APPENDIX
Memorandum submitted by the Parliamentary
Commissioner for Standards
Complaint against Mr Roy Beggs
INTRODUCTION
The previous complaints against Mr Beggs
1. On 29th March 2001, the Committee on
Standards and Privileges published a Report on complaints against
Mr Roy Beggs, Member for East Antrim,[4]
concerning his failure to register and to declare property interests.
The Committee decided that Mr Beggs had failed both to register
his interest in a landfill site at Ballyrickard Road, Larne, and
part-ownership of a factory site at Inver Road, Larne, and to
declare a relevant interest when tabling written questions and
intervening in a debate in the House of Commons.
2. During my inquiry into those complaints,
Mr Beggs wrote to me in a letter dated 1st March 2001:
3. I quoted this statement in my draft memorandum,
which I sent to Mr Beggs for comment and correction on 20th March
2001. We met on 21st March and, though he requested certain other
changes to my draft memorandum, he made no comment on or correction
to this quotation, which accordingly appears in the version of
the memorandum published with the Committee's Report.
4. The Committee recommended that Mr Beggs
rectify his entry in the Register of Members' Interests and apologise
to the House for these failures. Mr Beggs apologised to the House
on 29th March, as follows:
"I rise to make an apology to the House.
In its report published earlier today, the Standards and Privileges
Committee has upheld a finding by the Parliamentary Commissioner
for Standards that I failed to register my interest in some land
and property in my constituency and that I had failed to declare
that interest on several occasions. I unreservedly apologise to
you, Mr. Speaker, and to the House for these failures on my part,
which I deeply regret.
My breaches of the rules of the House arose because
I received no income from these interests and did not realise
that it was necessary to register and declare them. I have not
sought in any way to profit from my position as a Member of Parliament;
I have sought to protect jobs in my constituency. I have not sought
to conceal my interests from the House. This was an oversight
on my part, for which I accept full responsibility.
I am grateful to the Commissioner and to the Committee
for the speed with which the matter has been resolved. I am grateful
to the Committee for its recognition that I have cooperated
fully with the Commissioner's inquiry"[6].
5. On the same day, 29th March 2001, Mr
Beggs amended the relevant part of his Register entry to include
the Ballyrickard Road and Inver Road sites, as follows:
8. Land and property
Farm, approximately 60 acres, Co. Antrim,
interests in beef cattle.
Interest in a landfill site at Ballyrickard Road, Larne, Co. Antrim.
Interest in land and property at Inver Road, Larne, Co. Antrim.
The new complaints
6. On 9th April 2001 Mr Robert Lindsay Mason,
the Anti-Corruption Parliamentary Candidate for East Antrim at
the June 2001 General Election, wrote to me (Annex A) with
further complaints about Mr Beggs.
7. Mr Mason provided some information in
support of his allegations and asked a number of questions.
8. First, Mr Mason suggested that Mr Beggs
had misled the Committee and me in that he had claimed to have
"no interest" in,[7]
"no benefit"[8]
from and "no involvement"[9]
with the company Lintrend based on his land at Inver Road, Larne,
whereas his son, Roy Beggs junior had worked for Lintrend for
fourteen months; Mr Mason asked "should he not have disclosed
this fact to you?".
9. Secondly, Mr Mason asked whether Mr Beggs
"should not have declared" his constituency office
at Station Road, Larne (for which, he added, Mr Beggs had received
planning permission in 1989) in the Register of Members' Interests
between 1989 and 1999.
10. Thirdly, Mr Mason said that recent press
reports had suggested that Mr Beggs had by the time of writing
transferred the Station Road property to his daughters and was
claiming the parliamentary allowance for rent in respect of his
continued use of it as his constituency office. He asked "Did
Mr Beggs increase his parliamentary allowance by transferring
the Station Road property to his daughters ?" and "Did
the ownership transfer of the Station Road property bring increased
income to his family and was it permissible for him to do this,
at the taxpayer's expense?"
Summary of complaints
11. The new allegations were therefore:
12. I wrote to Mr Beggs on 12th April 2001 asking
him to respond to these allegations.
Mr Beggs's response to the complaints
13. Mr Beggs replied on 3rd May 2001, from 41
Station Road Larne, beginning his letter "I confirm again
that my Register of Interests is complete" (Annex
B ).
14. In his letter, Mr Beggs also wrote:
"My son Roy Beggs ...worked for Inver
Ltd, Larne, as a trainee manager from November 1989 until February
1991... I have never had any involvement with Inver Ltd or Lintrend
Textiles or Lintrend Lamont at the Inver Road site".
...
"The property above [on letterhead]
at 41 Station Road Larne was jointly purchased by my wife and
myself in 1988... Planning permission was obtained in August 1989
for change of use to a constituency office. Alterations, renovation,
redecoration was completed in March 1990. Office rent was claimed
between 1990-91 and 1996-97, on which income tax was paid up at
40% on my share and 25% on my wife's share of rental income. The
property was transferred to our daughters to whom rent allowance
claimed is paid annually".
Openness with the Committee and me on the employment
of Mr Beggs junior
15. I should like to deal at this point with
the first allegation, regarding the employment of Mr Beggs junior.
