new rent would be increasing and moved to [another London address] in August 2008 at a rent of £1,666 per month.
I was supplied with a document at the time detailing the rights I was giving up. It was my understanding that I would give up all existing rights and move on to a yearly lease. I am not presently aware of the exact nature of these rights, but at the time they were detailed in a legal document which was supplied to me by the landlord. This document might well be in storage and I will post this to you if it is.
A number of factors played a part in my decision to move. The most important one was that [the original flat in Dolphin Square] was fairly run down and while there were few options and property was quite scarce when I was elected in 2001, a few years later there was now more of a choice in the market and having lived in London for a few years I was more aware of the options available. Secondly, having lived in the one small flat for a number of years I was looking for somewhere nicer to stay.
Thirdly, the ACA budget for renting a flat provided enough provision for staying in somewhere better which would also allow my family to visit for the weekend if I decided to stay in London and not travel the 400 miles back to Edinburgh every weekend. This has only ever been possible in [the second flat in Dolphin Square]. It is no longer possible in my current smaller flat nor was it possible in [the original flat in Dolphin Square]. The offer of the windfall did not make me move immediately and I stayed in the [the original flat] for some time after the offer was accepted.
The figures for the amounts I could have claimed, but chose not to, are in my previous letter and I did not keep receipts for those amounts. I will have some details on old credit card records and will be able to look for these if required. One of the reasons I decided to end a number of the claims is that it avoided me having to keep receipts for everything and fill in a number of claim forms, which I appreciated would have to be 100% accurate, or there would be a danger of problems arising from any errors.
All my claims for each year since the windfall and up to the current year have been for items which were allowable under the ACA rules. When I accepted the windfall it was added to my total income which was then spent. It is impossible to detail exactly what income was spent on what expenditure, but the totals as detailed in my previous letter, show that a range of costs incurred directly relating to my employment as an MP, which would not have happened otherwise, exceed this total.
144 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
Since my previous letter, I have given this further thought and there are another range of items I would never have considered keeping receipts for, which amount to approximately another £1,000 per year, such as prizes for local events, schools, fairs and gala days; supplying wreaths for remembrance services, taking constituents to lunch or dinner after they have visited Parliament etc. A very conservative estimate of these amounts would be £1,000 per year, or another £8,000 since I have been elected. Whether or not I received the windfall I would have accepted these were all costs I would have accepted myself. I am only detailing these costs now in this way in reply to the question of “where was the windfall spent?” and to make it clear that it is a smaller sum than the extra costs incurred by me, since being elected. I would however add that personally, I do not believe that the windfall and the detailed items of spending above are in fact directly linked in this way.
My understanding, at the time, and from discussions with other MPs since then, was that advice from the House was that this was a private matter between the landlord and the tenant and that we had to make our own judgement as to what to do. As I said in my previous letter, all allowances and expenses must be clearly used in accordance with the rules, but this payment was not an allowance or an expense and the use of such amount was not clearly defined within the rules.
With regards to legal advice. I do remember being told that [solicitors] were working on behalf of the landlord and would not be in a position to give legal advice to the tenants, but they could give information to clarify the proposals. I did receive a large amount of paperwork at the time from [solicitors], the Dolphin Square Tenants Association and was informed of meetings that would be held by a number of groups, but I did not attend any of the meetings or take any legal advice as it looked like a fairly straightforward proposal to give up my rights to the flat I occupied at the time.
The only thing I would add is that from speaking to colleagues recently, it appears that those who did ask the House Authorities for advice were given a range of answers and that while I supplied a new lease to the Fees Office with the new rental level and the new terms and conditions on it, the Fees Office confirmed at each stage that everything was in order every time I submitted a new lease for approval.
I hope this provides the information you require. However should you require more information please send your reply to my home address at [ … ] during recess.
Thank you for your assistance with this matter.
16 July 2009
43. Letter to Mr John Barrett MP from the Commissioner, 20 July 2009
Thank you for your letter of 16 July in reply to mine of 25 June. I am grateful for the further information you have provided.
On the question of the rights which you surrendered in return for the payment, I am enclosing anonymised versions of offers which were made to tenants at Dolphin Square in Autumn 2005, one referred to as Cash and Go, the other as Cash and Stay. I would be grateful if you could let me know whether these were the offers you received and if so, which of the two you accepted.
I am also enclosing a copy of the report prepared by [the solicitors] to which I referred in my letter of 25 June. Could you let me know whether this is the document you saw and whether you took any account of their advice in reaching your decision?
I hope it would be possible to let me have your response within the next two weeks, although I recognize the recess is now upon us.
20 July 2009
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44. Letter to the Commissioner from Mr John Barrett MP, 4 August 2009
Thank you for your letter of 20th July including a number of documents relating to the above property. I believe the offers you enclosed for Cash and Go and Cash and Stay were the offers I received. I accepted the Cash and Stay option.
I also received a large amount of paperwork at the time relating to the options and it may well be that the document you enclosed was one of them, but I could not say for sure.
I do not remember seeing those pages with photographs of individuals at the top of each page and believe I would have remembered seeing them.
Having looked through that document, I remember references to meetings in the local school about the proposals but these may also have been advertised elsewhere. I did not attend these meetings or any of the drop-in surgeries and did not seek out any legal advice.
The only additional piece of information I would like to supply is further to your letter of 4th June, in item 6, where you asked what I did with the payment. In my previous letters I have detailed a number of costs which have been incurred in relating to my election as an MP that I could have claimed from the public purse, but decided not to, for a variety of reasons. I would add that two other significant costs should be added to this. One is the cost of phone calls from my mobile phone and land line. The mobile is used extensively for work related calls and many of the land line calls are work related, but I do not charge for either.
The more significant other cost relates to the fact that since being elected I have had to keep one room of my house as an office, for which I have charged no costs for since being elected in 2001. I have not accurately costed either of these, but would expect that £1,000 per year would go nowhere near meeting the costs I have incurred.
Should you require any further information please do not hesitate to contact me.
4 August 2009
45. Letter to the Commissioner from Mr John Barrett MP (received 8 October 2009)
Thank you for your letters of 7 and 23 September outlining a number of issues relating to the Dolphin Square tenancies.
There are a number of other issues that I believe require further clarification.
In previous correspondence I was asked for and gave details of what I spent the payment from the landlord on. I detailed sums well in excess of the payment, all of which directly related to my employment as an MP. It now appears that this detail does not appear to matter and is not related to in the later correspondence. I believe that this detail is important as for me it proves there was no personal benefit from the transaction.
I was not given the advice as detailed in the letter from [the Director of Operations at the Department of Resources] to yourself on 3 September, which clearly states that only two Members living in Dolphin Square were given the advice in November 2005. When the Dept. of Finance had the address and lease details of all those Members living in Dolphin Square at that time, why was this advice not then given to people, like me, when the Department was giving the same advice to others who lived at that address? If the Department failed to pass on this advice, when it was aware that others were staying at the same address, the Department clearly failed to carry out a basic function of communication to ensure that all Members received the same advice. This was not the case and different Members received different advice, or no advice at all.
In the same letter of 3 September, it states that arguably this is not a matter for the scheme of allowance rules. There is no mention of such payments in those and this payment was not an allowance, therefore I cannot see how it can be covered by such rules.
146 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
I believe that a number of MPs over the years have sold properties and kept the profits from those sales and that others have been offered payments from landlords to vacate premises, when those properties have been paid for by the allowances. For many years those matters were considered private arrangements and at no time have MPs been asked to refund the amounts involved. Is it not the case that this is a similar situation and that those who lived in Dolphin Square are in exactly the same position as the many MPs I referred to?
In conclusion, I have a great deal of sympathy with Mrs Joan Humble, who asked for and was given exactly the advice that this was not a matter for the Fees Office and that she was not advised to follow any course of action. I acted in exactly the same way as Mrs Humble, although I did not contact the Fees Office. I cannot see why, if there was any doubt at the time about how MPs were acting, why the advice given to two MPs was not then made available to everyone else. I can only repeat that the information I was asked for and gave in earlier correspondence also confirms that I did not profit from this transaction. If I had wanted to profit from the allowances I would have bought a property when elected in 2001 and sold it when I stood down.
Received 8 October 2009
46. Letter to the Director of Operations, Department of Resources, from the Commissioner, 8 October 2009
I would welcome any comments you may wish to make on the attached letter which I received on 8 October from Mr John Barrett MP commenting on the letters which you sent me on 14 August and 3 September about this matter.
I attach copies of my letters to Mr Barrett of 7 and 23 September and a copy of Mr Barrett’s reply.
As you will see, Mr Barrett is concerned that your letters made no reference to the information he provided about the use to which he had put the money he received; he asks why the Department did not pass on to all Members living in Dolphin Square the advice they had prepared; why you consider that the rules governing the allowances might apply to the transaction; and he reiterates his view that the payment he received was similar to that of other Members who had been offered payments by landlords as an inducement to vacate the premises, or of Members who received a profit from the sale of properties on which they had made claims against parliamentary allowances, which had been considered to be a private arrangement.
I would welcome any further comments you may be able or wish to make on these points. If you could let me have such comments within the next three weeks that would be most helpful, since I hope I will shortly thereafter be able to bring this inquiry to a conclusion.
Thank you for your help.
8 October 2009
47. Letter to Mr John Barrett MP, from the Commissioner, 8 October 2009
Thank you for your letter which I received on 8 October responding to mine of 7 and 23 September about the Dolphin Square tenancies.
It was most helpful to have this response. I am copying your letter to the Department of Resources since some of your comments relate to the advice they have provided. When I hear from them, I will be back in touch.
You say in your letter that Members in the past have been offered payments from landlords to vacate premises. It would be helpful if you could identify the cases in which you believe that has happened.
Thank you for your help on this.
8 October 2009
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48. Letter to the Commissioner from Mr John Barrett MP, 15 October 2009
Thank you for your letter of 8th October asking for specific details of any cases in which landlords have paid amounts to obtain changes to lease agreements.
I do not have any specific details of any individual cases, but, as with the gains made from property sales over the years, while I have no specific information regarding any individual’s specific case, I have heard a number of conversations stating that this has in fact happened.
I mentioned this in my previous letter in order to compare the advice given to Members in all cases.
15 October 2009
49. Letter to the Director of Operations, Department of Resources, from the Commissioner, 19 October 2009
I last wrote to you on 12 October to show you a response I had received from Mr Paul Holmes MP following my letter to you of 8 October with a response from Mr John Barrett MP, both following up the advice you had given me in your letter of 3 September about the Dolphin Square payments.
I now enclose a further letter of 15 October from Mr Barrett, together with a copy of my letter to him of 8 October about his suggestion that Members in the past had been offered payments from landlords to vacate premises. As you will see, Mr Barrett does not have any specific details of any individual cases.
I enclose also a copy of a letter of 12 October from Ms Sandra Gidley MP where, as you will see, she raises the question of why the advice from the Department was not made more widely available; the analogies drawn between these payments and profits from house sales; and the suggestion that there should be an audit trail for the dissemination in the Department of the advice that the Department prepared.
I would be very grateful if you could take account of Ms Gidley’s further points in preparing your response to my letter of 12 October.
19 October 2009
50. Extract from Letter to the Commissioner from Mr John Barrett MP, 28 October 2009
…
I am writing to confirm the one additional point I raised in relation to the Dolphin Square lease.
It concerns my belief that what MPs in Dolphin Square did was to sell a lease for a property in the same way that many property sales in England are in fact the result of leases being sold, rather than the freehold, which I have more experience of in Scotland.
This would again place those who sold their lease in a very similar position to the many MPs who have sold properties over the years, when that property was leasehold, rather than freehold.
…
…much information given by the Fees Office has been incorrect and Members often rely on the advice given to other Members over a period of time to establish the correct procedure to follow. In this case it was well established that properties sold, or leases sold, were in fact private matters, and that Members should make their own arrangements to deal with this.
28 October 2009
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51. Letter to the Director of Operations, Department of Resources from the Commissioner, 29 October 2009
I last wrote to you on 19 October to show you a response a had received from Mr Paul Holmes following up the advice you had given me three September about the Dolphin Square payments.
I now enclose a letter on 28 October from Mr John Barrett which, as you will see, he compares the payment he received to a payment a Member might receive in selling a lease hold property. I sent you on 8 and 15 October previous exchanges with Mr Barrett.
I would be very grateful if you could take into account Mr Barrett’s further points in letter preparing your response to my letter of 12 October and 19 October.
29 October 2009
52. Letter to Mr John Barrett MP from the Commissioner, 11 November 2009
I have now heard back from the Department of Resources with their comments on the points you have made in correspondence in respect of the advice which the Department of Resources sent me on 14 August and 3 September about the Dolphin Square payments.
I enclose an extract of the Department’s letter of 9 November which responds to the points you have made. I am asking the Department to let me know the source of the instructions which the Director refers to in his letter.
I believe I am now reaching the point where I can conclude this inquiry and prepare my draft Memorandum for the Committee on Standards and Privileges. But, if there were any final points you wished to make, please let me know within the next two weeks. I will then conclude my work on this inquiry and, once I have prepared the factual sections of my Memorandum, I will let you see them so that you can comment on their factual accuracy.
Thank you for your help with this.
11 November 2009
53. Letter to the Commissioner from Mr John Barrett MP, 12 November 2009
I thank you for your letter of 11th November regarding the Dolphin Square issue.
With regards to the Department’s letter enclosed and their comments regarding inconsistent guidance causing them to be puzzled, I can give a clear example of such contradictory advice from earlier this year, when the lease on my flat ended.
When my current lease expired in August, I asked the Department if the £1,250 monthly cap on leases would apply to my renewal. I was told categorically that it would. As my current lease is about £5,000 above that level per year, this would have meant moving out of my current flat or paying the £5,000 out of my own pocket. I was then advised by colleagues that this advice was wrong and that I could stay, as the cap did not apply to lease renewals. Had I accepted the advice given, it would have had serious consequences and it was the second hand advice he refers to in his letter, which actually saved the day.
After further contacts with the Department, they confirmed the advice from colleagues was correct and their advice was wrong. The lease was then renewed and the entire amount is now covered from allowances.
I agree with what he says about the telephone log, as I did not contact the Department for advice about the Dolphin Square lease, but it is worth noting that the above detailed example of poor advice was from face to face conversations and would not be logged, unless the staff member wrote down the details of our conversation following our meeting.
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Please feel free to copy this to the Director of Operations.
12 November 2009
54. Second letter to the Commissioner from Mr John Barrett MP, 12 November 2009
With regards to my other letter of today’s date, I believe that this information, along with other evidence previously discussed and detailed in other correspondence, throws into question the advice given to those two Members, who did ask for and were given advice at the time, regarding the Dolphin Square lease.
It cannot be assumed that the advice given to those two Members was in fact correct advice, just because it had been given to them by the Fees Office.
In concluding your deliberations it might be worth establishing whether or not that advice was in fact correct.
As my other letter points out, the advice given to Members is not infallible and from our previous discussion and correspondence there appears to be an assumption that those who received advice followed the correct procedure, whereas it is clearly possible that the opposite is the case.
12 November 2009
55. Letter to Mr John Barrett MP from the Commissioner, 17 November 2009
Thank you for your two letters of 12 November responding to mine of 11 November with the relevant extracts from the Department of Resources’ letter of 9 November which I copied to you.
I am grateful for both your letters. I will, as you requested in one of your letters, copy them both to the Department. But I think that I do have sufficient evidence now to bring my inquiry to a conclusion. I think it is in the interest of all the Members involved, and the House, that this matter is resolved. I do not, therefore, propose to invite the Department to comment on your discussions with it in respect of your current lease.
I have considered whether I should extend my inquiry by asking the two Members concerned about the advice referred to in the Department’s letter, but I do not believe I have been given sufficient grounds to suggest that the Department has provided me with false or inaccurate evidence on this aspect of their contacts with Members. I will, however, ask the Department to confirm what they have told me.
17 November 2009
56. Letter to the Commissioner from Mr John Barrett MP, 20 January 2010
I am writing in response to your recent letter of 7th January and the enclosed correspondence. As requested, I am enclosing my final comments on this.
The letter from [the Director of Finance and Administration] dated 1st November 2005 clearly states in paragraph 3 that the Green Book does not cover this specific situation and that of a personal windfall. This is certainly the case, but he does not then confirm that the existing, and current, custom and practice over many years is that when a windfall is received from a sale of a property paid for entirely from the ACA, the windfall is retained by the Member. This has applied to many sales over the years and currently a number of MPs are in the process of selling property paid for by ACA—for which no advice regarding the windfall is currently being issued. I would therefore contend that both types of windfalls should be treated in exactly the same way.
Paragraph 4 states that, “we should advise Members” on a course of action, yet, although copies of all leases for Dolphin Square were in the hands of the Dept. of Finance and Administration and they were aware of everyone who was residing at Dolphin Square at that time, advice was only given to two Members and not circulated to everyone. I have detailed in previous correspondence that I have had previous experience of
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advice which has been given to Members which has then proved to be incorrect and if acted upon would have cost me several thousand pounds. Since my last correspondence I have been given further incorrect advice regarding my current tenancy, relating to the winding up allowance, which if acted upon would have again had a significant financial impact in excess of a thousand pounds. Only after discussion with colleagues was I able to take the correct course of action.
I mention the above as it cannot be assumed that all advice given to Members by the Department is factually correct and using the experience of colleagues for guidance has in the past been the source of helpful and accurate advice to many Members. In the case of Dolphin Square windfalls many colleagues, including myself, believed we were acting correctly at all times.
In paragraph 4a it clearly states that the windfall can be set against future housing costs by the Department, but it does not make clear if the entire windfall was used to partly offset other costs directly resulting from employment as an MP, as was my own case, as to whether this was also acceptable.
As someone who used more than the entire windfall for such directly associated costs, I am still not clear as to whether there exists any advice on this at all.
In conclusion, I continue to believe that at all times I acted within the guidance and rules set out in the Green Book and that it made sense to use the windfall for a number of costs, some of which could have been claimed from a range of allowances, and therefore saving on the public purse.
20 January 2010
57. Letter to Mr John Barrett MP from the Commissioner, 21 January 2010
Thank you for your letter of 20 January responding to mine of 7 January with the correspondence from the Department of Resources.
I was most grateful for your comments. I think I have taken this as far as I need in order to conclude my work on this matter. I will, therefore, incorporate your letter in the evidence for the inquiry and in preparing the factual sections of my memorandum. I will let you see the factual sections in draft as soon as they are completed so that you can comment if necessary on their factual accuracy.
Thank you again for your help with all this.
21 January 2010
58. Letter to Rt Hon Sir Alan Beith MP from the Commissioner, 18 June 2009
Thank you for your letter of 15 June about the payment you received as a result of your tenancy in Dolphin Square. It was very good of you to send me such a full and prompt response.
I am most grateful for sight of the documents relating to your tenancy which you enclosed with your letter. I have taken copies and am making arrangements for the originals to be available for collection from my office, as you requested.
Having carefully considered the helpful information in your letter, there are a few points on which I would appreciate further clarification.
You said in your letter that you accepted £5,000 in return for surrendering the right to pass your tenancy on to your children, and that you set the money aside for redecoration of the flat. You also said that when Westminster City Council decided to sell the head lease of Dolphin Square there began a period of uncertainty in which it was not feasible or prudent to carry out decoration or improvement. I note from the terms of your lease dated 10 January 2006, in paragraph 4.3, that you are required to redecorate the whole of the interior every seven years. I would be grateful if you could let me know:
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1. when you received the £5,000;
2. when the flat was last decorated;
3. whether you expected that the full amount of £5,000 would be required to cover all the necessary redecoration;
4. what was the other refurbishment you refer to you undertaking before the 2008 summer recess, when it was carried out, and how it was paid for;
5. whether you have any documentation or other evidence in relation to the plans you had for refurbishment in the long recess of 2008—for example, builders’ quotations;
6. whether, instead of retaining the £5,000, you gave any consideration to surrendering the money to the Fees Office and claiming for the redecoration of the flat as and when the work was carried out;
7. whether you consulted the Fees Office at any stage about the options which were put before you by [the new owners].
I note that in return for the £5,000 you surrendered the extended succession rights but retained the standard succession rights. I assume therefore that the surrender did not affect the rights of your wife to take over the tenancy in the event of your death, but I would be grateful if you could confirm this.
You said in your letter that your wife contributes £600 per month which you deduct from your rent claim. It would be helpful if you could let me know, for each financial year from 2005–06, the total outgoings on the flat which were claimable against the Additional Costs Allowance; the claims you have actually made against the ACA; and the amounts your wife has contributed towards the total outgoings.
I hope it would be possible to let me have your response within the next three weeks. Once I have this, I am likely to be writing to the Department of Resources with your response and seeking their help.
18 June 2009
59. Letter to the Commissioner from Rt Hon Sir Alan Beith MP, 9 July 2009
Thank you for your letter of 18th June. I will try to deal with your questions paragraph by paragraph.
Paragraph 4
(1) In January 2005.
(2) The sitting room and bedroom were decorated in 2001-2. The kitchen, passage, toilet, bathroom and small spare room have not been redecorated since the time that I moved into the flat.
(3) I expected that the full £5,000 would probably be required to cover the complete redecoration of the flat which, as you point out, the lease requires.
(4) The re-tiling of the kitchen, for which my wife paid. Redecoration could not go ahead until this messy work had been completed.
(5) It was redecoration, not refurbishment, which was planned for autumn 2008. I was taken into hospital unexpectedly, which disrupted my plans to meet and obtain an estimate from the decorator. I was instructed thereafter to take at least six weeks off work, and we left London for Northumberland as soon as I was fit to do so.
(6) and (7) I had no reason at all to believe that the Fees Office would seek payment to them either of the £5,000 or, indeed, of the £48,030 which I had refused. It was not the House policy—and is still not the House policy—to recover capital gains on property on which mortgage interest is claimed, and I assumed that the same policy would cover these circumstances. I was not aware at the time of any colleague being asked for
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such payments (despite the cash offer arrangements being publicised) and we now know that in at least one case where advice was sought, the retention of a much larger Dolphin Square payment and its use to part finance a mortgage was approved by the Fees Office. The £5,000 payment arose from my tenant/landlord relationship, and it is important to recognise that the lease creates obligations which are part of that relationship, and for which the House authorities take no responsibility. For example, a Member giving up or losing his seat cannot claim from the Fees Office for the redecoration which the lease requires when the flat is vacated. The lease also creates other obligations such as carpeting and window cleaning which are no longer claimable from ACA.
Paragraph 5
My first wife had died and I had re-married in the period since I took out the original lease on the flat. Prior to changes, it was the practice of the Dolphin Square Trust at their discretion to allow spouses to take over a flat in the event of their partner’s death. This understanding could not be relied on under new ownership, and the Dolphin Square Trust negotiated for the company to allow joint leases for spouses already resident in the flats; we took up the opportunity and the lease is now joint.
Paragraph 6
I am not sure what you mean by “total outgoings on the flat which were claimable”: I could have claimed household items and other services up to the limit of the allowance. If you mean outgoings which I actually spent but did not claim from ACA, these included, for example, bedding, household materials, re-tiling of the kitchen, reupholstery and other items for which I have not kept records because they were not the subject of a claim. Much of this expenditure was contributed by my wife, in addition to the £600 a month towards the rent which, as I explained in my earlier letter, she has paid except during the period when she was contributing to the kitchen and refurbishment costs.
You ask for my actual claims: these are available from the Department of Resources and you have my authority to refer to them. I have noted one error in ACA when I unintentionally claimed twice over for a television licence, which was not picked up by the Fees Office at the time, and I have repaid this sum.
I look forward to seeing this matter resolved by a ruling from you as to whether the decisions I took in respect of the cash offers from [the new owners] were appropriate.
9 July 2009
60. Letter to the Commissioner from Rt Hon Sir Alan Beith MP, 14 September 2009
I have received your letter of 7 September. I am concerned that on several points it is incorrect, because it does not reflect the information I have already submitted. Obviously I am not seeking to prejudge your conclusions, but I would like to be sure that we agree on the facts of the matter. I should therefore be grateful if, before submitting anything to the Committee, you could assure me that you will make clear the following points, or clarify for me where my summary could be mistaken.
(1) I do not “fall into category (a) of Members” whose Dolphin Square rent was fully paid from the ACA, as my earlier correspondence makes clear.
(2) The advice given by the Fees Office, to which you refer, was never given to me or published to Members: it was given to only two Members.
(3) That advice was framed in relation to Members who chose to accept monetary compensation to “buy out their existing tenancies” (see paragraph 2 of the advice). I refused the monetary compensation offer, which amounted to over £48,000, because I did not wish to have the favourable terms of my existing tenancy bought out. Because it would have led to higher rental costs, I believed that it would not have been in the public interest for me to do so. The only compensation I accepted was for the loss of children’s succession rights in which there was no public interest. Even if there were any basis for retrospectively applying advice of which I was not aware at the time, the advice would have to have been advice relating to the circumstances I have described, not the advice given to someone who intended to accept monetary compensation to have a tenancy
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bought out. It is worth pointing out that the decision I took was to preserve the terms of my existing tenancy as far as the new landlord’s offer permitted, accepting only the removal of rights which did not accord with the objective of limiting the cost to public funds.
(4) The correspondence from Mrs Humble provides further support for my submission that many Members, knowing that the Fees Office made no claim on the substantial capital gains which Members could make through the use of ACA to pay mortgage interest, did not believe that the Fees Office would seek the reimbursement of compensation paid for changes in tenancy terms. Although my own case did not fall into this category, I held the same view about the £5,000 which I received in respect of succession rights.
(5) It was and remains my intention that I should make no personal gain from any aspect of my tenancy arrangements, and the £5,000 has always been set aside to defray costs such as redecoration which would otherwise have been claimable from the ACA, or to meet liabilities arising from the terms of a tenancy whose sole purpose was to provide me with reasonable accommodation to carry out my parliamentary duties in London, since my home and constituency are over 300 miles from London.
I look forward to hearing from you on these points.
14 September 2009
61. Letter to the Director of Operations, Department of Resources from the Commissioner, 22 September 2009
I enclose a letter of 14 September to me from Sir Alan Beith, in which he responds to my letter to him of 7 September, also enclosed. I would be very grateful for your comments on Sir Alan’s letter, and in particular his view that the Department’s advice to Dolphin Square tenants, described in your letter of 14 August, was framed exclusively in relation to Members who chose to accept monetary compensation to buy out their existing tenancies. Sir Alan writes that that the advice did not relate to his circumstances since he accepted only compensation for loss of children’s succession rights in which, in his view, there was no public interest. It would be very helpful to know whether you consider the Department’s advice encompassed the £5,000 received by Sir Alan in recognition of him giving up his children’s succession rights or whether you consider that different considerations should have applied.
I also note Sir Alan’s remark that he does not fall into the category of Members whose Dolphin Square rent was fully paid from the ACA. I take this to be a reference to the arrangements described in his letter to me of 15 June, which sets out the involvement of Sir Alan’s wife in funding the Dolphin Square accommodation, it would seem partly at least from her allowances from the House of Lords. In that letter, Sir Alan says that he and his wife normally work on the basis that she contributes a fixed monthly sum—currently £600—which he deducts from his rent claim. I would be very grateful if you could tell me whether, and to what extent, Sir Alan’s claims against the ACA were abated to reflect the contribution made by his wife and whether you consider that this would have affected the category in which Sir Alan’s circumstances would seem to fall in respect of his rented property, namely moving him from category a to category b or indeed to a new category and to different advice.
22 September 2009
62. Letter to Rt Hon Sir Alan Beith MP from the Commissioner, 11 November 2009
I have now heard back from the Department of Resources with their comments on the points you have made in correspondence in respect of the advice which the Department of Resources sent me on 14 August and 3 September about the Dolphin Square payments.
I enclose an extract of the Department’s letter of 9 November, which responds to the points you have made. I am asking the Department to let me know the source of the instructions which the Director referred to in his letter. I am also asking them for clarification about the rental abatement to reflect the share held by your wife.
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I believe I am now reaching the point where, subject to our interview on 24 November, I can conclude this inquiry and prepare my draft Memorandum for the Committee on Standards and Privileges. If there were any final written points you wished to make, please let me know within the next two weeks. I will then conclude my work on this inquiry and, once I have prepared the factual sections of my Memorandum, I will let you see them so that you can comment on their factual accuracy.
Thank you for your help with this.
11 November 2009
63. Letter to the Commissioner from Rt Hon Sir Alan Beith MP, 18 November 2009
Thank you for your letter of 11 November and for the redacted copy of the letter sent to you by the Director of Resources. You mention “the source of the instructions which the Director referred to in his letter”. The copy you sent me does not make reference to any instructions. Was this in one of the redacted paragraphs, and, if so, what is it about?
I can, however, provide you with details, should you require them, of my wife’s contributions to the rent of the flat, which have varied over the period since we were married but, over the whole period work out at an average of around 30%. You refer to the “share held by my wife”: this is a tenancy, not a mortgage on a property, so there is no question of a share being held. The contributions were made voluntarily because it seemed reasonable to us that my wife’s allowances for attending the House of Lords should make some contribution to the costs of the flat which we share, whether rental or other costs. Although she began contributing soon after we were married, she did not become a joint tenant until the new lease was agreed in 2006.
We took up the offer to make the tenancy joint at no cost because, in the event of my death, she could otherwise have faced eviction from the flat. This had not been the case under the Dolphin Square Trust tenancy, because the Trust’s declared policy was to grant continuing tenancies to widows in such circumstances.
I should like to reiterate that our approach to these matters was guided by our desire to keep down the cost to public funds of having adequate accommodation for our duties in London. We refused a very large cash benefit, which we could have kept under the then prevailing rules and interpretations, in order to retain very favourable rental terms. The cash offer was made because the new landlord knew that a much higher rent could be charged on Dolphin Square flats in the market conditions at the time. We set aside the £5,000 succession compensation to meet costs incurred under the lease such as decorating which, at the time, could otherwise have been claimed from allowances. In both decisions, therefore, we were motivated by a desire to keep down the cost to public funds, and this we achieved. Each of us, as a result, has been able to limit our accommodation expenses to well below the permitted level taking the relevant period as a whole.
Finally, I think it is important to stress that any conclusion which treated the £5,000 as a capital gain and sought recovery of it would have to be applied consistently in all cases where any kind of capital gain had been realised, including gains from the sale of a property on which mortgage interest had been paid out of the ACA.
I look forward to your response on my query about “instructions”, and to our discussion on 24th November.
18 November 2009
64. Letter to Rt Hon Sir Alan Beith MP from the Commissioner, 19 November 2009
The reason I sent you the extract from the letter is that other parts of the letter related to other Members and I thought it right to respect their privacy during the course of my inquiry. But I am sorry that, as a result, I made a reference to a part of the Director’s letter that I had not copied to you. I apologise for having caused the confusion. The reference in question was as follows: “In the main I can only reiterate the instructions, set
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out in my earlier letters to you, that my Directorate received on the nature of the guidance to be offered and the manner in which it should be disseminated.”
The guidance and the method of dissemination was set out in the Director’s letters to me of 14 August and 3 September which I copied to you with my letter of 7 September.
I was grateful for the further information you provided about your wife’s contributions to the rent of your flat and to the approach you took to the cash offer. I have noted also your point about capital gain. We may wish to cover some of these points when we meet on 24 November. I look forward to seeing you then.
19 November 2009
65. Agreed Note of Interview with Rt Hon Sir Alan Beith MP at 2 pm on Tuesday 24 November 2009
Present
John Lyon, Parliamentary Commissioner for Standards (JL)
Rt Hon Sir Alan Beith MP (AB)
Note-taker
Introduction
JL Thank you for coming in.
This is [the note-taker]. She will take a note of our discussion and show it to you so you can be satisfied as to its accuracy.
The note would be included in the memorandum I will submit to the Committee on the complaint and you can expect it to be published with the Committee’s Report.
I wrote to you on 18 November to set out the procedure and to give you the main areas I wanted us to cover. Other matters may arise during the course of the interview.
AB Before we begin I would like to read out my statement.
I voluntarily referred the terms on which I retained my rented Dolphin Square flat to you, as Commissioner for Standards, when my integrity was called into question in a seriously misleading newspaper article, and I chose to submit to you my belief that I had acted properly, in the public interest, without any intention or outcome of personal gain. In your letter to me of 18th November you summarise the allegations as an assertion that my decisions “may... have led to claims on (the) Allowance which were not necessarily incurred or may otherwise have favoured (my) personal interest over the public interest”. I believe that such allegations are completely false, and I hope I have demonstrated this to be the case in my letters to you of 5th June 2009, 14th September 2009, and 18th November 2009.
I think it is important to recall the context of my decision. After a long period of serious uncertainty about the future of Dolphin Square, the new landlords made offers which gave me the following options:
1) to give up the flat, receive a payment of £48,030, and use the money towards a mortgage on a flat elsewhere. I have always been opposed to the system under which the House pays mortgage interest, which is why I have relied on rented accommodation for the whole of my 36 years as a Member of Parliament. If I had wished to make personal profit, I would obviously have been able to do so if I had used the mortgage system over a very long period of rising property prices. An alternative version of that option would have been to give up the flat, receive the £48,030, and find another rented flat. Given that I had a secure tenancy
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with a below-market rent (which included heating and water rates), I could not have obtained such accommodation without significant extra costs;
2) to accept the £48,030 and a new tenancy of the flat. This would have been an insecure shorthold tenancy, with an immediate rent increase from £13,825 to £22,880 per annum; that would have had the effect of favouring my personal interest while adding substantially to my ACA claims;
3) to retain the very advantageous secure tenancy and below-market rent, thereby keeping costs down to the taxpayer, while accepting the £5,000 for revocation of succession rights—in my case my children’s succession rights—to use for the costs of redecoration, which is an obligation under the tenancy. There was no public interest in my retaining succession rights, and no loss to the taxpayer in my decision to give them up. This was the option I took.
A further possibility would have been to take option (3), but to make a payment to the Fees Office of the £5,000, less an amount to recognize my wife’s contributions to the rent, and a further amount for the periods in which general elections had taken place. I had no reason whatsoever to believe that the Fees Office would have expected such a payment, and I knew that many Members had decided to accept sums even larger than the £48,030 I had been offered, and used the money to take up a mortgage.
