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expenses scandal, politics MPs expenses, Uncategorized

Death by capital gains. Flipping MPs worry who’s next.


Dozens of MPs are returning to their constituencies this weekend deeply worried, and not just Peter Bone, who is the latest Tory MP to have his expenses under the microscope.  The backwash from the Maria Miller resignation could be about to hit a whole raft of MPs who have made large sums of money from the sale of their second homes.  The gentlemen from the press will be scouring the records to find out just how many might have benefited as Maria Miller did from flipping – the widespread practice of selling second homes in a rising property market.

The moment the public learned last weekend that the Culture Secretary had bought a £1.2 million barn conversion in Hampshire with the proceeds from the sale of her largely taxpayer-financed “second” home, she was toast. It wasn’t the perfunctory apology, the dodgy re-mortgages, the threats to the press or the obstructive behaviour toward the Standards Commissioner. It was the capital gains wot done it.

Her parliamentary expenses allowed her to access the cash machine that is the crazy London property market, where a house worth a couple of hundred thousand can, in a decade or so, rise in value to £1.4m, leaving £1.2m profit. Ms Miller only received around £90,000 of the taxpayer’s money to pay interest on the house she shared with her parents. Leverage did the rest. The Standards Commissioner thought she should repay £45,000; MPs on the Standards Committee chopped that back to £5000. But in the eyes of Joe Public, this minister got away with more free money than most people can earn in their working lives.


Ms Miller had a strong defence. She said she had acted within the rules as they were at the time and that is true. Many MPs flipped houses before the 2009 scandal. They were allowed to designate which was their principal residence and which was their second home and they often chopped and changed to make the best use of their allowances. The left-wing former Labour minister, Michael Meacher, had seven homes at one point. Nothing wrong with that. Perfectly legal and within the rules.

To everyone else, it appeared like grand larceny. The 2009 parliamentary expenses scandal was never really about duck houses and moat clearing, bizarre though these misuses were. It was really about public fury at the huge windfalls their elected members were pocketing from property deals. Politicians never quite got this, I think, because, like many middle-aged people, they don’t really think of the value of their homes as “real” money. How often have you heard people say – it’s only a paper gain, just funny money. Only it isn’t. The London property market has become a vehicle for the enrichment of a new propertied elite that can, like Ms Miller, re-mortgage their properties for very large sums of money along the way; in her case £575,000.

The cost of London property is paid for by millions of families having to mortgage themselves to death to buy a house in places such as Basingstoke, Ms Miller’s constituency. She cleverly rented a small property and designated it as her main residence for tax purposes. The Parliamentary Commissioner said Ms Miller never got to the bottom of this and other issues because of the former Culture Secretary’s obstructive “attitude”. This was the other cause of Ms Miller’s downfall. When asked to explain her financial arrangements, she came over all legal and claimed the parliamentary watchdog didn’t have the right to poke around in her private life. This led to her being criticised in the report from the Standards Committee itself, which for any MP is the kiss of death.

That was the moment David Cameron should have intervened and suggested she leave office for a while to clear her name. She could have done so with some dignity at that stage since the issue hadn’t yet lodged in the public mind. But it had lodged in the minds of the press, who pursued Ms Miller relentlessly as a result. After all, when a minister is criticised, however obliquely, by the Parliamentary Standards Commissioner, and is herself in charge of press regulation, even the most dozy reporter is going to sharpen his or her pencil.

Ms Miller’s aides then did something supremely daft. They appeared to threaten journalists on The Daily Telegraph, the Tory house journal, with reprisals under the Leveson scheme for press regulation. Holly Watt, a journalist on the paper, recorded one of the Culture Secretary’s special advisers, saying: “Maria has obviously been having quite a lot of editors’ meetings around Leveson at the moment. So I am just going to flag up that connection for you to think about.” No one quite knows what was meant by this remark, though it sounded like one of the Kray twins advising a prosecution witness that “accidents can happen”. The former editor of The Daily Telegraph, Tony Gallagher, claims he was threatened.

Perhaps these overzealous underlings were merely trying to suggest to the paper that its readers might think it was pursing a vendetta against Ms Miller. The Daily Telegraph is opposed to statutory press regulation. There had already been suggestions that the paper was monstering Ms Miller because of her support for gay marriage and for being a woman. Either way, it was a very unwise thing to do because it united the press in its determination to get the minister’s scalp.

The Daily Mail went ballistic and posted pictures of her £1.2m barn conversion in Hampshire, suggesting she had bought it with ill-gotten gains. Then it was just a waiting game. There was no way she could survive. It was all rather sordid and messy. But the strength of public opinion was something Mr Cameron could not ignore in the end. And so the inevitable exchange of letters was arranged to prevent further damage.

But these are dangerous times.  Many MPs have enriched themselves from playing the London property market thanks to tax-payer funded second homes.  They will be hoping that the light doesn’t shine on them.  Because this is now uncharted territory.  Everyone agrees Maria Miller did nothing wrong, played by the rules.  But that is no longer enough to immunise a Member of Parliament from the accusation of corruption.


About @iainmacwhirter

I'm a columnist for the Herald. Author of "Road to Referendum" and "Disunited Kingdom". Was a BBC TV and radio presenter for 25 years - "Westminster Live" and "Holyrood Live" mainly. Spent time as columnist for The Observer, Guardian, New Statesman. Former Rector of Edinburgh University. Live in Edinburgh and spend a lot of time in the French Pyrenees. Will that do?


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