16. Mr Lindsay Mason suggested that Mr Beggs
misled the Committee and me by not volunteering that his son had
worked for a period at the firm on the Inver Road site. Mr Beggs
agreed in response to my inquiry that his son had worked for Inver
Ltd for the period indicated but reiterated that he himself had
no connection with the firm.
17. In the course of my earlier inquiry I had
invited Mr Beggs to state whether he was aware of any [other]
interests he held which required registration[11].
He had replied (on 23rd February 2001) that he was "part
owner of land and property at Inver, Bleachers, Dyers, Finishers,
Inver Road Larne, with a Mr Thomas Topping since 1989. I contributed
£20,000, a small part of the purchase price and have received
no payment or benefit of any kind, nor has Mr Topping since purchase"[12].
He made no mention of the employment on the site of his son, Mr
Roy Beggs junior.
18. Although it was open to Mr Beggs, when writing
to me about his involvement with the Inver Road site to tell me
that his son had been employed there, there is no general obligation
on Members to register or to declare matters relating to the employment
of their families, and I have seen no evidence that Mr Beggs's
conduct in Parliament has been influenced by the employment status
of his son. I therefore saw no reason to investigate this complaint
further.
19. Although I did not think it necessary to
pursue the allegation that Mr Beggs had misled the Committee and
me in the particular way suggested by Mr Lindsay Mason, I have
considered whether Mr Beggs misled us in other ways. The possibility
that Mr Beggs had not, even after my previous inquiry, provided
full information about one aspect of his interests, rather than
the specific complaint, required me to review whether there were
other matters in which he might have failed in his duty of openness
under the Code of Conduct for Members of Parliament.
Allegations of failure to register property and
improper use of public funds
20. In the light of the information provided
by Mr Beggs it appeared to me that the other allegations, namely
that Mr Beggs had failed to declare other property and had improperly
increased his family's income at the public expense, required
further investigation.
Subsequent chronology of the inquiry
21. In the light of Mr Beggs's letter of 3rd
May 2001 I requested the Director of the House of Commons Finance
and Administration Department (of which the part known as "the
Fees Office" deals with Members' allowances) to provide me
with information as to how rent allowances are operated in relation
to properties owned by Members of Parliament or, as in this case
for part of the period, by members of their family. The Fees Office
explained that they would expect an independent local valuation
of the rent level before they would pay rent allowance to a Member
who owned a property which he used as his office and that the
same would be true of a rent allowance claimed by a Member who
used part of his home as an office. Members are also required
by the Inland Revenue to pay tax on the benefit of the rental
allowance but are able to set off expenses against this. The Director
of Finance and Administration also informed me that where a Member
was the owner of a property used for his office, the Fees Office
would normally expect to pay a contribution to costs, eg. rates
and utilities, but would not normally agree to a rental arrangement
which included a profit element.
22. I wrote further to Mr Beggs on 9th May 2001
(Annex C), asking him:
- the date on which the ownership of the
property was transferred to his daughters
- whether since that date he had continued to
pay tax and claim allowances against the tax on the rental allowances
and/or whether his daughters had paid the tax and claimed allowances
against the tax on the rent which he paid to them
- how the rent level was set and whether it
was agreed with the Fees Office
- whether the property had been used throughout
solely as his office or let for any other purpose
- why he neither registered the property while
he was its joint owner nor brought it to my attention when I asked
in the course of the earlier investigation (see paragraph 2 above)
whether he had failed to register any other property.
23. Mr Beggs replied on 20th June 2001, this
time from 9 Carnduff Road, Larne (Annex D), as follows:
"The assignment date of the Memorial
to the Registrar of Deeds was 23rd January 1998.
Office rent was claimed from 1990-91.
Tax [was] paid up to
31.3.97 by myself and Mrs Beggs. Reference office rent claimed
[from the Office Costs Allowance] for the years 1997-98 to date
half has been paid to [each of the Beggs daughters]
I have not been paying tax or claiming allowances
against the tax on the rental allowance and to the best of my
knowledge my daughters have paid tax and claimed no allowances
on the rent paid.
The rent level is set by a local property letting
company taking account of the levels approved by the District
Valuer determining the level of housing benefit contributed towards
rent by the Housing Executive ... I will invite rent assessment
by the Valuation and Lands Agency.
The property is and has been solely used as my
constituency office and advice and no part has been let for any
purpose".
24. He explained that he had not previously registered
the property because "it was not deemed by me to be of
'substantial value' and as it was no longer in my ownership when
asked I confirmed that my register of interests was complete",
adding "I do not recollect the specific wording used in
the last paragraph of your letter. If your question was in relation
to past failure to register, then I did not pick that up".
25. Mr Beggs also offered to ask the Valuation
and Lands Agency for a rent assessment, indicating that when he
had previously done so they had suggested that "a local
valuer would advise".