Others had made very substantial capital gains on properties financed by the payment of mortgage interest, without being asked to make any payment to the House authorities. The correspondence you have had with the Director of Operations confirms that no advice was given generally to Members on this matter, and that the advice which was formulated, but not circulated, related to tenants who had accepted payment for their tenancies to be bought out. I was not in that category. We also know from Mrs Humble that some Members received different advice on the issue.
If it were to be concluded that the £5,000 payment was a payment which the Fees Office were entitled to recover in part, then the same principle would have to be applied to all those who had accepted larger payments to give up their tenancies, and to all those who had made capital gains from the sale of properties on which mortgage interest had been paid from the ACA. It seems obvious that the House authorities had no expectation that such payments would be made or would be required. The Report of the Committee on Standards in Public Life has since excluded the possibility of recovering such capital gains on mortgaged property prior to the date of its report.
I should add that I very much welcome the recommendation of the Kelly Committee to end the system of payment of mortgage interest to finance accommodation for Members. My whole approach to my own case has been governed by my opposition to that system.
Conclusion
In my decision to remain at Dolphin Square on a secure tenancy and at below-market rent, refusing a large cash offer to give up the tenancy and retaining a small payment for succession rights to pay for redecoration, I kept down the costs to the ACA, prevented unnecessary additional cost to the taxpayer, and did not in any way favour my personal interest over the public interest.
JL Thank you. We will append this to the meeting note. We may cover some of the points you have made in the course of our discussion. Are you content for me to go ahead?
AB Yes, thank you.
Background
JL Can I first summarise my understanding of the facts? You have been a tenant in Dolphin Square since December 1975 and have been in your current flat since 1993.
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AB Yes.
JL Generally, over what I take to be the last 10 years or so, your wife, Baroness Maddock, contributed about 30% of the rent charged, from House of Lords allowances. You have claimed for the rent from House of Commons allowances.
AB Yes, we both met the costs.
30% is an average over the period. On one or two occasions she didn’t contribute to all the rent. For example, at one time my wife’s contributions were dedicated to the refurbishment of the flat—an option which was not available from the landlord. And she did not contribute in the quarter which included the General Election. But otherwise I always deducted her contribution from my claim.
JL Can you confirm that her contribution is £600 a month?
AB Yes, that is her current contribution. It represents 40–50% of the rent, or just under half.
JL Thank you. To continue with my summary: had you accepted the principal payment offered, which was £48,030, the rent overall would have increased substantially, initially from £14,441 a year to £22,880 a year.
AB Yes. At the time of the offer the rent was £13,825 and it would have gone up to £14,441 later that year. But if I had accepted the second option, the rent would have increased to £22,880.
JL You were, however, offered £5,000 to buy out the succession rights of your children. You accepted this offer and received the payment in January 2006. You considered there was no public interest in retaining these succession rights and that they related to the tenant/landlord relationship which creates obligations for which the House took no responsibility. We will come back to that point later.
AB Yes.
JL You set aside the sum you received to meet the cost of redecorating your flat, which otherwise you could have claimed at the time on your allowances.
You planned the redecoration for the summer of 2008, after tiling work on the kitchen, but your health problems meant that your redecoration plans had to be deferred to the long recess just passed.
AB Yes. It is the sort of task you do in the long recess, because it would be difficult to sleep in the flat while the work was taking place.
JL You did not consult the House authorities in advance of accepting the £5,000, but you believed that the position was analogous to Members making capital gains on the sale of their ACA- funded properties.
AB Yes, I considered that aspect of it was analogous.
JL Is that a fair summary of the position?
AB Yes.
Principles
JL Can I now turn to the principles on which you made your decisions? Why do you believe that accepting the principal offer (in your case, about £48,000) was not in the public interest?
AB It would have led directly to a very large increase in rent. The tenancy would have become insecure: I would have transferred to a shorthold tenancy with the duration at the landlord’s whim. But the primary reason was that there would have been a very large increase in rent—
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and to what end? So that I could receive a very large sum of money. That would have been exactly the case to which the allegations were directed.
JL Would it have been different if acceptance had led to no extra call on public funds?
AB That possibility had not occurred to me. It is not what happened.
I would not have expected the landlord to offer such a large sum of money unless it was to move out of the flat or change the terms of the tenancy. The option was not presented so I never considered it.
JL Would it have been different if you had left the flat and found somewhere else to stay at the same rent, or lower?
AB You are asking me to make a judgement about circumstances that didn’t exist.
JL I am trying to get at the principle against which you made your decisions.
AB The public interest is primarily engaged by the financial detriment. It is engaged by the fact that I could get a financial gain by imposing a detriment on the taxpayer or on the House. That exacerbated the case. It would not only have led to higher costs but to personal enrichment for myself.
It was blatantly and manifestly contrary to the public interest, which was why I didn’t do it.
JL Is there an argument that accepting the principal offer was not in the public interest because the Member would have benefited from a payout which came to them only because of a tenancy sustained by rental payments made from the public purse?
AB I can see some force in that argument. But it would have to have been applied to the gains on a mortgaged property too. It was open to the House to decide in both categories what was in breach and what was in the spirit of the rules. What both have in common is that the financial gain is created by the payment of rent or mortgage interest.
JL Can you help me on why in your view the succession payment (of £5,000) did not raise any issues of public interest?
AB No additional costs would have arisen. And the sum was such as could be applied to maintaining the flat. Most of this could be claimed from the allowances, until we had the new rule on redecoration. The lease requires us to redecorate every seven years.
The £5,000 helped me to deal with those obligations.
JL How far was the size of the sum relevant to your decision? Would it have still been acceptable if you had been offered much more?
AB It would be difficult to maintain that, say, £20,000 was the right figure. But £5,000 was close to the cost of redecorating the flat over that period, rendering it clean at the end of the tenancy; and ensuring the existing rooms were carpeted. These things were part of the conditions of tenancy. I never claimed against parliamentary allowances for carpets, but I could have done so.
JL You say that the succession payment arose from the tenant/landlord relationship which creates obligations for which the House holds no responsibility. Would that argument not also apply to the principal offer?
AB You could try to apply the argument, but set against it there would be the detriment of the greatly higher rent, and the scale of the payment in the principal offer, which was beyond what could be absorbed by the maintenance and other decorative costs I was talking about.
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JL Since the House paid the rent, does that not mean that the public interest must be engaged and that it is not solely a matter between the tenant and the landlord?
AB In a sense, in that I would not have had or needed the flat but for the fact of being in the House and representing a distant constituency. I would not have had the finance to take on the flat otherwise.
But if the tenancy was not there, the obligations would not exist. It is a fairly remote argument.
I rest my argument on the fact that the sum of money relates closely to the obligations I had to meet, which in turn generated costs some of which could be met from the allowances.
JL You say in your letter of 18 November that you believe any conclusion which treated the £5,000 as a capital gain would need to be applied consistently. Could I make clear that whether or not the £5,000 is a capital gain is I suggest a matter for the tax authorities. It is not something I would look at.
AB My assumption is that the £48,000 would have generated a requirement for capital gains tax.163
JL You have drawn an analogy between the succession payment and Members keeping the capital gain on the sale of their ACA-funded home. Do you think there is a distinction between a rented property where the person has no interest in the capital value of the property and where the only contribution to the capital value is through the rent which is being paid, and an owned property, where the person has an interest in the capital and has contributed to that value either through their initial deposit or through their mortgage repayments, or both?
AB That could be recognised as a capital gain arising from public funds.
If I had bought a property in my early days at the House, with say a mortgage of £25,000 and a deposit of £4,000, as I had the opportunity to do, my mortgage interest would have been paid throughout the period and by now I would have paid off the mortgage. I would have a property vastly in excess of the debt I hold. The increase in the value of my deposit could be computed—but the rest is only there because the House paid interest on the loan. That is how I personally see it.
By contrast I received a very small payment from the tenancy. No rights were surrendered. It would be perverse to ask for repayment if repayment was not required on very large capital gains on property for which the House had funded mortgage interest.
JL Why do you think that the public purse should not have been able to benefit from the landlord’s offer on succession rights, when it has made the rental payments which put the Member in the position to be offered that financial benefit?
AB A requirement to repay would be perverse. 164 You would have to take account of any rent not paid from public funds in calculating liability to repay.
JL Even though you are personally against repayment, did you feel uncomfortable with accepting the £5,000?
AB No, for the reasons I have given you. Some people were given advice from the House authorities that they were right to accept the payments. And some people were taking large
163 In his comments of 2 December 2009 on the interview note, Sir Alan Beith said “On reading the transcript, I realise that I had mis-heard your question. I was not referring to the tax position, but to the principle that if the £5,000 was considered to be a gain which should be paid to the House authorities, that principle would have to be applied to all the capital gains made through mortgage interest paid by the House.” 164 In his comments of 2 December 2009 on the interview note, Sir Alan Beith said “The public purse did benefit, potentially, because of the use of the money for costs which could have been met from the ACA.”
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sums as a basis for setting up a mortgage. So there was no basis to feel uncomfortable.
Use of the £5,000
JL Can I now turn to more practical matters—the use to which you put the £5,000? Would it have mattered if you had spent the money on a family holiday, rather than redecorating the flat?
AB I have explained why it seemed right to me to take the £5,000. I was not enunciating a general principle. It seemed to me a proper use of money to carry out obligations which could be met by further claims on the allowances. I was satisfied that this was a good purpose to use it for.
JL Are you saying that you would have been less comfortable using the money for a holiday?
AB I could have made the argument. But that was not what I used it for.
JL You received the payment in January 2006. Did you put it in a separate or earmarked account?
AB It is still there. It is not in a separate account.
JL I understand the problems you had in the summer of 2008 and I am very glad to see you so well recovered. But that was two and a half years after you received the money. I understand that you had to await retiling the kitchen, but does that really account for two and a half years?
AB I couldn’t do it in the summer of 2008: I was taken to St Thomas’s from the flat in the week before I was due to see the decorator.
After 2008 the next opportunity to do the work was in the long recess of 2009. We had the decorator in to do the bedroom, bathroom, toilet and passageway to the kitchen. That leaves the sitting room and small bedroom or storeroom.
It cost £2,765.60. That leaves some for the remaining redecoration.
JL Will the rest of the £5,000 be used up on that work?
AB Yes. If not, I will renew the toilet floor covering.
JL You received the payment in January 2006. Given that you needed to do the work in the summer recess, your first opportunity to do the work was in the summer of 2006; then there was the summer of 2007; you were ill in 2008, and you had this work done in 2009. But why did you not do it before 2008?
AB It was pointless to decorate before the kitchen refurbishment in the summer of 2006. It would have damaged the decorations.
But can I come back to you on the dates?
JL Yes. I would like to know why you did not take the opportunity to do this work in 2006 or 2007.
AB But it is not material to the issue of principle.
We retiled the kitchen in 2006 and replaced the 1960s cupboards. But there were long periods of uncertainty about the property.
JL May I ask you whether all this work would have been claimable from the ACA as the rules were in 2008—when you first intended to have it done? Did you have the headroom at the time?
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AB I could not have done the decoration in the same year as the retiling if I had charged it to my ACA.
But most years I claimed a lot less than I could have done.
JL Is your argument affected by the fact that since July 2009 you cannot now claim for that redecoration on the PAAE?
AB Since I intended all along to meet the redecoration costs out of the £5,000 it made no difference to me.
JL But I thought that your argument was that you took the £5,000 for work that you could have claimed against your allowances. By the time you had this work done the rules did not allow for such claims.
AB That is an ex post facto argument.
JL If the House decides that claims for this sort of redecoration are not allowed, does not your argument that you could have claimed fall away?
AB Why?
I did not know that the House would later come to that judgement. I used the money to meet a combination of obligations which could have been met from the allowances and those that couldn’t. They included the cost of decoration which arose from having the property.
JL But if the House has said, before you used the money, that Members need to meet these obligations themselves, does that not impact on your argument?
AB That is said with hindsight.
JL But the House has said that Members have to meet their own expenses in this area themselves. This was before you met them from the £5,000 you had received.
AB I had already decided to use the money for redecorating.
And it is difficult to use this argument when other Members were allowed to use money received from surrendering the tenancy to enable them to take out a mortgage. That requires a leap of imagination.
JL Would it not have been more transparent to have paid the money over to the House and claimed as necessary under the ACA?
AB Are you saying that it would have been better to ask for the money from the ACA so that people could see what I was spending it on? The idea that you should draw on the ACA just so that people can see how you spend your money is very odd.
JL I understand your argument, to be that you used this money instead of claiming for the work from the ACA? You took the money because you wanted to spend it on things you could otherwise have claimed from the ACA?
AB Using the ACA would have been perverse and resulted in a higher cost to public funds. The allegation is that I claimed costs which were not necessarily incurred or favoured my personal interest above the public interest. Your course of action would have had the effect alleged.
JL But you could have given the £5,000 to the House authorities and still had the work done.
AB You are straining this argument.
JL You said earlier that if there were a requirement to repay, it would have to take account of any
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rent which was not claimed from public funds. Can you clarify for me whether that would apply to your wife’s contribution which was from the House of Lords allowances?
AB I can’t. Neither you nor I can adjudicate on House of Lords allowances.
JL Her contribution one way or another came from public funds. So isn’t it true your full rent was indeed met from parliamentary allowances, although not wholly from the House of Commons? I am not questioning for a second your wife’s compliance with House of Lords allowances.
AB If you were to assert that principle, it ought to be applied to a wide range of capital gains including payments when a tenancy was bought out or the profit from a mortgage funded by the House… Even the House cannot make claims on sums which it didn’t generate or cause to be paid.
JL May I ask you about your view that the guidance prepared by the House authorities was relevant only to the principal offer?
AB Yes.
I did not see that advice until you sent it to me with [the Director of Operations]’ letter of 14 August. Only two Members received it at the time. And it dated from the end of 2005.
JL But does that advice not point to the principle?
AB No-one saw that advice until you found it.
I had refused monetary compensation to buy out my tenancy. If I had seen it at the time I would have asked what advice it provided to Members in my very different position.
JL Do you think there was any principle there that was relevant?
AB When I read it I thought that it took insufficient account of costs, of the need to keep down the costs of parliamentary allowances. It was addressing quite large gains made by giving up the tenancy which is not what I was doing. I assume that is because whoever wrote it knew the sums around at the time. I cannot say what was in the minds of the people who wrote it, but they did not communicate it to me.
Conclusion
JL What do you say to the argument that, under the rules, Members’ use of allowances must be above reproach and that, since it was solely your parliamentary allowances that generated the succession payment, you can properly be reproached for not having paid it over to the Fees Office?
AB To come back to the charge, that accepting the payment may have led to claims on the allowances which were not necessarily incurred or may otherwise have favoured my personal interest over the public interest, that is demonstrably not the case. The money I received was a payment, not a repayment to the Fees Office.
The money was legitimately received and I took a voluntary course of action in the way I used it. There was no loss to public funds.
JL But what do you say to the argument that you were only put in the position of receiving the payment because of the rent payments which you claimed from the House.
AB That argument is not persuasive. At the time the costs of the redecoration could have been met from my allowances.
JL And that remains right in your view even though the House no longer meets Members’ claims
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for decoration?
AB There are a number of expenses which are no longer claimable at this point while we wait for the implementation of the CSPL review. A central part of their recommendations is that the House should make arrangements for and maintain accommodation in London. If so we would have the option to take up that accommodation.
The current rule is temporary, a transitional arrangement.
JL But if you were to present an invoice for redecoration to the House authorities tomorrow they would not accept it, would they?
AB That is a different situation. If we were having this meeting next July, in that situation I might opt for fully provided and maintained accommodation.
We are discussing an actual situation, not a hypothetical one.
I repeat that I accepted the payment on the understanding that it could be used to pay for things I could have claimed. There was no loss to public funds.
JL But the work was done at a time when the costs were not claimable from the allowances. Does that affect your view?
AB You are in difficult territory, where you would also have to ask others what they would do. The rule would apply—but not in my circumstances.
JL Thank you. Are there any other points you would wish to make?
AB No, thank you. I will come back to you on the precise dates of the redecoration.
JL Thank you. [The note-taker]will now prepare a note of our discussion and show it to you so you can comment on its accuracy.
As you know you can expect the note to be included with any memorandum I will prepare for the Committee and it would be subsequently published with the report.
JL Any questions?
AB No thank you.
JL Thank you again for coming in.
Meeting ended at 3.30pm.
66. Letter to the Commissioner from Rt Hon Sir Alan Beith MP, 25 November 2009
Following my interview I promised to give you more precise checks of the timing of the work on our rented flat, although it is my view that the timing has no bearing on the issue, which, is, as you stated, whether my actions may have led to claims on the Allowance which were not necessarily incurred or may have favoured my personal interest over the public interest.
We commissioned the main part of the work on the kitchen in May 2006, but it was not carried out until Autumn 2006. This was followed by the tiling of the kitchen, which was done in spring 2007. In May 2007 my wife and I were heavily engaged in local elections, and my wife was elected to the Borough Council as well as serving on the County Council and serving as a member of the House of Lords; at the same time I was serving not only as Chairman of the Justice Committee but also as a member of the Intelligence and Security Committee both of which were very time consuming. This meant that for a period we simply did not have
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time to get estimates and organise the redecoration that summer, and there was no urgent need to get the work completed that year. Therefore we planned to get the decorating done the following summer, a plan which was disrupted by my admission to hospital.
The timetable would only become relevant to the issue if you were seeking to adduce it as evidence that, contrary to what I had stated, I did not intend to use the £5,000 for decorating and other costs arising from the tenancy. I trust that you accept my evidence on this point, and the fact that the greater part of the decorating has been done.
I will be writing to you separately about a procedural issue which seems to me to arise from the interview, but it would be easier to do this when I have seen and reviewed the note which was taken.
25 November 2009
67. Letter to the Commissioner from Rt Hon Sir Alan Beith MP, 2 December 2009
In my letter of 25th November I said that I would write to you separately about a procedural issue arising from our meeting. It is this: during our discussion you invited me to answer two propositions which were different from the ones originally referred to you, and did not lead to claims on the allowance which were unnecessarily incurred or to the favouring of my personal interest over the public interest. The two propositions were also mutually exclusive. On reflection, the simplest way for me to deal with them seems to me to answer them directly.
The first proposition was that I should have claimed the decorating costs from the allowance in the interests of transparency, having first remitted a share of the £5,000 to the Fees Office. This would not have benefited public funds, and the fact that I did not choose or even think of this option clearly does not mean that I was favouring my personal interest over the public interest. My concern at the time related to what was proper and justifiable.
The second proposition was that I should have changed my 2006 decision in 2009, to reflect the fact that the House decided in 2009, as part of the interim provisions prior to the report of the Committee on Standards in Public Life, not to fund redecoration expenses. Had I known that three years earlier, I could have chosen to decline the £5,000, kept the succession rights, and claimed the decorating costs from ACA. There would be no justification at all for requiring me not to use the money for redecoration in 2009 because of the choice I made in 2006 on the basis of what I knew then. It was, of course, impossible to reverse the original decision on succession rights three years later.
I am sorry to have to trouble you with additional points, but these were new propositions which I had not referred to you and which did not seem to fall within your own carefully worded definition of the issues under consideration.
2 December 2009
68. Letter to Rt Hon Sir Alan Beith MP from the Commissioner, 3 December 2009
Thank you for your letter of 2 December about the propositions which I put to you at our meeting on 24 November.
You suggest that this raises a procedural issue since the two propositions were, in your view, different from the allegation which I summarised in my letter to you of 4 June.
The reason I put these propositions to you was on account of the evidence which you had given to me in response to the allegation summarised in my letter of 4 June. Where a Member provides such a response, I believe it is reasonable for me to ask questions relating to that response which may be seen as relevant to my inquiry.
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In any event, I am most grateful for your letter setting out your answers to both of these propositions, which I will incorporate with the evidence I have collected in respect of this inquiry.
Thank you again for your help with this.
3 December 2009
69. Letter to the Commissioner from Rt Hon Sir Alan Beith MP, 14 January 2010
Thank you for your letter enclosing correspondence with the Director of Operations. [The Director of Finance and Administration’s] memorandum of 1st November 2005 makes clear beyond any doubt that it is advice relating to tenants who accepted an offer to buy out their leases, leading to shorthold tenancies at higher rents: as you know I received an offer of £48,030 to do this, and declined it. Even though the advice was not relevant to the decision I took, I remain surprised that no effort was made to circulate it to Members who were Dolphin Square tenants, since the Fees Office knew which Members had made claims relating to Dolphin Square addresses. Indeed it was not published to Members in any form. [The Director of Operations] writes that “it was not to be promulgated, other than on request”.
I presume that the correspondence about how much my wife contributed to the rent arises from your wish to confirm what I told you in my letter of 14 September (sub-heading (1)) and in earlier correspondence, to the effect that I did not fall into your category (a). I should make clear that I was never asked or advised about sharing the costs of the flat: the decision to do so, and the decisions on amounts contributed by my wife, were entirely our own—this was a voluntary arrangement we made because it seemed to us to be the correct thing to do. I should also point out that in the year 2006–7, my wife made her contribution by paying half the cost of refurbishing the kitchen, instead of contributing to the rent.
14 January 2010
70. Letter to Rt Hon Sir Alan Beith MP from the Commissioner, 18 January 2010
Thank you for your letter of 14 January responding to mine of 7 January with the correspondence I had received from the Department of Resources in respect of the Dolphin Square offer.
I was grateful for this response. I think I have now taken this as far as I need. I will incorporate your letter in the memorandum I am preparing for the Committee on this inquiry. I will let you see draft sections of that memorandum once I have concluded work on them, so that you can comment as necessary on their factual accuracy.
Thank you again for your help with all this.
18 January 2010
71. Letter to the Commissioner from Rt Hon Sir Menzies Campbell MP, 24 June 2009
Thank you for your letter of 4th June 2009, which I have read with care, particularly those passages which you quote from the Code of Conduct and the Green Book.
I enclose herewith a copy of my lease from the landlords of Dolphin Square, together with the documentation relevant to the compensation offered by them in return for discharging certain rights. 165
I should like to point out that I was offered and declined the sum of £38,000 to relinquish my protected tenancy and protected rent as a long standing tenant. I declined that offer because an inevitable consequence
165 Not included in the written evidence
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of doing so, was that my reliance on public funds from the Additional Costs Allowance would increase, either because I would require to seek new premises at an increased rent, or if I remained at [my Dolphin Square flat] I would require to pay an increased rent reflecting not protected status but market value. A third option which I rejected was to accept the sum of £38,000 and use that amount as a deposit for the purchase of a property with a mortgage which seemed likely to be in excess of my protected rent. I did this last because although I understood this then to be and still to be within the rules I have always had personal reservations about the notion of a capital gain arising in such circumstances.
I was offered and accepted the sum of £5,000 in return for the discharge of certain rights to succession mainly in favour of my wife and arising out of my protected tenancy (see paragraph 5.12 of the lease). No increased charge to public funds arises as a result of that decision.
I took the view that this was a discharge of a personal legal right at market value which accrued to me personally as a result of the tenant/landlord relationship. The right arose irrespective of the funding of rent and from a contractual relationship containing mutual obligations. If, for example, Parliament were to determine that MPs should no longer receive financial support for rent I would still be personally bound by the terms of the lease and obliged to implement the tenant’s obligations under it (e.g. see paragraph 4.3 of the lease).
With that by way of introduction I turn now to the particular questions you pose in your letter.
1) I have attached copies of the relevant documents for your perusal. I have been a tenant of what is effectively a bedsit apartment since approximately 1989 and during that period have made appropriate claims for the full rent paid during that period from the ACA. Apart from occasional visits by my wife no other person has occupied the premises but myself since then. The rent payable is contained in the documentation now released by Parliament and at this date amounts to approximately £700 per month (see schedule 1 to the lease).
2) I believe my preliminary outline of the circumstances answers this question but will be happy to provide further details if required.
3) I gave careful consideration to the offer and in particular the fact that my acceptance of it did not result in any increase in the charge to public funds. My analysis was as set out above i.e. that this was a personal right arising out of the mutual obligations between landlord and tenant. I did not feel it necessary to consult the House authorities nor did I supply them with any documentation.
4) I took the view on the foregoing analysis that there was no conflict between public and personal interest and that I was entitled to view this matter as I did since there was no increased charge to public funds and the discharge of rights was at what I understood and accepted was market value.
5) Not applicable.
6) I used the sum received to defray expenses which might otherwise have been charges against other allowances. I am confident that I have made no profit from the sum of £5,000 since it was received.
If I can provide any further information please let me know. May I take it that if you decide to take this matter any further you will allow the opportunity for interview?
24 June 2009
72. Letter to Rt Hon Sir Menzies Campbell MP from the Commissioner, 29 June 2009
Thank you very much for your letter of 24 June in reply to mine of 4 June, and for the information you have provided.
It would be very helpful in moving forward this matter if you could let me have the following further information:
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1. whether you saw the advice from solicitors which was prepared for residents of Dolphin Square in connection with the offer from the new landlord and, if so, what account you took of it (I have seen advice from [solicitors] of September 2005 apparently provided to residential tenants of Dolphin Square);
2. a more detailed indication of the items (and their value) which you consider you might have claimed for against parliamentary allowances but which you chose to purchase out of the payment of £5,000 without making such a claim (if there were any receipts for these items that would be particularly helpful);
3. the claims you actually made against your ACA in each of the financial years in which you deployed the payment of £5,000 for items you would otherwise have claimed from this allowance.
Any further points you would like to make would, of course, be very welcome.
When I have this information I expect to consult the Department of Resources.
I am very happy to talk to you informally at any time about this matter if you would find that helpful. I would of course advise you if I decided it was necessary to interview you, and naturally I would be willing to consider any request on your part for a formal interview; but before we reach that stage I think it would be helpful to be clear about the matters that an interview was intended to cover.
If you could let me have a response on these matters within the next three weeks that would be most helpful.
Thank you for your help on this.
29 June 2009
73. Letter to the Commissioner from Rt Hon Sir Menzies Campbell MP, 15 July 2009
Thank you for your letter of 29th June 2009. I answer your further questions as follows:-
1. I have searched my papers but do not appear to have any relevant documents other than those I have already supplied to you. If advice from solicitors was sent to all Dolphin Square tenants in connection with the offer from the new landlords it is a reasonable inference that I saw it. I cannot now recollect the terms of any such written advice in the absence of a copy of it. Since the landlords’ offer of 3rd October 2005 (copy already supplied to you) superseded any prior exchanges it may be that I disposed of the advice once I had received and accepted the offer, but this is supposition on my part.
2. I have no receipts for any such expenditure since I did not anticipate a requirement to produce them. But I avoided making claims for items which would under the rules then applicable have been allowable. For example, I made no claim for petty cash for my offices either in London or my constituency. I claimed only once in the four years for which claims have now been published for a TV licence. I rarely claimed for window cleaning, and never for the cost of cable television supplied to my flat. There were occasions at night after the House rose when I took taxis to Dolphin Square but did not claim for them.
3. I attach a schedule showing my ACA claims in the four years for which publication has now been made, together with the provisional figures for 2008–09 which have not yet been published. You will see that with the exception of 2007–08 I consistently claimed well below the maximum allowable. I hold the unredacted claim forms and supporting documentation and I should be happy to make these available to you.
If there is anything further which you wish please let me know.
15 July 2009
74. Letter to Rt Hon Sir Menzies Campbell MP from the Commissioner, 16 July 2009
Thank you very much for your letter of 15 July responding to mine of 29 June about this matter.
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I was grateful for the further information you have provided. At this stage, I do not think I need to ask you to send me your ACA claims forms for the relevant financial years.
You fairly note that you cannot recall the terms of the advice from solicitors, which I believe was sent to all Dolphin Square tenants, without seeing a copy of it. I attach a copy—and apologise for not having copied it to you before.
Perhaps you could let me know whether you recall seeing this advice, and let me have any comments you may wish to make on the relevance of it to your decision.
A response within the next two weeks would be much appreciated, although I recognise the recess is now nearly upon us.
16 July 2009
75. Letter to the Commissioner from Rt Hon Sir Menzies Campbell MP, 21 July 2009
Thank you for your letter of 16th July 2009 and for enclosing a copy of the advice from solicitors. Having read it I now recall seeing it at the time. I have no immediate comment to make on its relevance to my decision, but if there is a specific point you wish to draw to my attention I should be happy to try to deal with it.
As a general observation, however, I note that the advice confirms my previously expressed view that the lease between myself and the landlords contains mutual rights and obligations on both parties which subsist irrespective of whether parliamentary allowances are paid or not.
21 July 2009
76. Agreed Note of Interview with Rt Hon Sir Menzies Campbell MP at 2.30pm on Tuesday 10 November 2009
Present: John Lyon (JL)
Rt Hon Sir Menzies Campbell CBE QC MP (MC)
Note taker
Introduction
JL Thank you for coming in. This is [the note taker]. She will take a note of our discussion and show it to you so you can be satisfied as to its accuracy. I will be submitting a memorandum to the Committee on this complaint and you can expect the note of our discussion to be published with the Committee’s Report.
I wrote to you on 3 November to set out the procedure and to give you the main areas I wanted us to cover. Other matters may arise during the course of the interview. Are you content for me to go ahead?
MC Thank you. I am grateful to you for seeing me. I wanted to look you straight in the eye and explain that I had acted in good faith.
I want to say that the explanation I produced in my letter of 15 July was not ex
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 169
post facto. When the issue of this payment arose I considered all the aspects. I came to a considered and careful conclusion. I felt that there was no additional charge to public funds. I turned down £38,000 but regarded the smaller payment as a part of the contract between myself and the landlord, which arose irrespective of the nature of funding. If the House of Commons had resolved that no further support for claims for second homes would be offered, I would still have rights and obligations as set out in paragraph 4 of my rent agreement.
The money went into my account and it was used up in whole or in part by not making claims for elements that were at the time legitimate, such as petty cash here and in the constituency. £250 per month was allowed but I never made claims for this. There was also my TV licence (only once in four years did I claim for this); window cleaning (it was then a condition of my tenancy, but I only claimed once or twice); my home phone for which I did not claim; my office in my home (I never claimed for the heat and light), or taxis (I often did not claim for these, in effect through indolence).
You have seen the schedule showing the level of my claims. You will see that I am rarely above number 400 in the league table—except when I had substantial renovations made to my flat. After twenty years I thought these were justified. I had the authority of the Fees Office to proceed.
It was a personal right I was giving up. There was no question of an additional charge on public funds. The money released was applied to expenses I was otherwise able to claim for.
I am restating the position that was set out in correspondence.
I have seen Mrs Humble’s letters. I have no reason to doubt her account. It was credible and consistent with the sort of advice that was being given. If I had made an enquiry it is reasonable to suppose that I might have been given the same advice. But there were large numbers of Members in Dolphin Square and no effort was made to issue general advice on this.
I accepted the £5,000 because it was the discharge of a personal right. A parallel might be the capital gain from the sale of a property. I note that Sir Thomas Legg has not sought the refund of this, nor has the Speaker authorised him to do so.
JL Thank you. I am grateful for this summary of your position. I may refer back to some of what you have said in my questions. Are you happy for me to go ahead with my questions?
MC Yes.
Background
JL Let me first confirm my understanding of the position. In the autumn of 2006 you were offered £38,000 by the new Dolphin Square holding company to relinquish your lease on your flat there. You declined and so retained your protected tenancy. But you accepted £5,000 to relinquish the inheritance rights of your spouse.
MC Yes. My tenancy and rent are protected until 2034. I have been a tenant since
170 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
about 1989.
JL You did so because you considered this a private matter with no detriment to the public purse, and because it gave rise to no increased charge on public funds. You used the sum to defray expenses which you could otherwise have claimed against other allowances. You did not think it necessary to consult the House authorities and so were unaware of their views on this matter. Is this a fair summary of your position?
MC Yes, that encapsulates pretty well everything I have just said.
Rights and obligations
JL Could I then ask you about your view that this was a private matter affecting the mutual rights and obligations between tenant and landlord? In your view these subsist irrespective of whether parliamentary allowances were paid or not. This is the position set out in your letter of 21 July.
MC Yes. I believed there was a distinction to be drawn. I enjoyed a personal right which I was invited to discharge in return for market value, the value which the landlord placed on that right.
JL Does that argument also apply to the principal offer which you rejected? Why was that not a private matter affecting the mutual rights and obligations between tenant and landlord?
MC That offer was for a substantially greater sum.
That would have resulted in an increased charge to public funds. If I had accepted the payment I would have had to pay a market rent in Dolphin Square; or I could have moved to another rented property or I could have used it to pay for a deposit on a property. I would have received a much larger sum of money.
It was a much greater sum and in a different category. The right to compensation did not exist at law. Nothing in my lease entitled me to £38,000. It was compensation for giving something away, not for the discharge of a legal right. It was designed to persuade people to give up something they could have held on to.
JL But your lease gave you the right at law to continue with your protected tenancy and low rent, did it not?
MC Let me explain the background. The premises had begun to show their age, but in view of the tenants they had I was not surprised that the terms offered by the trustees contained protection of that kind for them. Some of the tenants had limited means.
JL In your letter of 24 June, you say that there was no conflict between your public and personal interests since there was no increased charge to public funds in you accepting the £5,000. You note that if you had accepted the principal offer of
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 171
£38,000, there would have been an increased reliance on public funds. Does that mean that you considered that the principal offer raised the question of a conflict between your public and personal interest?
MC Yes. There were three possible consequences of the payment, which would have increased the charge on public funds. I could have stayed but paid a market rent; I could have moved to a flat elsewhere and paid more, or I could have used the reimbursement of mortgage interest to acquire a property.
JL Can you help me on the principle you are applying here? Is it that for the public interest to be engaged, public loss has to be demonstrated?
MC Let us say that if there is no public loss, that is persuasive that no public interest is involved.
JL If, for example, you had downsized to a cheaper flat, so that your rent did not go up, would it have been acceptable to take the £38,000?
MC It would have been impossible to get a cheaper flat. I doubt I would get even a bedsit in SW1 for less. I have just one room plus a bathroom and kitchen.
JL But had it been possible?
MC I never considered it.
I have been in the House since 1987. If I had had a 20-year mortgage with interest paid by the taxpayer, it would have been paid off by now.
