Explained: the rent expenses ‘loophole’ used by MPs to pocket taxpayer cash

MPs including five government ministers are using the parliamentary expenses scheme to cover rental payments while making at least £10,000 a year each letting out properties in London, an investigation has found.

An analysis by The Independent of expenses claims found that over the past five years, a total of 17 MPs have used a loophole to claim a total of more than £1.3m in taxpayer-funded cash.

The findings have prompted anger and calls for reform as Boris Johnson's government “faces growing pressure over a deluge of ‘sleaze’ claims”, said the paper.

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‘Makes no sense’

According to The Times, “many of the MPs who benefit from the system are themselves highly critical of it and claim that they have been pushed into the arrangement” by the Independent Parliamentary Standards Authority (Ipsa). “They say that ultimately it costs taxpayers more,” the paper continued.

The loophole was created in 2010, when the expenses watchdog banned MPs from claiming mortgage interest payments following a separate expenses scandal. The move was “intended to stop them from making capital gains on taxpayer-funded properties”.

Ipsa said the new rules would only allow MPs to claim for “rental payments and associated costs”.

Some MPs who already owned London properties criticised the crackdown on mortgage expenses, arguing that they were being forced to subsidise the cost of having a second home that they needed in order to spend time in both London and their constituencies.

“To get round the new system – and not to lose out financially – some MPs decided to let the homes they owned in London while renting another property and claiming up to £22,920 per year from Ipsa,” said The Times.

Landlord MPs

The Independent reported that 15 Conservatives and two Labour lawmakers were making cash as “landlord MPs”.

The group include Tory former attorney general Geoffrey Cox. The Mirror revealed earlier this week that Cox “rakes in” around £1,000 a month by renting out a property in Battersea while claiming £1,900 to rent another property in the capital.

Cox is also currently “facing scrutiny over the £1m a year he earns as a lawyer”, said The Times. The row has been fuelled by suggestions that he used his parliamentary office while performing duties attached to his second job.

The five current ministers who have also claimed for rent while letting out London homes include International Trade Secretary Anne-Marie Trevelyan, Defence Secretary Ben Wallace and Foreign Office Minister James Cleverly.

Trevelyan “has claimed £106,000 in expenses” since 2016, according to The Independent, while Wallace and Cleverly claimed more than “£110,000 in taxpayer-funded rent” and “£71,000 in expenses” respectively.

Prisons minister Victoria Atkins and junior Treasury minister John Glen are reported to have used the loophole too.

Other Conservative MPs to have benefited from the scheme include former trade minister Liam Fox, former media minister John Whittingdale, Philip Davies, Robert Goodwill, Laurence Robertson, Sir Geoffrey Clifton-Brown, Anne Marie Morris and Greg Knight.

Labour MPs Geraint Davies and Clive Betts have claimed £67,000 and £44,000 respectively “in taxpayer funding to rent a home”, said the paper.

But Tory backbencher Damian Collins “has the single largest rent expenses submission, claiming just over £148,000” over the past five years.

‘Virtue-signalling’

Alistair Graham, former chair of the Committee on Standards in Public Life, is leading calls for the loophole to be closed.

“It may be within the rules, but it’s quite wrong for MPs to use the public purse in this way,” he told The Independent. “MPs have a duty to claim only public funds that are necessary.

“If there’s an opportunity to end the loophole allowing them to do this, then we must take it. There is a growing feeling that the rules must change.”

Some critics have suggested effectively “means-testing” MPs before deciding whether they should be able to claim taxpayer funds to pay their London rent. However, an Ipsa spokesperson said the “view has not changed that an MP’s personal financial situation is not a relevant ‘test’ for whether they should receive support”.

“We do not want to judge an MP’s private arrangements and whether or not they should live in a property they own,” the spokesperson added.

“Our concern is to ensure that MPs have the appropriate support they need to carry out their parliamentary roles, including suitable accommodation in two locations.”

Despite the regulator’s defence of the system, some MPs remain unconvinced.

“You could not invent a more stupid system,” an unnamed Tory MP told The Times. “It’s inconvenient for MPs, it’s expensive for the taxpayer and makes no sense. It’s virtue-signalling.”