26. I wrote again to Mr Beggs on 25th June 2001
(Annex E). In this letter I:
- said I looked forward to receiving a copy
of the information from the Valuation and Lands Agency as soon
as possible, giving the rent levels appropriate to the property
for the years 1988 to date
reminded him that he had not, at our meeting
on 21st March 2001 corrected the inclusion of my original Report
of his statement that he had no other interests which should
have been registered
invited him, if he wished to make any further declaration
to me, to do so
noted that he had written that he had not had tax
assessed on the benefit he had received from his rent allowance
since the transfer and advised him to contact his tax office to
check that his tax affairs in relation to the rent allowance for
the years 1988 to date were in order and subsequently to confirm
to me that this was so
asked him if I might request the Fees Office to confirm
the evidence he had provided about the allowances he had received
from the Office Costs Allowance from 1988 to date.
27. Mr Beggs replied on 3rd July 2001 enclosing
a copy of his letter authorising the Fees Office to make the disclosure
I requested and saying he would be forwarding to me the information
I needed from the Valuation and Lands Agency.
28. In reply, on July 4th, I advised him to wait
for the independent valuation he had requested before he asked
the Fees Office to comment on the rental levels he had actually
claimed (Annex F).
29. The Fees Office provided the information
that Mr Beggs had claimed rent from the Office Costs Allowance
as follows:
1993-94 £2,600
1994-95 £2,600
1995-96 £2,860
1996-97 £2,945.80
1997-98 £2,052.25
1998-99 £3,900
1999-00 £4,160
30. The Fees Office explained that earlier figures
are not kept but Mr Beggs subsequently provided the information
(see para 41) as follows:
1989-90 £ 560.00 (16 weeks only)
1990-91 £2,080.00
1991-92 £1,297.00 (Office Costs Allowance exhausted)
1992-93 £2,080.00.
31. The Fees Office also told me that Members
are not required to supply supporting documentation when claiming
rent, and that Mr Beggs had not done so in this case.
32. I also asked the Fees Office what guidance
was available to Members as to what accommodation costs might
be charged to the Office Costs Allowance. They referred me to
their publication Parliamentary Salaries, Allowances and Pensions,
known as the "Green Book".
33. Paragraph 4.5.1 of the Green Book states
that the Office Costs Allowance may be used to cover office, secretarial
and research costs, describing these as "the normal direct
costs of a Member's parliamentary office and acquiring research
services" and listing the following examples:
- salaries and expenses for secretaries
and researchers (including payment of childcare expenses)
- cost of equipping an office, including purchase,
rental or maintenance of equipment
- day to day running costs, such as heating,
lighting , rates and cleaning
- rental of office accommodation; purchase of
an office is not regarded as an admissible expense
- production of newsletters, surgery leaflets
and web sites
- cost of data protection notification.
34. Paragraph 4.5.2 reads "If there is
any doubt about whether an expense may be met from the allowance
please contact the help line numbers for advice".
35. I asked the Fees Office what advice they
would give to a Member enquiring as to the payment of rent against
the OCA for premises he/she owned. They replied "All OCA
claims are subject to the certification by the Member that they
have been wholly, exclusively and necessarily incurred in the
course of their parliamentary duties. Therefore we do not allow
for notional rental costs for a Member who owned a property but
it would be perfectly proper to charge for a proportion of the
running costs".
36. On 9th July 2001 Mr Beggs wrote to me that
the Valuation and Lands Agency needed a formal request from me
to provide a valuation, and I spoke, and subsequently wrote, to
the Agency asking them to provide an office rental valuation for
the premises for the years 1988-2001.
37. The Agency sent me their substantive reply
on 20th July 2001 giving their assessment of the commercial rental
value of the Station Road property, as follows (Annex G):
1 April 1988 to 31 March 1993 — £2,340
per annum
1 April 1993 to 31 March 1998 — £2,600
per annum
1 April 1998 to 31 March 2003 — £3,016
per annum
I sent a copy of the letter to the Director of Finance
and Administration.
38. The Valuation and Lands Office figure includes
an element of return on capital. A further letter from the Office,
in reply to a request from me for clarification explained: "The
previously reported rental estimates were based on a standard
commercial lease assuming that the tenant would be responsible
for the insurance of the property, internal and external maintenance,
and payment of rates. The figures therefore represent the full
profit element, ignoring any outstanding mortgage or loan costs"
(Annex H).
39. After receiving the valuation I wrote again
to Mr Beggs, on 23rd July, inviting his comments on the rental
values assessed in relation to the claims for rent allowance he
had made (Annex I).
40. In the same letter I asked him:
- what price he had paid for 41 Station
Road Larne in 1988 and what he estimated to be its current value
- whether he had at any stage mentioned the
property to the Registrar of Members' Interests or to my predecessor
- when he started to use the house as his constituency
office, whether he had claimed rent from the Office Costs Allowance
as soon as he began to use it as an office, and, if he did not
claim immediately, to explain why he made his first claim in 1990-1991
- when he had made the approach to the District
Valuer that he had mentioned in his letter of 20th June 2001,
which local valuation agent he had used and what valuation they
had provided, how often the valuation had been repeated and if
he would provide me with any documentation which referred to these
valuations.