If I had been inclined to maximise value for my personal financial benefit then I could have done so. But renting was convenient and Dolphin Square was convenient. It suited me. My room is the size of a small hotel bedroom, but that is all right because my wife came down only a little.
JL Would it have been wrong to decide to take the opportunity to move elsewhere in London and pay more for that flat? The ACA would have allowed you to put in a larger claim within the ceiling.
MC There would have been additional cost to the public purse which was not justified.
JL If it is a private matter between landlord and tenant surely questions of public loss do not arise? Can it be a private matter if you take account of public loss?
MC Either it is a private matter, in which case it is no business of the House; or in the alternative, if it is not, I say that I am serving the public interest.
JL Why do you say your accepting of the £5,000 is a private matter, since you would not have been in the position to be offered £5,000 were it not for the expenditure
172 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
of public funds on your accommodation since 1989?
MC I was offered the £5,000 because of my status as a tenant. The funding I received could have been withdrawn at any time.
JL But up to that point it had not been withdrawn. As tenant, you had the advantage of having had your rent paid from public funds.
MC That was in pursuance of my duties as an MP. If I lost my seat the mutual rights and obligations of landlord and tenant would have continued. The House was not in the position of tenant; the House had no interest in the lease and the House would not have stood behind me.
JL Under the terms of your lease, was there an additional private loss in not accepting the £5,000?
MC The issue relates to a series of mutual rights and obligations of landlord and tenant. These included the succession rights of my wife.
JL Why did you believe that there was a risk of private loss through not accepting?
MC I obtained value for the discharge of a legal right. Looked at it that way, if I had kept the right, I would have retained an advantage.
JL You had two other options in addition to the one you took: you could refuse the offer, or you could accept it and pay the money received to the House. Why did you decide not to take one of these?
MC The succession rights were personal to me. They did not belong to the House.
I paid rent on the basis of the agreement I had entered into.
JL What difference would it make if the discharge of the rights had not been at market value?
MC I assumed it was market value, but I couldn’t ask around to find out. I suppose I could have held out for £10,000 or £15,000—but there were no comparables.
JL Can I touch on your mortgage analogy? You note that a Member might benefit financially from the sale of a property on which parliamentary funds have met the mortgage interest. Do you think the parallel is exact?
MC It would be incongruous if the gain from a mortgage were to be permissible but not that from this secondary right. I started with the inhibition that I would not take out a mortgage. I did not want to enter the property market in this way. It was my inhibition—not that of others.
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 173
It is incongruous that this is where it has brought me, while others have acquired valuable assets in a rising property market.
JL Do you see any distinction between a Member benefiting financially from a property on which parliamentary funds have met the rent and in which they have invested no capital, and a Member benefiting financially from capital appreciation, having had their mortgage interest paid but having themselves made a capital contribution to the property?
MC I don’t think so.
JL Does it make a difference that the rent was paid in part or in full from public funds?
MC I don’t think so.
JL Why not?
MC Perhaps I spoke hastily. It was a novus actus. I was influenced by the relative size of the sums. I can’t remember my thought process very clearly, but I thought £38,000 was too much and £5,000 was not enough to raise a question.
The payment was for a discharge of my right under the lease.
JL Does this take account of the Department of Resources’ statement about this guidance?
MC Well, there is a conflict with the credible accounts given by Members about the advice received, and what the Director says would have happened had I asked for advice.
Let us remember that the performance of the Fees Office has been under review. It may be that the individual Mrs Humble spoke to decided to go his own way.
At one time 65 MPs were living in Dolphin Square. It is spoken of as if is a luxurious block. It is not. It is a 1930s Cubitt building—it doesn’t compare with luxury apartments in other parts of London.
Use of the £5,000
JL Can I ask you now about your use of the £5,000? Why did you not claim these costs from your allowances? You had the headroom to do so from 2006–07.
MC I didn’t keep receipts. I am not very good at writing everything in a notebook.
It was more convenient to do it this way. For example, if I was taking account of the use of the phone at home I would have to have had two bills.
174 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
JL But there is no audit trail to show how the money was spent. Is that a disadvantage?
MC Well, it depends if you accept my word.
JL Is there not also a point about transparency? Many claims are published now but these will not appear among the published records.
MC As I said, there are quite a few expenses directly relevant to being an MP which never appear among the published expenses. We are down here for 30 weeks of the year; we are not just sent here for three days at a time. Many people do not understand that.
JL In your letter of 1 June you said that you used the £5,000 to offset costs incurred before and after you were Leader of the Liberal Democrats. Should I understand that to mean that you used it to defray some of the costs of the Leader’s office?
MC No. But I should tell you that whereas the Leader of the Official Opposition has a car and so on, the Leader of the Liberal Democrats has no salary above his salary as an MP. Chairs of Select Committees get more: about £14,000. We rely on Short money to fund the office.
I didn’t use the money to pay for the Liberal Democrat leadership, but I had greater parliamentary expenses.
JL If this was a private matter between tenant and landlord, why does it matter how you spent the money?
MC I was arguing in the alternative. I did not personally profit from the £5,000. It was legitimately spent on things I could have claimed. MPs have other expenses which they incur in the course of their work but for which they cannot claim. For example, we are at the top of every charity subscription list. Other expenses are paid but not these.
Some expenses are 50:50 parliamentary:party political. The distinction is not always clearly drawn. For example, the Communications Expenditure. We are preparing an Annual Report in my office just now. It can be hard to see where the line is drawn.166
Conclusion
JL Finally, what would you say to the argument that, under the rules, Members’ use of allowances must be above reproach and that, since it was solely your parliamentary allowances that generated this payment, you can properly be reproached for not having paid it over to the Fees Office?
166 In commenting on the interview note on 23 November, Sir Menzies noted, “But the last word lies with parliamentary authorities to whom a draft must be submitted.”
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 175
MC I accepted it in good faith. I was offered the payment because I was a tenant. The funding of the rent was a different matter in my view.
JL Could you just have left the payment and not accepted it?
MC I go back to the question of capital gain. There is an incongruity.
It is no secret that substantial numbers of Members were living in Dolphin Square, and only six referred themselves to you. It would have been straightforward for the Fees Office to ascertain who was in Dolphin Square at the material time and to take the opportunity to issue general advice.
JL Thank you. [The note taker] will now prepare a note of our discussion and show it to you so you can comment on its accuracy.
I have offered all six Members an interview. I shall be interviewing one more Member and once I have seen him I hope I will have all the information I need, although it is unlikely that I will complete my report before Christmas.
Thank you for coming in.
Interview concluded about 4.00pm.
77. Letter to the Commissioner from Rt Hon Sir Menzies Campbell MP, 21 January 2010
Thank you for your letter of 7th January 2009 and for sending me the copy correspondence enclosed with it.
I have three comments to make. First, the letter sent to two Members of the House on 22nd November 2005 clearly deals only with the situation where monetary compensation has been offered to “buy out existing tenancies”, and does not appear to cover the situation where a sum was tendered to compensate for the discharge of legal rights which was the position in my case.
Second, the Memorandum of 1st November 2005 is consistent with the letter of 22nd November 2005 in that it refers to the buying out of tenancies and makes no reference to legal rights.
Third, no explanation is offered as to why the purported advice was not circulated to all Members who were known to the Fees Office to be Dolphin Square tenants as would have been clear from their claims against the ACA. If this matter was thought significant it is difficult to see why this was not done.
21 January 2010
78. Letter to Rt Hon Sir Menzies Campbell MP from the Commissioner, 25 January 2010
Thank you for your letter of 21 January responding to mine of 7 January with the correspondence from the Department of Resources.
I was most grateful for this response. I think I have taken it as far as I need and it would be right to bring this matter to a conclusion. I will now, therefore, include your letter in the Memorandum I am preparing for the Committee on Standards and Privileges. Once I have concluded work on the factual sections, I will let you see them so that you can comment if necessary on their factual accuracy.
176 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
Thank you again for your help with this matter.
25 January 2010
79. Letter to the Commissioner from Ms Sandra Gidley MP, 29 June 2009
Thank you for your letter of 8th June. I am sorry I have not replied to you quite as soon as you requested but have been leading on the Health Bill for my party and have not had time to give full and proper thought to this matter.
These events occurred in 2006 and I have since discarded some of the paperwork I had at the time as I regarded the matter as a closed one but I shall answer your questions to the best of my ability.
I would first comment however that your letter quoted from the Green Book. Unfortunately, whilst the Green Book covers what is permissible under the expenses rules it does not deal with the situation that inhabitants of Dolphin Square found themselves in when offered a payment to surrender their tenancies.
The background to my particular set of circumstances is that I first moved into Dolphin Square in July 2000. The first flat was very tiny and noisy so I moved to a larger, better located flat in October 2002. During the final year I was there my rent was £4,624.75 a quarter (equivalent to a monthly rent of £1,541.58) and I felt that this was at the upper limit of what was affordable. The full rate was claimed against the ACA. Unfortunately I have only retained the Dolphin Square paperwork relating to my proposed option. However, I can recall that had I stayed, and not accepted any payment, the rents would still have risen at a rate greater than inflation. From memory, the fair rent scheme did not apply to my tenancy and the landlord would be entitled to apply for an immediate update and this could be reviewed every two years. Whilst there was some protection with staying in the Square and signing something called Option B, the projected rents still represented a significant increase on what I had been paying.
As I felt that this was unsustainable I rang the Main Office at Dolphin Square and asked whether there was any chance that I could move to a smaller flat within the complex. I had always found Dolphin Square very convenient as a number of colleagues lived there and it was handy for sharing taxis after a late vote etc. I was told that moves had been frozen and the only way that I could proceed was to go through the offer process and then move. At the time they made it very clear that there was no option to keep my protected lease and then move within the Square at a later date unless I was prepared to pay the higher rents that would then be in operation.
I then decided to investigate other rental options in order to compare rents and see what was available as there seemed to me to be little point in moving if I could not find an acceptable flat at a lower rent. Ultimately I moved to a slightly smaller flat half a mile away. The rental for this was £1,516.66 per calendar month. This may not immediately seem like a large saving but there are a number of points that need to be borne in mind.
1. The rental agreement was fixed for two years and over a period of time this represented a substantial saving
2. The flat was furnished, so the only extra expenses I would have to incur would be rates, utility bills etc.
3. The flat also had its own laundry facilities so I did not have to incur laundry bills.
4. The flat was also on good public transport networks. This reduced the cost to the public purse as there is little need to use taxis when attending engagements.
In effect, because of the future financial implications of staying at Dolphin Square, I felt I had little choice but to accept the offer of £18,751 to surrender my tenancy. In effect I had to sign a Deed of Surrender, relinquishing the rights to my tenancy and I also had to offer full vacant possession.
Other options available at the time included Option B which was to stay in Dolphin Square. I believe there was also another option which would have enabled me to stay for an extra year but would have offered me a
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 177
similar cash amount for leaving after a year. As my rent would still have increased in the short term I did not feel that this was an option that was open to me.
The Fees Office were aware of the move because I had to provide a new rental agreement but no moving costs were borne by the taxpayer. I had to put down various deposits for the [Vauxhall] flat and this was approximately equivalent to 10 weeks rent. I funded this myself and also the purchase of a few small items I needed for the flat when I moved in. The only claims I made for the new property were rent and utility bills.
The offer was obviously the subject of much discussion with colleagues and the consensus seemed to be that this payment was a property related offer, payable for giving up certain rights as a tenant. I certainly believed that there was no difference between taking money under these circumstances [and] a Member of Parliament downsizing his ACA funded flat and using the profit for whatever purpose. In short, the rules do not deal with this sort of situation.
In effect the public and, what could be perceived as private interests, did not conflict as the rent paid for under the ACA actually decreased and I funded the costs of the move and the deposits. There was no mechanism for paying money back and if this money should have been returned to the Fees Office I believe there would then be a question mark over every MP who has made a personal profit on an ACA, funded property transaction and questions would need to be asked whether it is a matter of public interest that those monies should be returned. Indeed, if I had left Dolphin Square and refused the payment the taxpayer would have borne some of the moving costs.
It is almost impossible for me to say how I deployed the money from Dolphin Square. As I have already said, I paid the moving costs and deposits and the rest of my money went into the bank. I did not account for it in a separate credit line! I can also recall buying a new computer and camera at the time—which are used for parliamentary purposes but were not claimed against any allowance.
In reality I regard this as an entirely separate matter but it is the case that there have been a number of parliamentary related costs, over the years, that I have funded from my own purse. I list some of the costs below
1. I moved office in 2002 and the IEP ran out in January of that year. For two months I paid all the office costs out of my own purse—to the tune of over £2,000.
2. During the 2005 election I had to fund my rent out of my own pocket—our tenancy agreements are not such that we can easily end and restart a tenancy when there is an election. This sum was over £1,500.
3. During the years 2006–07 and 2007-08 I paid over £330 per month, out of my own salary, into my staffing budget. The total was nearly £8,000.
4. I frequently pay intern costs out of my own pocket.
5. I funded the costs of defending a politically motivated legal case in 2005. This cost me over £3,000.
6. In addition I regularly supplement budgets for office stationery etc. There are also a number of incidental expenses related to being an MP to the tune of £100 to £200 a month.
I trust that the above explanation answers your questions but please let me know if there is anything that is not entirely clear as I am more than happy to answer further questions.
29 June 2009
80. Letter to Ms Sandra Gidley MP from the Commissioner, 1 July 2009
Thank you for your letter of 29 June in reply to mine of 8 June. I am grateful for the information you have provided.
I would be grateful for some further assistance on a few points.
178 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
I am enclosing a copy of a report prepared by [solicitors] in October 2005 for Dolphin Square residents on the various options open to them at that time. Could you let me know:
1. whether you saw this advice and considered it at the time;
2. whether Option A: Cash and Go was the offer made to you which you decided to accept. (You will see that the advice given on page [] was that this option could be attractive to tenants looking to leave Dolphin Square within the first few months of 2006.)
You said in your letter that from memory the fair rent scheme did not apply to your tenancy and that the rent could be reviewed every two years; and that under Option B the projected rents represented a significant increase on what you had been paying. It would help me if you could indicate whether the offer made to you under Option B was materially different from that made to other Dolphin Square tenants—I enclose an example.
You also said that the Fees Office were aware of your move from Dolphin Square to [Vauxhall] because you had to provide a new rental agreement. I would be grateful if you could say whether you consulted the Fees Office about the offer which was made to you by [the new owners] before you decided to accept it, and if so, with what result.
I hope it would be possible to let me have your response to these additional points within the next two weeks. If there is any difficulty about that, or you would like to discuss any aspect of this matter, please contact me at the House.
Thank you for your help on this matter.
1 July 2009
81. Letter to the Commissioner from Ms Sandra Gidley MP, 14 July 2009
Thank you for your letter and enclosures of 1 July.
Here are the answers to your further questions.
1. I can recall seeing a copy of the Report to the Residential Tenants of Dolphin Square produced by [solicitors]. Some of the information therein is also duplicated in the offer booklets which were later produced. I have to say that I did not read the document fully and the reason for this is worth putting into context. Over the period of several months Dolphin Square tenants had received many large documents from a range of interested parties and it was impossible to keep up with them and the day job.
2. I took the Cash and Go option. As mentioned previously, I wanted to reduce my rent and was not allowed to move to another flat in the Square.
3. I believe I was also made an offer under Option B. The terms would have been similar but the financial breakdown you provided seems to be for a flat with a lower rent. There was a wide range of properties in Dolphin Square and about 24 pricing bands and my rent was in one of the most expensive bands.
4. I did not consult the Fees Office about the offer itself. As I said in my earlier letter I did not see any difference between taking the money from this offer and a colleague with an ACA funded mortgage profiting from a property move.
I hope that this is helpful and will be happy to answer any further questions.
14 July 2009
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82. Letter to the Commissioner from Ms Sandra Gidley MP, 12 October 2009
Thank you for your letter of 7 September which was delayed in reaching me. You ask if I have further comments. I would like to make the following observations.
1. I have no reason to doubt Joan Humble’s account of events and believe she would have made a different decision if she had been given the advice which the Fees Office claims was issued.
2. I would repeat my earlier assertion that I regarded this unexpected payment as falling into the same category as a Member profiting from a property sale. Given that the advice from the Fees Office has significant implications on all MPs with a mortgage (if followed through to a logical conclusion) I am surprised that the advice was not issued more widely at the time.
3. [The Director of Operations at the Department of Resources] did not answer your question with regard to whether any consideration was given to making the advice more widely available.
4. [The Director of Operations] does not comment on the analogies that were drawn between this payment and profit from a house sale, the mortgage interest of which had been paid by the ACA. There cannot be one rule for rentals and one for house owners.
5. [The Director of Operations] claims he was confident that no advice was offered by the Department other than that he outlined. His confidence appears to be misplaced and he has not outlined which members of staff the information was communicated to, how it was communicated and what mechanism was in place to make sure the staff had actually read it. Shouldn’t there be an audit trail available for this?
I look forward to discussing the matter with you in the future. I have to say though that this situation is somewhat ironic as I intentionally rented a flat as I was uncomfortable with the idea of personally profiting from a property funded by the taxpayer. The Dolphin Square offer caused me a personal dilemma as I had planned to move anyway. As part of the money was paid in tax and part of the money was used to fund my move to a lower rental flat I felt that the overall burden on the taxpayer was lessened. If I had refused the payment or stayed in my flat either of these options would have cost the taxpayer several thousand pounds more overall.
12 October 2009
83. Extract from a letter to Ms Sandra Gidley MP from the Commissioner, 19 October 2009
Thank you for your letter of 12 October responding to mine of 7 September about the Dolphin Square payments.
I was grateful to see your further comments. In view of its references to the Department of Resources, I am copying it to them for any comments they may wish to make.
…
19 October 2009
84. Extracts from an email to the Commissioner from Ms Sandra Gidley MP, 3 November 2009
… we discussed the advice given by the Fees Office. I had not appreciated that this advice was only issued on the 22nd of November which was only three days before the final deadline for making a decision with regard to the lease. Some MPs may well have made a decision and already signed by that date although I have to say that I waited until the final day before signing,
This does not materially affect me but I thought it might be helpful in forming part of your overall consideration. …
180 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
3 November 2009
85. Letter to the Director of Operations, Department of Resources from the Commissioner, 4 November 2009
I have written a number of letters to you enclosing responses from Members to the advice which you sent me on 14 August and 3 September to assist me in this inquiry into payments offered to certain Members from the Dolphin Square landlords.
The last letter I sent you was on 2 November. I now enclose an additional email of 3 November from Ms Sandra Gidley MP. She last wrote to me on 12 October about this matter and I forwarded that letter to you on 19 October.
I would be grateful if you could take account of Ms Gidley’s latest point in relation to the timing of the guidance the Department prepared in responding to the various comments made by Members, which I have forwarded to you.
Thank you again for your help.
4 November 2009
86. Letter to Ms Sandra Gidley MP from the Commissioner, 11 November 2009
I have now heard back from the Department of Resources with their comments on the points you have made in correspondence in respect of the advice which the Department of Resources sent me on 14 August and 3 September about the Dolphin Square payments.
I enclose an extract of the Department’s letter of 9 November which responds to the points you have made. I am asking the Department to let me know the source of the instructions which the Director refers to in his letter.
I believe I am now reaching the point where I can conclude this inquiry and prepare my draft Memorandum for the Committee on Standards and Privileges. But, if there were any final points you wished to make, please let me know within the next two weeks. I will then conclude my work on this inquiry and, once I have prepared the factual sections of my Memorandum, I will let you see them so that you can comment on their factual accuracy.
Thank you for your help with this.
11 November 2009
87. Email to the Commissioner from Ms Sandra Gidley MP, 21 January 2010
Thank you for sending me further documentation with regard to this matter. I have now had an opportunity to fully consider it and I offer the following comments:
You provided extracts from the letter to Parliamentary Commissioner for Standards from Director of Operations, Department of Resources, 17 December 2009. The extract referred to a memo from the then Director of Finance and Administration which contained “substantive guidance” and goes on to say “It is also my very clear recollection that the instruction to my staff and me was that the guidance was to be made available to Members who sought advice: it was not to be promulgated other than on request”. I merely comment that I am surprised that this instruction was not also in writing and was communicated verbally and I am very curious to know the reasoning behind this decision. I would also like to know whether the Clerk of the House and the then Speaker were aware that this instruction was not in writing and would not be communicated more widely. If they were aware, did they approve?
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The letter to the two Members states the “potential awkwardness of the situation whereby public money (ACA) has been used too [sic] meet past rental costs either in part or in full” and goes on to state “it would be inappropriate to gain a personal benefit when the rent has been paid wholly from the public purse”. It would be difficult to quibble with this statement were it not for the fact that it is/was widespread custom and practice for Members to purchase a property using an interest-only mortgage. In these case there have never been any perceived problems with Members trading down and realising equity in their property. I struggle to see the philosophical difference between the two situations.
Similar comments are made in the Director of Finance and Administration’s memo, of 1st November 2005, to two Assistant Directors. He makes a comment about the propriety of Members taking the cash in circumstances where the rent had been paid wholly from the ACA. If this principle is all important I do feel that all Members should have been issued with this general guidance as the “judgement” affects a much wider cohort of MPs than those who lived in Dolphin Square.
The only difference between Members profiting from a property funded by a mortgage paid for using ACA and Dolphin Square tenants accepting the payments is that Members with a mortgage made their arrangements in the full knowledge that they would directly, financially benefit from a future property sale. Dolphin Square Tenants could not have foreseen the potential payout. I therefore do not see why they should be subjected to a different set of principles, compared to those who have, with the approval of the House, profited from a taxpayer-funded mortgage.
21 January 2010
88. Letter to Ms Sandra Gidley MP from the Commissioner, 25 January 2010
Thank you for your email of 21 January responding to my letter to you of 7 January with copies of my correspondence with the Department of Resources in respect of my Dolphin Square inquiry.
I was most grateful for this response. I think I have taken this as far as I need and it would be right to bring this matter to a conclusion. I believe I have enough evidence of the actions of the Members about whom I am inquiring and the various considerations in their minds and the minds of the House authorities. I do not propose, therefore, to pursue further the questions raised in point one of your email.
I will now, therefore, include your email in the Memorandum I am preparing for the Committee on Standards and Privileges. Once I have concluded work on the factual sections, I will let you see them so that you can comment if necessary on their factual accuracy.
Thank you for your help with this matter.
25 January 2010
89. Letter to the Commissioner from Mr Paul Holmes MP, 3 July 2009
In March 2006 I was renting a one bedroom flat at Dolphin Square, at a monthly rental of £1,198. I had occupied this flat since October 2001. Dolphin Square had been built and run as a Housing Trust since the 1930s offering lower cost rented accommodation than would otherwise be found in Central London/the Westminster area, for those who had to work in the area. For me it was very convenient as it was 20 minutes walk from Parliament and I was able to move in quickly as a complete stranger to London.
By the time I became a tenant, rents were still lower than the usual market rents in the area, but were nearer to commercial prices than they had been for earlier/longer standing tenants. Tenancy agreements by 2001 were also I understand different in other ways to earlier ones—not including for example the right to pass tenancies on to children and including a requirement that the flat was not your main residence but only occupied for a limited number of nights/days per year. The flats were very basic, kitchen and bathroom fittings in mine were for example basic and elderly. Communal corridors and access ways were shabby and in need of decoration and recarpeting. I could of course, at any time in 2001,2002,2003,2004, 2005 and 2006 have moved to higher rental more upmarket flats in the Westminster and wider area. I did not do so and thereby cost the taxpayer
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between £2–3,000 LESS per year, (£10–15,000 over 5 years), in rental than I could have chosen to do so. I could, alternatively, at any time have bought a property (using ACA to pay mortgage interest, legal fees, moving fees etc etc), a property, which I would later be able to sell at a large personal profit. The majority of MPs follow this option.
However by 2006 Westminster Council had sold out its share in the housing trust to a USA based property development company. This ended a 70-year-old housing trust—an eventuality which no one could have foreseen when I moved to Dolphin Square in 2001. This company came with a bad press about their intentions and what they had done when they took over a similar block of flats in Paris. They offered a payment to all tenants to either leave or to stay but with rents increasing to commercial levels. A third alternative was to stay with rents at a lower than commercial level for 10 years (and as I say tenants of longer standing than I, had much more favourable rents and tenancy agreements). The company has reduced staffing, maintenance and security. They did try to further change the ownership arrangements for the flats (allegedly so they could start to sell rather than rent them), a legal move they abandoned only very recently immediately prior to a court case. They have reduced casual parking to just 7 places for 1,000 tenants and visitors and doubled the charge, and so on. Their payout was therefore also compensation for considerable inconvenience to existing tenants, changes in tenancy agreements, reductions in staffing, security and maintenance, as well as to allow for future more commercial rent levels.
I decided that their takeover in 2006 was a good time to move to more satisfactory accommodation, accepted their terms (£9,949.80 on which I paid £459.60 capital gains tax) and moved out with no intention of returning.
From April 2006 to September 2006 I took a temporary short term let at [another London address] at £1,000 per month [saving a total of £1,188 over six months, compared to my previous rent level at [Dolphin Square]
However having spent the summer of 2006 looking at alternatives that were close to Westminster I could find nowhere that was as convenient and/or not at a much higher rent. With my temporary let running out and the new parliamentary year approaching I therefore moved back to a smaller and cheaper (than [the original]), flat at Dolphin Square.
From September 2006 to September 2007 I rented a smaller one bed flat at Dolphin Square, for £1,083 per month. [Saving £1,280, plus rent inflation, over 12 months, compared to my previous rent level at [the original Dolphin Square flat]
From September 2007 to September 2008 my rent at [the second Dolphin Square flat] increased to £1,245 per month, which with normal rent inflation was more or less exactly where it would have been had I still been at [the original Dolphin Square flat] on the old rental terms.
Over two and a half years following moving out of [the original Dolphin Square flat], I therefore paid approximately £2,500 LESS rent than if I had stayed at [the original Dolphin Square flat]. There were removal and legal costs (to [the other London address] and back to Dolphin Square), which would not otherwise have been incurred, which totalled £688.06 in all, reducing the rent “saving” to approx £1,800. There were also rent overlaps between moving out/in to [the other London address] in April 2006(£439.31) and back in September (£830) reducing the “saving” on rent from April 2006—September 2008 to approx £530.
Only since October 2008, some two and a half years later, has my rent increased beyond the old level I was paying at [the original Dolphin Square flat]. However even if I had been paying higher rent from April 2006 I would reiterate that I and any other MP could—legitimately and entirely within the ACA rules—have moved to a more expensive rental at any point in any year from 2001 to June 2008.
The fact is that I clearly never set out to use the ACA in order to make a personal profit. I have only ever used it for the purposes prescribed—to allow me to live in London while discharging my duties as an MP.
I did not seek advice back in 2006 as it seemed clear to me that: a) Taxpayers’ money was not involved. I received an “unexpected and unplanned for windfall gain” from an international property developer in exactly the way I had received a “windfall gain” many years earlier when the Halifax ceased to be a mutual and became a bank, paying out to private mortgage holders and depositors
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 183
like myself as a result. This unexpected gain had not been planned for in the way that those MPs, legitimately, using ACA to pay a mortgage plan to make a personal gain upon sale of that property. b) I moved out to a cheaper flat and then, through force of circumstance, back to an initially cheaper flat at Dolphin Square.
I enclose documents relating to the money I received from [the new owners], although I did not retain copies of their offer booklets. All documentation regarding the Dolphin Square flats and the [other London] flat were of course lodged with the Department of Finance and Administration in October 2001, April 2006 and September 2006.
You also ask how I deployed the £9,439.20 (after tax), that I received from [the new owners]. I paid this into my bank account where it largely cleared my overdraft, an overdraft that included approx £6,200 I had to personally pay (over and above IEP), to set up my constituency office from scratch in 2001–02—including installing security measures as recommended by the police, which also included the nearly £1,000 I had to pay on a useless and empty Dolphin Square flat during the 2005 General Election, when ACA cannot be used even though the flat only exists purely and simply to allow me to carry out my parliamentary duties in London. An overdraft which also included various utility, phone bills and other running costs, which I have had to pay out of my own pocket in various years when the IEP provision has run out around Feb/March leaving a shortfall on the running costs of my very busy constituency office in Chesterfield. In 2009-10 I will of course also have to pay out the best part of another months rent on my London flat during the next General Election—even though Parliament is not sitting and I will be campaigning in Chesterfield whilst the London flat I only rent because of being an MP sits empty and useless!
Please do let me know if you have any further questions.
3 July 2009
90. Letter to Mr Paul Holmes MP from the Commissioner, 8 July 2009
Thank you for your letter of 3 July in response to mine of 10 June. I am grateful for the information you have provided.
I would be grateful for some further assistance on a few points.
I am enclosing a copy of a report prepared by [solicitors] in October 2005 for Dolphin Square residents on the various options open to them at that time. Could you let me know:
1. whether you saw this advice and considered it at the time;
2. whether Option A: Cash and Go was the offer made to you which you decided to accept. (You will see that the advice given on page 3 was that this option could be attractive to tenants looking to leave Dolphin Square in the first few months of 2006.)
I appreciate that you did not retain a copy of the [the new owners’] offer booklets. I enclose, therefore, a copy of a Cash and Go offer letter which I understand was produced for other tenants. Could you let me know, to the best of your recollection, whether this was the letter which you received in October 2005? As far as I can see, there is no reference to reductions in service levels or to the payment offer being a reflection of such a reduction. It seems to be presented as an offer in return for your surrender of your tenancy. If, therefore, you had any documentary or other evidence to help substantiate your recollection of the terms, that would be most helpful.
I note what you say about the rent levels you have paid since April 2006. Could you let me know whether in your judgement, had you chosen to remain in Dolphin Square rather than accept the offered payment and move out, the rental payments which you would have paid for your apartment would have been more than those you have actually incurred? (I note in this context that the [solicitors] report referred to above says at page 4 that a new lease under Option B was the most advantageous offer for tenants who saw themselves continuing to live in Dolphin Square for the medium to long term.)
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I hope it would be possible to let me have your further response to this letter within the next two weeks. I would then propose to seek advice and comments from the Department of Resources.’
Thank you for your help on this matter.
8 July 2009
91. Letter to the Commissioner from Mr Paul Holmes MP, 20 July 2009
Further to your letter of 8th July.
As far as I can recall—it was almost 4 years ago—the documents you have copied to me may well have been the same as the ones I was originally sent by [the new owners] and by [solicitors].
I did not see myself staying at Dolphin Square for the ‘“medium to long term” as referred to in the Option B Lease offer (2018 -2034 is specified, by which time I would be 77 and almost certainly not still an MP!). My permanent home, and my family, are in Chesterfield. Accommodation in London is purely to provide me with somewhere to live whilst I am an MP. Whilst a convenient 20 minutes walk from Westminster the flat was very basic, the communal areas to the flats were shabby, the view from my window was of the back of another block of flats and of a concrete canyon side road. This side road acted as a sound funnel from the main road by the River Thames so that whenever my window was open there was a constant roar of traffic— even in the early hours of the morning.
Having visited other colleagues’ flats that were in more modern blocks and even closer to Westminster I had been thinking of moving after I was re-elected in 2005. The proposed takeover by [the new owners], who were heralded by a bad press from both the media and the newsletters circulated by the Dolphin Square Residents Association, prompted me to indeed move in April 2006, under the Option A Cash and Go terms.
However, as previously explained, having moved to a temporary let I had been unable to find anywhere close to Westminster and as affordable by the end of that summer and so moved back in September to a smaller, cheaper flat (but with a better view and masked from road noise) at Dolphin Square.
Had I in fact “seen myself staying” at Dolphin Square for another 2 or 3 years, then I could simply have taken the Option A Cash and Stay offer. I would have received the same windfall of money from a private company but without the inconvenience of moving out.
I note that on Page 3 of the [solicitors] advice it clearly states that “In some respects the [the new owners’] AST tenancy is onerous and quite different to what you have been used to in Dolphin Square.” Also whilst [the new owners] did not openly state that they would reduce service levels for all tenants, by reducing porter/security staff from approx 12 to 2, reduce the hot water temperature, reduce internal and external maintenance, all but completely remove casual parking facilities etc etc—this is nonetheless what they have done and what was predicted of them based upon reports of how they operated after taking over a Paris apartment block.
I have already provided you with data on the rent level I paid before and after April 2006 so it is not a matter “of my judgement”. For 18 months after leaving [the flat] I paid LESS rent than if I had stayed in that flat. For another 12 months I paid a rent level that was virtually identical to what I was paying back in March 2006 (equal allowing for the usual annual increase that would have been levied on my original … flat at Dolphin Square).
For two and a half years therefore I paid LESS or EQUAL to what I would have paid had I stayed in [the original Dolphin Square flat]. Only since October 2008 has my rent increased beyond the original March 2006 level.
There has never been any requirement that I or any other MP stay in a rented property that we first occupied because it was cheaper than moving elsewhere. In any and every year from 2001 to May 2009 I could have moved to a more expensive (larger, better fitted, nearer to Westminster etc), rented property. Similarly in any and every year from 2001 to 2009 I could have chosen to use my MAXIMUM allowance to pay the mortgage interest on a property I could later sell at a large personal profit. But I never chose either of those options.
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 185
Finally I would note that one MP who took the Cash and Stay option says that she took Fees Office advice and was told that it was an entirely private issue. Another MP, a Cabinet Minister, according to the press cutting you yourself sent to me, tried to hand his £18,000 Cash and Go money to the Fees Office. They refused to take it adding it instead to his ACA where he used it and the ACA to help buy a property that he would then later be able to sell at a large personal profit.
20 July 2009
92. Letter to the Commissioner from Mr Paul Holmes MP, 8 October 2009
Thank you for your letters of 23 and 7 September.
Like Joan Humble MP in her letter of 18 September I simply do not understand how [the Director of Operations at the Department of Resources’] private, unpublished and therefore unknown guidance to those who rented, can possibly be reconciled with the clear, public and still standing policy of his Department, that the great majority of MPs are allowed to “gain a personal benefit” from the use of public funds. This is the case even where their purchase of a second home/property has entirely (100% no deposit interest only mortgage), or in part, been financed by the deliberate and planned use of the ACA with the full knowledge and co operation of his Department.
