Party leaders clash as Gordon Brown urges MPs' expenses overhaul

Prime minister says MPs must vote to abolish second-home allowance as soon as possible because voters have lost confidence in system

• Andrew Sparrow, senior political correspondent
• guardian.co.uk, Tuesday 21 April 2009 11.52 BST
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Gordon Brown's video message on the Downing Street website

Gordon Brown today said he wanted MPs to vote to abolish their controversial second home allowance next week.

In a surprise move, the prime minister said parliament needed immediate reform of the MPs' expenses system because voters had "lost confidence" in the way it operated.

"I believe we have to act urgently with interim proposals to restore people's confidence that MPs are there to serve the public and not serve themselves," the prime minister said in a video statement posted on the Downing Street website.

The Tories described the move as a "significant but welcome U-turn" and said it contained many of the proposals they had put forward.

The announcement marked a change of tack by Brown, who until today had resisted calls from David Cameron and Nick Clegg for reforms of MPs' expenses to be introduced quickly.

Brown will meet the two opposition leaders tomorrow evening, a spokeswoman for Cameron said.

The prime minister had argued that parliament should wait until the committee on standards in public life had completed its inquiry into the matter.

Under Brown's proposals – which will have to be approved in a vote next week – there would be various changes to the system.

• The second home allowance, known as the additional cost allowance and worth up to £24,006 a year, would be abolished and replaced with a daily allowance for MPs living outside London.

It would only be paid for those days on which an MP attended parliament.

MPs representing constituencies within "reasonable distance of Westminster" would not receive it, but would qualify for the London supplement – worth £2,916 a year – which is currently paid to inner London MPs.

• Ministers in grace and favour accommodation would not be able to claim the daily allowance.

• MPs' staff would be employed by the House of Commons, not by individual members.

• MPs with jobs outside parliament would have to publish full details of how much they were paid and what hours they worked.

Under the current rules, they only have to declare what they are paid for work they do that is related to being an MP.

Cameron said today's developments represented "a big U-turn by the prime minister".

"We had been calling for a meeting. We now have one," he added.

"We called for a ban on ministers claiming second home allowances when they enjoy a grace and favour home. He is now proposing this.

"We argued MPs' staff should be directly employed. He is now proposing this."

However, Cameron said there were still some "real issues" with proposals for a daily allowance and stressed he would use the meeting to press for further reforms.

"These include the abolition of the communications allowance, a reduction in the number of MPs and a clear commitment to a reduction in the overall cost of politics," he said.

Clegg, the Liberal Democrat leader, warned against bringing in a Brussels-style daily allowance system.

"The great danger is this: you are giving MPs a cheque simply for turning up for work, and the MPs don't have to prove that they need that money or what they are going to spend it on," he told BBC News.

However, he said all party leaders were united "in a desire to fix" the current system.

Brown said the new ruleswould cut the overall amount spent on MPs' expenses and allowances, saving money for the taxpayer.

He did not say how much the new flat rate allowance would be worth.

Ministers will ask the senior salaries review body to produce a figure in line with comparable allowances paid by other public and private sector employers.

In a statement, Brown said the issue of expenses was "casting a cloud over the whole of parliament".

There is concern within Labour that the expenses row has been particularly damaging because ministers have been accused of abusing the system.

The home secretary, Jacqui Smith, and Tony McNulty, the employment minister, are both being investigated by John Lyon, the parliamentary commissioner for standards, over allegations they have been abusing the second home allowance.

Both have denied any wrongdoing.

Smith has faced particular scrutiny after admitting she had inadvertently claimed for two pornographic films watched by her husband..

Following this, Brown urged the committee on standards in public life to launch an immediate inquiry into the system.

No 10 said that Brown had met Sir Christopher Kelly, the chairman of the committee, to assure him the new rules would be "interim" and that he still wanted the watchdog to go ahead with its inquiry.

In response to Brown's announcement, Kelly said his committee would publish a paper tomorrow as the opening move in its inquiry into MPs' expenses.

"It is no surprise to me that the political parties want to deal with this themselves," he said.

"The fundamental review we are carrying out is still needed and will still go ahead.

"This issue needs to be dealt with properly so that the public can have confidence in the integrity and probity of the system."