- to confirm that he had estimated the rent
on the basis of the levels which the District Valuer considered
would be used for calculating Housing Benefit which would be payable
by the Housing Executive for properties of a similar type in the
area and to explain why he had used this formula
- whether, when he began to claim rent from
the OCA he was aware of the rules covering such claims, whether
he had read the guidance, whether he had at any stage consulted
the Fees Office and, if so, what advice he had received and on
what date
- how much he had claimed against rent in 1990-91,
1991-92 and 1992-93 (see para 30)
- why he had decided to make the house over
to his daughters in 1997/1998
- on what terms the house was made over to his
daughters, whether they had paid him for it, and if so how much
and on what basis any payment was made for example on the basis
of an independent valuation
- when exactly he had started paying rent to
his daughters
- to explain the position on the payment of
tax between 31st March 1997 and January 1998 if he and Mrs Beggs
had been paying tax up to 31st March 1997 and his daughters from
January 1998.
- to confirm whether he had taken my advice
of 25th June 2001 to contact his tax office to check that his
tax affairs were in order and to provide me with confirmation
that he had done so.
- to confirm, noting that he had apparently
now moved his office, that he had no further involvement in 41
Station Road and, if this was correct, to let me know the date
his tenancy ceased and to confirm he did not own 9 Carnduff Road.
41. Mr Beggs replied on 21st and 22nd August
2001. In his letter of 21st August (Annex J) he wrote:
"at the time of your earlier inquiry I had no other interests
to be registered. The property at Station Road Larne had been
transferred by my wife and myself to our daughters. I have not
paid tax or claimed allowance against tax since the property transferred
to [his daughters]. They have paid the tax since".
In answer to my specific questions he wrote:
"At the time of your earlier inquiry,
I had no other interests to be registered. The property at 41
Station Road, Larne had been transferred by my wife and myself
to our daughters.
I have not paid tax or claimed allowance against tax since the
property transferred to [his daughters]. They have paid
the tax due since.
Tax on rental income from 41 Station Road, Larne was paid. Tax
allowance was claimed in 1994-1995 in respect of complete re-roofing.
No other claim for Tax Allowance was made on rental income from
41 Station Road.
This property was purchased at a cost of £10,000 in 1988.
I enclose a copy of the valuation at the time of transfer as supplied
to Auditors Brian Stewart, Beattie Marcus.
No" [In response to the question as to whether he had
mentioned the property to the Registrar or my predecessor]. "Not
deemed of substantial value.
House bought in 1988 on 17th August. It was first used as a constituency
office from December '89 and the rent claimed for 1989-1990 included
a claim for sixteen weeks in 41 Station Road. The first full year
rent claimed was for 1990-1991. No claim was made for 41 Station
Road, Larne between August 1988 and December 1989. During this
period renovations and alterations were made which were completed
by the end of March 1990.
I contacted the District Valuer after receiving one of your letters
in which you asked if rent level was agreed with the Finance Department.
Rent was discussed with Robert Stirling & Co.
Auctioneers, Estate Agents, Valuers. Enclosed receipt.
I advised you to contact the District Valuer formally for his
assessment having formed the impression that the District Valuer
worked for Government, Public Bodies. [His daughters] engaged
International Property Advisers DTZ McCombe Pierce whose valuation
report is enclosed.
The rent level set was in keeping with rents charged for similar
properties most of which were rented out at higher weekly rents
than assessed by the District Valuer whose valuation determined
the maximum level of Housing Benefit paid by the Northern Ireland
Housing Executive to claimant in privately owned property. This
was deemed to be a fair approach and appears to produce figures
until recently which are close to your District Valuer's assessment.
No [In response to the question about whether he had read
the guidance notes or taken advice on his claim]. I had not
read the guidance notes. I did not consult the Finance Office.
Rent claimed in 90-91 was £2,080
Rent claimed in 91-92 was £1,297.43
Rent claimed in 92-93 was £2,080
The lower claim in 91-92 was because there were insufficient funds
in Office Cost Account to pay rent which the District Valuer assessed
at £2,340 per annum
Rent claimed 93-94 was £2,600 (Same as Valuation & Lands
Agency)
Rent claimed 94-95 was £2,600 (Same as Valuation & Lands
Agency)
Rent claimed 95-96,96-97,97-98 averaged £2,619.35 ie. £19.35
per annum over valuation.
Rent claimed since 1998-99 is above valuation by District Valuer
but approximates to the Independent Valuation supplied by DTZ
McCombe Pierce.
Rent has been claimed at the end of the financial year when all
other expenses have been paid. Low level rent claimed indicated
insufficient funds in Office Costs.
I have repaid £58.05 in respect of years 95-98 (3 x £19.35)
and £160.00 for 99-2000 to the Fees Office.
I was advised when finalising my 96-97 tax accounts to make a
will.
It [the property] was transferred as a gift. No payment
made. There was an independent valuation for tax which was supplied
to the Auditor.
You will be aware that solicitors take time to process instructions.
Time had also passed before I found time to sign completion documents.
Rent has always been claimed at the end of the financial year.
Decision had been made at end of financial year 96-97 to transfer
property and rent was paid to them for 1997-1998 when claimed
in 1998. [His daughters] have paid tax on rent received
since 1997-98.
Outright transfer was intended to be effective from 1-4-97.