Neither—if the facts are as reported in the newspaper story you forwarded to me—do I understand how his private, unpublished and unknown guidance on renting, can be squared with the process whereby a Labour Government Minister paid his Dolphin Square money into his ACA, so that he could then use it along with the ACA to help finance the purchase of a property which he would/will later sell at a large personal profit.
I also do not understand why, having formulated this private opinion (which applied one unpublished rule to the minority who rent and another, public, rule to the majority who buy), he did not circulate it to all the MPs who rented at Dolphin Square. This is a considerably larger number than the six who have self referred to you, but it would have taken little more than half an hour to skim through the records to see who they all were.
I would therefore repeat my previously made points:
1. It never occurred to me to ‘“seek advice” as this buy out/compensation package involved funds from an American property development company, not the taxpayer. The new landlord’s tenancy conditions are, as [solicitors] noted at the time, “MORE ONEROUS AND QUITE DIFFERENT TO WHAT YOU HAVE BEEN USED TO IN DOLPHIN SQUARE.” [The new owners] have indeed drastically reduced porters and security staff numbers, reduced grounds and flat maintenance, sold off car parking spaces and so on.
As the majority of MPs are openly allowed to make a very large personal profit (£700,000 for one senior Opposition Frontbencher and £350,000 for a recent Prime Minister have been reported in the press in the last fortnight), out of using ACA to help buy a property, it seemed clear that there was no restriction on my accepting a compensation package of this kind.
2. I never set out to make a personal profit from the use of ACA—as shown by virtue of the fact that I have rented a flat in London for the eight years I have been an MP, rather than indulging in taxpayer assisted property speculation.
3. No one could have foreseen in 2001, when I began to rent at Dolphin Square, that a few years later Westminster Council would end a 70-year-old Housing Trust by selling out their stake to a commercial property developer.
4. I moved into a cheaper flat and then to another cheaper flat. For some two and a half years after I moved out of [the original Dolphin Square flat] I was paying less (18 months) or the same (12 months) rent as a result of moving.
5. There is in any case absolutely no rule regarding use of ACA which states that once renting a property an MP cannot move to a more expensive one, as long as they keep within the ceiling allowed for in the ACA. Until this summer that ceiling was the whole of the ACA. But as my claim forms show I actually
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cost LESS in rent for 18 months and the same (allowing for normal rent level increases), for a further year after moving out of [the original Dolphin Square flat].
8 October 2009
93. Letter to the Director of Operations, Department of Resources, from the Commissioner, 12 October 2009
I last wrote to you on 8 October to let you see a response from Mr John Barrett MP commenting on the advice you had previously sent me to help me with this inquiry into payments which some Members accepted in respect of their tenancy of Dolphin Square and to invite your comments on the points he had made.
I now enclose a letter of 8 October from Mr Paul Holmes MP which also comments on that advice. As you will see, Mr Holmes refers to the status of the guidance you have produced, questions its contents and he says that he does not understand why the opinion was not sent to all Members who rented at Dolphin Square.
I would be grateful if you could reflect on Mr Holmes’ letter as well as Mr Barrett’s when you let me have your further response on this matter.
I am very grateful for your help.
12 October 2009
94. Letter to Mr Paul Holmes MP from the Commissioner, 11 November 2009
I have now heard back from the Department of Resources with their comments on the points you have made in correspondence in respect of the advice which the Department of Resources sent me on 14 August and 3 September about the Dolphin Square payments.
I enclose an extract of the Department’s letter of 9 November which responds to the points you have made. I am asking the Department to let me know the source of the instructions which the Director refers to in his letter.
I believe I am now reaching the point where I can conclude this inquiry and prepare my draft Memorandum for the Committee on Standards and Privileges. But, if there were any final points you wished to make, please let me know within the next two weeks. I will then conclude my work on this inquiry and, once I have prepared the factual sections of my Memorandum, I will let you see them so that you can comment on their factual accuracy.
Thank you for your help with this.
11 November 2009
95. Letter to the Commissioner from Mr Richard Younger-Ross MP, 30 June 2009
Thank you for your letter dated 9th May regarding my self referral for certain payments received from my landlord at Dolphin Square.
I will answer your questions as best I can; however proof of some items is difficult as I have not kept all documents to which you refer as they did not relate to IEP or other parliamentary claims. I may have some receipts archived in my attic, but these would take some time to find.
I have always avoided conflict between my personal interest and public interest. I deliberately do not have, and never have had while an MP, any external earnings so as to avoid any such conflict. I have always followed the rules on allowances and expenses as they have been advised to me.
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 187
In the context of the current discussion, as with all other expenses, I have not used any Parliamentary allowances for personal purposes. All expenses claimed in respect of Dolphin Square related to the provision of a flat in London as permitted by the rules.
I moved into my current flat in Dolphin Square in August 2001. The accommodation is a small unmodernised flat on the second floor overlooking a service road. It has one bedroom, a lounge, a small kitchen approximately 8 foot by 8 foot, and a bathroom.
The rent for the first year was £12,870; this payment includes heating and hot water. The original tenancy agreement is attached.167 The term of the agreement was for three years, renewable. The Trust maintained a restricted rent policy which I understood would be maintained until 2034.
The Square was very popular with MPs throughout the 70s and 80s as it allowed them to maintain a flat in London at a low rent. This was of particular benefit to MPs who wished to remain working in London after leaving the House or who hoped to be elevated to the Lords. This is still the case. This benefit has been accepted for a long time by the House authorities.
My lease agreements were lodged with the House authorities which I take as acceptance of that benefit and my rights in it. You will note that these could potentially last long after I left Parliament.
The tenancy was renewed in June 2003... At the time Westminster City Council indicated it wished to give up its lease on the Square. The arrangements were that the Freehold was owned by Friends Provident, Westminster Council held the head lease and sub let it to the Dolphin Square Trust Ltd. Over 2004/5 a number of potential leaseholders came forward and a number of options were put to tenants. All of them I seem to recall involved a payment of some kind to the residents, indeed even one was rumoured to offer us the option to buy our flats. The discussion as to whether we could accept any payments therefore started at that time.
My rent and service charges were as follows:
2001–02—£12,870
2004–05—£13,771
2005–06—£14,203
In 06/7 it was due to increase to £14,678.
A new lease was agreed on 24/11/05 168 which set the rent/service charge at £14,820 for 2006–07, rising to £15,561 for 2007–08 and then to around £18,700 for 2008-09. I considered this a breach of the understanding we had been given on future rent rises. The landlord asserted that this was the correct market rental. At this stage I preferred to seek alternative accommodation. However the cost and disruption of finding another flat and moving seemed excessive when a General Election was considered to be less than a year away. For 2009– 10 I refused to pay a 3.5% rise and secured the rent/service charge at £19,140.
The new leasehold agreement is enclosed.169
Tenants were offered a second option which would see their future rent rises set at, I believe, 3%. On this basis the rent for 2007-08 would have been £15,264, 2008–09 £15,722 and 2009–10 £16,194. This option would have maintained the effect of subsidising my living costs, if I chose to live in London, well after leaving the House.
The increase in my rent was agreed and paid by the Fees Office.
167 FN: Not included in the written evidence 168 FN: Not included in the written evidence 169 FN: Not included in the written evidence
188 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
I did not claim rent for one period during the General Election in 2005. Should another General Election be called at any time I will be responsible for the lease costs, and if I leave Parliament the same will also be true until the notice period is up—without any further benefit to myself. I therefore have risks associated with the lease which are wholly and personally my responsibility.
The rights I gave up included a tenancy agreement until 2034, and a guaranteed rent. I have not kept the offer documents.
In considering the offer I considered the Green Book and spoke to a number of people including parliamentary colleagues at both ends of the House. A number of Lords who were formerly MPs also had these decisions to make. I generally always refer matters to the Fees Office. However I cannot recall any specific conversation with the Fees Office. I have spoken with [an official] of the Fees Office with whom I would usually discuss any issues. He cannot recall whether or not we spoke on this matter, but does recall discussing the matter with other MPs and referring the matter “up the line” for a policy decision. He has emailed [the Assistant Director] to ask if a record of such a decision exists. I will come back to you as soon as I have a reply. Certainly I was never informed of any guidance on the issue.
In my reasoning at the time I took into account that MPs are permitted to use the ACA to pay interest on mortgages. (Capital repayments were stopped in 2001.) MPs also can and do take out interest only mortgages in the certainty that over time prices will rise and they may keep the profit. This the House has and does allow them to do and it is considered entirely legitimate.
MPs have also to my knowledge moved homes and kept the profit.
They have also sold up, moved, re-mortgaged and then claimed more from the ACA.
If all of this is accepted, as I understood it to be when I was considering this decision, then giving up the benefits associated with a rental agreement for a cash payment must also logically be accepted. Certainly there was no intent to make a profit.
If it is not acceptable, then the profit from any property bought using the ACA must also be repayable, as indeed must any extra value to any property due to ACA payments being used to refurbish or modernize a property.
I received a total sum for giving up my various rights associated with the tenancy of £8,031.14 (Appendix E) 170on which I paid capital gains tax.
In considering my decision I also considered the increased level of rent I would be asked, to pay. In deciding whether to give up my rights I had first considered whether I wanted to remain in Dolphin Square. I was not convinced that I would like the new regime and the changes it would bring. I decided I would want to move, which meant I considered that the rent increases would not be of significance.
However, my intention to move was very sadly frustrated. In July 2006 my mother died, followed within four months by my wife’s mother and father. Early 2007, therefore, was not an easy time and my wife and I could not face the strain of a move. I did not move a year later for the reasons I have already outlined.
It was therefore my intention to move to a more modern property, certainly with more space, and therefore at a higher rent, but still within the guidelines and limits. Such moves are accepted by the Fees Office. The only criterion that guides us is the sum of the allowances.
What proportion we spend on rent or mortgage is entirely a matter for us. Paying 100% of the allowance on mortgage or rent has clearly been deemed “beyond reproach”.
Another consideration at the time was the amount of money I was necessarily spending over and above the IEP limit on maintaining my parliamentary offices.
170 FN: Not included in the written evidence
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 189
Many MP’s I know dip into their own pockets to subsidise their offices, although some do not.
I am 100% committed to providing the best service I can for my constituents. I try to cover nine surgeries a month touring Teignbridge, and I encourage people to seek my help. I have over 13,000 names now on my database as having asked for my help. I also have the fourth largest constituency by voters spread over 660 square miles, making it also geographically large.
In round terms, I believe I have spent around £15,000 of my own money over the last eight years supporting my work. (Some of this has been set against tax.)
This £15,000 is in addition to other costs I regularly incur, such as support for volunteer helpers, my annual Christmas card, contributions as the MP to local events causes or charities, entertainment of constituents etc. None of these have been claimed for or set against tax.
In my work, and in taking the lease on Dolphin Square I do not act in the hope of making a profit; I would have bought a flat had that been my intent.
My considerations and discussions with peers led me to believe that I could with honour keep the payment from Dolphin Square. It was not a payment from the taxpayer, and in taking it I was conscious that it would help me maintain a high level of service for my constituents.
I concluded that there would be no additional cost to the taxpayer over and above what I was entitled to claim for living costs wholly exclusively and necessarily incurred, but that I could use the developer’s money for the good of my constituents.
30 June 2009
96. Letter to Mr Richard Younger-Ross MP from the Commissioner, 8 July 2009
Thank you for your letter of 30 June in response to mine of 9 May. I am grateful for the information you have provided.
I would be grateful for some further assistance on a few points.
I am enclosing a copy of a report prepared by [solicitors] in October 2005 for Dolphin Square residents on the various options open to them at that time. Could you let me know:
1. whether you saw this advice and considered it at the time;
2. whether Option A: Cash and Stay was the offer made to you which you decided to accept. (You will see that the advice given on page 3 was that this option could still be attractive to tenants looking to leave Dolphin Square after the spring of 2007.)
You said in your letter that the new lease you agreed in 2005, a copy of which was at Appendix C to your letter, set the rent and service charges at £14,820 for 2006-07, £15,561 for 2007-08 and around £18,700 for 2008-09. As I understand the document, it provides for a shorthold tenancy for 2006-07 for £14,820, but I can find no provision for arrangements for future years. If you have any documents on which your estimates for 2007-08 and 2008-09 are based, it would be very helpful if you could let me have a copy.
I hope I am right in concluding from what you say in your letter about your use of the payment that you did not, in the event, use the money on items which otherwise you would have claimed from your parliamentary allowances. If I am wrong on this, do let me know.
It would be very helpful if you could let me have your further response to this letter within the next two weeks. I would then propose to seek advice and comments from the Department of Resources.
Thank you for your help on this matter.
8 July 2009
190 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
97. Letter to the Commissioner from Mr Richard Younger-Ross MP, 27 July 2009
Thank you for your letter dated 8th July 2009 raising a few further questions.
I do recall seeing the [solicitors’] report, along with lots of other information from the Tenants’ Association etc. I did opt for the Option A: Cash and Stay, which [the solicitors] said may be “attractive” to tenants leaving after the spring of 2007.
The initial rent was a 0% increase on the predicted Dolphin Square Trust rent for 2006–07 and only 5% for 2007–08, which proves their point.
The figures I gave for 2007–08 and 2008–09 are based on actual rent paid and not on forecast; I enclose a statement of account for Feb 2008 in the sum of £1,296.75.
To clarify, the point from your penultimate paragraph, I have not “double counted”, all the costs I referred to were not claimed on ACA, and as I explained, there would not have been sufficient capacity in ACA to do so.
Further to the key point on advice given; I understand that at least one MP was told by the Fees Office they could keep this payment. I hope that this will be confirmed to you.
However, even if this is not the case, I have had it confirmed from the Fees Office that profits from a property sale could be kept and that this advice has not changed, and that a new mortgage could be taken out and increased payments for interest claimed.
This is certainly what I was advised when first elected in 2001. The Dolphin Square payment however was not a simple “profit” as it was received for giving up benefits that were personal to me, not to the House, and the acceptance of liabilities such as a twelve month lease, which again is personal to me. An election in June 2007 would have cost me over £11,000 in rent for a flat I may not have had a use for if I had lost that election!
MPs may also “profit” from another source and that is foreign travel, as we are entitled to keep any “air miles” and use them for private travel. On the latter, this does not apply to Ministers, which raises the issue of Andy Burnham who had his Dolphin Square money paid into his ACA. As purchases on ACA are kept and are tax free, it could be argued that he benefited from them, and this was clearly approved by the Fees Office.
Finally, if such payments should not have been accepted, why did no one advise MPs known to be accepting the offer? The Fees Office certainly had knowledge of the new leases, as I sent them mine in 2006. They would also certainly have known the payment I received, as my details were included in an article in the Mail on Sunday that year!
I hope that this helps you come to a conclusion, and I apologise for any repetition. I would be happy to meet to discuss this. I do have to be in London a couple of times over the recess if you wish to meet.
27 July 2009
98. Letter to the Commissioner from Mr Richard Younger-Ross MP, 30 October 2009
Thank you for your recent letter regarding the Resources Centre response and Joan Humble’s letter.
I find [the Director of Operations’] letter very surprising and flawed.
With regard to clause (a) of [the Director’s] letter; no Member elected before 2005 will have wholly paid for the rent from ACA, for we all paid for the period of the 2005 election etc.
I do not see how paying the money to the House of authorities for them to add this to a Member’s ACA is significantly any different to accepting the payment, if that payment is then used for interest payments on a mortgage or even for furniture that becomes the property of the member with no tax paid on it. Indeed the Member may benefit more as I am not sure if capital gains tax would be paid in this instance. With regard to clause (b) of [the Director’s] letter, why is there a date before which [the Director’s] advice does not apply?
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[The Director] does not explain why his department says an MP selling the lease on a property he bought is substantially any different than a Member being paid for giving up a lease. His department have consistently said that the former is acceptable. Why does his letter not confirm this? I have asked his Department this question and I have received no reply.
[The Director] says two Members sought and were given advice. He provides no evidence of this. Has he advised you who those Members were and have you been able to confirm with them what [the Director said] to them?
Joan Humble has clearly contradicted what [the Director said] in his penultimate paragraph. I understand at least one other Member was given this advice, that it was “their” money. As Members rely on the advice given from their colleagues, this advice would have become the perceived view of the Fees Office. This would be taken as it logically fits with what MPs with mortgages were told. [The Director’s] letter also makes no reference to an MP giving up rights. I gave up the right to keep the flat until 2034. If I stood down at the next election, this would have been of great benefit to me. [The Director] does not explain why other Members who told the department they had decided to take up the offer were not given the advice given to two Members.
In his second letter he stated that, “I am clear that the advice referred to above was promulgated to staff in the Department who dealt directly with Members.”
If this is the case why was a member of his staff unable to clearly recall this advice when I spoke to him in May this year? He had to ask.
He says that this ‘“authoritative” advice would have been given to Members from November 2005 onwards. However Members knew of a proposed offer months before as the Trustees and Tenants Association kept tenants abreast of developments to sell the Leasehold of the Square, indeed the proposal for a buy out was known before the summer recess. The [solicitors’] “Report to the Residential Tenants” was sent to residents in early October. This detailed the options.
The offer document is dated October 3rd 2005 and I had to return it by November 24th 2005.
Although I have no clear recognition of speaking directly to the Fees Office, it is in my view highly likely that some MPs discussed this with the Resource Centre staff before the November “guidance”.
[The Director] in his letter says that “the offer to Dolphin Square tenants became known to staff of the House around October 2005”. He does not say how this became known to them, I assume that it would be through a Member. If so who was that Member, and are they one of the two written to on November 22nd? Why, when Members sought to change the lease in early 2006, was the “advice” not given then?
Finally it is said that by raising our rent we have cost the Exchequer more than if we had stayed. I indicated in my earlier letter that I had intended to move. What I should have added at that time is that had I stayed on the lower rent, I would have used that allowance over a few years to replace the fitted carpets that came with the flat in 2001 and to improve both the inadequate bathroom and kitchen, the latter of which is very poor. All this would have been a reasonable use of the allowance under the Green Book at this time.
30 October 2009
99. Letter to Mr Richard Younger-Ross from the Commissioner, 11 November 2009
I have now heard back from the Department of Resources with their comments on the points you have made in correspondence in respect of the advice which the Department of Resources sent me on 14 August and 3 September about the Dolphin Square payments.
I enclose an extract of the Department’s letter of 9 November which responds to the points you have made. I am asking the Department to let me know the source of the instructions which the Director refers to in his letter.
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I believe I am now reaching the point where I can conclude this inquiry and prepare my draft Memorandum for the Committee on Standards and Privileges. But, if there were any final points you wished to make, please let me know within the next two weeks. I will then conclude my work on this inquiry and, once I have prepared the factual sections of my Memorandum, I will let you see them so that you can comment on their factual accuracy.
Thank you for your help with this.
11 November 2009
100. Letter to the Commissioner from Mr Richard Younger-Ross MP, 17 November 2009
Thank you for your letter of 1 November with an extract from the Department of Resources letters of the 14th August and 3rd September.
With regard to the answers I sought, not only have they not replied but they have not even acknowledged my enquiry.
He says he is “not at all surprised” that a member of his staff could not “clearly recall” the advice given at the time. I find this surprising as the issue was clearly aired in the Mail on Sunday at the time, October 2006 if I recall.
His assertion that the lack of a phone log “supports his recollection that he did not contact the Department”, neither does that, as they did not log calls and is not actually what I said, I cannot recall whether I did or not.
Other Members clearly do remember speaking to his Department and that he seems unable to answer, but perhaps that and the other unanswered questions are in the other parts of his letters.
17 November 2009
101. Memorandum from Director of Finance and Administration, 1 November 2005
To: [Departmental colleagues]
From: [Director of Finance and Administration]
1 November 2005
DOLPHIN SQUARE
I have consulted the Clerk and the Speaker about how to advise Members who are residents of Dolphin Square about whether they can properly accept the Landlord’s offer of a buy out of their existing tenancies.
Facts
2. On the basis of the cases I have seen, the facts appear to be:
- A number of Members reside in Dolphin Square, and have leases of varying lengths.
- The leases are not of an “owner occupier” nature where the tenant would in effect buy a long lease. Instead they are normal rental arrangements where the tenant pays an annual rent, but does not pay a capital sum at the outset, or receive any capital value when they give up the lease.
- The current rent charges appear to be in the region of £13,000 to £15,000 a year.
- The new landlord has written with a proposal to buy out the leases and turn them into 364-day shorthold tenancies at a higher rent. The aim is almost certainly to increase rentals over a period, either with
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existing tenants, or by bringing in new, higher paying tenants. The cash buy outs vary in amount. We are aware of offers varying between about £4,500 and £23,500.
- Current tenants have also been given the option of not taking the cash offer, and continuing at a rent similar to the current rent, which would then increase by about 2 per cent a year until 2018.
The existing rules
3. The Green Book does not cover this situation in specific terms, nor would it be reasonable for it to do so: there are many possible permutations of rental arrangements, and each kind has to be looked at on its own facts and judged against the principles of normal financial governance (including propriety, regularity, accountability, transparency and value for money). On grounds of propriety it would not seem to be appropriate for Members to accept cash and keep it personally in circumstances where the rent had been paid wholly from the ACA. It would amount to a personal windfall entirely attributable to rights earned with public money.
Line to take
4. The line to take is: a) Where the rent has been paid wholly from the Additional Costs Allowance:
— We should advise Members against taking the cash offer and keeping the proceeds themselves, on the ground that it would appear inappropriate to gain a personal benefit when the rent has been paid wholly from the ACA;
— If a Member does want to accept the cash offer and pay it over to the House, or set it against future rental payments in the current year, this can be arranged. b) Where the rent has been partly paid from ACA and partly privately:
— Members can with propriety retain a proportionate part of the cash offer if they wish. The decision on what was the appropriate proportion would be for the Member, as DFA would not have the relevant information. The House would be happy to receive the balance. c) Where the rent has been paid wholly from private funds
— Tenants are free to accept or reject the offer.
Where a tenant had in the past had rent paid from ACA, but this has not been the case during in-date years (ie since April 2002), they can be regarded as being under c) above.
5. You should emphasise that this advice is only about what is appropriate in terms of financial governance and public money. The Department is not in a position to advise tenants about which option is the best for them in other respects.
If Members are unhappy with the advice
6. If Members are unhappy with this advice, please let me know. It is possible, for example, that other aspects will emerge when we start giving advice. If Members wish to challenge the advice, the matter could be put formally to Mr Speaker, with the possibility that the Members Estimate Committee will consider it at his request.
Director of Finance and Administration
1 November 2005
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102. Letter to the Commissioner from Mr Richard Younger-Ross MP, 15 January 2010
Thank you for your letter dated 7th January and the enclosures.
Regarding the memorandum from [the Director of Finance and Administration]. I find it hard to believe that the Speaker approved their actions. He would have known how MPs profited from their mortgages.
In item 4 a) he says “that it would appear inappropriate to gain a personal benefit when the rent has been paid wholly from the ACA”.
However many Members, if not most elected since ‘97 have interest only mortgages. Therefore the benefit they will receive on selling the property will have been gained “wholly” from payment of ACA. In fact it is worse because they may have used ACA to “improve”‘ the property as well!
In item 3 he talks about “a personal windfall entirely attributable to rights earned with public money”.
Is this not the case with a mortgage? It is not, however, the case with the buy out, for the buy out was for rights until 2034, given on taking up the tenancy. This is not directly related to the ACA payment. Nowhere in the memo does he say do not tell Members unless they ask. Was the Speaker aware that MPs would not be advised?
15 January 2010
103. Letter to Mr Richard Younger-Ross MP from the Commissioner, 18 January 2010
Thank you for your letter of 15 January responding to mine of 7 January with the correspondence from the Department of Resources.
I have noted the points you have made. I think I have now taken this as far as I need and it would be right to bring this matter to a conclusion. I believe I have enough evidence of the actions of the Members into whom I am inquiring and the various considerations in their minds and in the minds of the House Authorities. I do not propose, therefore, to pursue further the matters raised in your letter.
I will now, therefore, include your letter in the memorandum I am preparing for the Committee on Standards and Privileges.
18 January 2010
104. Letter to the Commissioner from Mr Paul Holmes MP, 8 February 2010
Thank you for your letter of 3rd Feb which reached my Westminster office on Friday 5th Feb and my Chesterfield home on Saturday 6th.
Your summary is an accurate factual account of our correspondence.
However with reference to the Department of Resources’ point … that “it never occurred to me to seek advice”... no of course it did not.
Mr Speaker, as quoted in the introduction to the Green Book of April 2005, said “They [Members] should seek advice in cases of doubt and read the Green Book with care.”
There was no doubt in my mind—and absolutely nothing in the Green Book in 2005 or 2006 to say otherwise, as the Director of Operations admits … in your summary. Neither was there anything to say otherwise in the Green Book in an edition as late as the revised edition of July 2009! Only with the eventual publication of your report in 2010 will any suggestion of any contrary guidance be made public—and with no explanation from the Director of Operations as to why he never published this secret “guidance” or why it completely
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contradicts the rules that DID allow Members to make a personal profit by using ACA money to purchase a property. As the Director of Operations tells you … in response to Joan Humble’s letter of 18th September which also makes this argument—”her points are very fair”. Neither is there any attempt to explain why it would however be judged OK to pay the money into the ACA and then use it to buy a property as one MP is reported in the press to have done!
I accepted an entirely unforeseen windfall from a property company and moved to a cheaper flat. It was two and a half years before my rent increased beyond what I was paying in my original flat. At any time from 2001 to 2009 I could entirely within the Green Book guidance have moved to a more expensive flat or indeed have bought a property. Nothing in the published guidance and common practice of the Green Book led me to believe that I should not accept this windfall and only your research four years later has uncovered the secret and highly contradictory “advice” on this.
8 February 2010
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Written evidence to the Committee
Letter to the Clerk of the Committee from Rt hon Sir Menzies Campbell MP, 24 February 2010
I refer to your letter of 17th February 2010 and our subsequent telephone conversations, and confirm that I will be available to give oral evidence to the Committee on 2nd March at 9.30am. As agreed I now provide a note of the issues which I wish to place before the Committee.
I regret that I am unable to accept the Commissioners reasoning and his conclusions. I, therefore, invite the Committee to accept the explanations put forward by me to the Commissioner and recorded in his Report.
In addition I should be grateful if the Committee would consider the following:—
1. That notwithstanding the present “group” reference to the Commissioner the position of any member referred to the Committee should be considered individually and on the material relating to that member alone.
2. That before making an adverse finding in respect of any member the Committee should apply a standard akin to proof beyond reasonable doubt in view of the reputational consequences of such a finding.
3. That in judging the actions of any member the Committee should apply the standards applicable at the time of those actions and not retrospectively the standards at the time of such judgement e.g. see paragraph 307 of the Commissioner’s Report.
4. That the Commissioner is incorrect when he rejects the proposition that the payment in question was analogous to a capital gain made on a property purchased in part through the Additional Costs Allowance. The proper approach is to consider the outcome which is the same in principle in each instance.
5. That there is no reason to doubt the credibility of the evidence volunteered by Mrs Joan Humble to the Commissioner and recorded between paragraphs 26 to 37 of the Commissioner’s Report.
6. That there is no reason to assume that the advice drawn up by the Fees Office but not distributed applied to payments in discharge of succession rights. The discharge of succession rights cannot reasonably be described as a “windfall” – see paragraph 295 of the Commissioner’s Report.
7. That in the last bullet point of paragraph 321 on page 96 of the Commissioner’s Report he wrongly asserts that I used the money for items which could not be claimed from the Parliamentary Allowances – see instead paragraph 186 of the Report.
8. That in considering the conduct of any Member the Committee should consider whether that conduct was reasonable in all the circumstances having regard to the
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obligations to which the Member was subject and in particular whether the Member’s conduct resulted in an additional or unnecessary charge on public funds.
9. That the Commissioner’s conclusion that I put my private interest above my public interest is not sustainable if it is accepted that I applied the sum received on public purposes, namely Parliamentary expenses which would otherwise have been claimable under the Parliamentary Allowances e.g. see paragraph 163 of the Commissioner’s Report and the table on page 54.
I shall of course also be available to the Committee to answer any other questions which may be thought to be relevant.
Letter to the Clerk of the Committee from Richard Younger-Ross MP, 24 February 2010
Further to my phone call to you this morning, I confirm that I wish to give oral evidence to the Committee.
May I also ask the Committee to consider the following points:
1. The evidence of Joan Humble appears to have been ignored. She clearly states the fees office told her to keep the money. Secondly we advised John Lyon that a second MP also stated that he had been told the same and can name the member of staff who spoke to him. Mr Lyon did not wish to take any further evidence from others and would or could not seek evidence from other MPs.
2. Mr Lyon seems to accept that the advice given to two MPs at the time was correct but the Research Department accepted that their interpretation was open to challenge with either the Speaker or the Members Estimates Committee determining that advice. If the fees office accepted that their interpretation may be wrong, perhaps Mr Lyon should have pursued the quality of the advice given to the two Members more than he appears to have done.
3. On the grounds that MPs did not put up a capital sum, both Mr Lyon and the Resource Centre consider that the payment offered was different to the sale of a lease hold property. However, when an ‘interest only’ mortgage is undertaken and several members have done so, then there is no capital payment. Therefore to say the payment was received and the profit from a leasehold sale are different on the basis of capital payment is wrong. And I contend what I did was no different to any MP selling their leasehold.
4. Mr Lyon is also dismissive of the notion that we were giving up rights for a low rent until 2034. Members who did not take up this offer who retire now will be able to profit with low rents for the next 24 years. This profit will have come from the period of rental paid for from the ACA. If accepting payment for
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giving up that ‘right’ is wrong, then keeping that ‘right’ must also be wrong for it comes from the same source.
5. The Resource Centre advice also contradicts itself. For the two Members were advised not to take the money but they would pay the money into their ACA account for that year and then claim that money back for furniture on interest on the mortgage, both of which are a direct gain to the members. Either taking the money was wrong or it wasn’t, passing the money through the Fees Office cannot make it right if it was wrong to benefit from it.
6. This evidence is being taken against the background of MPs profiting from Mortgage interest payments, when it is argued such payments were wrong. But no member taking such a payment is being reprimanded for doing so per say, and retrospective repayments seem very unlikely, certainly not back to 2006.
Mr Lyon closure of taking further evidence from other MP’s places a number of MPs at a severe disadvantage, as they will be determined to also make errors of judgment by the media if the Committee supports Mr Lyon’s report. There may be many reasons that they did not self refer in the first instance, but one that must be considered, in that they did not believe they had acted improperly and in one case why should they because the fees office told them it was alright.
Letter to the Clerk of the Committee from John Barrett MP, 24 February 2010
Following our telephone conversation of earlier today I can confirm that I wish to give oral evidence to the Committee on Standards and Privileges regarding the report to be considered on 2nd March.
I would also ask for the following points to be considered and submit this as written evidence for consideration by the Committee.
The central theme to the following points is that I believe that there is little, or no clear link between the evidence supplied by a number of Members and the conclusion that has been drawn from that evidence.
1 – The report confirms that the sum paid by the developer was not an allowance or expense and the use of such sums is not clearly defined in the rules. I therefore used my own judgement and spent much of that money on amounts which could have been claimed from allowances, the balance, on costs incurred as an MP. This effectively used the developer’s money rather than tax-payer’s money to fund costs directly associated with being an MP. This was clearly not a case of putting personal interest above public interest, yet the conclusion of the report appears to be the opposite.
At no time did my action result in a personal interest. As I have said in my correspondence in the report - had I wanted to benefit from personal gain I would have purchased a
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property and then sold it when standing down. I deliberately decided against doing this because I believed this would appear to be benefiting financially from the current system.
2 - The rental of Dolphin Square properties is often quoted as having been fully met from Parliamentary funds (page 101 line 23), unlike purchased property, where Members have contributed varying amounts. This has been given as one reason for treating the rented properties differently from purchased properties. This is not factually correct, as the rent during dissolution is paid out of Members own funds and depending on the length of time Members have lived there, some have contributed significant sums towards the cost of their lease. The similarity between leasehold property purchases and the selling of the rights to the lease at Dolphin Square have been dismissed. Again I do not believe this is the correct judgement to be drawn from the evidence submitted.
3 - The final report mentions a number of other MPs, who either received no advice or contradictory advice, from the written advice given to only two MPs and refers to a large number of other MPs not covered by the report, yet it does not give any credence to the actions of those, such as Joan Humble, who acted in exactly the same way as those in the report.
In the report I have given two examples where advice from the Fees Office was factually wrong, yet the advice given to the two MPs has been assumed to be the only factual document supplied to MPs against which the actions of those in the report should be judged.
I would contend that this should be looked at by the Committee, as I do not believe the advice to pay money from a third party to the Fees Office is one which stands up to scrutiny. Had the advice been, not to accept the money or return it to the developer, this would have been quite different, but to effectively say, “take the money and then hand it over to the Fees Office” strikes me as unusual to say the least. Had this amount not been due to the MPs, but in fact to the Fees Office, those MPs would not have been liable for taxation on that amount, as it has been judged to be the case by the Inland Revenue.
In conclusion, I would ask the committee to look again at the final three paragraphs of the report and to consider whether the conclusions do in fact reflect the large volume of evidence in the rest of the report. In particular the following
Paragraph 333 – could equally apply to all sales of property paid for by allowances and to this date the Dept. of Finance and Administration does not give out such advice. I would therefore question why this should only apply to Dolphin Square tenancies.
Paragraph 334 – accepts that some of the cost of the leases was not provided by Parliament, which again puts them in the same position as those purchasing property, but does not take into account where the windfall was spent. This is a key factor as to whether or not any private interest was served.
Paragraph 335 – refers to the many others in a similar position and there should be some consideration of all the facts of the case from all of those who were involved, not just those provided by the six in the report. While there were references to some others in the report, most of those who accepted the lump sums were not asked to contribute.
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Written Evidence submitted to the Committee by Sandra Gidley MP, 1 March 2010
I have now had an opportunity to read the finalised report. I have some specific comments relating to sections of the report and also wish to make some overall comments before giving oral evidence to the committee.
The key point I would wish to make is that if I wanted to make money as a result of payments made by the tax payer I would have taken out a mortgage.
I had decided to leave Dolphin Square anyway but had decided to wait until the offers were made because there was no clarity about what the options would be and there might have been an option which allowed me to move to a smaller flat.
