The Legislative Origins of the MPs' Expenses Scandal
| DOI | http://doi.org/10.1111/1468-2230.12003 |
| Author | David Stopforth,Gavin Little |
| Published date | 01 January 2013 |
| Date | 01 January 2013 |
The Legislative Origins of the MPs’ Expenses Scandal
Gavin Little*and David Stopforth**
The MPs’ expenses scandal of 2009 was one of the most controversial Parliamentary events of
modern times. It had a profound impact on public perceptions of MPs and led to the Parliamen-
tary Standards Act 2009.Little academic consideration has, however, been given to the legislative
origins of the scandal and the role of ministers and MPs in the creation of the system for MPs’
expenses under the Finance Act 1984. Using official documents obtained by Freedom of
Information requests, weconstruct a comprehensive historical analysis of how – without one word
of debate in Parliament and only minimal media coverage – ministers and MPs created a special
statutory scheme for their own benefit, which they had effective control of and which exempted
their expenses claims from the rules applying to other UK taxpayers and the jurisdiction of the
Inland Revenue.
INTRODUCTION
The scandal over MPs’ expenses has had profound consequences. The
publication in 2009 of the details of MPs’ expenses claims by the Daily
Telegraph1– which until then had been kept out of the public domain – led
to the resignation of the Speaker of the House of Commons, the conviction
and imprisonment of a number of MPs, significant legislative change and a
major crisis of confidence in Parliament, senior politicians and standards in
public life.
There is, however, little academic analysis of the development of the
system for MPs’ expenses during the 1970s and 1980s.2This is remarkable,
given the serious consequences which were to follow twenty-five years later.
Our objective is therefore to use official papers released following Freedom of
Information (FOI) requests to develop a detailed narrative which explores
the controversial history of why and how the law governing the tax treatment
of the MPs’ Additional Costs Allowance (the ACA), which became known
as the second home allowance, developed in the way that it did. The FOI
requests were made to a number of government departments3in May 2009,
and the Treasury responded. After extensive correspondence, a significant
number of official documents was released in November 2009 and, given
*Professor of Public Law, The Stirling Law School.
**Professor Emeritus of Revenue Law,The Stirling Law School.
1 See generally R. Winnett and G. Rayner, No Expenses Spared (London: Bantam Press, 2009).
2 A number of the issues and sources analysed in detail in this paper havebeen discussed in summar y
in the broadsheet and professional press: see D. P. Stopforth,‘How the MPs got their way’ Daily
Telegraph 23 May 2009; ‘Starting the gravy train’(2009) 164 Taxation 496 and ‘Keeping the gravy
train running’ (2009) 164 Taxation 522.See also I. Cowie,‘Margaret Thatcher and MPs’ expenses’
Daily Telegraph 9 Apr il 2010.
3 ie HM Treasury, HM Revenue and Customs and the Cabinet Office.
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© 2013The Authors.The Modern Law Review © 2013 The Modern Law Review Limited. (2013) 76(1) MLR 83–108
Published by BlackwellPublishing, 9600 Garsington Road, Oxford OX42DQ, UK and 350 Main Street, Malden,MA 02148, USA
the wide public interest in MPs’ expenses,4the Treasury published them on its
website.5
The paper is set out as follows. Br ief consideration is given to the events of
2009 to provide context for the historical analysis, before focussing on the
creation of the ACA in the 1970s and its status under tax law.We then develop
a detailed and at times surprising account of how Ministers and MPs reacted
in the early 1980s after the Inland Revenue (the Revenue)6criticised the lax
operation of the ACA by the House of Commons authorities and insisted that
excessive claims should be disallowed.The ways in which Government Ministers
over-powered the Revenue and secured the support of the then Prime Minister,
Mrs Thatcher, for special tax legislation for MPs are scrutinised. Thereafter, we
analyse the Byzantine arrangements made for the passage through Parliament of
the resulting provision – section 28 of the Finance Act 1984. Its controversial
substance and effect is then evaluated.Finally, the key events and issues to emerge
from the study are brought together in a short conclusion.
MODERN CONTEXT: THE PARLIAMENTARY EXPENSES
SCANDAL OF 2009
Following the coming into effect in 2005 of the Freedom of Information Act
2000 (the 2000 Act),attempts were made to have the expenses claims of a small
number of leading MPs made public.7These were contested vigorously by the
House of Commons authorities. Both the Information Tribunal8and then, in
2008, the Divisional Court,9decided that there was a strong public interest in
information about the system of MPs expenses being made available.As a result,
an attempt was made in Parliament to exempt MPs’ allowances from the require-
ments of the 2000 Act: it was, however, recognised that the information would
have to be published.10
In May 2009, in a dramatic intervention, the Daily Telegraph published the full
details of many MPs’ expenses claims and the payments which were made to them
by the House of Commons authorities.11The infor mation,which had been leaked
to the newspaper, was very much more detailed than that which the House of
4 Letter from Kate Jenkins, Head of HM Treasury Rights Unit, to Professor David Stopforth 3
November 2009.
5 The official documents released under FOI can be accessed from the HM Treasury website at
‘1983/84 correspondence on MPs expenses – leading to clause 28 of the Finance Act 1984’ 3
November 2009 at http://www.hm-treasury.gov.uk/foi_expenses_1984.htm (last visited 6 Feb-
ruary 2012).
6 Now HM Revenue and Customs.
7 Information was requested in relation to 14 MPs, including former Prime Minister Tony Blair.
8Corporate Officer of the House of Commons vInformation Commissioner, Information Tribunal Decision
Notice, 26 February 2008, EA/2007/0060.
9Corporate Officer of the House of Commons vThe Information Commissioner and Others [2008] EWHC
1084 (Admin).
10 House of Commons Library,‘MPs’ allowances and FoI requests’ 22 June 2009, 12–20 at http://
www.parliament.uk/documents/commons/lib/research/briefings/snpc-04732.pdf (last visited 7
June 2012).
11 See generally Winnet and Rayner, n 1 above.
The Legislative Origins of the MPs’ Expenses Scandal
© 2013 TheAuthors. The Modern Law Review © 2013The Modern Law Review Limited.
84 (2013) 76(1) MLR 83–108
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