Tax has been assessed and paid by myself and Mrs Beggs on rent
claimed from Office Costs Allowance up to 31-3-97 in respect of
41 Station Road, Larne.
I have not moved office. I have lived at 9, Carnduff Road, Larne
since 14/7/1966. This is my home address. Some constituency work
is done from our home and constituents are regularly assisted
when they call here at all times. As some correspondence from
you to me had arrived opened, I gave instruction for my mail to
be sent direct to my home until this issue is finally cleared
up. My constituency office is still at 41 Station Road, Larne.
The tenancy will continue.
Since I was first elected, property at 8 Glynn Road Larne was
owned by Mrs E.W. Beggs from August 1983. Planning permission
was obtained for change of use to office accommodation. Renovations,
alterations and preparation for office use were carried out through
1984 into 1985. From 1/4/85-31/3/86, 1986-1987, 1987-1988, 1988-1989
office rent was claimed at £1,300 per annum as agreed with
Robert Stirling Auctioneer Valuer. 8 Glynn Road was occupied until
December 1989 and then the constituency office transferred to
41 Station Road, Larne. Rent claimed from Office Cost for 1989-1990
was £1,460 and tax has been paid. In May 1984 No. 6 Glynn
Road was purchased by our daughter. The intention was to integrate
both properties. Plans were drawn up but could not be proceeded
with because of redevelopment proposals for public housing and
eventually a Vesting Order. No income was received from time of
purchase to Vesting Order acquisition and as No. 6 Glynn Road
remained vacant throughout the period, the £1,000.00 invested
in 1984 realised only £55.16 in the compulsory purchase".[13]
42. In his second letter, dated 22nd August 2001,
which Mr Beggs corrected and replaced on 9th October (Annex
K), Mr Beggs further explained the basis of his claims from
the OCA and suggested that it could be said that he had, overall,
underclaimed. When itemising the rent claimed, Mr Beggs pointed
out that in some of the early years he had claimed less than the
value subsequently set by the District Valuer (in one year, 1991-92
because there were insufficient funds left in his OCA). He explained
that he did not propose "to claim underclaimed calculation".
43. In the same letter Mr Beggs reiterated that
he had returned to the Fees Office the amount he accepted he had
overclaimed for the years 1995 to 1998 and 1999-2000 (the Fees
Office confirmed to me that they received his cheque for £586.05
(see para 47), noted that there remained a disputed overclaim
of up to £1,868 depending on which valuation was accepted
and ended "I will accept advice on whose rental assessment
is payable".
44. With these letters, Mr Beggs enclosed copies
of a number of documents ( Annex L).
45. I wrote further to Mr Beggs on 3rd September
(Annex M), noting that he did not consider the Station
Road property to be of substantial value and asking him:
- how much the sixteen weeks rent he claimed
in 1989-90 amounted to.
- to send me a copy of the valuation provided
by Robert Stirling, as I found a receipt for their services insufficient
evidence.
- to confirm whether in 1990-91 all the rent
claimed was paid to his wife and to let me know how it was divided
with her or any other person in other years
- since the valuation provided by DTZ related
only to the period from 2000 onwards, and since from April 2000
onward he rented the property on a five year lease, to let me
know the basis on which he occupied it from 1997 onwards, and
why he changed that basis
- whether he had taken independent advice on
what the rent level for 41 Station Road, Larne should be and if
not, how he had established it
- if he had established the appropriate rent
by taking what he assumed or knew would be the Housing Benefit
figure and adding a proportion to it, how he had decided on the
proportion to be added
- whether, when he said the system he adopted
for setting the rent level "was deemed to be a fair approach"
this was his own view or whether he had had independent advice,
and if the latter, what it was and who provided it
- whether he could shed any light on why the
District Valuer's assessment should suddenly diverge so markedly
from his own (and that provided by DTZ McCombe Pierce).
- to elaborate on his statement, in answer to
my question as to why he had decided to make the property over
to his daughters when he did that he "was advised...to
make a will".[14]
- whether the "independent valuation
for tax which was supplied to the auditor" was the valuation
supplied by DTZ McCombe Pierce, and, if otherwise, to provide
me with a copy.
- whether his daughters had paid tax on the
rent received from the 1997 date on which the transfer had been
intended to be effective, whether he had paid tax on the allowance
and if he would confirm with the Inland Revenue that he had no
tax outstanding, for any years, on the rent allowance or rent
and if he would let me have sight of the confirmation.
- in which years he rented Nos 6 and 8 Glynn
Road, Larne from his wife and/or daughter as a constituency office,
the rent paid each year and claimed from the OCA and the basis
on which the rental valuation was provided.
46. Mr Beggs replied on 26th September (Annex
N). He wrote:
"£560" [rent claimed in
1989-90 for 41, Station Road, Larne].
We are unable to find valuation requested from R. Stirling
and Co. and could not obtain a copy as Mr Stirling retired from
business some years ago. However, Valuation and Lands Agency assessed
rental value 1/4/88-31/3/93 at £2340.00. Rent claimed from
Office Costs was lower during this period.