I did spend some time considering the offer and a quick look at the rental property market at the time led me to believe that I could find something cheaper and more modern. I saw no overall problem with accepting the money because of the widespread practice of the majority of MPs who eventually profit from a mortgage. This was in 1995 when this practice was not questioned—although I realise that the matter is now under review. That said, I did think it right that I would be able to broadly account for the money and hence I made the decision to use it to fund items related to my parliamentary work. However, I must stress that this was only because I personally felt more comfortable with this course of action.
I do believe the advice obtained from the Clerk of the House and the Speaker was highly relevant as it clearly states that any financial benefits from any source should be paid back pro rata. This certainly was not the norm when an MP sold an ACA funded house as all of the profits (less capital gain) would be kept by the MP. In light of this the advice should have been given to all Members and the general principles incorporated into the Green Book.
If that course of action had been followed I would not have been in this position.
I now wish to make the following comments on the report itself:
Para 31: I asked the Commissioner whether there was an audit trail which would prove that all staff were aware of the Dolphin Square advice. I asked this because of my experience working in large organisations in which staff were asked to sign to say that they had read and understood any new policy. The Director of Resources merely replied that there was an audit trail but if he did provide detail to the Commissioner then all I can say is that it was not forwarded to me for comment. In the absence of an audit trail it is not clear how the Director of Resources could be “clear that the advice had been promulgated to all staff”.
Para 32: The Director of Operations states that “We have no record of that conversation. It is not clear to me why such advice would have been given when authoritative advice was readily available.” The first point I would make is that it is not unknown for the Fees Office to provide incorrect and inconsistent advice (John Barrett gives examples in his written evidence). More importantly, I feel that it is unfortunate that the Commissioner seemed to
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give more weight to the statement of the Director of Operations than that of Joan Humble. There was no incentive for Joan Humble to come forward and provide written evidence and I believe it is entirely to her credit that she did so as it would have been far easier for her to keep silent on the subject. I believe the situation is that she accepted the offer in writing and sought advice about the offer when the final papers came through and before she accepted the money.
Para 33: The Commissioner believes that I fall into category A because all of my rental payments were met from public resources. This is not strictly true because of the dissolution rules which mean that MPs pay their own rental costs during this period. A more precise statement would be that I fall into category B.
Para 39: The Clerk of the House and the Speaker were aware of the memo which included the “substantive guidance” issued to those MPs who contacted the Fees Office. Ev 101 is a copy of the memo from the Director of Finance and Administration to departmental colleagues. I am unclear as to whether this includes all advice provided by the Speaker and Clerk of the House as a copy of the original advice was not provided to the commissioner. There is also lack of clarity over why the information was restricted to those who asked and even the Commissioner has been unable to get to the bottom of this matter. If the situation was so unusual that the Fees Office felt it necessary to seek advice then, by logical extension of the argument, it was not a straightforward decision for MPs to make.
Para 43. It is also worthy of note that the memo has said that it is possible that Members might query the advice in which case it should be further tested. I am not aware that any such further test has been applied.
Para 101: Alan Beith states “we know now that in at least one case where the advice was sought, the retention of a much larger Dolphin Square payment and its use to part finance a mortgage was approved by the Fees Office”. I believe he is referring to a Cabinet Minister who was featured in the Daily Telegraph and was accused of coming to some arrangement to avoid paying Capital Gains Tax. I do not believe that was the intention but it is unfortunate that the Minister followed the Fees Office advice and was then publicly vilified for doing so. I assume that he is one of the two people who received advice in writing from the Fees Office.
Para 109: I note that the Director of Operations concurred with Sir Alan’s “fair observations that Members might well have considered the capital gain made on a property purchase funded in part through the ACA analogous to that of the tenancy compensation”
Para 311: It is relevant to note that the Dolphin Square rent was due to increase and my new rental agreement fixed a lower rent for 2 years.
Para 323: I believe this paragraph is very relevant but have significant sympathy for Joan Humble who is named in the report
Para 327: The Commissioner agrees with the Director of the Department of Resources that this is “primarily an ethical rather than a technical question” but makes no comment on the same Director’s statement concurring with Sir Alan’s “fair observations that Members might well have considered the capital gain made on a property purchase funded in part through the ACA analogous to that of the tenancy compensation”
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The Commissioner also states that the key point is that the payments from parliamentary resources put members in a position of being offered a sum of money. This is true—but it is also true of members who use public money to pay the interest on their mortgage.
Para 328: I am pleased that the Commissioner says that he has no evidence that I deliberately put personal interest above public interest. However, I do not see what my personal interest is as I have used the payments for parliamentary related activity. I did not stress this in my correspondence with the Commissioner as I believed the key point was the comparison with the ACA and I did not want to make a moral judgement on any colleagues who might have spent the payment (from a developer) in other ways. Once I had paid the deposit costs on my flat and my Capital gain and bought some IT equipment the approximate sum of money remaining was used to supplement my staff budget over the next two years. This was a deliberate decision which I took to balance the public interest. The public purse benefited from the lower rents and not having to fund my moving expenses.
Para 330 (iii) As stated previously. The advantage of the move was that a lower rent was secured for the next two years. Not all utility bills were included in the Dolphin Square rental and the overall increase was minimal. The payment was used to fund the moving costs and deposits. As already stated—I do not accept that I put my personal interest above the public interest because I ensured that money was used in pursuit of my parliamentary work. What seems entirely strange is that “within the rules” I would have been allowed to pay the money into the ACA and then use this money as a down payment on a flat, have my mortgage interest paid—and then profit to a greater degree. So, if I had followed Fees Office advice I could have eventually made a personal profit vastly in excess of £18,000 (less capital gains). As it is I made no overall personal profit. I have difficulty in reconciling this with a principle of fairness.
(iv)The Commissioner says that he does not “seek or need to come to a view on the propriety of Members making capital gains on the sale of their parliamentary funded homes” and believes that that is a matter for IPSA and the House. He then dismisses the arguments that all six members put forward (and Joan Humble)—that there was a direct analogy. All Members mentioned in the report made their decision made on similar assumptions. There were many other Members who took the Dolphin Square offer—we cannot be sure but I suspect they all made similar assumptions, indeed these were assumptions that were regarded as “fair” by the Director of Operations (WE38)
The legal advice was only to accept the principal offer if a tenant intended to move within the next 12 months. I have already explained that I had already made the decision to move—on which case the clear advice was that Option A (Cash and Go) would be attractive to people planning to move within the next few months. This made Option B irrelevant to my particular circumstances.
Para 333. I now regret not taking advice from the Fees Office but it is also clear that not all Members were given the correct advice. I also contend that I have put the public interest first for reasons already given.
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 203
Para 334. The Commissioner is indeed correct in his statement that if the House authorities sent their guidance to all Members who were tenants of Dolphin Square then I would “have been able to avoid the difficulties which have now come to light”
Written Evidence submitted to the Committee by Paul Holmes MP, 1 March 2010
In late autumn 2005 I accepted a compensation package from the Property Development and Management Company that was my new Landlord. This Company had bought out and brought to an end the 70 year old Housing Trust where I had rented a flat since 2001. In March 2006 I moved to a flat with a cheaper rent.
I believed at the time that I behaved entirely correctly as: a) It was a similar situation (although entirely unexpected and unplanned), to the majority of MP’s who with the full and open knowledge and assistance of the House Authorities used ACA money to buy a property which they could later sell at a personal profit. b) It did not involve my claiming money from the ACA but was a compensation payment from a private Landlord. c) As the Director of Operations confirmed to the Parliamentary Commissioner “there was nothing in the Green Book or anywhere else which specifically covered buy outs of this nature.” To this day (July 2009 edition) there is still nothing published in the Green Book about this situation and the private advice that the Director of Operations formulated was never circulated to the MP’s who rented at Dolphin Square. Only when the Parliamentary Commissioners Report is published, 4 years later, will this private and unpublished guidance be made generally available.
When a newspaper raised questions about this in 2009 I and 5 other MP’s immediately self referred our actions to the Parliamentary Commissioner for Standards. Without that self referral no further investigation would have taken place. The Legg Audit for example did not look at this issue as the compensation money was not a claim from the public purse.
The Commissioner has concluded that in accepting the new Landlords compensation payment all MP’s (not only the 6 of us who self referred), “made a serious misjudgement (para 335, page 105)…hat he has no evidence that any Member did this deliberately (Para 328, page 98)…and that had the House Authorities sent their guidance to all Members who were at the time tenants of Dolphin Square, then all of those Members should have been able to avoid the difficulties which have now come to light” (para 335, page 105).
Clearly I will fully accept whatever ruling is made as a result of this enquiry, there would have been no point self referring otherwise. I would though ask the Committee on Standards and Privileges to consider several issues before reaching its final conclusions and recommendations:
204 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
1. I cannot understand how, on the evidence available, the Commissioner has arrived at the judgement that there is no comparison at all with the situation of the majority of Members who used ACA to purchase a private property. Had I from 2001, instead of renting, used the ACA to fund a 100%, interest only, no deposit mortgage then I could, in the booming housing market of 2006, have sold that property—entirely funded by ACA—at a large personal profit.
The rules on this may well be changing in 2009/10, but not retrospectively. Kelly recommended that ‘from November 2009’ any profit from ACA funded property should go the public purse. IPSA may well adopt this proposal from the end of March 2010. But in 20005/6 when I judged that accepting my new Landlords compensation package and moving to a cheaper rental was not an issue, I was acting in good faith based I thought upon the clear and open regulations then in operation. It does not seem in accord with natural justice to retrospectively treat the minority, who use the ACA to rent, differently to the majority who used the ACA to buy a property.
2. The Commissioner has not followed up or responded to a question I put to him both verbally and in writing. A press report that the Commissioner sent to all 6 self referring MP’s, indicated that one Member at Dolphin Square had accepted the compensation package, paid it into his ACA and then drawn it out to help pay the deposit on buying a £215,000 flat. How could it be judged wrong in 2005/6 to accept the compensation package from a private Landlord but OK to do so if the money was first passed through the ACA in order to help purchase a private property? There seems to me to be a complete inconsistency once again here in the private and unpublished advice of the Director of Operations and the public policy and workings of his Department and the ACA system? I based my judgement at the time on the known public operation of the ACA.
3. The Commissioner has considered the evidence submitted by Joan Humble an MP who has voluntarily submitted evidence to the enquiry. She did seek Department advice and was told that the compensation was a private matter and entirely up to her. The Department say they have no record of this and she never had the name of the person she spoke to on the Departments enquiries helpline. However I understand that another MP says he also sought advice, received the same answer as Joan Humble and can name the official who gave it to him. As this report on the 6 of us who self referred will also inevitably apply to all those who accepted the compensation package but did not self refer, then I would have thought that wider evidence should be collected from those individuals.
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 205
Oral Evidence: Witnesses
Tuesday 2 March 2010 Page
Rt hon Sir Menzies Campbell CBE QC MP Ev 1
Rt hon Sir Alan Beith MP Ev 7
Paul Holmes MP Ev 10
Richard Younger-Ross MP Ev 16
Ms Sandra Gidley MP Ev 19
John Barrett MP Ev 23
206 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
Further written evidence
Supplementary evidence from Paul Holmes MP to the Committee, 8 March 2010
I am writing further to our meeting 2nd March and having read the transcript of my oral evidence and subsequent questions from the Committee.
1. I was very surprised at that meeting that Members of the Committee were not aware of all the contents (see Questions 70, 71, 72, 73, 74 and Questions 106, 107, 108, 109, 110, 111 and 112), of the original newspaper report (of 29th May) that triggered our self referral. I knew that the newspaper article was in the list of 104 documents, relating to written and oral evidence, which were contained in the Appendix to the Parliamentary Commissioner for Standards Report. As this (full), newspaper report was among the very first items that the Parliamentary Commissioner had sent to the six of us who self referred to him, I had not looked more closely at it in the Appendix. After last Tuesday’s meeting I went back to look at the Report and found that the part of that newspaper report that is relevant to Q’s 70-74 and 106-112 had in fact been left out of the partial extract that was included in the final report. This was despite my specifically raising that point with the Commissioner in my letters to him of 20th July 2009 (Document 91 in the Appendix to the Report), 8th October (Document 92) and 8th February 2010 (Document 104) and explicitly asking him to examine this comparison during our meeting on 27th October 2009. Nowhere in his Report does the Commissioner refer to this case at all and the relevant newspaper report has that section edited out.
I believe this strongly reinforces my point that the Commissioner had not in fact looked as requested at the parallel issue of an MP (at least one -the newspaper article says “Others took the money and used it as a deposit to buy another tax payer funded property.”), being aided openly by the Department of Resources to receive in full ‘the benefit’ of the Dolphin Square ‘windfall’ money. The newspaper article reports in detail that “[a Member] received £18,230 when he left his Dolphin Square flat in 2006. He declared the windfall to the Parliamentary Authorities, but was permitted to add it to his existing second home allowance and spend the money on a new £215,000 flat in South London.” How in light of this can the Commissioner say that there is no comparison between money, entirely unexpectedly, accruing from renting and money accruing from deliberate property purchase. In the [name] case it is exactly the same sum of money, yet the Commissioner, despite my request, has not investigated or commented upon this before arriving at his conclusions.
I believe that this issue is absolutely central. The Commissioner uses the Director of Resources private view to conclude that we made a ‘serious misjudgement’ in accepting this compensation payment from a new commercial landlord. Yet one MP (at least) Joan Humble, consulted the Fees Office and was explicitly told it was an entirely private matter and nothing to do with ACA. Another one (at least), [name], is reported to have been openly assisted by the Fees Office to transfer the cash through their accounts and into a property purchase and so ‘enjoy in full the personal benefit’ of this money. At what point does the Commissioner believe that a ‘serious misjudgement’ becomes entirely acceptable simply because the money in question is passed through another account?
John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross 207
How do these two Fees Office actions square with the privately arrived at advice of the Director of Resources –advice which was never in any case communicated to all the MP’s concerned either privately or by publication at any point from 2005-2010?
All of us who accepted this compensation windfall did so in good faith believing it was an entirely private matter, it was not taxpayers money we were being given and it was entirely analogous to the great majority of MP’s who keep all the profit from second home property sales regardless of what percentage of that property was funded via ACA money.
2. In questions 85–105 Chris Mullins asks me about the analogy between using ACA money to rent and to pay the interest on acquiring a private property. At Q102 he also notes that Sir Alan Beith had believed in 2005 that there was an ethical issue about accepting the much larger of the two compensation sums he was offered (as a result of having rented at Dolphin Square for over 30 years) whereas I and more than a dozen or others did not. On reading Sir Alan’s evidence I note that he also told the Commissioner that he believed there was an ethical issue in deliberately using ACA to help buy a property! Saying: a) “He had always been opposed to the system under which the House paid mortgage interest, which was why he had relied on rented accommodation for the whole of his 36 years in Parliament. If I had wished to make a personal profit, I would obviously have been able to do so if I had used the mortgage system over a very long period of rising prices” [Page 39] and that “the latter [using ACA to pay mortgage interest], could be recognised as a capital gain arising from public funds” [Page43]. b) Had Sir Alan accepted his £48,030 windfall compensation then his ACA funded rent at Dolphin Square would have risen from £14,441 per year to £22,880 per year [Page 41].
By comparison my acceptance of £9,490 compensation (after tax), resulted in my rent falling from £14,198 per year to £12,000 for 6 months and then to £12,996 for a further 12months. Only two and a half years later did my rent increase to a level above what I would have been paying had I stayed in my original flat and the following year (2009-2010) it was frozen with no increase at all.
The point all this makes is that MP’s over some decades have taken very different personal decisions about using ACA to rent (a minority) or to buy/help buy (a majority), and in 2005/6 about accepting or not the entirely unexpected and unplanned windfall compensation from a new landlord at Dolphin Square. All in these specified instances acted in good faith based upon the rules of the Green Book and their individual circumstances. A different rule should not be applied retrospectively and certainly not to one minority group but not to a much larger majority.
Supplementary evidence from Richard Younger-Ross MP to the Chairman of the Committee, 12 March 2010
Re. Dolphin Square self referral.
Sandra Gidley and I were approached by [a Member] on Monday night regarding our self referral. He told us that he had accepted the payment having approached the Fees Office
208 John Barrett, Sir Alan Beith, Sir Menzies Campbell, Sandra Gidley, Paul Holmes and Richard Younger-Ross
and having been advised that he could accept the offer. I believe he has now written to you on this matter.
[The Member] is not the MP Joan Humble refers to when she told us that she knew another Labour Member who been advised that they could accept the offer. So [the Member’s] evidence now makes three MPs who were advised they could keep the money to two who were told they could not. Timing is vital on this for the advice against was only issued to the two MPs days before the deadline to accept the offer long after most of us had come to a decision
[The Member] also told us that the advice was given by [an official]. This is the same officer I believe Ms Humble’s friend had advice from, is the same one I generally always spoke to and would have been the person I would have spoken to and as I said I can not recall either way whether I did or did not.
I am told that [the official] suddenly left the employ of the department a few weeks ago.
Can I ask if [the official] has been interviewed as it appears he may be able to throw some light on why members believed that the advice was to allow them to keep the payment for giving up the rights on their lease. If he was not interviewed can I ask that you consider doing so.
Supplementary evidence from Ms Sandra Gidley MP to the Clerk of the Committee, 15 March 2010
I apologise for the last minute nature of this e mail but I have had IT problems in linking remotely to the parliamentary system.
Last week [a Member] approached Mr Younger-Ross and I and made some cryptic comments about Dolphin Square. I mentioned to him that I did not realise he had lived there and asked whether he had taken the money. He confirmed that he had done so and I then said, “So you didn’t speak to the Fees Office about it then?”
His response to this was something along the lines of “Aye, I did. I was told it was a private matter between myself and the landlord.”
I then asked him specifically whether he had received anything from the Fees Office in writing and he told me that he had not received a letter on the subject.
He was also able to recall the name of the staff member he spoke to—which was [an official].
I later asked Joan Humble if [the Member] was the other Member she was aware of who had spoken to the Fees office and been given this advice. She said that it was not. Thus, it would appear that at least three Members were given conflicting advice to that which has been supplied to the Commissioner for Standards.
I am aware that [the Member] has written to the committee on the matter.
I make no further comment but believe the committee should be aware of these facts.
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Committee on Standards and Privileges: Evidence Ev 1 Oral evidence
Taken before the Committee on Standards and Privileges on Tuesday 2 March 2010
Members present Sir Malcolm Rifkind, in the Chair
Mr Kevin Barron Hon Nicholas Soames Nick Harvey Paddy Tipping Mr Greg Knight Dr Alan Whitehead Mr Chris Mullin
Witness: Rt Hon Sir Menzies Campbell, CBE QC MP, gave evidence.
Q1 Chairman: Thank you very much, Sir Menzies. Q2 Chairman: I think I can give you that assurance Welcome to the Committee. As you know, the on behalf of the Committee right away. Each Commissioner has concluded his report which he Member will be considered entirely on his or her has submitted to the Committee. You, and indeed a own merits. number of your colleagues, have asked for the Sir Menzies Campbell: I am obliged, and that is why opportunity to give evidence to the Committee, I anticipated I would not need to persuade you very which we are very happy to agree to. I propose to much of it. May I just make one further point? It invite you to make any opening remarks that you may well be that in the proper exercise of that would wish, and then once you have made any responsibility the Committee feel it necessary to opening statement I will invite my colleagues to ask discriminate as between one member of the group any questions of you that they feel appropriate. and another. If the Committee’s logic and reasoning Sir Menzies Campbell: Very good; I am obliged. Can leads towards that then, of course, that would be the I begin by saying I understand it is unusual in these right thing to do. The second point I would like to circumstances for Members of the House to seek to make, if I may, is that an adverse finding against any give evidence before the Committee. I have chosen to Member may well have severe reputational exercise that right in the same way as I chose to have consequences and possibly in some cases severe a formal interview with the Commissioner because it financial consequences. These consequences are may well be that in the proper determination of this perhaps rather more urgent and acute in the period matter questions of good faith and credibility will immediately prior to the run-up to a general arise and I thought it only right, both for the election. May I also say that there may be Commissioner and for the Committee, that the reputational consequences not just for those who are opportunity should be given by me to allow what I formally before the Committee but others who may have to say about these matters to be heard at first be thought to be in the same position as those who hand and not in writing. I submitted a letter on 24 are before the Committee. That is why, although this February of this year setting out a number of issues is not a legal proceeding or anything approaching it, which I wish to seek to draw to the attention of the nonetheless it is a proceeding which requires the Committee, and, of course, I do so, as it says in that exercise of judgment. This Committee is sitting in letter, on the footing that, with all due deference to judgment. That is why I would respectfully suggest the Commissioner, I am unable to accept his that a standard akin to “beyond reasonable doubt” reasoning and his conclusions so far as they infer a would be appropriate before any adverse finding failure on my part, and I would in general invite the were to be made. The third point I would like to Committee to accept the explanations put forward make is that, with respect, it seems to me that the by me and recorded by the Commissioner in his appropriate way to proceed is to apply the standards report. The particular issues that I wish to deal with at the time of the actions which are the subject of this morning are set out in that letter and I think I inquiry and not retrospectively the standards of can deal fairly quickly with items 1, 2 and 3. May I today, and I say that in the light of the, shall we say, say that I am well aware of the strictures against rather diVerent atmosphere which has prevailed in making an extended opening statement repeating relation to these matters over the last 12 to 15 matters which are already dealt with in the report. I months. I would just briefly, if I may, at this point shall do my best to avoid that. The present reference invite the Committee, as I am sure it has already, to to the Committee might appear to have the have regard to the terms of paragraph 307 of the appearance of a group reference but, Commissioner’s report, which I suspect is a notwithstanding that, and I would not have thought paragraph that Sir Alan Beith may return to. You that I would need to persuade the Committee very will find it at page 92. If you look at paragraph 307, much about this, it respectfully seems to me that the this is the department in exchanges with the position of any Member must be considered Commissioner: “The Department confirms that the individually and against the material which is guidance was not published to Members, and relevant to that Member and that Member alone. concurs with Sir Alan’s ‘fair observation that Processed: 16-03-2010 10:54:43 Page Layout: COENEW [E] PPSysB Job: 002206 Unit: PAG1
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Members might well have considered the capital gain landlord. I asked for confirmation that the made on a property purchase funded in part through arrangement had nothing to do with the Fees OYce the ACA analogous to that of the tenancy and my claims under the Additional Costs compensation.’” That, it seems to me, provides some Allowance. Again I was told that it was an entirely help in determining the attitudes of the time at which private matter and the analogy was used with MPs decisions were made rather than the time at which who moved to other flats or sold homes, made a these matters are under review. It is also relevant to profit on the sale, and bought new properties using my fourth point in which I argue, with due deference, the allowances available. I then acted based upon that the Commissioner is incorrect when he rejects that clear advice from the Fees OYce.” Thereafter the proposition that the payment in question in my the Commissioner wrote to Mrs Humble setting out case was analogous to a capital gain made on a the procedure, and there is a further letter across the property purchased in part through the Additional page, item 33, in which Mrs Humble writes: “Thank Costs Allowance. I respectfully suggest the proper you for your letter of 7 September . . . ”, and then approach to this matter is to consider the outcome, again, trying to read short, “I note that [the Director not the mechanism, which is the same in principle in of Operations] acknowledges, given the passage of each instance. In that regard again, I ask the time since my conversation with a member of his Committee to look at page 100 of the report, about staV, that ‘it is, of course, diYcult to be certain of the halfway down the page, and I will give the paragraph precise exchange at that time’. Hardworking oYcials reference for the notes. It is paragraph 330 ii, . . . ” and so on, and she then goes on to say, “ . . . but halfway down page 100, and the Commissioner for me this conversation was unique and the detail records: “I consider that all the Members should important in helping me reach a decision. I was told have recognised that the oVers were a potential very clearly that my dealings with my new landlord benefit which had become available to them only were entirely my own private concern. As [the because of the payments of their rents from public Director] himself states ‘this matter is arguably not funds. The benefit, however small or large, and one for a scheme of allowance rules.’ At no time did I whatever the cause, should, if accepted by the receive any other advice on the rules, their Member, have been made over to the public purse.” interpretation or guidance of a more general That I understand to be the centrepiece of the nature.” She goes on to say, “I do wonder how the Commissioner’s reasoning. I cannot see any written guidance referred to in [the Director’s] letter distinction in principle between that and a benefit sits with the long-standing practice of Members of which would accrue as a result of the realisation of a Parliament claiming mortgage interest payments property for which mortgage interest had been paid from the Additional Costs Allowance, then selling from public funds, and I would invite the Committee these properties and keeping all the profits from the to reach that conclusion. May I turn to item 5 and sale.” On page 31, in correspondence item 38, about say that there is no reason to doubt the credibility of halfway down that page, the Director, in the course Mrs Humble’s evidence, which was volunteered by of his exchanges with the Commissioner, writes: “I her, and that I think is the important matter because, acknowledge Mrs Humble’s letter of 18 September of course, by volunteering this evidence she and her points are very fair.”, so it is not just Mrs indirectly brought the scrutiny of the Commissioner Humble’s view but that view appears to be, to the upon herself. She had no need to do that, and by extent that sentence indicates, endorsed by the acting in that way the Committee may think that any Director. Can I move on to item 6 on my list, in evidence that she oVers can be regarded as credible which I say that there is no reason to assume that the and reliable, and indeed she was advised, as the advice, which was framed and not publicised, Commissioner records, that her evidence would be necessarily covered succession rights. The published, so this was not a question of her, as it Commissioner himself accepts the distinction were, coming under the radar. By volunteering and between compensation for giving up a tenancy and by writing in the terms that she did she was legal rights, and the Committee will find that at page essentially putting herself into the public domain. 99, paragraph 330 ii. At the bottom of the page the Might I ask the Committee to look at page 28 of Commissioner writes: “I recognise the distinction Sir the index? Menzies Campbell has drawn between the principal cash, which in his view was compensation for a right Q3 Chairman: When you say “the index”, you mean which did not exist at law, and the succession the annex”? payment which, he has argued, was for the discharge Sir Menzies Campbell: Yes, the annex, page 28, and of a legal right. I recognise, too, his view, and that of it is document 30. The Committee will see, trying to Sir Alan Beith, that the succession right was a read short, that the first paragraph records that she personal legal right in respect of the relationship has had a conversation with Sandra Gidley and between a tenant and landlord which would introduces her purpose in writing, and she goes on to continue even if public funds no longer supported say: “I explained to Sandra that I had sought advice the rental payments.” We do not know if the Fees from the Fees OYce about the oVer made by the new OYce would have regarded succession rights in the owners to all the existing tenants of Dolphin Square. same light, and what, of course, is interesting—and I I was told in a telephone conversation that any have not been able to find anywhere in the exchanges renegotiation of my lease, including the oVer of a between the Commissioner and the Fees OYce and buy out from my previous tenancy agreement, was they have oVered no opinion on that to date—is that an entirely private matter between me and the new nor, I think I am correct in saying, has the Processed: 16-03-2010 10:54:43 Page Layout: COENEW [O] PPSysB Job: 002206 Unit: PAG1
Committee on Standards and Privileges: Evidence Ev 3
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Commissioner invited them to say whether or not as the Commissioner has fairly recorded, I was they would have treated the succession rights in the oVered £38,000 to give up my tenancy. I could have same way as what I might call, for ease of reference, done that and I could have taken that money and the mortgage payment principle. I can deal with 7 purchased a flat and put down a deposit and then and 9 together. In that regard the Commissioner claimed mortgage interest on that flat. I could have appears to have said that I used the money that I stayed where I was, taken the £38,000 and paid a received for items which could not be claimed from market rent but not protected rent, as I still continue the parliamentary allowances, and I think that is to to pay, and indeed I could have taken the money and be found at paragraph 321, where he says on page moved to another, shall we say, more salubrious 96: “the money was used either for items which could address than Dolphin Square and, again, increased otherwise have been claimed from parliamentary the charge to public funds. Looking to all of those allowances (as argued by Sir Alan Beith), or for that factors which I have put before the Committee this purpose and to meet other costs incurred as a result morning and to the contents of my discussions with of being an MP but which could not be claimed from the Commissioner as recorded in his report, it the allowances. (This argument was put to me by Mr respectfully seems to me that an adverse finding in Barrett, Sir Menzies Campbell, Mr Holmes and Mr my case would not be justified. One last point if I Younger-Ross.)” If one looks back to the recording may: I understand that it would be a serious matter of my exchanges with the Commissioner at were the Committee not to accept the paragraph 186, page 59, you will see there: “Sir recommendation of the Commissioner, that is Menzies denied that he had used some of the £5,000 perfectly understood, but I hope I can legitimately to defray some of the costs of the oYce of Leader of say to the Committee that, of course, the Committee the Liberal Democrats . . . ”, and he then goes on to makes the judgment. If you will forgive the parallel say that I gave information about the position of the if there is anything in the parallel that is slighting, Leader of the Liberal Democrats and I did not use planning oYcers make recommendations; planning the money to pay for the Liberal Democrat committees make decisions. In our case the leadership, but I had greater parliamentary expenses Commissioner makes recommendations but it is for as a result of being in that position. “He did not the Committee to exercise the judgment vested in it personally profit from the £5,000. It was legitimately in the decisions which it makes. If there are any other spent on things he could have claimed.” It seems to questions I will do my best to answer them. me that is at odds with the Commissioner’s finding at paragraph 321. Perhaps I could just say in respect Q4 Chairman: Thank you very much indeed; that is of that that the sort of thing that I am talking about very helpful indeed. Can I open up with a couple of is home phones, both in my home in Edinburgh and questions, if I may? You mentioned the Joan my constituency cottage, for which I never made any Humble correspondence. Could you inform the claim. I never made any claim in respect of the use of Committee whether you personally were aware of my study for parliamentary work, which some Joan Humble’s experience at the time you took the colleagues claimed and which they were allowed. I decision you did? never made any claim for petty cash, for television Sir Menzies Campbell: Not at all. The Humble licensing except, I think, on one occasion, in the four correspondence came new to me when the years for which information was then available, for Commissioner— things like window cleaning, not for taxis, not for cable television or anything of that kind. I regarded Q5 Chairman: So you were not in any way influenced these as part of the rub of the green and did not make by it in the decision you yourself took? claims, although at that time such claims would have Sir Menzies Campbell: Not at all, no. been allowable. I just briefly draw the Committee’s attention to the table at page 54 of the report, the top Q6 Chairman: You have indicated, as have other of the page. I set out from a table that was available Members, the fact that the advice of the Fees OYce on www.theyworkforyou.com the claims which I was not made available to Members, and that indeed made for ACA during the years 2001-02 to 2007-08. is not a matter at issue. Can you explain why, In relation to the last of these years I did claim 98 per knowing that you were going to receive a significant cent of the maximum, which meant that was work sum of money, you did not seek advice from the Fees done with the authority of the Fees OYce, but in the OYce, because generally speaking Members are other years it will be clearly seen that I was well down encouraged to ask the Fees OYce in circumstances the league table, as it were, on some occasions that might have some financial implications whether claiming as little as 50 per cent or 61 per cent of the the action they are proposing to take is consistent total available. Can I conclude simply by inviting the with what the Fees OYce would recommend? Committee to consider what I say at paragraph 8? Sir Menzies Campbell: Let us go back to the question The Committee’s task, it respectfully seems to me, of good faith and credibility. When these two oVers and I hope you will not think it presumptuous of me eVectively were made I gave careful consideration to to oVer this observation, is to determine whether the them both and I rejected the first for the reasons I conduct was in all the circumstances reasonable at have indicated. I then took the view, which appears the time when the decisions were made. It seems to to be recognised, that there was a distinction me that a particular factor in that must be whether, between a payment which was eVectively to give up as a result of that conduct, any additional or a tenancy, and a payment which was in respect of an unnecessary charge was made to public funds, and, existing legal right, and that that legal right arose, as Processed: 16-03-2010 10:54:43 Page Layout: COENEW [E] PPSysB Job: 002206 Unit: PAG1
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2 March 2010 Rt Hon Sir Menzies Campbell
I have said in evidence to the Commissioner, out of Q12 Chairman: Noting the distinction that you are the relationship between tenant and landlord. It is a making, did you at any stage consider whether, legal right which arose as soon as I signed the because the fact that this payment would not have tenancy.It is a legal right which, if I had not exercised been made but for the fact of your tenancy and that the option to take it, would still continue today and the rental payments were entirely met from the it is a legal right which, supposing, for example, I public purse, it might have been appropriate at least had lost my seat in 2005 and kept my flat, would to share the proceeds of that payment with the public have subsisted after that point, and I therefore took benefiting as well as yourself in regard to the sums the view, for the reasons I have set out, that it was of accepted? a diVerent and distinct nature from anything which Sir Menzies Campbell: No, I did not, but, of course, arose in relation to what was a bribe—“bribe” is not until Sir Thomas Legg’s report there has been no the right word, but what was an inducement and was suggestion that where a capital gain has been made for me giving up something. I was giving up in relation to the purchase of property there should something which had value in return for a value. be a sharing. Again, were I being asked to make that decision today, then obviously one would take into account these changes in circumstances. Q7 Chairman: I think we understand the reasons that influenced your decision at that time, but what I am curious about is, with hindsight,— Q13 Chairman: One final question, if I may. We Sir Menzies Campbell: Ah, well. know, obviously, that most, if not all, of the rental payments were made from the public purse, but the tenancies, as we understand it from the evidence that Q8 Chairman:— do you consider it might have been has been given, not just by yourself but by other preferable for you to seek advice, even if you were Members as well, included other obligations, clear in your own mind, nevertheless, to protect your including financial obligations, that the tenants own position, that that might have been helpful? themselves had to pay. Sir Menzies Campbell: With hindsight? Sir Menzies Campbell: Yes, indeed, at the waygoing, for example. Q9 Chairman: Yes. Sir Menzies Campbell: But let us remember, which is Q14 Chairman: Can you inform us, in regard to your why I laid such stress on this point at the beginning, own lease, what were the other actual or potential that in 2005-06 attitudes towards these matters were financial obligations against which you could not rather diVerent. If I may say so, with hindsight, if I claim from the public purse? were coming into the House of Commons today I Sir Menzies Campbell: There was a duty—there is a would have no interest in property. I would not even duty; it still exists because I am still a tenant—to rent property; I would stay in hotels, because the render the property in the condition in which it was complications which have arisen and the originally let, and the judgment of that rests with the embarrassments which have been caused as a result landlord, so that is an obligation which in due course of the arrangements which the House has previously I will have to fulfil. had in place, frankly, are not worth the candle. The dislocation of having to move to a diVerent hotel Q15 Chairman: Do you have any estimate of the every week would seem to me to be as nothing likely cost that that might involve, very compared to the potential embarrassment which has approximately, obviously, because it can only be flowed from the previous arrangements. approximate? It will be decorating costs, presumably. Sir Menzies Campbell: It would require to be Q10 Chairman: Thank you. I have two other decorated and my recollection is that the flat was not questions and then I would like my other colleagues carpeted, but if I could just go back to the to ask any questions they wish. You have explained expenditure which I incurred and which was the reasons why you felt it was reasonable for you to authorised by the Fees OYce, I would anticipate that accept what is called the windfall in regard to— at the waygoing there might be an expense of £1,000, Sir Menzies Campbell: With respect, it seems to me round figures. I am afraid I am plucking that out of that this could not be regarded as a windfall. A the air, but the principle to which you refer, windfall is an unexpected benefit. This was not a Chairman, is absolutely right. windfall. Q16 Chairman: And am I correct that for the Q11 Chairman: Had you expected it? dissolution period you would not be entitled to Sir Menzies Campbell: I was aware of it; I knew it claim? existed, so it was not unexpected in the sense that it Sir Menzies Campbell: I am not entitled to claim. was something that came out of a clear blue sky, and therefore where language is used to suggest that the Q17 Chairman: In the whole period of your tenancy, “give up your tenancy” arrangement (not very however many dissolution periods there were? elegantly put) was a windfall, I would agree with Sir Menzies Campbell: Well, no. My recollection is that, but I do not think the same description can be that to begin with, and I see some nodding around applied to the formal discharge of an existing legal the table, during dissolution we were entitled to right. claim, but I think in the 2001 election, certainly by Processed: 16-03-2010 10:54:43 Page Layout: COENEW [O] PPSysB Job: 002206 Unit: PAG1
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2005 and I think 2001, it was made clear that we made over to the public purse”, and it respectfully could not. That, if I may say so, just goes to my point seems to me that that paragraph is as relevant to a about other obligations arising out of landlord/ purchase of property, using the support for tenant irrespective of the source of funds. mortgage interest, as it is to the circumstances in which I find myself. Q18 Hon Nicholas Soames: Sir Menzies, may I ask you did you seek the advice of a solicitor on this Q22 Chris Mullin: You are saying taking into matter in London? account not all of the profit, as it were, but taking Sir Menzies Campbell: There were arrangements into account the facts that the Commissioner has made through a firm of solicitors that advice could mentioned, that he may have paid some of the be sought, and I think that the Commissioner has capital? recorded that in the report, but they say a lawyer Sir Menzies Campbell: In my respectful submission should never represent himself; otherwise he would that is neither here nor there. It is the outcome. If you have a fool for a client. Because I understood the law start at one end, on the Commissioner’s analysis, not then I did not think it necessary to take independent mine, the Commissioner says they were public funds, legal advice. We were told that we could do that, there was a private benefit; therefore, that private although we would have had to pay for it, but the benefit should have been returned. If that is the general advice that was given to me by the solicitors principle how is that principle diVerent in relation to who were acting for the company which had a property purchase with mortgage interest? I do not acquired the property seemed to me entirely want to start a hare but I imagine most Members consistent with my own view, so I did not seek around the table have a substantial number of air external legal advice. miles, particularly if they are on select committees. I have several hundred thousand air miles as a result, Q19 Chris Mullin: Sir Menzies, you appear to be though not all, of House of Commons travel but also arguing diVerent things at diVerent points in your of private travel. I never use them for holidays or letter here, firstly and rightly that you should all be anything of that kind. That is public funds at one considered separately on your own circumstances, end for private benefit at the other. Should that be but, secondly, that, given the standards that struck down? prevailed at the time, everybody in this position— and I do not just mean that as regards succession Q23 Chris Mullin: You have opened an interesting rights—ought to be given the benefit of the doubt. new front there, Sir Menzies, but, if you will forgive Sir Menzies Campbell: I do not argue that, Mr me, we will not go down that road just now. Mullin. That is a matter for each individual. I am Sir Menzies Campbell: No. I am not trying to argue here, which perhaps sounds a little selfish, in my own that that somehow assists my position. All I am interests, and it is for others to make the case in trying to argue is that if you are looking for respect of themselves. That is why I wanted to come consistency, which I think one is entitled to look for and give evidence myself and why I raised the in these matters, then that is another illustration of question of good faith and credibility at the outset of where, if you applied the principle of public funds at my evidence. one end, private benefit at the other, you would most certainly want to do something about that. Q20 Chris Mullin: On this point about your position being in some way analogous to all those who had Q24 Chris Mullin: Just going to point 7 in your letter, sold property and pocketed the capital gain, did you you say that the Commissioner wrongly asserts that see that the Commissioner addressed that point on you used the money for items that could not be pages 101 and 102? Would you like to turn to that? claimed from the parliamentary allowances, but Sir Menzies Campbell: I rather thought I had dealt somewhere in here, paragraph 186, you are quoted with that point under my item 4, where I say that I do as saying, “It can be hard to see where the line is not accept --- under 101 and 102, was it, Mr Mullin? drawn”, ie, between things that could be claimed and things that could not. You are agreeing with the Q21 Chris Mullin: Yes, that is right. Commissioner there, are you not? Sir Menzies Campbell: I appreciate that the Sir Menzies Campbell: No, I am not, if you look at Commissioner does not believe that the analogy is the context in which I say that, Mr Mullin, if I might suYciently close and he seeks to draw a distinction invite you. Paragraph 186? between a property in which the purchaser has a capital interest and a property which is rented in Q25 Chris Mullin: Yes, that is right, it is. You are which the landlord has a capital interest, but that is quoted in the last sentence or two. why I said that one should look at the outcome and Sir Menzies Campbell: “Some expenses are 50:50 that why I referred the Committee to that sentence parliamentary/party political. The distinction is not in the Commissioner’s report back at page 100: “I always clearly drawn. For example, the consider that all the Members should have Communications Expenditure. We are preparing an recognised that the oVers were a potential benefit Annual Report in my oYce just now. It can be hard which had become available to them only because of to see where the line is drawn.” It was in that context, the payments of their rents from public funds. The and the Commissioner allowed me to add a footnote benefit, however small or large, and whatever the to my evidence—I notice he is nodding his head— cause, should, if accepted by the Member, have been which is not recorded here, but I think it is recorded Processed: 16-03-2010 10:54:43 Page Layout: COENEW [E] PPSysB Job: 002206 Unit: PAG1
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2 March 2010 Rt Hon Sir Menzies Campbell later in the body of the report to the eVect that, of no additional salary. In fact, chairmen of select course, it is for the Fees OYce to determine. As committees on the Liberal Democrat benches earned everyone knows, you have to submit a draft report more than the Leader of the Liberal Democrats. to the Fees OYce which determines what is Some say that is a proper reflection of allowable and what is not, but that sentence should responsibilities. be seen in my submission in the context of the remainder of the paragraph, and I was at that point talking about communications expenditure. Q35 Mr Barron: When you became knowledgeable about the Fees OYce, as we then called it, its Q26 Chris Mullin: But I do not think you do dispute position, in relation to Dolphin Square, obviously, that some of the things that you spent the money on you took the decision not to take the windfall, could not be claimed on the allowances, do you? eVectively. Sir Menzies Campbell: I most certainly do. Sir Menzies Campbell: Yes.
