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Garbled Article in The Times about Mortgage etc

There has been a garbled article published in The Times today about the mortgage on my london flat.

It is based mainly on what I put on my weblog in May 2009 here

It gets a bit complex with me having a mortgage on Fletcher Buildings then clearing it and then getting another one.

It remains my view that what I did was not only within the rules and cleared by the authorities at the time, but also saved money for the taxpayer.

If you look at my posting of May 2009 you will find that my personal expenses over a period of years were £45,075 less than those of Khalid Mahmood MP.

There were other options such as selling and repurchasing or renting out my own flat and renting another via ACA. Those would have cost the taxpayer more.

What doing this achieved, as opposed to simply leaving the flat without a mortgage, was to enable me to put more revenue expenditure into the subsidy that I provide to my constituency activities.

I know that parliament now doesn't allow MPs to buy properties - so this could not be done by an MP elected in 2010. The concentration should be on reducing costs, but instead is on having a system that no-one can critise. The end result is becoming a mess.

I also stopped claiming second home expenses in early 2009 as a measure to reduce the deficit. (aka save the taxpayer money).


PoliticalHack said…
So you didn't stop claiming at the point when the press started digging into the whole expenses morass?

For a man with an extra-parliamentary income of £200k, is it ethically justifiable to say that you had to 'reorganise your finances because your income was going down'?

Is it right to take out a mortgage on a property that you already owned outright, apparently so that you could lodge a claim? What was the need for the mortgage?
john said…
Expenses are not means tested. They are paid in order to do a job. That is the same for travel costs to london or the costs of staying in London.

I have historically planned my expenses claims with a view towards being the lowest cost MP in Birmingham.

That I am continuing to do.

There were alternatives to taking out the mortgage such as selling and renting or renting out the flat and renting another. The option of putting the mortgage on cost the taxpayer less.
PoliticalHack said…
The lowest cost option to the taxpayer was to use your second home, which was fully paid up and would not have cost the taxpayer £875 a month for three years. I have no problem with the ongoing costs - utilities, service costs, etc - as they are reasonable for an employee working in two locations.

This isn't about other MPs in Birmingham, they can justify their own claims. It should not be about being the cheapest MP, but about the most effective. Expenses claims should not be planned as soem sort of loss leader, but should be to reimburse for costs incurred as a result of your parliamentary duties. That's what the form specifies - the form that you signed whenever you claimed expenses.

You took out an additional mortgage to allow you to pay off a debt against another property unrelated to your parliamentary work. Is that consistent with signing the statement on ACA2?
john said…
It is entirely consistent with what it says on ACA2.

"I confirm that I incurred these costs wholly, exclusively and necessarily to enable
me to stay overnight away from my only or main home for the purpose of performing
my duties as a Member of Parliament."
Chrissie Heavey said…
Thank you Political Hack for getting things cleared up for us by asking these questions.
I can see that John unlike many other MP's did not take the P...
There is a difference.
matt said…
The Parliamentary rules says

Mortgage and rental arrangements

PAAE must not be used to meet the costs of renting a property
from yourself; a partner or family member (including a spouse
or civil partner); a close business associate; or an organisation or
company in which you or a family member have an interest (other
than as an ordinary investor).

PAAE must only be used for mortgages taken out with a company
subject to regulation by the Financial Services Authority.
In all other circumstances Members
must contact the Department.

Members are also strongly encouraged to keep mortgage
arrangements as straightforward as possible. Complicated financial
products, which may make it difficult for the Department to advise
Members as to their validity, should be avoided.

The Department must be consulted in advance

You are not allowed to claim rent or mortgage payments on a home that you already fully own

So I still do not understand, how you can re-mortgage a house (in order to be able to claim Mortgage Interest) and then use those funds raised from the mortgage to buy business premises,

That is clearly using the public’s taxes for personal gain and profiteering.

That seems obscene to me and I can not begin to conceive how this can be deemed as acceptable behaviour.
john said…
You miss two key points:

Firstly, I did not benefit personally because the money was recycled into constituency and case work support.

Secondly, the rules have changed over the years and you are quoting from the current rules.
matt said…
how did you not benefit personally?

The money you raised through a mortgage, you used to pay off the mortgage you had on Business premises.

Those Premises are now owned by yourself.

Therefore you have personal gain.

The way I understand ACA was

It was designed to encourage people who did not come from a wealthy background, to become MP's

It was meant for the use of constituency MP's out of London, to be able to rent or buy a 2nd home in London to be able to carry out parliamentary activities.

The fact that you already owned 2 properties in London, though 1 was rented out, surly meant as you already had a property in London, that you where living in, that was fully paid for, you could not claim rent and you could not claim mortgage expenses, on a mortgage that didnt exist.

So you took out another mortgage,(which you then claimed as ACA) And used the Funds from the Mortgage to pay of your business expenses.

And you have another home in your constituency which you designate as your main home.

how is that not against parliamentary standards. Please do not justify, what was cheaper to the tax payer. The fact remains you had a home in your constituency, and 2 properties fully owned by yourself in London. So why would you be entitled to claim ACA in London, apart from the standard utilities and food costs?
john said…
I did not benefit personally because I recycled the money (and more) into constituency and casework support.

Rember that the relevant sums are the interest and not the capital.

It was clearly within the rules at the time it was done (over five years ago).

-- you will note that this is what I said in my previous post.

There is no sense me repeating this again after this post.
PoliticalHack said…
But you used the money to pay off the mortgage on a property well outside the constituency and one that has never been used to support residents in Yardley - except as a base for printing political leaflets and party organising.

The point is not whether you personally benefitted, but whether your claims were in line with the rules. You could argue that constituency support and casework effectively bolsters your position as an MP and therefore contributes to your continued status, so does provide an indirect (and hard to measure) benefit to you.
john said…
The claims were clearly within the rules as was checked at the time.

The argument that because it benefited constituents it also benefited me gets a bit remote.

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