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No. 10 Morning Press Briefing From 16 July 2008

Morning press briefing from 16 July 2008

Briefing from the Prime Minister's Spokesman on: MP's expenses and fuel duty...

MP's Expenses

The Prime Minister's Spokesman (PMS) told the assembled press that the Leader of the House was in the process of tabling a Written Ministerial Statement setting out the Government's position on the matter. Since the vote on the 3rd July, the Leader of the House had had a number of discussions, not only with Members of Parliament, but also with the chair of the Committee on Standards in Public Life and the Comptroller and Auditor General.

The written statement that she was publishing made a number of proposals. Firstly, the Green Book that sets out the rules on entitlements to allowances, should be re-written by the Advisory Panel on Members Allowances, including abolishing the so-called John Lewis List. The Advisory Panel on Members Allowances would keep the Green Book under review and would advise on any further modifications to the rules that may be required, including what the reasonable costs of mortgage interest for a second residence were.

We were also proposing consulting on changing the additional cost allowance, so that the reasonable reimbursement of the cost of furniture and other household goods was capped at 10% of the additional cost allowance in any one year. We would strengthen the Advisory Panel on Members Allowances by increasing its membership to include two independent, external appointees. There would also be an external financial audit by the NAO, covering all of the allowances in the Green Book, not just the additional cost allowances, but also allowances relating to travel, staffing costs, incidental expenses and the communications allowance.

This was something that, following the vote on the 3rd July, the Prime Minister had said was an issue that would need to be looked at again. That was why the Leader of the House had been in discussion with MP's and other people and had been working on a series of proposals for several weeks. In light of the late decision taken by the opposition to change the subject for the opposition debate today and in light of the fact that there was going to be a debate anyway at short notice on MP's expenses, it was decided that we would set out the full Government position today.

This would be a whipped vote on a Government amendment, on the basis of the amendment tabled by the Government and the proposals set out in the Leader of the House's written statement.

Asked whether the House would go through and give figures of what was acceptable for every type of claim, the PMS said that this was something they would have to look at. In the Government's view, the issue with simply restricting the additional cost allowance to mortgage interest payments, council tax and utility bills was that there was a risk that that could encourage MP's simply to take out very large mortgages. MP's had different circumstances and some could decide that it was better for them to rent or to live in a modest house and therefore there was a debate to be had about what the appropriate balance was between what was a reasonable mortgage interest payment that could be claimed and what were the reasonable costs for furnishing a second home.

The PMS added that he didn't think anyone was questioning the right of MP's to be reimbursed in a reasonable way for costs of running a second home, which was associated with being an MP. We needed to look at what a reasonable balance was of entitlements under the additional costs allowance between mortgage interest payments and for example furnishing expenses. We were making clear that the costs of furnishings should be capped in terms of the amount that could be claimed at 10% of the total.

Asked what the abolition of the John Lewis list would mean, the PMS replied that what it meant in practise was that it would be for the NAO to decide the basis on which claims for furnishings and other items should be assessed. So it was actually an NAO list. Put that the Government seemed to be abolishing something without knowing what would be put in its place, the PMS said that we were abolishing it and it would be replaced by a better system, which had tougher audit revisions in it and a stronger role for the NAO. Asked who would be deciding what the reasonable costs were of furnishing a second home, the PMS said the alternative proposal was that MP's could claim all of the additional cost allowances, up to the full limit from their mortgage.

What we didn't want to do was create a situation whereby MP's were incentivised to take out large mortgages. They could for example choose to buy an expensive furnished home and deal with issue that way, but that was clearly not something the Government thought was sensible and that's why we thought it was right that there was a dispassionate and reasonable review of what the right balance should be.

Asked why the Government decided against an independent, external audit system, the PMS said that there were a number of practical issues that were raised during the course of the debate a few weeks ago. That proposal did strengthen the internal audit procedures and the overall system was being audited by the NAO. Put that wasn't it the case that during the initial debate, the Prime Minister thought that an external audit was the best approach, the PMS said there would be an external audit of the overall system.

Asked if this reverted to the decision reached by the House of Commons last time, the PMS said that we had built on that decision. What the House voted on last time was for a strengthening of the internal audit procedures. Put that if the price of furnishings was capped at 10%, which was about £2400, would the NAO check that people had simply not spent more than that or would they go through each individual item, the PMS repeated that what the Written Ministerial Statement said was that there would be an external financial audit by the NAO, covering all of the allowances in the Green Book and not just the additional cost allowance. It would be for the NAO to satisfy itself that their audit procedures were sufficiently robust.

Asked whether the Prime Minister was happy with the way the vote went two weeks ago, considering that the Government was building on that, the PMS said that the Prime Minister said at the time that he was disappointed by the way the vote had gone, but we would have to come back to the issue. We were coming back to it with a set of proposals which were more transparent and which strengthened the procedures around MP's expenses.

Asked why it was a whipped vote now and not then, the PMS replied that the Prime Minister had said last time that this was something we would need to revisit. The PMS said that the Prime Minister was not satisfied with the outcome of the vote last time and in light of that, the Government had decided to bring forward its own proposals.

Asked why the Government was not scrapping the huge increase in the London allowance, the PMS said that the Green Book setting out rules on entitlements to allowances would be re-written by the Advisory Panel on Members Allowances and that may well be something that they looked at. Asked if the Prime Minister would be there to vote on it, the PMS said that it was very much the expectation that he would be there.

Fuel Duty

Asked why the Chancellor had chosen today to postpone the 2p rise in fuel duty and did it have anything to do with the fact that there was a by election coming up, the PMS said that that was not the case. There were a lot of precedents for the postponement of autumn increases in fuel duty being made before the summer break. This was the case in 2004, 2005 and it was the case in 2006. The Chancellor had done this now because he wanted to end any remaining uncertainty.

Asked if there was an argument for not doing these staged increases as the Government often ended up not doing them anyway, the PMS said it was not the case that we had always postponed them, but it was right that we took decisions on tax based on the best information we had at the time. We had always said consistently that the Chancellor would come back to this decision in advance of its implementation on the 1st October. We had never said that this was simply a matter for the Pre-Budget Report (PBR).

Asked if it was consistent with purdah rules, the PMS said it was completely consistent with them. Asked whether consideration would be given to cutting fuel duty, the PMS said that any future decisions on tax were a matter for the Chancellor in the PBR and the Budget.

Asked if this was an acknowledgment by the Government that oil prices were unlikely to fall, the PMS said that the reasons for the Chancellor's decision were set out in the statement issued by the Treasury today.

ENDS

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