Q27 Chris Mullin: You do dispute it? Q36 Mr Barron: What did you think about their Sir Menzies Campbell: Yes, I do. I did not claim advice? anything which I— Sir Menzies Campbell: The first question I asked myself was why was it not promulgated. I only Q28 Chris Mullin: Oh, no, I am not suggesting that. became aware of this advice when the Commissioner You did not use the succession— began his inquiry last June, I think I am correct in Sir Menzies Campbell: We are at cross purposes. I saying, so again I was looking back with the benefit did not use this money to reimburse myself for things of hindsight. My first question, indeed, I say so, I which I could not have claimed from my think, in a letter I wrote to the Commissioner, was parliamentary allowances. that if this was thought to be significant then why was the information not passed round? I also Q29 Chris Mullin: That is your decision? immediately asked myself is not the position (which Sir Menzies Campbell: That is my decision. is now under review) analogous to the position of those who use the mortgage interest support in order Q30 Chris Mullin: Yes, okay. to purchase a property? Sir Menzies Campbell: And I went, I think, to some lengths to try and elucidate that a moment or two ago. Q37 Mr Barron: We have had that debate about equity and that is in the report. The advice says that Q31 Chris Mullin: You mentioned home phones, use if a Member does want to accept the cash oVer and of a study. pay it over to the House or set it against future rental Sir Menzies Campbell: Petty cash. payments in the current financial year this can be arranged. What was your rent for the property at the Q32 Chris Mullin: TV licensing and taxis. time? I know you did not accept this oVer of £38,000, Sir Menzies Campbell: Window cleaning, taxis, but what was your rent? television. Sir Menzies Campbell: It is recorded. It is about £700 per annum.1 Q33 Chris Mullin: Use of a study I would have thought was disputable. Q38 Mr Barron: So what would have happened to Sir Menzies Campbell: Well, there are Members the rest of it within the year that was not oVset who— against rent? Sir Menzies Campbell: If I had received the advice Q34 Chris Mullin: I am sure there are, but again and had acted on the advice, I would have paid you are— £5,000 and would have claimed £700, which is a net Sir Menzies Campbell: There are Members who diVerence of £4,300. claim. I merely am pointing to the fact that these were costs which I incurred which could have been claimed under other heads of expenditure, but I just Q39 Mr Barron: What I am saying is you were make clear the point about leadership. I did not use oVered £38,000 for the windfall which you rejected. this money to defray any of the costs of leadership, Sir Menzies Campbell: I did. but, of course, in addition to the costs of leadership one’s parliamentary expenses are higher if you are the leader of a party, for all the obvious reasons. Q40 Mr Barron: This advice suggests to me that if More people ring you at the weekend. You are you had taken it you could have handed it back to expected to reply. You cannot always go back to the House or you could have paid your rent for a your constituency every weekend so you have to ring year. your organiser or your constituency assistant. There is an increase in the volume of parliamentary 1 Note by witness: I regret that I inadvertently suggested that my rent was approximately £700 per annum when it was in expenses inevitably if you are the leader of a political fact about £700 per month. My error aVects the remainder party. It is not a cri de coeur but, as matters stood of my answers to Mr Barron’s questions on the point but the then, the Leader of the Liberal Democrats received matter was cleared up by the Chairman at Question 42. Processed: 16-03-2010 10:54:43 Page Layout: COENEW [O] PPSysB Job: 002206 Unit: PAG1
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Sir Menzies Campbell: Or more than a year, because Q43 Chairman: Are there any other questions? No? my rent was £700 and the amount was £5,000. Is the Thank you very much indeed. Are there any final implication of your question that— points you want to make? Sir Menzies Campbell: I do not want to labour the point but the test is, was my behaviour reasonable at Q41 Mr Barron: I want to know how you interpret the time and not with the benefit of hindsight? the advice. Sir Menzies Campbell: I am doing it with the benefit Q44 Chairman: Thank you very much indeed. We of hindsight. I understand that what was being said will fully take into account the points that you have there was that you could either keep the money and made today, and, of course, in your evidence. it would be set against any subsequent claims which Sir Menzies Campbell: In view of what I said a little you made, including rent, or alternatively you could earlier about the proximity to an election, is the pay a cheque to the House of Commons authorities Committee in the position to give any indication as and continue to make claims which would have been to when it might be in a position to issue the met in full. decision? Chairman: I cannot give you an absolute assurance Q42 Chairman: In any event, either way this was not but I think it is highly likely that we will want to relevant to your circumstances because you did not reach a conclusion in these particular cases within accept the funds in the first place. the next few weeks, certainly before a dissolution. Sir Menzies Campbell: No, it was not. Thank you very much indeed.
Witness: Rt Hon Sir Alan Beith MP, gave evidence.
Q45 Chairman: Good morning. Thank you very same action in the same circumstances. The second much for joining us. As you are aware, the general point is that since the time when evidence Commissioner has concluded his deliberations and was being taken the Chairman of the independent has presented his report to the Committee. You have Parliamentary Standards Authority has given exercised your right to appear before the Committee indications that a decision may be taken to recover and therefore I would encourage you to do so now capital gains from Members who had mortgage and to give any opening statement you might wish to interest paid from allowances, but that such recovery make and then the Committee will be invited to ask might be limited to gains after a fixed date, probably any questions to you. November 2009, as recommended by the Kelly Sir Alan Beith: Thank you very much, Sir Malcolm. Committee. Although, as Mr Lyon points out, there I am grateful for the opportunity to put to the are some diVerences between mortgage interest cases Committee some points arising from Mr Lyon’s and tenancy cases, there is also a key common factor. report, including one matter which has been aVected In Mr Lyon’s words, it was the payments from by developments since the evidence was taken and parliamentary resources, sometimes over many one point in his conclusions in which a factual error years, which put each Member in the position of has arisen on which I have not previously had the gaining a sum of money. He was referring there to a opportunity to comment because it was in the lease but exactly the same applies to a property. Any conclusions. The facts at the heart of my own case, decision by the Committee to impose a penalty in which I referred to the Commissioner, are that I these cases would have implications for the further refused the payment of £48,030 to give up my consideration of the mortgage issue, and I think that tenancy at Dolphin Square, the result of accepting if completely diVerent principles were applied which would have been a large increase in the rent, injustice would arise. I turn now to my own case partly charged to the allowance. Instead I accepted which I referred to the Commissioner. I want to a £5,000 payment to give up family succession rights make it clear, and I think it is clear from the facts, which had no eVect on the rent so that I could use that I acted entirely with the intention of putting the that to meet decorating costs required by the lease public interest ahead of my personal interest and in which could otherwise have been claimed from pursuit of the injunction in paragraph 3.3.1 of the allowances at the time. I will return to the details of Green Book that I should obtain value for money my own case but I want first to refer to two general from accommodation, goods or services funded issues which arise from Mr Lyon’s report as a whole from the allowances. If I had wanted to make a and are not related only to my case. The first is a personal profit I would have accepted the £48,000 point that is made by Mr Lyon in paragraph 323 in oVer to give up the low market rent tenancy and by which he says that his findings from this inquiry refusing to do so I have achieved a saving of well would have significant implications for any who over f35,000 in rental costs which would otherwise accepted oVers from the new landlords, and there have arisen. Actually, if I had wanted to make a were quite a number who did. I think it would be personal profit I should have taken out a mortgage contrary to natural justice for the Committee to early in my 36-year parliamentary career as I would reach conclusions relating to those Members who be sitting on a profit probably of several hundred referred their own cases unless it was clear that any thousand pounds, but I actually made a deliberate rulings would apply to all Members who took the decision that I did not think that was the appropriate Processed: 16-03-2010 10:54:43 Page Layout: COENEW [E] PPSysB Job: 002206 Unit: PAG1
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2 March 2010 Rt Hon Sir Alan Beith MP course for me. The separate oVer of £5,000 was for Lyon also mentions dissolutions during which the disposing of family rights. It had no eVect on the rent is not met from allowances. This may seem a tenancy, there was no public interest in it, and it small point but there have actually been seven provided a small sum of money which I could set general elections while I have been a tenant at aside for the regular redecoration which the lease Dolphin Square, which adds up to over half a year’s requires. Since this cost could also at the time have rent. I believe that I made a reasonable judgment been claimed, there was a further potential saving to which I based on the rules as they were at the time. I parliamentary funds by this action. Mr Lyon welcome Mr Lyon’s recognition that the decision to concludes that I should have sought advice from the refuse £48,000 was taken “commendably” in the Fees OYce on this matter, and with hindsight I regret public interest and that, in what he refers to as “a not having done so and apologise for this. However, lesser misjudgement”, I had no deliberate intention I did not believe it was covered by Mr Speaker’s of breaking any rule or departing from the code of reference to seeking advice in cases of doubt because conduct. He also makes clear that this misjudgement I had no doubt about it at the time. This was in a would have been avoided if the House had sent context when the Fees OYce was known to take no guidance to all Members who were tenants at interest in securing repayment of capital gains made Dolphin Square, although the advice it had drafted on mortgages paid for by allowances. In your did not actually cover cases such as mine where the evidence you will find that the Director of tenancy was not given up. I submit that, as Mr Lyon Operations concurred with what he called my “fair accepts in his final paragraph, it was a matter of observation” that Members might well have judgment on which I may have been mistaken, not considered the situation to be analogous to that of a breach of the rules of the House or of the code of capital gains on mortgages. And if I had sought conduct, as he suggests in two other paragraphs, so advice there is no certainty at all as to what that I hope that in its conclusions the Committee will advice would have been, as Mrs Humble’s evidence recognise that I have tried carefully to keep to both shows. I could well have been advised, as she was, the letter and the spirit of the rules and that any that it was a private matter. Of course, since then the misjudgement I made was unintended, did not place Legg inquiry has concluded that Fees OYce advice my private interest ahead of the public interest and is not definitive anyway, and Mr Speaker Martin’s kept down the cost to public funds of my London introduction to the Green Book says that Members accommodation. I am sorry to have spoken at length themselves are responsible for ensuring that their use but I did not get the Clerk’s letter telling me that I of allowances is above reproach. That is what I should not make a lengthy statement at the sought to do and honestly believed that I had done. beginning. Mr Lyon further concludes that it would have been more transparent to have paid the £5,000 to the Q46 Chairman: No, that is very helpful indeed, House and then to have claimed the money for thank you very much. We now will have an redecoration from allowances. With hindsight I opportunity for questions to you, if we may. Could accept that this is so but my motive at the time was I begin by referring you to the evidence referred to in to reduce the costs, which I achieved, and therefore the Commissioner’s report at paragraph 101, and at to keep to the rules set out in the Green Book. The the end of paragraph 101, which is at page 33, you rules and practice of the House in 2005 did not cover are quoted as saying, “ . . . we now know that in at or attach suYcient importance to public least one case where advice was sought, the retention transparency, as we have all had to acknowledge of a much larger Dolphin Square payment and its since. There is an inadvertent factual error in this use to part finance a mortgage was approved by the part of Mr Lyon’s conclusions. He states that the Fees OYce”. Are you able to give us any more arrangements Members made were not suYcient to information about this and why you believe it to be establish an audit trail which could subsequently be the case? checked. In my case that is not so. I have made Sir Alan Beith: No. I was told this by one of my available to Mr Lyon the account for the decorating colleagues who may give evidence about that and it is quite clear how much was spent, what it was particular case. spent on and how much remains available to maintain the cycle of redecorating which the lease Q47 Chairman: Did it refer to himself or what he had requires. I can make the relevant document available heard from elsewhere? if the Committee wants it. I hope that this point will Sir Alan Beith: No, that he had heard from someone be accepted, fully taken into account in the final else. I am not really a good witness on this point conclusions and corrected in the report. The last because there were stories in the press at the time detailed point I have to underline about my own case about someone who took this action but, although I is that my rent has not been wholly met from House am not, as it were, on oath, I cannot substantiate of Commons allowances. My wife has contributed that particular piece of evidence from my own direct amounts from the House of Lords allowances which knowledge. are governed by diVerent rules, and her contributions have been deducted from what I Q48 Chairman: That is perfectly fair; thank you very would otherwise have claimed. We have also much. In your statement a few moments ago you between us not claimed the full amount of the rent referred to many other Members who have been to which we are entitled and that was recognised in tenants of Dolphin Square but who are not before figures agreed in the course of the Legg inquiry. Mr the Committee. 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Committee is only able to consider cases that either time as to what would be considered an appropriate are the subject of a complaint or, as in your own case, response to the opportunity to receive this £5,000. In have been the consequence of self-referral. We have hindsight would you consider that there is any force no competence to go beyond that, but we have also in the argument that, as the sum would not have been encouraged by other Members to treat each been paid but for the tenancy at the rent which was individual case on its own merits rather than draw a being paid from public funds, at least the blanket conclusion. Do you disagree with that? consequences of that could have been shared with Sir Alan Beith: No. I think each case has to be the public even if some of it was attributed to the considered on its merits. It is in the nature of the redecorating objectives that you have mentioned? Committee’s work that it must consider each case on Sir Alan Beith: If that were true I think it would its merits. Were it to reach some general conclusion apply to mortgage interest as well, but also in my applying to several cases or to all cases, it is that case my approach to this—and we did actually general conclusion which I was arguing would have consider this as an ethical issue; we sat down and to be seen to apply even if the Committee could not talked about it, my wife and I, quite extensively,— itself apply it without a subsequent complaint, but I was that it was beneficial to public funds to carry out entirely accept the view that each individual case the redecorating using the sum of money and that must be considered on its merits, and in other cases the sum of money would be used up. At the time I not currently before the Committee there may well thought, if not by the redecoration, there were a be individual circumstances. couple of other things I really needed to be done, like renewing the toilet floor covering, but that there was Q49 Chairman: You have mentioned that the use to no case really for handing over money if the money which you intended to put the £5,000 that you could be used to achieve a saving to public funds. As received was for the redecoration of the flat, which I said earlier, this was in a context in which there was was itself an obligation under the tenancy. Has that no established practice of the Fees OYce receiving redecoration now been completed? sums of money from people who had made gains of Sir Alan Beith: It is not completed. There is another any kind. stage to go and in my evidence just now I said it is clear how much money is still left to allow that Q54 Chairman: In your own case, so far as you are completion. The flat has to be redecorated every aware (perhaps I should know this already from the seven years and I try to do that on a cyclical basis, evidence) if you had not chosen to use the money you not doing the whole flat at the same time. The last received for giving up the secure tenancy to pay for stage involved the kitchen, the bedroom and the the redecoration, did you have unclaimed—do you corridor. It was less time since I had redecorated the have unclaimed—Additional Costs Allowance sitting room, so the next stage will be the sitting entitlement that you could have used for the same room, the bathroom and the toilet. purpose? Sir Alan Beith: Over the period? Q50 Chairman: Are we talking purely about redecoration or does it involve any structural Q55 Chairman: Yes. changes or replacement of furniture or fittings? Sir Alan Beith: Most definitely, yes. Perhaps I should Sir Alan Beith: No, entirely redecoration. explain that very little could be done to the flats because of all this uncertainty, and in the year Q51 Chairman: And, very approximately, what sort immediately following it I used allowances in order of cost do you anticipate this will be? to carry out quite a bit of refurbishment to the Sir Alan Beith: I think the total will exceed the property—essentially in the kitchen, which is all £5,000. The redecoration done so far amounted to recorded and the subject of some discussion—which about £2,800, and I would expect that the next stage the landlord was not going to do because I had been would be round about that sum. unhelpful; I had not given up my tenancy. So, obviously,those who were in this position were going Q52 Chairman: And are you able to say to us that in to have to look after themselves. So there was a year your judgment that is expenditure that you have no in which I could have done it, but the following year choice but to make as a result of the legal obligations I had headroom. At the time I made the decision I as a tenant arising out of the tenancy? also had headroom. At the time I could have chosen Sir Alan Beith: Yes. If I did not do it two possibilities not to take the money and proceeded with the could ensue. One is that I could have the tenancy redecoration but done less refurbishment. taken away for failing to satisfy the terms of the Chairman: Thank you. I have no other questions. lease, bearing in mind I would be losing a favourable My colleagues might. tenancy at below market rates, and the second is, of course, that I would in any event be charged for a Q56 Nick Harvey: Sir Alan, you made the point, complete redecoration at the end of the tenancy if I which is in the Commissioner’s report at paragraph had not kept the flat in very good decorative order. 93, that the sum of money, the £5,000, that you had accepted was not liable to Capital Gains Tax. Then, Q53 Chairman: The final point I would like to ask a few paragraphs later, at paragraph 97, you suggest myself is that you have said in your opening that had you taken the larger sum it could have been statement just a few moments ago that with repaid to the Commons net of Capital Gains Tax. hindsight you regret not having sought advice at the Sir Alan Beith: Yes. Processed: 16-03-2010 10:54:43 Page Layout: COENEW [E] PPSysB Job: 002206 Unit: PAG1
Ev 10 Committee on Standards and Privileges: Evidence
2 March 2010 Rt Hon Sir Alan Beith MP
Q57 Nick Harvey: You say these two things Q61 Chris Mullin: So if the outcome of this hearing confidently, as if you have researched them a little. was (and I am not saying it will be but I am just Can you tell us why it is that one would have putting to you one possible outcome) that you attracted Capital Gains Tax and the other not? should repay succession money minus the Sir Alan Beith: I can, because there was an annual decorating costs and things for which you supplied Capital Gains Tax threshold, if I remember rightly, an audit trail, you would not consider that unfair? of £8,000, at the time, and the payment was of Sir Alan Beith: I would abide by any decision the £5,000. Committee took. There are some complications about the House of Lords contribution that is Q58 Nick Harvey: I see. So it was not that the involved, and the private contributions involved— character of the payment was diVerent; it was simply as indeed there are with mortgage interest, I should a question of the threshold. hasten to add—but I would abide by the decision Sir Alan Beith: Exactly, and I probably did not that the Committee made. Clearly, it is obvious from express that that clearly. what I am saying, and my demeanour, that I felt at the time that I acted correctly and with integrity, so Q59 Hon Nicholas Soames: Sir Alan, can I ask you it would always be painful to have to take a course the same question I asked Sir Menzies Campbell: of action which appears to deny that that was the given that this was a complicated and unusual case, but I am in the Committee’s hands now and I transaction, did you consider consulting your own will take whatever action the Committee requires me solicitors for legal advice? to take. Sir Alan Beith: We had the benefit of legal advice, Chris Mullin: Thank you. which I supplied to the Commissioner, from a firm of solicitors acting on behalf of tenants. It was, as you Q62 Dr Whitehead: When you set aside the £5,000 say, an extremely complicated situation but we were for your redecorating expenses, did you at any stage rather fortunate that the Dolphin Square Trust went let the House authorities know that you had done to considerable lengths to try to ensure that those that and that, therefore, you were not claiming tenants who wanted to stay and to keep their old money which you might otherwise have claimed tenancies had access to legal advice. So there were through your allowance in order to carry out the separate firms of solicitors engaged—probably decoration, and the absence of decoration is rather more expensive solicitors than I could have therefore explained by the fact that you had £5,000 aVorded—and I was entirely content to rely on any to do it? advice that they gave. Sir Alan Beith: No, I did not. There is not a place on the form for you to say: “By the way, I am not Q60 Chris Mullin: Sir Alan, do you accept that, claiming X because of Y”. I do that, actually; I have albeit with hindsight, it might have been better if you now, since then, developed the habit of writing on had handed in the £5,000 and then charged the the form “minus my wife’s contribution of X- decorating costs to the allowance? hundred pounds”, but I did not actually take the Sir Alan Beith: That is, indeed, the point that I very sensible step that you have just suggested. sought to address earlier because we discussed it when I had an oral interview with the Commissioner. Q63 Chairman: Any other questions? Any final Yes, I can see the case for that, but I think it has to comments you would like to make, Sir Alan? be seen in the context that my primary objective in Sir Alan Beith: I am in the Committee’s hands, and looking at the Green Book was to achieve value for my final reply to Mr Mullin, I think, sums up money and not to put my private interests above the probably how I feel about the matter. public interest; transparency, I have to say—the fact that this would be more clearly publicly known— Q64 Chairman: Sir Menzies Campbell asked us was not high on the list of priorities and was not when the Committee was likely to reach a clearly expressed in the rules and guidance that I was conclusion. I cannot give a specific time but you can considering. I accept that, with hindsight, it could certainly assume that a conclusion will be reached have been done that way. Alternatively, of course, I before Dissolution. It may be quite soon but it will could have said: well, actually, if the money has to go certainly be before Dissolution. to the Fees OYce anyway I could refuse the payment Sir Alan Beith: Thank you very much. and simply retain the rights that were there. Chairman: Thank you very much indeed.
Witness: Paul Holmes MP, gave evidence.