Although the receipt was issued to my wife by R. Stirling &
Co. Income Tax was paid on half of rental income claimed by me
and the other half was paid by my wife for 90-91, 91-92, 92-93,
93-94, 94-95, 95-96, 96-97. The property was occupied from year
to year. The basis was changed to provide me with secure permanent
office accommodation.
I have taken independent advice from Letting Agents and enquired
from Northern Ireland Housing Executive regarding Housing Benefit
payable to tenants in private sector accommodation in the course
of my constituency work.
The District Valuer's assessment was not challenged. I know that
higher weekly rent is paid for smaller office accommodation which
I have visited. In my opinion the District Valuer undervalued
the property.
My accountants for the past thirty years had been reminding me
in recent years to make a will and in 1997 after the sudden death
of a close friend and before visiting my eldest sister in San
Diego, I did so and my sons also benefited at that time.
My accountants were provided with a valuation supplied by Brian
A Todd & Co. Copy enclosed.
[His daughters] have paid tax on rent from 41 Station Road,
Larne since 1/4/97. All rent allowance claimed was paid to them.
Only No. 8 Glynn Road, Larne was rented as office accommodation
from my wife.
The rent claimed from O.C.A was as follows
1/4/85-31/3/86— £1,300.00
86-87 — £1,300.00
87-88 — £1,300.00
88-89 — £1,300.00
89-90 — £1,400.00 of which £280 was my
share for tax purposes
in tax year 89-90.
The rental valuation was provided by R. Stirling
& Co. who negotiated the sale of the property to the Northern
Ireland Housing Executive".
47. The Director of Finance and Administration
wrote to me on 25 September 2001 (Annex O) setting out
how he had calculated the amount Mr Beggs had overclaimed and
explaining how the matter had been resolved. The letter ended
"Mr Beggs has shown good faith in seeking to set things
right and in repaying us the amount he has overclaimed, totalling
£2,454.05 (ie the £586.05 he paid in August plus the
£1,868 he has now paid). In the light of this, and on the
basis of information that has currently been provided, I can tell
you that the matter has now been resolved to my satisfaction,
and I do not propose to take further action".
ANALYSIS
Failure to register property
48. Members are required to enter in the Register
of Members' Interests any property other than any home used for
the personal residential purposes of the Member or the Member's
spouse, which has a substantial value or from which a substantial
income is derived.
49. "Substantial value" has
not yet been defined. In the Fifteenth Report of Session 1999-2000,
Consultation on Proposed Amendments to the Rules relating to the
Conduct of Members, the Committee on Standards and Privileges
recommended that for the purposes of Category 8 (Land and Property)
of the Register "substantial value" should be
defined as 50 per cent of the current parliamentary salary and
"substantial income" as ten per cent of the current
parliamentary salary[15].
In response to representations from Members, in its Fifth Report
of 2000-01, Proposed Amendments to the Rules relating to the Conduct
of Members, the Committee changed this recommendation so
that "substantial value" should be defined as
a total property portfolio of a value equivalent to, or greater
than, 100% of the parliamentary salary[16].
The House has yet to decide on this recommendation.
50. On the other hand, in its earlier Report
on complaints against Mr Beggs, the Committee on Standards and
Privileges had decided that, although Mr Beggs had not thought
it necessary to register an interest worth £20,000 in a factory
site in Inver Road because he did not think it was of substantial
value, he should in fact have registered it.
51. Between 1988 and January 1998, Mr Beggs and
his wife jointly owned property at 41 Station Road Larne, which
was used as his constituency office from late 1989 and in respect
of which Mr Beggs claimed rent from the Office Costs Allowance.
This rent was split between himself and his wife. At no time did
Mr Beggs register this property.
52. In my earlier inquiry I asked Mr Beggs to
let me know of any other interests "which require
registration".[17]
On 23 February 2001 he replied "I am unaware of any interests
which require registration"[18].
On 1st March 2001 he told me "I have no other interests
which should have been registered"[19]
and did not correct this statement when I sent him the draft memorandum
for comment.
53. I have on several occasions sought to establish
why Mr Beggs at no time drew my attention to the Station Road
property, and he has explained that he did not appreciate that
my question was intended to cover past as well as current interests.
54. On 9th May 2001 I asked him "why
you neither registered this property at the time when you were
its joint owner nor brought it to my attention when I asked you
whether you had failed to register any other property during my
investigation earlier this year?". He replied on 20th
June 2001 "I do not recollect the specific wording of
the last paragraph of your letter.[20]
If your question was in relation to past failure to register I
did not pick that up in the question put which I believed was
addressing the accuracy of my current register of interests".
In view of the wording of his statement of 1st March 2001, which
contained the phrase "which should have been registered",
Mr Beggs's explanation that he thought I was referring only to
current interests is difficult to accept.
55. In his letter to me of 20th June 2001, Mr
Beggs gave as his reason for not registering the Station Road
property his belief that it was not of "substantial value",
a view he reiterated in his letter of 21st August 2001, when he
stated that its purchase price in 1988 had been £10,000.
