Sunday, May 25, 2008

The House of Commons Fees Office Needs Complete Reform

Imagine you are an MP and your spouse is also an MP. Imagine you get a life insurance policy worth a potential £430,000, which costs £867 per month. Each. Is your first thought...

a) to get a direct debit from your own bank account like any normal person
b) to bill the taxpayer

Alan Keen and his wife Ann took option B. The real scandal is that the House of Commons Fees Office approved this transaction. Mr & Mrs Keen will no doubt defend themselves robustly, but whatever their defence is, I suspect it won't wash with their respective electorates.

The full story is in the Sunday Times. I'm not actually seeking to make a party political point out of this as I am sure there are some odd expenses which have come to light for Conservative MPs too. What this episode means is that the whole system needs a complete overhaul and it should be conducted by professional auditors from outside the Parliamentary Estate. The Fees Office has proved itself incapable of running its own affairs.


zendo said...

I hope their constituents read this and dump the pair of them at the next general election.

PS The reason I don't post here often is the stupid word verication
you have. This is my 3rd---and final attempt this evening.
Is it an l, is it a 1 etc.

Anonymous said...

The truly disappointing thing is that so many MP's have effectively abused their expenses system. They sanctimoniously sound off about 'tax payers money' in Parliament and then do this? What makes it worse, so much worse is the way they tried to stop the public finding out about.

All very disgraceful and saddening.

Anonymous said...

It really is time MP's realised that they are OUR servants, we are not their servants!

If they don't come to their senses in the short term and realise the bloody obvious, then maybe, just maybe the 'people' should simply remind them who is the boss.

Anyone else for the barricades?

Anonymous said...

I think you miss the point. This is great news for people with life insurance policies. They can now claim the policies against their tax. If it's a genuine expense, and we have parliment's approval on it from this case as a precident, it means life insurance has just got cheaper.

The more revalations the better. We're on the cusp of a new era. The new era is one where politicians lead, and tell us how to get off taxation, get expenses past auditors, reduce our overall tax bill. ...


Anonymous said...

I am very glad you raised this issue of the corrupt practices of MPs in relation to their expenses. The whole business makes my blood boil.

How did the grasping Blairs ever get away with remortgaging their constituency home for double its value - to raise cash for other house purchases - then claiming their resultant £90K mortgage from the taxpayer?

and all the while the Blairs had free use of TWO taxpayer funded other houses gratis.

Why was the taxpayer saddled with paying for their bloody aga?

And why is the taxpayer forced to pay the mortgage on grasping Brown's constituency home plus the full cost of his homes in Downing Street and Chequers plus all manner of other expenses?

What greedy b*stards they are.

So that's what Brown means by social justice, he and his family's snouts deep in the trough funded by hard working people's taxes.

We should buy a hotel to accomodate MPs with free secretarial services and postage and MPs should be allowed to claim for nothing else.

Anonymous said...

You say 'I suspect it won't wash with their respective electorates'. I only wish that were true. Chiswick residents (Chiswick is the largest, but unmentioned part of the Brentford and Isleworth constituency - you know, the bit that pays for it all) have long been pulling their hair out at the antics of the K££ns, as they are known. See endless threads on the discussion forum for details. None of us has any idea what they do when they're not lining their nests - Ann Keen doesn't respond to constituents or hold regular MP surgeries.

Sadly, we seem to be in one of those constituencies where Labour could field a monkey and still get elected.


Anonymous said...

I'm happy that my MP is well paid, I'm fine that she is paid for travel to and from the constituency, I don't mind that she employs her husband and other staff.

I'm not happy to pay on top for her life insurance, shopping, TV licence etc because that is what her WAGE is for.

Anonymous said...

And these are the kind of people, along with Conway, Maclean, Beckett, Hain et al, who have the gall to dictate to us on ethical issues such as abortion!

Anonymous said...

That seems alot for life insurance - I think I pay £33 for £500K for myself with Standard Life.

Perhaps you ought to get an online quote for them - how old are they both?

Unsworth said...

The Fees Office should be removed from the Houses of Parliament and relocated elsewhere. The staff are in every sense far too close to MPs. And its terms of reference, reporting and answerability need radical overhaul.

Colin said...

Never mind the insurance, the real scandal with A & A Keen plc is their housing arrangement.

This pair represent neighbouring constituencies in west London ( Feltham & Isleworth), yet they felt the need to use our money to buy a luxury pad in central London. Technically what they have done may be within the rules, but that doesn't make it right. This particular pair of parasites should be exterminated asap - we can't afford them...

Praguetory said...

Tobin - I don't think there's any need to be despondent in a seat that is Conservative target 64 and swung hard in the 2006 locals. Ann Keen will be kicked out next time. Keep plugging away.

Anonymous said...

Perhaps all MPs should be forced to disclose their expenses on their websites like Nadine Dorries does?

Anonymous said...

Because of this story I have found that the new Tory prospective parliamentary candidate for Brentford and Isleworth is Mary McLeod and that the Tories have taken control of LB of Hounslow!

So this is the prime time for all Tories in this borough to start raising their profile as you can see from Tobin's post we Chiswickians do not know!!

Anonymous said...

