Mr Tony and the architecture of corruption


From the current Private Eye, adding some welcome background:

Tony Blair and accountants PricewaterhouseCoopers jointly helped push through a rule change in 2004 that brought the MPs’ expenses scandal to the heart of government. Without Blair’s new rule, explicitly designed to boost ministers’ expenses, many of the current frontbench embarrassments would not now be an issue.

The Senior Salaries Review Board looked at MPs’ pay, using a survey of MPs prepared by PwC, and the firm was happy to support a point that Private Eye understands was pushed by the Prime Minister. Its report said: “There were comments made about the rules which require ministers and other paid office holders to elect their London residence sa the main residence and the constituency as their second property. The rules mean that the ACA [Additional Costs Allowance] is used against costs on a property which in many cases has been owned by the MP and his or her family for a significant number of years and where the mortgage is typically low.”

The report makes it clear ministers complained that because they were deemed to live in London, they could not “flip” homes in order to claim higher expenses; they could only claim on their generally cheaper properties outside the capital. According to the review board, the rule was dropped in February 2004.

Hazel Blears’ property ladder, Maria Eagle’s flipping, Caroline Flint’s new London flat, the bulk of Shahid Malik and Shaun Woodward’s expenses and Kitty Ussher’s war on “bad taste” Artex all depend on the 2004 rule change, as do the bulk of Gordon Brown’s own additional costs claims.

The Commons members’ estimates committee of senior MPs told Private Eye that it changed the rule in February 2004, reflecting the concerns in the PwC report.

The former PM’s support for the change was no random act of greed (indeed, Blair did not personally use the change to raise money himself, relying instead on a complex mortgage transaction on his constituency home.) He was actually trying to increase his ministers’ income while publicly appearing to keep a lid on their headline pay.

He did so by following a model set in 1985 by Margaret Thatcher, who, trying to hold back public sector pay and wanting MPs to appear to set a good example to teachers and the like, had introduced the crucial change in the Additional Costs Allowance which allowed MPs to begin claiming their mortgage costs rather than simply hotel bills or rents. Thus began the great Westminster property speculation game – Blair simply extending the perk to his London-based ministers who were always whingeing that they didn’t earn enough.

Quite so. I would simply add that this is another classic example of the law of unintended consequences coming back to bite New Labour in the arse. Back in the day, when MPs would vote themselves a generous pay rise, there would be a few days of bad headlines and it would all blow over again. It’s precisely the desire to avoid those few days of bad headlines that has led to the culture of systematic dishonesty, and thus directly to the last three weeks of shocking headlines. Who knows, maybe it’s karma.


  1. May 31, 2009 at 6:41 pm

    […] Mr Tony & the architecture of corruption – aka – Unintended Consequences […]

  2. June 1, 2009 at 8:25 am

    You might be interested that I wrote a little more about the detail of the Additional Costs Allowance, a scheme to cheat firefighters, nurses , jobcentre clerks and teachers out of their pay, at the link above (or below)

  3. June 19, 2009 at 12:26 am

    […] Just a reminder here that Tony Blair, the Great Evil Dictator himself, changed the rules in 2004 on second home expenses, aka flipping, which have now led to so many of the present unhappy gang of MPs coming a cropper.  Another thing the GED did was to introduce the Freedom of Information legislation in 2000. Prior to this the public had NO IDEA what expenses MPs were claiming. […]

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