Q65 Chairman: Good morning, Mr Holmes. report for the Committee. You have exercised your Paul Holmes: Good morning. right to appear before the Committee, which we were very happy to endorse, and I would like to invite you Q66 Chairman: Thank you very much for joining the to make any opening statement and, thereafter, my Committee. As you are aware, the Commissioner colleagues or I may wish to put some questions to has concluded his investigations and has produced a you. Processed: 16-03-2010 10:54:43 Page Layout: COENEW [O] PPSysB Job: 002206 Unit: PAG1
Committee on Standards and Privileges: Evidence Ev 11
2 March 2010 Paul Holmes MP
Paul Holmes: Okay, thank you very much. I have and that would be fine. They are also saying that— submitted a written statement yesterday which says, the Director of Resources actually says this, more or less, what I wanted, so I will be very brief. eVectively, in his private advice—had I taken the In 2005 the housing trust where I rent a flat was sold compensation, paid it into the ACA and then drawn to a commercial landlord and the housing trust came it out again to spend, for example, on a deposit for to an end. Obviously, that was totally unexpected; buying a house, that would be fine. But they are when I went there in 2001, as a newly-elected MP, I saying that to take the compensation and move to a never knew that was going to happen, and that came cheaper flat is wrong—was a misjudgement. I do not out of the blue. The new landlord oVered understand how they can arrive at that judgment; compensation to all 1,000 tenants. The new landlord they seem to be applying one rule to the minority of came with a bad press—for example, in relation to MPs who rent, entirely diVerent to the rule that they what they had done when they took over a similar apply to the majority of MPs who buy. I do not block in Paris. The legal advice that came with the understand how they arrive at that, but if that is the oVers from the landlord pointed out that the new final judgment that is the final judgment. The tenancies were much more onerous than what Parliamentary Commissioner said that we made a Dolphin Square tenants had previously had, for serious misjudgement, that there is no evidence we example, and so for all sorts of reasons I accepted the did it deliberately, and that had the private advice of compensation and moved to a cheaper flat and then the Director been published none of this would have to another cheaper flat. At that time in 2005 I could happened. Two other points I would ask you to not see that there was any problem with this. I knew consider: one is that I did specifically ask the that the vast majority of MPs, with the full openness Parliamentary Commissioner, both in writing (twice and the full permission and co-operation of the I think) and verbally in a meeting, to look at the Department of Resources, used the ACA to buy a situation which was reported in the newspaper property and that when over the previous ten, 20, 30 report that started all this and that he sent to me at years they have sold that property they kept the start of the inquiry, where one MP at Dolphin everything that accrued from that; they did not pay Square took £18,000 compensation, paid it into the anything back into the public purse. I could not see ACA and then drew it out to be part of the deposit that there was any diVerence between the two on buying a property. I asked specifically how can it situations, except that this had happened in a totally be judged that it was wrong to take the unplanned and unexpected way; there was nothing compensation and move to a cheaper flat but, in the Green Book that specifically referred to this, and the Director of the Department has said that in somehow, it becomes okay if the money is paid the evidence that is in the Parliamentary through the ACA and then drawn out again? The Commissioner’s report. The Director of Resources Parliamentary Commissioner has completely did arrive at a private judgment about this which it ignored that; he has not looked into that; he has not did not circulate to the MPs involved and which it commented on that at all, and I do think that that is did not publish in the Green Book as an addendum, something that needs some further consideration. and still to this day has not published; the first time Finally, there is the point of the other MPs who took that that private advice of his will become available the money but have not self-referred. Obviously, the is when the Parliamentary Commissioner’s report is Parliamentary Commissioner only looks at the published shortly. As soon as the newspaper raised people who have been referred to him, but one of questions about whether this was the correct thing to those other MPs did voluntarily submit evidence to have done in 2009, I and five colleagues self-referred the Parliamentary Commissioner, which is in the because, to me, my integrity is very important and I report, and she said that she did take advice from the was delighted that the Legg report gave me a clean Fees OYce and was categorically told it was a bill of health, apart from £150 which was down to private matter and entirely up to her, and it was not the Fees OYce not applying their secret John Lewis anything to do with the Department of Resources. list, as it was at the time. Had they published that list, The Department of Resources say they have no you know, that problem would never have happened record of that; she said she does not know who she either. So I immediately self-referred, and obviously spoke to, she simply rang the inquiry desk. Another I accept whatever recommendations come out of MP, I understand, also says that they took that this Committee in light of the Parliamentary advice from the inquiry desk and that they can name Commissioner’s report. However, I do ask you to the oYcer who gave them that advice. So there seems consider three things in making your final decision. to be some considerable confusion about what The first one is while I will accept whatever the advice was formulated and what advice was given. Parliamentary Commissioner and yourselves say, I Inevitably, although this was about the six of us who simply do not understand, in view of the evidence self-referred, as the Parliamentary Commissioner and the situation, how the Parliamentary points out in his conclusions, it is going to Commissioner and the Director of Resources automatically impact on all the other MPs at arrived at the judgment they have. They seem to be Dolphin Square who also took the compensation, saying—they are saying categorically in the and it does seem to me that evidence from them Parliamentary Commissioner’s report—that had I, should be taken, especially from the one that has in 2001, taken out a 100 per cent interest-only, no- already voluntarily given evidence which the deposit mortgage and then, at some later date, sold Commissioner reports but then makes no comment that property, I could have kept the money from that on at all. Processed: 16-03-2010 10:54:43 Page Layout: COENEW [E] PPSysB Job: 002206 Unit: PAG1
Ev 12 Committee on Standards and Privileges: Evidence
2 March 2010 Paul Holmes MP
Q67 Chairman: Thank you very much indeed. We Q71 Chairman: Do you know personally whether may have some questions, if we may, that Members that is correct or not, that story? wish to put to you. Could I begin, if I may? You have Paul Holmes: I know people who have spoken to the made several references to various informal or other named MP, who does not deny it. advice that other Members may have received—Mrs Humble, I think, is another named person. Can I ask Q72 Chairman: Sir Alan Beith’s evidence, which is in whether you personally sought any advice? It is the report, refers to this statement that says (this is suggested that you did not seek any advice either page 33) that we now know that in at least one case formally or informally before you took the decision where advice was sought, the retention of a much to accept the payments that were being oVered. larger Dolphin Square payment and its use to part- Paul Holmes: As I said, really, I could not see any finance a mortgage was approved by the Fees OYce. reason in 2005—I could not see that there was any When I asked him, he said he did not have any need to take advice; to me it seemed absolutely personal knowledge of that, it was simply hearsay. I comparable to the situation of the vast majority of think you referred to it being a newspaper report. MPs who buy a property and then sell it. There was Paul Holmes: It is actually contained in the nothing in the Green Book that specifically referred Parliamentary Commissioner’s report, so it names to it; I could not see that there was an issue. When the person, it gives the exact figures. Legg did the five-year audit of ACA claims, of course, it did not look at anything like this because Q73 Chairman: In this Commissioner’s report? I do it did not involve any claims from the public purse; not think it does. it was an entirely private aVair between a landlord Paul Holmes: I am assuming that that newspaper and a tenant. report is part of the papers—
Q68 Chairman: In retrospect, do you think it might Q74 Chairman: I am not aware that there is any have been better if you had sought advice from the evidence as to whether that is a correct report or Fees OYce? whether the Member in question— Paul Holmes: In retrospect, and, as the Paul Holmes: No, but that is part of the point I Parliamentary Commissioner has pointed out, had make; that with a view to all the other Members who the privately formulated advice of the Director of did not self-refer, who took the compensation Resources been published, none of this would have package, this report will immediately, when it is happened. Clearly, a lot of the MPs involved could published, impact on them, as the Parliamentary not see that there was any question here at all. In Commissioner points out, and that there are clear retrospect, as I say, six of us self-referred areas of evidence that would be relevant from immediately when a question was raised, but we those people. could not see any issue at the time, given the widely accepted, open practice of most MPs using ACA to Q75 Chairman: Can I ask you: the £9,440 that you buy a property and keeping the proceeds from sales accepted, was that before Capital Gains Tax? of those properties. Paul Holmes: That was after Capital Gains Tax. The original sum was £9,900. Q69 Chairman: Whatever information you did receive, I think you have said that you yourself did Q76 Chairman: Are you able to give us a general not speak to Mrs Humble, so whatever view she indication of how that sum has been used? might have been given formally, you were not aware Paul Holmes: As I say in the evidence that I gave to of that at the time you took your compensation? the Commissioner, it paid oV my bank overdraft, Paul Holmes: No, no, that is right. and £6,200 of that bank overdraft was the money that I paid to set up my oYce in 2001/02 to Q70 Chairman: You mentioned what you thought implement all the security measures the police the Fees OYce, or the Department, were saying in recommended but that Parliament, for example, regard to what Members might have done. In their only pays the first whatever it was then—the first actual statement that they had prepared, which they £1,000, sort of thing. Most years I have to pay some did not send to all Members but they had it available of the bills on my constituency oYce around about to respond to inquiries; they said that if a Member February/March when the IEP sum runs out, so I does want to accept a cash oVer and pay it over to the had been running on a permanent overdraft from the House or set it against future rental payments, they day I was elected. suggested, it could have been used. I think in your statement a few moments ago you implied that they Q77 Chairman: The final point I wanted to put to were quite happy for it to be used for mortgage you, if I may, is you have seen the Commissioner’s payments or other matters of that kind. argument that this windfall, as it has been described, Paul Holmes: As I say, there is that uncertainty on only arose as a result of the rental payments that you that because, as I say, the initial newspaper report and other Members had paid which was entirely which was sent to us by the Parliamentary funded by the public purse. Given that circumstance, Commissioner states quite clearly that one Member did you then consider, or do you now consider, that at Dolphin Square took £18,000 and something, it would not be unreasonable if the public purse, at paid it into the ACA and then drew it out to be a least to some extent, had benefited from this deposit on a flat. windfall? Processed: 16-03-2010 10:54:43 Page Layout: COENEW [O] PPSysB Job: 002206 Unit: PAG1
Committee on Standards and Privileges: Evidence Ev 13
2 March 2010 Paul Holmes MP
Paul Holmes: Again, as I said, in 2005 I did not see Paul Holmes: Two-and-a-half years later. that there was an issue here. It was an entirely private sum of money; it was not coming from the public Q80 Chairman: You are saying that is true but only purse. I was moving to a cheaper flat so the rent I two-and-a-half years later. would be claiming was less and was for the next 18 Paul Holmes: The first flat I moved to was a months. You have to go for two-and-a-half years temporary, six-month let and it was cheaper than the before I am paying more rent than had I stayed in the flat I had been in for the last four/five years. I then original flat. Of course, I did not know what was moved to another one that was cheaper for a further going to happen two or three years in advance. At year than the one that I had previously been in. the time, I did not see an issue, given that the vast majority of MPs, with the full, open permission and co-operation of the Fees Department, used their Q81 Chairman: You say this in your evidence. Can ACA to buy a property which they then sell. Had I you clarify— done that with a 100 per cent interest, no-deposit Paul Holmes: Then, for a further year, which takes it mortgage in 2001 I would have been able to sell that to two-and-a-half years, the rent went up to the same flat for about £80,000 profit last year, even in a level (give or take the odd pound) as it would have been had I still been in the original flat. depressed London housing market. I did not see in 2005 any issue. If there is an issue now then the question is what you do in retrospect? The Kelly Q82 Chairman: Can I just be clear on that—and this report recommended that from November 2009 any is my final point—if you had not accepted the £9,000 profits that are made from selling properties paid for would the increased rent that you were paying after by ACA should be paid back to the public purse. two-and-a-half years have been incurred or would IPSA, probably, from the end of this month that have been avoided? (although we do not know) is going to recommend Paul Holmes: No, if I had stayed at Dolphin Square, that perhaps from March, from the General but there was no reason why I would necessarily stay Election, any profits made from selling a house, at Dolphin Square. flat—property—purchased by using ACA money should be paid back to the public purse but they are Q83 Chairman: No, but it is therefore correct that— not suggesting retrospective payments; they are Paul Holmes: Yes. suggesting in both cases that it should start with eVect from whenever that report comes into eVect. Q84 Chairman:—after two-and-a-half years you The judgment I made in 2005, I think, was entirely in were paying more rent, which you would not have keeping with what the general operation of the ACA had to pay if you had not accepted the— was, as the majority of MPs used it to buy houses, Paul Holmes: But that was two-and-a-half years properties. Looking back, yes, you could certainly later. It was not something that involved my argue that any profit that is incurred from using judgment in 2005 when I was moving to a cheaper ACA money should be paid back to the public purse, flat, with no intention of ever going back to but that would apply to a much wider area and that Dolphin Square. is back to the first point I made: I do not understand how the Parliamentary Commissioner, with the evidence in front of him, can conclude that it would Q85 Chris Mullin: Can I jut ask you to address again this argument that your situation is analogous to be okay to buy a property and sell it and keep the those who are using the ACA to fund mortgage profit, it would be okay to transfer the money to interest? You have repeatedly said “to buy a flat” ACA and then pull it out and use it as a deposit on but, actually, what you mean is to fund the mortgage buying a property but it was not okay to take the interest, not the capital. money and move to a flat with a cheaper rent. Paul Holmes: Yes.
Q78 Chairman: There is one other clarification I Q86 Chris Mullin: You agree about that? need to make arising out of what you have just said. Paul Holmes: Yes. You have just said that in your view the consequences of your decision did not result in Q87 Chris Mullin: Have you read the higher rental payments— Commissioner’s report? Paul Holmes: Not for three years—two-and-a-half Paul Holmes: Yes. years later.
Q88 Chris Mullin: Have you seen that at page 101 he Q79 Chairman: If I may just complete the question. addresses the point about the comparison between In his conclusions in his report at page 101, the mortgage interest and the capital sum in this case, Commissioner has actually concluded that it is clear and he gives a couple of reasons why he thinks they from the evidence that having accepted the principle are not analogous? You have seen that? oVer, three of the Members, Mr Barrett, Mr Holmes Paul Holmes: Yes, and, as I said, I do not understand and Mr Younger-Ross, ended up paying and how, with the evidence before him, he has arrived at claiming for a higher rent than they would have had that conclusion. If that is the conclusion I have to to pay had they stayed put. accept it, but I do not understand it. Processed: 16-03-2010 10:54:43 Page Layout: COENEW [E] PPSysB Job: 002206 Unit: PAG1
Ev 14 Committee on Standards and Privileges: Evidence
2 March 2010 Paul Holmes MP
Q89 Chris Mullin: He says that, firstly, many of them Q97 Chris Mullin: You still believe that now in 2010? have paid part of the capital themselves before they Paul Holmes: Yes. buy, and, secondly, that they are in any case liable to repay the capital when the property is sold. That is Q98 Chris Mullin: Secondly, you are saying that the not the same, is it? issue seemed clear to you in 2005. Paul Holmes: Well, many have paid some money in Paul Holmes: Yes. towards that property and some have not. I know people—and I could have done it in 2001—who took Q99 Chris Mullin: Certainly when the oVer of out 100 per cent, no-deposit, interest-only £9,000-odd was made to you. You are one of six mortgage— Members giving evidence today. Would you acknowledge that two of them, on the basis of the Q90 Chris Mullin: Right, but they are still liable. same facts, at the same time, and in the face of an Paul Holmes: They paid no money of their own oVer that was substantially larger than the one made towards it, in the assumption—and the fairly safe to you, came to the opposite conclusion? assumption—that years later they would sell it at a Paul Holmes: Yes, and there are another dozen who big enough profit to clear the capital and have a large accepted the money and there are others who did not sum over. accept the money as well, other than the six who self- referred. So diVerent people took diVerent decisions, Q91 Chris Mullin: However, they are still liable for but, to me, it seemed a fairly clear situation. the capital. Paul Holmes: Yes. Q100 Chris Mullin: When did you become aware that Sir Alan Beith and Sir Menzies Campbell had reached the opposite conclusion to the one that Q92 Chris Mullin: And the interest, in many cases, you reached? certainly in the last few years, has been well below Paul Holmes: When the Parliamentary the rental value. Commissioner’s report was sent to us. Paul Holmes: There are all sorts of other arguments about the whole business of buying properties, about whether that is actually a better deal for the Q101 Chris Mullin: Are you saying they are wrong? taxpayer, in that often rents tend to go up and Paul Holmes: No, I am saying they made a judgment mortgage payments tend to stay the same. That is a in 2005, as did other MPs, and around about a dozen whole separate argument. to 18 of us made a diVerent judgment.
Q102 Chris Mullin: They were very clear, and they Q93 Chris Mullin: So it is not analogous, is it? I am have given evidence to us today. Sir Alan said to us not disputing that there might be an issue there (and, that he recognised, at the time, there was an ethical indeed, Sir Thomas Legg has drawn attention to it), issue. You did not recognise an ethical issue? but it is not analogous to this situation, is it, at all? Paul Holmes: I did not see any issue at the time, Paul Holmes: To me, in 2005, it seemed absolutely given the way the ACA operated, the way the analogous. majority of MPs used it to buy a property, and all those other issues. I was taking a sum of money from Q94 Chris Mullin: We are now in 2010. Does it seem a private commercial landlord who had bought out still absolutely analogous in the light of those two the housing trust where I rented, and I was moving points the Commissioner has made? to a cheaper flat. I did not see that there was an issue. Paul Holmes: As I say, in retrospect, there are a lot It would seem, from Joan Humble’s evidence to the of things which are going to change in the way the Parliamentary Commissioner, that the oYcer on the system operates, and some have already changed. I inquiry desk at the Fees OYce agreed with her. The am talking about the position in 2005 when I made private conclusion that the Director of Resources this judgment. came to, which I understand was finalised two days after the deadline for MPs to actually decide what Q95 Chris Mullin: Just moving to the judgment— they were going to do, and was never communicated Paul Holmes: One other point, of course, is that if to us, came to a diVerent conclusion, but it seems you are renting you also make commitments about from at least two MPs that when they rang the Fees redecoration, repairs, window cleaning—the whole OYce inquiry desk they were told this was entirely lot that comes with that as well. I know Sir Alan private and entirely up to you. Beith has made some detailed comments on that about the obligations he has as a long-term tenant, Q103 Chris Mullin: You had never had a discussion where I was a fairly recent tenant, so there are with Sir Alan Beith or Sir Menzies Campbell? commitments also if you are renting that involve Paul Holmes: Prior to— payments on your part as well. Q104 Chris Mullin: Prior to these events. Q96 Chris Mullin: There are indeed. I, again, put it Paul Holmes: Self-referral—this? No. to you that the situation is not analogous, is it? Paul Holmes: I believed it was in 2005, and I still Q105 Chris Mullin: So you were not aware at all of believe that in principle. the position that they had taken. Processed: 16-03-2010 10:54:43 Page Layout: COENEW [O] PPSysB Job: 002206 Unit: PAG1
Committee on Standards and Privileges: Evidence Ev 15
2 March 2010 Paul Holmes MP
Paul Holmes: No. the time (I assume we are referring to the Daily Chris Mullin: Thank you. Telegraph article of 30 May 2009)? Did you know that had happened prior to the date— Q106 Nick Harvey: Mr Holmes, in your letter to us Paul Holmes: No. As I say, in 2005 it just never and, again, in your oral evidence this morning, you occurred to me that there was a problem at all, which have talked about a specific instance of a Member is why I never told the Fees OYce, because there was who took payment of £18,000 and used it for the nothing in the Green Book that covered this, and the deposit on a £215,000 flat. Did I correctly custom and practice was—well, not custom and understand you to say that you had written to the practice but the open, permissive rules and the full Commissioner asking him to investigate that case? co-operation of the Fees Department was that MPs Paul Holmes: In my written submission to the could buy properties, sell them and keep the surplus. Commissioner, I think twice but certainly once, I raised that with the Commissioner, and I said: “Can Q114 Dr Whitehead: When you decided that you you look at the comparisons here?” and I also raised would self-refer to the Commissioner, six people did it verbally in a meeting that I had with the that together and a number of other people did not, Commissioner. some of whom are mentioned in this particular article. Did you talk to those five people, not Q107 Nick Harvey: Did you name the Member? necessarily about the detail of their individual Paul Holmes: Yes. circumstances but about the common understanding that you should self-refer, because you had a Q108 Nick Harvey: You say that the Member— particular view about what your actions amounted Paul Holmes: And the Member is named in the press to? report that the Commissioner sent to me in the first Paul Holmes: I talked to three about it of the six who place. self-referred. I did not know that Menzies Campbell and Alan Beith were going to self-refer but I did talk Q109 Nick Harvey: Forgive me, I may be being a to the other three who are in my circle of friends. We little dense. The only press article in our bundle, are all the people who were elected in 2001 together which is item number one in our annex, does not and have been close friends ever since. So of course appear to be— we talk to each other regularly. Paul Holmes: If it is the same article it was the very Chairman: Any other questions? last paragraph, last sentence of the newspaper article. Q115 Nick Harvey: What is your understanding of the rates at which the protected tenancies in Dolphin Square were going up? They were not set in aspic, Q110 Nick Harvey: You say that the Member does were they? Although they were lower than the not deny the facts in this case. market rents they do go up each year. Do you have Paul Holmes: Other people tell me that they have any knowledge— talked to him and he does not deny that. Paul Holmes: I do not know the details, and I think they are contained in all the submissions that the Q111 Nick Harvey: However, it is your contention Parliamentary Commissioner has got, and it varied that you had asked for that to be investigated? also. When I became a tenant in 2001 the rents at Paul Holmes: Yes. I can go and dig out my written Dolphin Square the rents were fairly close to the submission, which will be contained in all the papers commercial level, although a bit below it. If you were there, where I specifically raised that point. As I say, a tenant who had been there for ten, 20 or 30 years I also verbally raised it at a meeting we had with the they were massively below the commercial rate. So it Commissioner. I think it is something that needs varied enormously, depending on individual further comparison. circumstances, which is one reason why we had much lower payments than other people that had Q112 Nick Harvey: It is your understanding, in that been there 20 or 30 years were oVered. case, they specifically cleared that with the Fees OYce at the time? Q116 Chairman: Any other questions? Thank you Paul Holmes: Yes. I also got the impression from very much indeed, Mr Holmes. We are very grateful what the Director of Resources was saying that it to you. was okay to pay the money into ACA and then draw Paul Holmes: Thanks a lot. Can I ask what is the sort it out and spend it on other things. It says that in of timescale of procedure from here? what was totally private advice which has now been published by the Parliamentary Commissioner for Q117 Chairman: Yes, that is a fair question. I cannot the first time. give you an exact figure for when the conclusions will Nick Harvey: Thank you. be reached but I can assure you it will certainly be before Dissolution. It is likely to be in the next two Q113 Dr Whitehead: Two things: did you get that or three weeks, but I cannot give an absolute impression at the time you took the decision to guarantee on that. receive the money or did you get that impression at Paul Holmes: Thank you. Processed: 16-03-2010 10:54:43 Page Layout: COENEW [E] PPSysB Job: 002206 Unit: PAG1
Ev 16 Committee on Standards and Privileges: Evidence
Witness: Richard Younger-Ross MP, gave evidence.
Q118 Chairman: Good morning, Mr Younger-Ross. of the House, and I am still not too sure how Richard Younger-Ross: Good morning. someone who is not paying a capital sum and has not put anything at particular risk is that much diVerent Q119 Chairman: Thank you very much for joining to selling a lease. I am still at a loss to understand us. As I think you are aware, the Commissioner has that diVerence. Lastly, there is an inherent concluded his deliberations and has prepared a contradiction in the rules from the House, in that the report for the Committee. You have asked to give advice given, which was not given to Members evidence, which you are entitled to do, and we are (although the House authorities knew we were very happy to see you this morning. moving, clearly; we sent the leases, they saw the Richard Younger-Ross: Thank you. change in our rental agreements, the House authorities knew—even if they did not know from that they would have known from the Daily Mail or Q120 Chairman: I am going to invite you to make the Sunday Mail in October 2006, which published any opening remarks that you wish to make and then all of this) says that if the moneys are taken they I will invite the Committee to ask you any questions should be paid to the House, which can then be they might wish to put to you. recycled through the ACA for further rental Richard Younger-Ross: Thank you. If I can just start payments or mortgage interest or for furniture or for with a small correction and a small apology. In the statement I made to yourselves, in item 2, in the last carpets, if you have purchased some. sentence it says: “Mr Lyons should have pursued the quality of the advice given”; it should say “could Q121 Chairman: Where do you say this is said? have”. A minor but significant error, and my Richard Younger-Ross: This is in the apology that I did not spot that earlier. I think the Commissioner’s letter. It is implied that you can take diYculty I face with this is that you find yourself in the money and pay it into the ACA. Not in the a position where you have taken a series of actions, Commissioner’s letter—sorry—it is in the Resources you have not done so for personal benefit but then letter from them. It is very clear in that that if you find that a report is done which says that you have take the money and pay it into the House, as one actually tried to do something for personal benefit, Honourable Member2 apparently did, then you can when that was not the intent at all at the time. I look claim it back again for your ACA. If you have taken at the report drawn up and feel that whilst I a mortgage and you are using it for interest, then that recognise large parts of it there are elements of it is clearly of direct benefit as well. I cannot see that which I am not too sure are complete, and elements which I am not too sure are thought through, and this contradiction between what the House is saying contradictions which, in terms of what the House on the two hands is resolved in the report that we authorities were doing, have not been resolved. The have before us. bits which concern me are the seven main points in my memorandum. I think one of the most serious is Q122 Chairman: I am sorry to interrupt, at this the position of other Members. We were giving stage, but I just wonder if you could clarify a point. evidence and suggested that further evidence could In the actual written document that was prepared by be taken, but the Commissioner felt that he needed the Department to be used in response to queries, no further evidence. However, this leaves a number what they say is on page 9 of the Commissioner’s of Members in a diYcult position who have not self- report, which is that if a Member does want to accept referred, one of whom who did give evidence, but we a cash oVer and pays it into the House or sets it know of other members who said they had received against future rental payments, that is the only thing advice from the Fees OYce, one of whom we they refer to— understand can name the oYcer from the Fees OYce, as it then was, but that evidence has not been Richard Younger-Ross: I understand it was used for gathered. I suspect that if we had further evidence payments to the ACA and used in other cases, saying that, actually, we were told that we could reportedly, for other purposes, in that someone had retain the money then that would put a slightly moved from a rental position to a mortgage position diVerent light on these proceedings. Indeed, it and that it was allowed to be used for that mortgage. would, if Members were being told this. Then within Those are my comments. the report where it says that “talk in the House was influential”, if the talk in the House was that people Q123 Chairman: Is that the end of your— had been and gathered that evidence then that is Richard Younger-Ross: That is. what we would have heard. Therefore, our not referring, not going to the Fees OYce, may be more understandable. The other bits I am particularly also Q124 Chairman: Thank you very, very much indeed, concerned about is the lack of comparison between that is most helpful. Can I move to questions now? interest-free mortgages, which are essentially the There are one or two points I would like to put to same as a rental agreement, in that there is no capital you, if I may. I think you have said in your evidence sum involved (and the word “capital sum” is used in that you accepted that £8,031 was the payment. the report), and I think the letter from the Fees OYce Richard Younger-Ross: Or thereabouts, yes. refers to it. An interest-free mortgage allows someone to, over a period of time, accrue a profit for 2 Note by witness: The Daily Telegraph claim that Andy their own use. That is deemed to be within the rules Burnham had received money via his ACA. Processed: 16-03-2010 10:54:43 Page Layout: COENEW [O] PPSysB Job: 002206 Unit: PAG1
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2 March 2010 Richard Younger-Ross MP
Q125 Chairman: Is it the case that as a consequence payments remained the same. So the part I would of your acceptance of this oVer the rental payments argue with is that the burden to the taxpayer would that you were required to pay for the next several not have been any diVerent. years were higher than they would otherwise have been? Richard Younger-Ross: There was an increase in Q130 Chairman: If it had been any diVerent, in your rental. I had an unmodernised flat in Dolphin view, would it have been reasonable for you to accept Square. If the lease had carried on as was then I the payment? would have undertaken other works to bring it up to Richard Younger-Ross: I would not have allowed it a more acceptable standard—i.e. the carpets were in to do so and did not. So it is a hypothetical question fairly poor condition and needed replacing and the I cannot answer. kitchen was in a very poor condition. So although the rental payments would have increased, the cost to the ACA and the taxpayer would not have Q131 Chairman: Do you accept that if a Member has increased. I had actually taken the decision, at that accepted a windfall sum and, as a consequence, if it time, I wished to move out because it was a fairly was the case, the cost to the public purse was to small, dark flat, but, as I outlined in 2006, my mother increase, that is an unfair outcome and that the died, my mother-in-law died and my father-in-law public purse should not have been allowed to suVer died, and we ended up in the position where it really a higher burden because of the windfall? was not feasible to make a move, although I then Richard Younger-Ross: It would depend on the determined, after we had recovered from that, that I intent, and I cannot second-guess what other would move either before or immediately after this Members may or may not have done with the money. current election we are about to have, which I I used the money to benefit my constituents in that, expected to be last year, not this. as many other Members do, the costs of my constituency oYce cost considerably more than the Q126 Chairman: Can you clarify this point a bit IEP at that time allowed for. further, if you would be willing to do so? Richard Younger-Ross: Yes. Q132 Chairman: Parliament has decreed what the Q127 Chairman: In your particular case (not just in maximum allowances are and, therefore, all your case but in your case), the consequence, as I Members, not just you, are required to pay out of understand it, of accepting what has been described their pocket if they wish to spend more than the as a windfall and retaining it for your own use was maximum. In your particular case, and in the case of that the burden on the public purse increased a number of other Members, a windfall was oVered because your rentals were higher in subsequent years to you which arose out of the fact of your tenancy on than they would otherwise have been. the flat in Dolphin Square. The question I am asking Richard Younger-Ross: No, I do not accept that as a you is (not necessarily in your particular case): if it proposition. The ACA is the burden on the taxpayer was clear that the consequences of a Member and it is the total of the ACA that is a burden, not accepting a windfall was an increase in public funds just the rental element. It has to be seen as a total being required to be used, would you say it was sum, not just as in part. Otherwise, if an MP moved reasonable for the Member to accept? into a small dungeon in their first year, paid very Richard Younger-Ross: The money that came is not little rent and they then subsequently decided they directly related in that sense to the payment. The wished to move, then you could argue that that money came from an agreement which had onuses actually increased the burden on the taxpayer and obligations upon the tenant. I beg the question because they moved from a dungeon to somewhere back, as I did in my several points. In entering that else. tenancy agreement, Members have actually already, in a future time, a benefit in that if they had stayed Q128 Chairman: I understand there are lots of on the lower rent and they had retired say, at this hypothetical other possibilities that might have election, and they had stayed in London, then they occurred, but I wanted to know about your would benefit from a below-market rent. That could particular decision and the consequences that flowed be a benefit of £20,000, £30,000 or £40,000, from that. You have accepted the windfall payment depending on where they were staying. So if it is of some £8,000, as I understand it. wrong, hypothetically, as you are saying, for Richard Younger-Ross: Yes. someone to benefit from taking a cash windfall at one point in time then, logically, it must be wrong for Q129 Chairman: This is what the Parliamentary any Member whose rental payments have accrued a Commissioner’s report says. If you had not accepted benefit post leaving this House to benefit from that, your rent would not have increased in the way lower rents. that it did. It is purely on these particular points. Richard Younger-Ross: The rental payments would have increased; not as proportionately as high—in Q133 Chairman: Whether or not that is the case, fact they increased higher than we had been what we have to come to a view on is whether in your indicated they would be in the pre-run-up, and all particular circumstances there was a net increase to the talks that we had before—but the ACA the public purse. Processed: 16-03-2010 10:54:43 Page Layout: COENEW [E] PPSysB Job: 002206 Unit: PAG1
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2 March 2010 Richard Younger-Ross MP
Richard Younger-Ross: No, there was not. that. However, when you are, as a lot of MPs are— you have not come here with loads of money in the Q134 Chairman: In your view, you are telling us, it bank; it took me a long time to get elected and I had was not. Just one final point, if I may. Did you a very hefty overdraft, and the burden on the family personally consider seeking advice at the very (said by my wife: “You are spending more than you beginning of this process before deciding whether to are allowed on this; you are eating into our bank accept this money, or seeking advice from the account”) means that there is a family dynamic Department as to whether this would be a which says how often can you keep subsidising your reasonable and appropriate thing to do? work as a Member of Parliament? My argument Richard Younger-Ross: Yes, and as I was saying in would be I will keep doing that, but if there is a my evidence, I cannot clearly recall all the benefit in terms of enabling me to do that in a less discussions we had. There was a lot of chatter from painful way then one would take it. In taking this it people who were both people who had tenancy enabled me to carry on at a higher level than I would agreements and those who did not, and the advice of have done otherwise. everyone was no, it is nothing to do with the House; Members make profits, large profits, from selling Q140 Hon Nicholas Soames: Mr Younger-Ross, I am properties and through their mortgages, there is no going to ask you a question I have asked all the other problem in you accepting— people who have been here this morning. Given the inevitable complications of such an unusual Q135 Chairman: You are saying you discussed that transaction, do you not think it pretty casual on your with Parliamentary colleagues, but are you part not to have sought detailed advice either from acknowledging that you did not actually ask the the solicitors who were acting at the time for the Department? tenants or from the Fees OYce, or indeed from your Richard Younger-Ross: I cannot recall exactly what own solicitor, given the near proximity of public I said and who I spoke to, but I had a number of funds? conversations with the Fees OYce at diVerent times. Richard Younger-Ross: I do not say that it was I cannot say I did, I cannot say I did not. casual at all. One did talk to other colleagues here; one did take legal advice from the solicitors acting on Q136 Chairman: The Department has said, and they behalf of the tenants. We were given a lot of advice have prepared advice which they were willing to give on that, and, yes, I did discuss that with other any Member who asked— solicitors who are friends and colleagues. Not my Richard Younger-Ross: That advice only appears to family solicitor—I do not have one, as such, but I have been drawn up at the beginning of November. have other legal advice that I spoke to. The lease agreement, if you were moving, had to be agreed by, I think it was 25 November. The letter Q141 Hon Nicholas Soames: And their advice was? they actually issued to the two Members was only Richard Younger-Ross: That it was nothing to do issued two days before that. The decision in principle with the House authorities. had been made in May, June or July, earlier in the year. Q142 Hon Nicholas Soames: That was also the Chairman: Thank you very much. Other questions. advice of the solicitors advising the tenants? Richard Younger-Ross: As far as I am aware. Q137 Dr Whitehead: You were elected in 2001, and I assume you sent out Christmas cards and you Q143 Hon Nicholas Soames: You said you consulted supported volunteers without resort to claims? them, so you must know. Richard Younger-Ross: Yes. Richard Younger-Ross: I had conversations but as far as I recall I did not have any— Q138 Dr Whitehead: Up to 2006. Richard Younger-Ross: And still do. Q144 Hon Nicholas Soames: So you did not formally consult. Q139 Dr Whitehead: Did the £9,000 make any Richard Younger-Ross: I had conversations with the diVerence to that activity or did you— solicitor acting on behalf of the tenants, but it was a Richard Younger-Ross: In terms of Christmas cards long time ago and I cannot recall the precise detail and claims, no, but what it did allow me to do was of that. in terms of funding the oYce, in terms of the excess of bills, in terms of telephone bills. It is hard to define Q145 Chris Mullin: On the ethics of accepting the because it is at the end of the financial year when you sum of money on oVer, were you aware that some of realise there is not enough money in the IEP left, so your colleagues had reached a diVerent conclusion? there were other costs which would accrue and come Richard Younger-Ross: I was aware that some had, to that. Some of those would have been taxable or but you look at why people come to diVerent were claimed against tax, some are not; there were conclusions. As I said, there was a benefit in not other bits—if you have travel receipts which you taking the money at that time, because the benefit, if claim because you could not claim during the year, you see your long term in London, is to actually so there would be other bits of diVerent costs which retain the flat at a lower rent. So there was good you just lose at the end of the year. That is not incentive, if you like, for people to opt for something uncommon and it happens to a lot of MPs. I know diVerent. One of the reasons people recommended to Processed: 16-03-2010 10:54:43 Page Layout: COENEW [O] PPSysB Job: 002206 Unit: PAG1
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2 March 2010 Richard Younger-Ross MP go to Dolphin Square was that it is a place which has Q149 Dr Whitehead: Could I briefly return to the lower rents, and the argument was put that if you go question of the rent increase that was agreed with the there, when you leave then you will have a low rental new company subsequent to the changeover of afterwards. ownership of Dolphin Square. As far as I understand, the sequence of events was that after you agreed that you would have essentially a Q146 Chris Mullin: When did you become aware diVerent rental arrangement as a result of accepting that some of your colleagues had turned down this the buy-out, as it were, you accepted a three-year sum? arrangement which rose to almost £19,000 for Richard Younger-Ross: I was aware in 2005 that one 2008-09? Richard Younger-Ross: But it was not for three or two probably would not have taken the money years. You could move out at any time and I would but they had their own motives and reasons for have moved out at an early stage. If it had not been doing so. for the tragic deaths of three members of close family, I would almost certainly have moved out in 2007, as that had been my intent at the time, in which Q147 Chris Mullin: Had you discussed it with them? case in terms of rental increases they would not have Richard Younger-Ross: We discussed it and they said had any impact at all in that sense, so that was my they were not taking the money. That was it. No-one intent, and all I can do is look at what my intent was had said to me, “I think this is wrong.” The only time when I was taking the decision. I realised anyone thought it was wrong was when I read a comment in the Sunday Mail in 2006 from a Q150 Dr Whitehead: But you actually stayed there Member of Parliament not far from where I reside. until the end of 2009. You disputed a rent rise in 2009-10? Richard Younger-Ross: Yes, I tried to dispute it the Q148 Chris Mullin: We have had evidence this time before but I did not win that time; I did the morning from Menzies Campbell and Alan Beith, last time. both of whom turned down rather larger sums than Q151 Chairman: Any other questions? Thank you the one in your case, and they have both said, and very much indeed. One or two of your colleagues Alan Beith said specifically, that they recognised that have asked when we are likely to reach conclusions there were ethical issues involved. on these cases. I cannot give you an exact time but Richard Younger-Ross: They did not share that with certainly before the Dissolution some time in the us at the time. next two or three weeks and maybe earlier. Chris Mullin: Thank you. Richard Younger-Ross: Thank you very much Chairman: Any other questions? indeed.
Witness: Ms Sandra Gidley MP, gave evidence.
