We would like to respond briefly to the articles in the Mail on Sunday and other media covering the flat we use in London. Like any other employment which requires people to work away from home, living expenses can be reclaimed fromI reprint their statement, partly because I'm sure few others will do so, but also because it highlights the problems which surround this second home allowance. It is quite clear that the have broken no rules and sought clearance for the arrangement, yet they face vilification in the press. I make no pretence of understanding the accounting arrangement they have gone through so I am not going to to comment on it one way or the other, but those who are critical should remember the fact that it has been sanctioned by the Fees Office. If criticisms are to be made, they should be directed at the House of Commons authorities.
Parliament up to a prescribed limit. In the late 1990s, we took advice from our solicitor and accountants about our likely inheritance tax liability, as so many families do. As a result of the advice given to us, we paid off the mortgage on the flat with the proceeds of a small legacy and an insurance policy which had just matured.
We were further advised to put the flat into a Trust for which there are three Trustees (our solicitor and ourselves) who administer the Trust on behalf of the beneficiaries. We no longer own the flat and in order to meet the objectives and terms of the Trust, we are obliged to pay the full market rent which is recommended by an independent valuer/estate agent. The current rent is not £30,000 per annum
as stated in the press articles but is in fact £21,600 per annum.
Before we proceeded, the arrangement was agreed by the Fees Office and we clearly would not have gone ahead unless this had been the case. If we did not use our present accommodation, we would have to rent or buy other accommodation (for which legitimate expenses could be claimed as now) and there is, therefore, no additional cost to the taxpayer from the present arrangement.
More often than not we travel together by car off peak saving both on mileage allowance and very substantially on the high cost of rail travel. It is also a fact that we are both in the lowest quartile as far as Parliamentary expenses are concerned and we seek to use the allowances available as prudently and responsibly as possible.
The 'Second Home' allowance is something which causes huge controversy among the media and voters. What sticks in many people's throats is the ideas that MPs can make a huge capital gain from these properties and question why that gain isn't returned to the taxpayer who has paid for the property in the first place (well, the mortgage interest, to be more accurate). It used to be the case that 40% of the gain was indeed returned to the taxpayer through CGT, but with the new arrangements, MPs will benefit even further.
Those who complain the loudest, though, fail to come up with an alternative. Dormitories for MPs?! It is clearly not possible for MPs to maintain two houses - one in the constituency and one in London - on a salary of £60,000. If you think it is, then what you are arguing for is a new cadre of MPs who are rich and can afford to keep themselves from their own resources.
So what do you think an alternative to the second home allowance could be?