Ian - A scandal certainly. And possibly even more so if this insurance is an endowment policy - ie, if they actually get money back from the insurance company at the end of say 10 years this could represent a simple transfer of money from the tax payer to their pocket.

Now that surely has to be wrong.

Anonymous said...

The life policy needs further investigation...

Life Insurance as a condition of a mortgage was stopped many years ago - I believe the predecessors to the FSA (SIB), claimed it was miss selling where it was a condition as many people (single people for example) did not need life insurance, it was an unnecessary expense.

As the Keens mortgage would be paid if either of them died (by the taxpayer, as it already was being paid), it was unnecessary and was miss sold (or miss purchased).

Furthermore, the policy was Whole of Life. These are usually Unit Linked policies and can build up a cash sum within them, effectively you are paying higher premiums in the early years, which go into the fund, and the fund is used to pay the increased real cost of premiums when you are older - so as to maintain a level premium throughout your life.

However you can surrender the policy at any time and withdraw the fund that has accumulated - perhaps when you retire as an MP for example?

Nice little tax free fund, paid for by the tax payer.

Then there is the fact that their Brentford family home, in Mrs Keens constituency, is no more than 10 miles from Parliament in one direction, or 10 miles from Mr Keens constituency in the other.
What is the problem with commuting to work like the rest of us?

There was no real need for a £500,000 London flat paid for at the taxpayers expense.

It is time the Revenue took an interest in the expenses that have been claimed and paid.
If MP's get away with fiddling their employer, that is bad enough.
If they are failing to inform the Revenue of the expenses claimed, that were not claimed "wholly and exclusively in the course of their trade or profession" then they are a taxable receipt.

Finally there is a very simple remedy for this 2nd home con. It does not require dormitories and the like.

The MP's additional cost allowances for 2nd homes should work in the same way as the much touted equity share mortgages for Key Workers that Brown likes to extol the virtues of - for Nurses, fireman and other low paid key workers.
Under that scheme the key worker only benefits from the increase in property prices in relation to the amount of equity they personally funded. They do not benefit from increases in equity for the part of the property that is subsidised (funded by the taxpayer).

The scheme already exists for key workers - MP's are no more than that.

Anonymous said...

It has nothing to do with the cost of running a second home. It should not have been allowed.

As well as the Additional Cost Allowance, are there expenses that can be claimed for the first home as well?

Anonymous said...

One other question about the policy...

I wonder if they had the commission rebated?

If you take a policy through a fee based advisor (perhaps your accountant), whilst you might pay £100 for the service on a simple, limited advice product like this, to back a mortgage, the commission would be several thousands of pounds on such a high premium.

I hope they didn't miss the opportunity to trouser a few thousand pounds at the start.

Anonymous said...

By the way, that was Ann Keen strolling round a hospital with Gordon on Friday post the by-election.


Alex said...

The purpose of covering mortgage payments is to pay for accommodation while they are MP's. They could do this but they choose to buy rather than rent. Any costs and risks associated with ownership rather than rental should be for the accopunt of the MP's. That includes any life insurance to cover the capital repayment.

The Keens should be ordered to repay the costs of life insurance premia that they have claimed.

Anonymous said...

The whole system needs rethinking.

It should be based on MPs being able to claim for the genuine additional costs involved in carrying out their duties - similar to any other expenses regime.

Therefore they should be able to calim reasonable costs to stay in london - but not end up owning a second home as a result.

They should have to put in proper receipts for everything they claim, etc.

Anonymous said...

This from the lot who like to lecture us on the morality of tax avoidence which is just as legal as "within the rules". It would be good to see HMRC give them a good working over. Such expenses received by a company employee would be taxed on the benefit in kind.

Victor, NW Kent said...

I sent an email today to my MP. The gist of it is "Please believe me when I tell you that moves to increase MPs pay by 25% and allow them an unvouchered tax-free £23,000 expenses are angering the public. This is the same public which is reeling under tax increases, horrendous fuel and power increases, soaring food prices and increases in council tax and public transport as well as prescription fees.

Parliament risks the absolute contempt of the voter. Somebody must try to halt this, another symptom of political moral corruption".

May I ask all of you, irrespective of allegiance, to send something similar to your MP.

Anonymous said...

What I find puzzling about MPs expenses is the role of the Inland Revenue. In every company I have ever worked, all expenses bar the most trivial had to be itemised, receipted and declared to the Inland Revenue so that they could be taxed as income.

Did I miss something? Has a law has been passed exempting MPs from normal rules of taxation? I cannot think of any other reason why their expenses should be free from investigation and justification to the tax authorities.

Anonymous said...

The House of Commons itself needs reform: You shouldn't be allowed to stand for a seat until a certain age (say 40), and the salary should be linked to the average earnings, possibly multiplied by some constant.

This would allow every candidate an opporunity to prove his worth in the real world beforehand, and stop the rise of these 'career politicians'.

Unknown said...

The Fees Office staff seem to have been acting as advisors to MPs assisting in how to get their claims accepted up to the monthly limits. A better managed run Fees Office would have refused to do this and would not have paid out any monies unless fully justified under the Green Book Guidelines. That's where the problem lies.