(The valuation of £28,000, for 41 Station Road, Larne, was
established in 1998 after the transfer to his daughters.) It is
surprising in view of the Committee's findings on 28 March 2001
on the previous complaint against him, namely that a property
interest of £20,000 should have been registered, that Mr
Beggs was not alert to the need to register the Station Road property,
which was valued at £28,000, particularly since when he apologised
to the House on 29th March 2001[21]
for his earlier failure to register interests he said "my
breach of the rules of the House arose because I received no income
from these interests and did not realise that it was necessary
to register and declare them".
56. On 25th June 2001 I wrote to him again, reminding
him of his words of 1st March 2001, that "I have no other
interests which should have been registered" and that
he had not corrected this. His reply, in his letter of 21st August,
was "at the time of your earlier inquiry I had no other
interests to be registered. The property at 41 Station Road Larne
had been transferred by my wife and myself to our daughters"
(see Annex K).
The claim for office rent against the Office Costs
Allowance
57. The allegation made by Mr Lindsay Mason was
that by claiming rent payable to his daughters Mr Beggs was improperly
increasing the family income at public expense. In the course
of my inquiry it became apparent that since his election to the
House in 1983 he had been claiming rent from the Office Costs
Allowance and paying it first to his wife (for 8 Glynn Road) then
to his wife (and himself) for 41 Station Road and after 1997 to
his daughters (for 41Station Road after the transfer).
58. Although the allegation by Mr Mason refers
to Mr Beggs's payment of rent from the Office Costs Allowance
to family members, a preliminary question arises. Rent claimed
between late 1989 and 1997 was paid to his wife and to himself,
and if claiming rent payable to one's relatives is not appropriate
practice claiming for oneself might be held to be still less so.
I have therefore considered the question of whether Members may
claim rent payable to themselves.
59. The Code of Conduct for Members of Parliament
specifically states that "no improper use shall be made
of any payment or allowance made to Members for public purposes
and the administrative rules which apply to such payments and
allowances must be strictly observed". It is incumbent
on Members, under the Code, to be scrupulous in abiding by the
rules.
60. Guidance to Members on what may be claimed
from the Office Costs Allowance is contained in Parliamentary
Allowances and Salaries (the Green Book). This guidance
includes the overarching requirement that all claims must be certified
by the Member as having been "wholly, exclusively and
necessarily incurred in the cost of their parliamentary duties".
It also states that reimbursement of rental for office accommodation
is permissible but not the cost of buying an office (paragraph
4.5.1). There is no specific written guidance advising Members
to seek independent valuation of any rent paid to themselves or
to connected parties.
61. The Green Book is silent about the payment
of rent to connected parties/people who are not at arms length.[22]
On the other hand, it does encourage Members who are uncertain
about the acceptability of a claim to seek advice: "If
there is any doubt about whether an expense may be met from the
Office Costs Allowance, please contact the help line numbers for
advice" (paragraph 4.5.2).
62. I asked the Fees Office what advice they
would give to a Member enquiring about the payment of rent against
the Office Costs Allowance for premises owned by him or herself.
The Office replied: "All OCA claims are subject to the
certification by the Member that they have been wholly, exclusively
and necessarily incurred in the course of their parliamentary
duties. Therefore we do not allow for notional rental costs for
a Member who owned a property but it would be perfectly proper
to charge for a proportion of the running costs". In
addition they would advise any such member to obtain an independent
valuation.
63. For much of the period since 1989 the rental
claimed by Mr Beggs has exceeded the valuation by the Valuation
and Lands Agency.
| Year |
Claimed by Mr Beggs | VLA figure
|
| 1989-90 | £560 (16 weeks only = £1,820 pa)
| £2,340 |
| 1990-91 | £2,080
| £2,340 |
| 1991-92 | £1,297.43
| £2,340 |
| 1992-93 | £2,080
| £2,340 |
| 1993-94 | £2,080
| £2,600 |
| 1994-95 | £2,600
| £2,600 |
| 1995-96 | £2,600
| £2,600 |
| 1996-97 | £2,860
| £2,600 |
| 1997-98 | £2,945.80
| £2,600 |
| 1998-99 | £2,052.92
| £3,016 |
| 1999-00 | £3,900
| £3,016 |
64. The rental valuation of the Station Road property provided
by the Valuation and Lands Agency includes an element of profit
(see para. 38). The Director of Finance and Administration of
the House of Commons is clear that it would be inappropriate to
allow Members to claim a commercial rent in relation to property
they own because that would be in effect allowing a Member to
claim from the public purse a profit on his or her property. Mr
Beggs did not at any stage register the property.
65. Mr Beggs explained to me that the rental income from the
property at 41 Station Road had throughout been properly declared
to the Inland Revenue and that he had confirmed that neither he
nor his wife owed any tax in respect of it (see Annex K). The
Green Book, however, makes it clear that "the OCA is taxable
and must be included in your tax return, but expenses that are
wholly, exclusively and necessarily incurred in the performance
of your duties as an MP are eligible for tax relief" (para
4.3.1). I spoke to Mr Beggs on 1 October and advised him to confirm
with the revenue authorities that he owed no tax on the allowance,
which he did on 3rd October (see Annex O)
Misleading the Committee and me
66. Mr Lindsay Mason's original complaint suggested that Mr
Beggs had misled the Committee and me in the course of the previous
inquiry by not being fully open about his connection with Lintrend.