Q152 Chairman: Good morning, Ms Gidley, thank a very complicated matter, otherwise the Fees OYce you very much for joining the Committee. I think would not have felt it necessary to seek further you are aware that the Commissioner has concluded advice. I believe that this advice should have been his own deliberations and has produced a report for disseminated widely at the time as it also has a the Committee. You have asked for the opportunity significant relevance to all MPs with a mortgage to give evidence directly to the Committee, which is which is funded or part-funded by the taxpayer. To your entitlement, and we are very happy to hear your date the Green Book has not been updated as a result opening statement and then we may have some of that advice. I have to say that the Fees OYce are questions to put to you. Please proceed. usually incredibly helpful. They often send out Ms Gidley: I would like to start by thanking you for circulars if they become aware of an issue. Why they giving me the chance to speak to you in person. I did not wish to be helpful in this particular set of circumstances remains a mystery that even the have provided further written evidence but I felt that Commissioner for Standards appeared unable to get this was quite a complicated matter so it might be to the bottom of. I completely disagree with any helpful for the Committee to question me conclusion that I put private interest before public individually. I will come on to my statement. When interest. I moved to a flat which had a much cheaper first elected I made a conscious decision to rent a rent which was fixed for the next two years. I also property because I did not want to profit personally made a conscious decision to use the developer’s from an investment which was initially funded by the money, once the costs of moving to a new rental taxpayer. You will see from the written evidence that apartment had been covered, to add funds to my I planned to move anyway so the unexpected oVer of staYng budget so that I could provide a better money from a property developer meant that I service to my constituents. I want to stress two thought very carefully about what it was best to do. points. When I self-referred I felt that the Whether MPs accepted the money or not was clearly Commissioner for Standards would accept the Processed: 16-03-2010 10:54:43 Page Layout: COENEW [E] PPSysB Job: 002206 Unit: PAG1
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2 March 2010 Ms Sandra Gidley MP parallel between the payment from the developer I did not keep a line-by-line account, it was and an MP profiting from a mortgage. He has not approximate, but I did not keep the money for my and I must admit I am confused by this logic. It has personal gain. always been important to me that I can look my constituents in the eye and say how I have spent taxpayers’ money. The clean bill of health I was Q157 Chairman: Given that you said you thought given by Legg reaYrmed my own belief that I could about this very, very carefully before you reached a do this. Equally, I felt that if people asked about the decision, why did you not think it appropriate to Dolphin Square payment I would be happy to tell contact the Department and ask their view? I know them that I had spent the money on staV and support you said they did not volunteer it but you never to undertake my parliamentary work even better. asked them either. The money was not public money but because of the Ms Gidley: As is always the case with any matter that circumstances in which the money was available I aVects MPs, this was the subject of much tea room felt happier if I could broadly account for it even discussion. It was probably the only thing people in though the money was eVectively a private payment. Dolphin Square talked about. Usually if there was I worked this through by approximations. I knew any advice or anybody has any information, it what I was getting from the developer and I worked spread like wildfire. So I could have done but I think out some approximate moving costs, capital gains, et the consensus was, and reading the evidence of other cetera, and what would be left over, and over the people who have self-referred they seem to have next two years I put an equivalent sum of money into come to the same broad conclusions, that there was my staYng budget. The public purse and my not a problem. constituents have therefore benefited from this money. I am happy to answer any further questions Q158 Chairman: You said the consensus but we the Committee may have. know, for example, that Sir Alan Beith and Sir Menzies Campbell, who were oVered much larger Q153 Chairman: Thank you very much indeed. That sums, thought there was an ethical problem and is very helpful. Could I open up the questioning if I declined to accept the principal sums that were being may. You said that right at the very beginning of oVered. Were you aware of that? your public life you did not wish to profit from the Ms Gidley: I did see that. They had very, very low taxpayer. rents. It would be very, very diYcult for them to find Ms Gidley: Right. equivalent rents.
Q154 Chairman: And as a consequence you chose Q159 Chairman: That is not the reason they gave. rental rather than a mortgage? Ms Gidley: Yes. Ms Gidley: That is not the reason they gave but I am just pointing out that if I was in their position I would not have moved because both of those Q155 Chairman: You have however accepted a sum Members have been in Dolphin Square for a very, of £18,000— very long time. I do not know what Sir Menzies Ms Gidley: Yes. Campbell’s flat is like, but I have been in Sir Alan Beith’s flat and it is a very nice flat and for that rent Q156 Chairman: —which you would not otherwise I would have stayed. There would have been no have anticipated. And although that was not directly question; I would not have been thinking to move. from the taxpayer, the Commissioner has expressed a view that the taxpayer ought to have benefited from that sum being made available because it was Q160 Chairman: You said the reason you felt it right the taxpayer who had to pay the rent without which to accept the sum was because you have used those you would not have got the windfall in the first place. sums to improve your staYng and other ways in How do you respond to that given your own which you serve your constituents, but of course personal priorities? there are staYng allowances for all Members of Ms Gidley: That is a very fair question and clearly Parliament. Did you wish to use resources to employ the oVer made me think hard. However, I had more staV than would have been possible for most decided to move anyway and the advice we were Members of Parliament? given from the Dolphin Square people at the time Ms Gidley: I have always spent my staYng was that if we were seeking to move this was the best allowance almost to the maximum and I will be oVer. I felt that if I used that money to cover my absolutely blunt, I have a very small majority, I am moving costs and as down-payment on a flat, then a Liberal Democrat and we have to provide a very, there would be no problem with that because the very gold-plated service to constituents. I have an money would eVectively have otherwise have come oYce that is open all hours. We try to be very from the ACA. I also felt that the wider point of proactive in helping people. I do not wish to be principle was that this was no diVerent to profiting disparaging about some other MPs but we actively from a mortgage. It was my personal thought about try to get to the bottom of every problem and keep it, so I did not think there was any fundamental constituents happy. My background in retail has problem—rightly or rightly—and my personal made me very, very customer-focused, if you like. thought about it was that I actually wanted the That is a decision I made and I think my constituents money to go back into the public purse in some way. have benefited from that extra investment. Processed: 16-03-2010 10:54:43 Page Layout: COENEW [O] PPSysB Job: 002206 Unit: PAG1
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2 March 2010 Ms Sandra Gidley MP
Q161 Chairman: If you had funded for that anybody asked I could explain to them. Two additional staV out of your own pocket, as any other constituents have asked and they seem fairly happy Member could have done, that might have been one with the explanation I gave to them.3 thing but you did so out of a windfall payment which you only received as a result of the rental payments Q168 Chairman: But you did not explain to them at that had been paid out of the public purse? the time that you received this money? Ms Gidley: I did. Ms Gidley: I think it was in the Mail on Sunday and a couple of constituents wrote. Q162 Chairman: Should not the public purse have at least to some extent benefited as a consequence of this windfall which neither the public nor you were, Q169 Chairman: At the time you accepted the funds? as it were, responsible for creating? Ms Gidley: It was afterwards but I explained to them Ms Gidley: The public purse did benefit though what I had done and there was not any come back. because—well, I suppose I have to say that. You usually know if somebody is unhappy. Chairman: Thank you very much. Other questions? Q163 Chairman: The public purse did not benefit because you would not have employed these Q170 Hon Nicholas Soames: Ms Gidley, I would like additional staV otherwise. to ask you a question I have asked all the other Ms Gidley: No, but the public did benefit and I think Members who have been before us this morning. It is that is a very important point to note. quite clear that this was a complicated and extremely unusual transaction, to put it mildly. Q164 Chairman: Is that a subjective judgment as to Ms Gidley: Yes. whether they did or they did not? Ms Gidley: You will have to ask my constituents Q171 Hon Nicholas Soames: Do you not think, even whether they think they benefited from the without the knowledge of hindsight, that it is investment I put in. I firmly believe that the public thoroughly casual that you went ahead with this benefited. It seemed to me a useful and eVective use transaction on the basis of discussions that you had of the money. had in the tea room with other colleagues? It is an extraordinary assertion that the public good is Q165 Chairman: Just one final point on that because served by your selling a lease for which you are I am anxious to be clear as to your view. Putting on paying a large sum of money which then goes to run one side whether the public benefited and looking a constituency oYce. purely at the question of the public purse and the use Ms Gidley: I could argue that the public good is not of public funds, do you in retrospect consider served by MPs profiting from a mortgage. whether it might have been reasonable that either all or a proportion of this windfall should have been Q172 Hon Nicholas Soames: That is not the available to directly reduce the cost to public funds question. The question is: is it not thoroughly casual of the payment of the rent which enabled you to get of you not to have sought professional advice on the that windfall in the first place? use of what was eVectively public money? Ms Gidley: Some of it was of course because I used Ms Gidley: What do you mean by professional it for ACA-related costs. My feeling at the time was advice? that actually this was eVectively private money,but it was my personal feelings about personally benefiting from public money that made me use the money in Q173 Hon Nicholas Soames: The advice of a solicitor the way I did. This was 2005. I might have made a or someone professional and learned in these diVerent decision today. I cannot say. matters and not tea room gossip as you have described it. Q166 Chairman: Things have moved on. Ms Gidley: It would not have occurred to me to Ms Gidley: I cannot say. The whole atmosphere of consult a solicitor. It should have occurred to me what happens has changed, but, eVectively, it did possibly to consult with the Fees OYce. occur to me that other MPs could have taken the Hon Nicholas Soames: Thank you. money and used it personally and I did not really Chairman: Any other questions? want to put them in any sort of trouble really because I felt that if they had made that decision that Q174 Dr Whitehead: You mentioned the tea room probably would have been acceptable. discussion about Dolphin Square and about what to do basically. Were you aware at any stage that two Q167 Chairman: Would it be fair to say your Members, who presumably were part of that approach was that so long as your use of this discussion, had actually received letters from the windfall was not to increase your standard of living Fees OYce but was being used for what you deemed to be beneficial to the wider public, that is how you 3 Note by witness: On re-reading this I recalled that I had not reconciled this as being an acceptable use? mentioned two other constituents who have been in touch more recently raising questions. Both of them were known Ms Gidley: That is how I felt. They were a matter of political activists who are unhappy with anything I do. public knowledge. I think there was a report in the However, it is only right that I draw their response to the Mail on Sunday some time before this and I felt if attention of the Committee. Processed: 16-03-2010 10:54:43 Page Layout: COENEW [E] PPSysB Job: 002206 Unit: PAG1
Ev 22 Committee on Standards and Privileges: Evidence
2 March 2010 Ms Sandra Gidley MP
Ms Gidley: No, and this surprises me because Ms Gidley: Yes, about 14 I worked out that I was usually that sort of information becomes widely given. known. Certainly if I had had a letter like that I would have told all my colleagues and said, “Hang on, have you seen this? Think again.” Absolutely Q182 Chairman: Was most of that used for staYng that would have been the case. The letter was only or a proportion? sent out two or three days before we had to sign on Ms Gidley: No, about £4,000 was used to cover the dotted line. I must admit I tend to be quite a last moving costs, the initial rent is still with my landlady minute person so I freely admit I signed on the day at the moment. As I mentioned, I bought some IT but some people might have signed by that time. I equipment. My home computer was knackered and have to say I feel particularly sorry for Joan Humble, I only use my home computer for parliamentary who was named in the report and who has not had a work, which is a bit sad. So a couple of costs there. chance to put her full side of the story. As a result of I worked out roughly what was left and came to the a chat with her, I said, “You lived in Dolphin Square. conclusion it was about £8,000 and that was what I Did you ask advice? Did you receive one of these paid back, not paid back but paid into my staYng letters?” She said, “No, absolutely not.” I think she budget. originally signed to accept the money but decided to take advice before receiving it. What happened was Q183 Chris Mullin: Could you, if pressed, provide an we had to commit by I think it was a date at the end audit trail for the money you say you spent on of October. Those of us who went could be served removal? notice any time over the next year, so we could not Ms Gidley: I cannot because that is five years ago. I even take a gamble on which financial year any of could probably find the papers for the initial rent, this would fall into, if that was a consideration. that chunk of the money, but the physical removal When she received her oVer she did decide to take costs and all of the other bits and pieces, no, because advice, I understand, before she finally accepted the they were thrown away. I did not think I would need money and contacted the Fees OYce and was told them. But the way I dealt with the staYng budget that this was an entirely private matter. She knows of money was actually to ask for the money to be taken another MP who was given the same advice. I think out of my salary simply because I thought if I paid it this is the frustration that many of us feel that we have found out about this advice quite latterly. The all upfront, I could not have done it in one year, so Fees OYce usually, if there is an issue aVecting a lot this just seemed to be easiest way for me to do it. of MPs, will disseminate that advice, but clearly that advice was not consistently given. Q184 Chris Mullin: So the rent paid on the new flat you could provide an audit trail for. Is that right? Q175 Chairman: The money that you received was You obviously paid a month in advance? £18,000. Was that all used for staV costs? Ms Gidley: Yes, I have got the papers somewhere,. Ms Gidley: No, there was the capital gains, there is £4,000 approximately with my landlady. Q185 Chris Mullin: Right but not for any of the Q176 Chairman: Say that again. other stuV really? Ms Gidley: £4,000 to my landlady. I covered some Ms Gidley: Yes, obviously the payroll people will moving costs otherwise I would have claimed from have details. ACA. I did not claim any moving costs or flat deposit or initial weeks’ rent. Q186 Chris Mullin: That is in relation to oYce costs, but in relation to removal costs no? Q177 Chairman: Roughly what proportion would be Ms Gidley: No I could not because after a couple of used for moving costs approximately? years—we all amass a lot of paper here so Ms Gidley: Before or after we talk about the unfortunately I cannot, but the bulk of that money capital gains? I can. Q178 Chairman: You have to pay the capital gains. Ms Gidley: What proportion of what was left. Q187 Hon Nicholas Soames: Ms Gidley, what happened to the extra people you hired after the Q179 Chairman: Is the £18,000 a gross figure or a money ran out? net figure? Ms Gidley: I actually used it for my staV to work Ms Gidley: That was before. extra hours. I have a number of part-time staV who were happy to work for some extra hours so their hours reduced. Q180 Chairman: A gross figure, right, and the capital gains would have been? Ms Gidley: About 3,800. Q188 Hon Nicholas Soames: Those records will appear, will they? Q181 Chairman: So you were left with about Ms Gidley: Thinking back three years it is diYcult to £14,000, or £15,000, something of that order, not show a direct comparison but I am happy for people exactly but something of that order? to look at my staYng accounts if they want to. Processed: 16-03-2010 10:54:43 Page Layout: COENEW [O] PPSysB Job: 002206 Unit: PAG1
Committee on Standards and Privileges: Evidence Ev 23
2 March 2010 Ms Sandra Gidley MP
Q189 Hon Nicholas Soames: Secondly, Ms Gidley, Ms Gidley: No, I would not have subsidised the staV. there will be an audit trail for the IT because there will be receipts of course. Would you like to tell this Q196 Chairman: You say you would not? Committee what was the IT equipment that you Ms Gidley: I would not have made the staYng actually bought? payment. I might have eventually had to buy a Ms Gidley: It was a computer and a digital camera. computer if it fell over but I had not planned to buy one at that time. Q190 Hon Nicholas Soames: Only a computer and digital camera? Q197 Chris Mullin: When you say extra staYng Ms Gidley: Well and all of the things that go with the costs, were they engaged in public activity or party computer. Again, I no longer have receipts because political activity? they are past— Ms Gidley: It was public activity. Q198 Chris Mullin: All public? Q191 Hon Nicholas Soames: Where did that Ms Gidley: It was mainly casework resource. computer go to? Chris Mullin: I see, thank you. Ms Gidley: As I said, it went to my home but it is used almost exclusively for parliamentary purposes. Q199 Mr Barron: You talked about paying upfront I spend enough time on the computer during the rent and you talked about moving costs. Was that week. I do not want to spend too much time at home. rent or a deposit on the new flat? Ms Gidley: It was a deposit and I think from memory Q192 Hon Nicholas Soames: So after the digital it was either four or six weeks’ rent in advance as camera and the computer and the extra hours and well. the moving costs and the VAT? Ms Gidley: Yes. Q200 Mr Barron: So that was not claimed from ACA? Q193 Hon Nicholas Soames: The rest of the money Ms Gidley: No. went into which allowance? Ms Gidley: Into my staYng allowance. Q201 Mr Barron: Did you exhaust all your ACA? Ms Gidley: I cannot remember. It may have been Q194 Hon Nicholas Soames: So the whole of the close but I cannot remember. It just seemed a bit silly, balance went into the staYng allowance? seeing I had this money, and it seemed to me that the Ms Gidley: I must admit I did not keep a separate purpose of this money should be, if there are any moving costs or deposits to be paid, that it should be audit trail as such because I considered this private used for that. That seemed to me an entirely proper money, but I wanted to use it in a way that would use of the money. benefit the public, so I did not keep a line-by-line account but I made approximations and I feel that Q202 Mr Barron: That would have been claimable the bulk of the money,if not more, was used as I have from ACA under diVerent circumstances? described. Ms Gidley: Potentially. I do not know about the deposits; I have never asked. Q195 Chairman: Ms Gidley, you said because this was private money you did not want to use it in a Q203 Chairman: Any further questions? Ms Gidley, way that would benefit yourself but could I just thank you very much indeed, that is very helpful to probe you on that because if that money had not the Committee. A number of your colleagues have been available, is it not entirely possible you would asked, and you might be interested, when we are still have bought the computer and still have had likely to reach a conclusion. I cannot give you an extra staYng costs which you would have had to pay exact time but it will certainly be before the out of your own pocket and therefore in that sense Dissolution, probably in the next couple of weeks or your own personal circumstances did benefit from so. I cannot give an exact date but it will certainly be being able to fund these forms of expenditure which shorter rather than longer. Thank you very much you thought to be in your constituents’ interests indeed. from this windfall? Ms Gidley: Thank you very much.
Witness: John Barrett MP, gave evidence.
Q204 Chairman: Thank you very much indeed for John Barrett: Thank you and I thank the entire joining us this morning, Mr Barrett. As you are Committee for the opportunity to give this oral aware, the Commissioner has concluded his report evidence. I hope to show that I acted not only within to the Committee but you have exercised your right the guidance and rules of the Green Book but I also to ask to give evidence to the Committee, as have a believe that I acted correctly at all times and I did not number of your colleagues. I am now about to invite favour private interest over public interest. I believe you to make any opening statement and we will then that using a property developer’s money for costs have the opportunity to put any questions to you. associated with my work as an MP while at the same Processed: 16-03-2010 10:54:43 Page Layout: COENEW [E] PPSysB Job: 002206 Unit: PAG1
Ev 24 Committee on Standards and Privileges: Evidence
2 March 2010 John Barrett MP time reducing cost to the public purse was the correct not true. The allowances which enabled oVers to be thing to do. I know that acting within the rules on its made were the allowances which were used and paid own is not good enough any more. There also have for in rent prior to any oVers being made. It was use to be acceptable and justifiable reasons for MPs of the allowances in 2001, 2002, 2003, 2004 and 2005 making decisions in relation to expenses, but having which were paid when we were tenants of Dolphin read through the report and its conclusions I find it Square that allowed the oVer from the landlord to be very diYcult to accept that those conclusions made. It was not anything to do with allowances accurately reflect both the evidence given and the post the oVer being made. Following on from that actions of the Members referred to. The reason I say statement in 328 it states that this was inconsistent this is I think the conclusions have failings which fall with the Speaker’s injunction. As I say, if the into three categories, and I will try and be as brief as allowances were in fact those allowances paid up to I can. The first is that I believe a number of an earlier date this cannot be so. I think the statements in the conclusions are factually incorrect. Committee should be 100 per cent confident that the The second is that I believe a number of conclusions conclusions in the report contain accurate facts, and from the evidence have been arrived at because of a I believe that not to be the case. Secondly, I referred misunderstanding of how the system of MPs’ to a misunderstanding of how the MPs’ expenses expenses actually does work. Thirdly, I would say system works when it works correctly. As I say, I that there are a number of conclusions that have believe that a number of conclusions in the report are been drawn which could only have been justified had in fact based on a misunderstanding. The phrase is additional work been done to justify those used in the conclusion that if MPs had stayed put conclusions. I have done some of that work and I there would have been a reduced call on the public come to the opposite point of view. I did send a letter purse. I would say the flaw in that conclusion is that to the Chairman because as the only one of the six it misses out an understanding that MPs are entitled MPs who self-referred who is standing down I also to and can use the balance of their account for feel there is a natural justice that everybody who perfectly justifiable claims. In my own case I had stayed in Dolphin Square at the same time and had stayed for many years in an unmodernised flat. received the windfall from the property developer Whether the rent went up or down I could certainly should have had their cases looked at, but I accept have used the balance of those claims to pay for the that is not to be the case. I did actually consider as to decoration of that flat. I did not do that and after whether it would have made sense for myself to have four or five years I decided to move to an improved referred all the other MPs who were in similar and redecorated flat. I could have used the balance positions but decided not to do so. I did think that of the ACA and I chose not to do so, so it cannot be other cases of individuals who were named in the directly drawn from the fact that if a rent had gone report, such as that of Mrs Joan Humble, should up or down that the balance was an extra cost or a have her case considered at the same time but, as I saving on the public purse. It is quite well-known say, I have decided not to go down that road. I did that we have our budget set for a range of items, staV not self-refer because I thought I had done anything costs, IT and so on, and one could argue that wrong. I genuinely believed that I was self-referring spending the minimum is a saving to the public purse in order to clear my name. If I can touch on the but, as I say, I do not believe these budgets are factually incorrect statements. There are a number extravagant and employing no staV may save money of statements about the rental of Dolphin Square on the public purse but it would not necessarily flats being met entirely from allowances, and deliver the quality of public service that the taxpayer although it does in parts of the report refer to the fact would expect. I also take exception to the phrase that the rental was not paid during Dissolution, the which is used a number of times that if MPs had report does refer to the payment of the entire rental stayed put this would be the correct thing to do. As by allowances and then goes on to draw conclusions. it says elsewhere in the report, it is perfectly Clearly one of the times that rental was not paid by acceptable for MPs to move maybe to a diVerent flat the public purse was during Dissolution, and in the or an upgraded flat if their own flat is in a poorer case of some of my colleagues the amount that was state. I do not think it is for the Commissioner to say actually paid in the windfall was much less than the that they should stay in specific accommodation in amount they had paid out of their own pockets order to spend less than the amount that has been during the Dissolution periods. Secondly, there is a allocated in the budget. I would contend on this statement in the report which says that Members point that the Commissioner did not fully were well aware in advance that allowances would understand how an MP’s work involves using a not cover that period of Dissolution. That is just not budget eVectively and spending that budget to true. I was never aware of the fact and I know that a deliver the best possible value for money rather than number of other MPs who were flat hunting at the just keeping the costs to a minimum. Thirdly, I think time I was elected in 2001 were not aware when it the conclusions have a mistaken assumption that is came to the next election they would be expected to made on a number of occasions when it relates to the pay for the rental out of their own pocket. There is extra cost to the public purse. I checked through my another statement in the conclusion which gives me ACA published accounts over the entire period and great concern and that was in paragraph 328 which the direct result of receiving the windfall in relation says that “their use of the allowances which allowed to my rent comes to four months of increased rent them to be made these oVers was not above paid at £44, so £176 extra was paid and, again, I reproach”. I would contend that this is again simply think had the Committee been given a detailed Processed: 16-03-2010 10:54:43 Page Layout: COENEW [O] PPSysB Job: 002206 Unit: PAG1
Committee on Standards and Privileges: Evidence Ev 25
2 March 2010 John Barrett MP analysis of the specific extra costs that had resulted though year after year they have cost the public from the change in amount, I think that should have purse much less. With falling interest rates, some of been given for every single MP and it was not in the them are now paying significantly lower per month report. As I say, when I looked at the cost that was in interest than I am paying in rent. I think that it is the additional cost. The savings to the public purse clear from a number of conclusions in the report, following the windfall were much, much greater than and I would argue that in my case I did not put this. Initially, there was approximately £1,400 paid private interest in front of public interest. I did not to HM Revenue & Customs. I think that is an use the windfall for any other costs than those important point because before I draw my remarks associated with me being a Member of Parliament. I to a close I would point out that the Revenue & will stop there and I am happy to take any questions. Customs accepted that this was a payment to an individual. This was not a payment that should have gone to the House and was somehow taken by the Q205 Chairman: Thank you very, very much indeed. individual. Apart from the Revenue & Customs, You have made a number of comments about the several thousand pounds that I could have claimed rental consequences of a decision that you took. Can from the public purse I did not claim. I think that we be clear in our own minds what your evidence is. extra work should have been done in detail and In his conclusions at paragraph 298 on page 90 of the should have been supplied to the Committee. Page report the Commissioner has said you accepted an 102 of the report says that Members like myself, who oVer of £11,234 and then he goes on to say at the end stated that they could have claimed expenses but of that paragraph: “The rent for his protected flat in decided not to, did not leave an audit trail that could Dolphin Square had been £13,462 in the year 2004. be checked. I do not see that is the case. Prior to me The rent for the flat he moved to after accepting the getting the windfall I used to claim certain Cash and Stay oVer was £18,456 a year in 2006. The allowances which I stopped claiming afterwards. I rent on his flat in 2008 was £19,942 a year.” We know did not keep receipts for those allowances but if my that one of the consequences of accepting cash was published ACA is looked at, several thousands of that rents would go up in a way that they would not pounds which could have been claimed have not otherwise have done. Are you disputing any of the been claimed. Finally, there is a conclusion in the facts in paragraph 298 that are stated by the report that the amount should be handed over to the Commissioner? House authorities. Possibly with the benefit of John Barrett: I have a note of the rental figures. The hindsight, the course of action I should have taken rental up to the period the windfall was paid was would have been to have handed it back immediately £14,000—I will get the exact figure here. to the developer, not that that would necessarily have saved the public purse, although it may have Q206 Chairman: Mr Barrett, before you get the perceived to have been in the public interest because figure, I understand that this particular part of the it would have avoided the entire issue. I think it report was actually agreed with you. Therefore you would have in fact cost the public purse more. The are not disputing it? paragraph which gives me most concern is the John Barrett: No, I am not disputing the figures, but conclusion that the taking of the cash benefit and the what I think is not clear in that report is that the rent retaining of this cash benefit meant that we put for the new lease of the flat that I was in, that I personal interest over public interest. Again, received the benefit from, went from £1,190 a month Chairman, I will not go into the details because it is to £1,235 a month. I then moved flat completely and in my evidence, but I did not retain it; I used it for the Commissioner has drawn the conclusion that I costs specifically related to being a Member of moved to a flat with a much higher rent as a result of Parliament. I think had this been detailed in the receiving the windfall. That was not the case. conclusions of the report it would have been clear that the private interest was not put in front of the public interest. As I stated, it does say in the report Q207 Chairman: If you had not accepted the at paragraph 328 that public funds should have windfall and had stayed in the flat you were in, benefited to the full. Were that to be the case the presumably your rent would not have increased in obvious course of action could have been that the the way that it did? House authorities could have asked the developer John Barrett: The rent would have increased by £44 that the money be paid directly to them. It was in fact a month. paid to the individual MPs and those MPs paid tax on that sum of money. I think it was clear that the Q208 Chairman: It would have increased by £44 a authorities did not do so because the House month. authorities neither had a direct interest in the lease John Barrett: It did increase by £44 a month but nor in the discussions which then took place. If I what I am saying is I stayed in that flat for a period could end by saying that a number of changes have of four months. been made in recent months which I think will likely cost the public more. Mortgages with MPs apparently gaining from the public purse are now Q209 Chairman: The oVer which you were made frowned upon. I have always rented property and which you accepted was to receive cash to end your have never been criticised for doing so. Colleagues tenancy and move to other accommodation. I who have bought property have been criticised even understand that is what you did? Processed: 16-03-2010 10:54:43 Page Layout: COENEW [E] PPSysB Job: 002206 Unit: PAG1
Ev 26 Committee on Standards and Privileges: Evidence
2 March 2010 John Barrett MP
John Barrett: That is right. conversations at the time the general consensus of opinion was that this was very similar to giving up a Q210 Chairman: And the consequence of your lease or selling the lease of a leasehold property. decision to do that was that instead of the public purse having to pay £13,000 a year they were having Q217 Chairman: You say that was the general to pay £18,000 a year? consensus but of course we have heard from Sir John Barrett: No. Menzies Campbell and Sir Alan Beith, who were oVered much larger sums than you or other colleagues, that they took the view from an ethical Q211 Chairman: Why not, sorry? point of view that it would be wrong to accept those John Barrett: The reason is the flat I was staying in sums because it was the public purse that had paid which cost £1,191 a month changed to £1,235. That for the rental that allowed them to stay in those flats. was the consequence of receiving the windfall. Did you not consider it? John Barrett: Again, as I said in my evidence, I Q212 Chairman: Forgive me interrupting but the thought this was money coming from a property consequence of you receiving the windfall was that developer. I am quite happy to accept a number of your tenancy came to an end, so it does not matter associated costs that come along with being elected the rental on that particular flat? to be a Member of Parliament, and I took the view John Barrett: That is right. But I actually moved out that I could use this money from the property of that flat before the tenancy came to an end. I developer to pay a number of those costs. asked that I could get out of it. The flat that I moved to was an improved flat, a modernised flat. I had Q218 Chairman: Did it not strike you that you were been flat hunting and I stated that in my evidence only being oVered that sum because of a tenancy that anyway. I had been looking for— was funded out of the public purse and therefore it might not be unreasonable for the public purse, at Q213 Chairman: You are saying you would have least partially if not wholly, to share in the windfall done it anyway? that had been oVered? John Barrett: Yes, and I stated this to the John Barrett: I did not see that the rental which the Commissioner. One of the reasons that I had moved public purse had paid for, which, as I say, had gone flat and had been flat hunting was the flat I had been up £44 a month over that period (and I had paid in for five years had not had any work, decoration or £1,300 of that rental myself during the previous improvement and it was a pretty rundown flat. Also period of Dissolution) was a direct repayment to the during those five years that flat was so tight that I public purse. Had this money come from an expense could not get any family visits down here. or an allowance I would have viewed that it had come from the public purse. This was money that was being given by a property developer. Q214 Chairman: So you had personal reasons for moving? John Barrett: I had personal reasons for moving and Q219 Chairman: We have been told that when leases then when the rent of that improved flat went up come to an end the tenant is expected under the again I had to move back to a smaller flat because terms of the lease to redecorate the property. What rentals were increasing. My correspondence with the was done in the circumstances of these windfalls? Commissioner explained the reason I moved was not That was not required? as a direct result of the windfall. John Barrett: Nothing was done at all.
Q215 Chairman: Can you help the Committee as to Q220 Chairman: Because of the special why when you were made an oVer of many circumstances. That was part of your lease, was it? thousands of pounds arising out of rental payments John Barrett: I think in the lease it said that and a tenancy, which were being largely or entirely properties should be redecorated every seven years. funded by the public purse, you did not think of seeking advice from the Department as to whether it Q221 Chairman: Yes, but also we have been told that would be appropriate for you to accept that money? there was also a requirement when a tenant vacated John Barrett: I read through the documents and I did a lease they should redecorate the property to ensure not take legal advice. it was in the condition in which they had found it. John Barrett: That may well be the case. Q216 Chairman: I do not mean legal advice; I mean advice from the Department, not so much on the law Q222 Chairman: In any event that was not but on the public interest and the propriety of what demanded of you? you were contemplating doing? John Barrett: It was not demanded of me, no. John Barrett: I did not think that the oVer of the amount from the landlord, from the property Q223 Chairman: The world is a diVerent world today developer, was something that the House authorities as it was four or five years ago, but in retrospect, do would necessarily have to give myself advice about. you take any diVerent view today either as to It did not strike me at the time. I spoke with a whether you should have sought advice or as to number of colleagues and asked them. I know from whether some part of the windfall— Processed: 16-03-2010 10:54:43 Page Layout: COENEW [O] PPSysB Job: 002206 Unit: PAG1
Committee on Standards and Privileges: Evidence Ev 27
2 March 2010 John Barrett MP
John Barrett: I still would not have taken advice Q227 Dr Whitehead: Would you say that you from the Fees OYce. As I say, the advice which has decided to use the money to cover other significant been given to me over the years, had I only taken costs? You were elected in 2001 and therefore you advice and not checked it with colleagues, would incurred these additional costs and you mentioned have cost me several thousand pounds. In my the room you had used as an oYce for example. evidence to the Commissioner I gave two clear Would you say that you therefore decided that the examples where the Fees OYce has given very poor money that you had received would cover those advice. One was when the rent was recently capped costs with hindsight or foresight? at £15,000 a year. I went to renew my current lease. John Barrett: I was quite happy to accept a number I still rent a flat behind County Hall— of costs. As I have said before, I have a dedicated room in my house which I use for parliamentary business, and I have never considered claiming for Q224 Chairman: Forgive me interrupting but you that, telephone calls or for a range of other costs. are not suggesting you did not take advice because That had been the case for about four years. I put a from previous experience you did not think the very conservative estimated cost on that of £2,000 a advice was worth taking? year. Knowing that had been the case for four or five John Barrett: That is one of the factors. years, when the windfall was then received and I paid tax on it and other costs which had surprised me which had happened, for instance the fact that the Q225 Chairman: You are saying that. parliamentary authorities did not pay the rental John Barrett: It is one of the factors. As I said, the period during Dissolution and probably will not pay advice about my current rental was that the cap rental during the next Dissolution. Like many MPs would apply to my current rental. My current rental who do not have surplus funds, I have estimated I is several thousand pounds over the cap and I was probably spent about £8,000 to £10,000 in that first told by the Fees OYce that I would have to move out term and would probably be spending about £8,000 or pay about £4,000 myself. I checked this out with to £10,000 again in the next term out of my own pocket, so when a net £8,000 or £9,000 after tax came colleagues and it turned out the Fees OYce was through, I thought that is what I will use that money completely wrong and that the cap did not apply to for. I also realised that things were changing. For on-going leases. I am currently winding up. I have instance, early on, claiming the cost of meals down got it in writing from the Fees OYce that I could in here at Westminster was perfectly acceptable. It had fact give notice when the Prime Minister calls an moved in more recent years as to being very election and during the period of Dissolution my questionable, so I decided that when subsistence of contractual obligations under the current lease will £25 a day was brought in I would not claim that at be paid under the winding-up allowance. I have also all. I was perfectly entitled to claim in the region of got it in writing from the Fees OYce that this £2,000 a year but I also decided not to claim that. I information is factually incorrect and I will have to also decided not to claim mileage, and there were pay the winding-up months from my own pocket. I items like that, they were all put forward because I asked whether I could have something to confirm thought that was the right thing to do. We had had that because I had to now contact my landlord. I this windfall and I accept entirely that had I not been have given my landlord notice to quit and the advice a tenant at Dolphin Square that I would not have that I have now been given is that I will have to wait had that windfall, but I am absolutely convinced for clarification. I am still waiting for clarification that at no time did I benefit personally from that. from the Fees OYce on a subject which has now passed in time and I have had to give my landlord Q228 Chairman: Any other questions? Any final comments you would like to make? notice to quit. You can understand, Chairman, my John Barrett: No, just to thank you for the confidence in the advice is not great. A lot of my opportunity to give oral evidence. I realise it is a colleagues, on the other hand, have 20-plus years’ long, complicated case. experience and when the oVer was made and I spoke to colleagues it did sound very similar to the Q229 Chairman: That is certainly true. Thank you arrangements that were in place when an MP gave very much indeed. Just for your information, and we up a lease of a leasehold property by selling a flat. I have said this to your other colleagues, we will came to that conclusion. The only person I spoke to certainly reach a conclusion on these matters before at that time was my wife and I did not take advice the Dissolution. I cannot give you an exact date but from the Fees OYce or legal advice. it is likely to be within the next two or three weeks we will do so. John Barrett: As I say, as the one Member who is not Q226 Chairman: Her advice is usually better, is it? standing for re-election I will look out with interest. John Barrett: Well, you may say that! Thank you. Chairman: Any other questions from colleagues? Chairman: Thank very much indeed.