As I said in paragraph 19 I did not find it necessary to pursue
this allegation.
67. Mr Beggs wrote to me (on 1 March 2001) saying "I
have no other interests which should have been registered".[23]
Before including this quotation in my draft memorandum to the
Committee on Standards and Privileges I sent it to Mr Beggs for
comment and he did not correct it. At the outset of the present
inquiry, in response to my letter asking him to comment on Mr
Lindsay Mason's allegations Mr Beggs wrote: "I confirm
again that my Register of Interests is complete" (See
Annex B).
Draft Memorandum
68. When I had drafted my memorandum, but prior to coming
to any conclusions, I sent a copy to Mr Beggs so that he could
provide me with corrections of fact and any further comments he
might wish to make.
69. Mr Beggs replied on 9th October 2001 (Annex P)
explaining that his letter of 22nd August contained an error which
made his calculations as to possible under- or overclaim of rent
from the OCA incorrect. He requested that a replacement letter
be substituted. This appears as Annex L. He also corrected some
points of fact and suggested some amendments. I considered his
suggestions and made some alterations to my draft memorandum.
70. Mr Beggs reiterated that he had not registered the property
because it was not "of substantial value", pointing
out that he had purchased it for £10,000 in 1988 and that
the valuation of £28,000 related to September 1998, after
the transfer to his daughters.
CONCLUSIONS
71. In reaching my conclusions I have borne in mind the principles
underlying the Code of Conduct for Members of Parliament, the
purpose of the Register of Members' Interests and the guidance
available to Members.
72. The purpose of the Code of Conduct is to "assist
Members in the discharge of their obligations to the House, their
constituents and the public at large". One of its articles
states that "No improper use shall be made of any payment
or allowance made to members for public purposes and the administrative
rules which apply to such payments and allowances must be strictly
observed".
73. The Register of Members' Interests is designed "to
provide information of any pecuniary interest or other material
benefit which a Member receives which might reasonably be thought
by others to influence his or her actions, speeches or votes in
Parliament, or actions taken in his or her capacity as a Member
of Parliament".
(i) Failure to register pecuniary interests
74. Between 1988 and January 1998 Mr Beggs was joint owner
with his wife of property at 41 Station Road Larne, which was
not used for their personal residential purposes, and which he
did not register in the Register of Member's Interests. The property
was bought for £10,000 and in January 1998 was valued at
£28,000.
75. Mr Beggs gave as his reason for not originally registering
the property that it was not of "substantial value".
Even if this judgement was initially a reasonable one for Mr Beggs
to make, it ceased to be tenable once the Committee had decided
in relation to the previous complaint that his share of £20,000
in the Inver Road, Larne, site was registrable. His explanation
for failing to mention 41 Station Road when I invited him to confirm
that his Register entry was complete, namely that the property
was no longer in his possession at the time, is undermined by
his use of the phrase "should have been registered".
76. Although the House has not yet defined "substantial
value" it is my opinion that the Station Road property was
registrable as it was valued at £28,000, which is more than
the value of another property owned by Mr Beggs which the Committee
had previously decided met the criteria for registration. Even
had the House adopted the recommendations contained in either
the Fifteenth Report of 1999-2000 or the Fifth Report of 2000-2001
it is likely that the property would have been registrable.
77. As well as owning the Station Road property, Mr Beggs
derived a rental income from it. I am therefore of the view that
Mr Beggs should have registered the property in the period between
his acquisition of it in 1988 and the transfer to his daughters
in 1998. He should in any event have remedied his omission when
I specifically invited him to tell me, in my letter of 12 February
2001,[24] if he was aware
of any interests he held which required registration, even though
by that date he had transferred the property to his daughters.
78. Mr Beggs failed to register his property at 41 Station
Road, Larne, from 1988 to 1998.
Complaint upheld
(ii) Overclaim from Office Costs Allowance
79. I investigated the allegation that Mr Beggs, by improperly
claiming office rent against the Office Costs Allowance, wrongly
increased his own and his family's income at public expense against
the requirement of the Code of Conduct that states that "no
improper use shall be made of any payment or allowance made to
Members for public purposes".
80. No rule nor guidance specifically forbids Members of Parliament
to claim reimbursement of rent against accommodation which they
or members of their families own, but the "green book"
makes it clear that in cases of doubt further advice should be
sought. Mr Beggs has admitted that he was not aware of the guidance
and had sought no advice on whether he could claim this allowance
in these circumstances. In my view there was sufficient doubt
about the propriety of the arrangement—not least because
of the possible adverse public perception—for Mr Beggs to
have sought advice when the arrangement was first entered into.
This of course also applies to the period between 1983 and 1989
when he was paying rent from the Office Costs Allowance to his
wife in respect of 8 Glynn Road.
81. In 1997, Mr Beggs transferred 41 Station Road to his daughters
(the legal transaction was confirmed in January 1998) and from
then on he paid rent to them which he drew from the Office Costs
Allowance.
82. Irrespective of whether the arrangement entered into by
Mr Beggs was acceptable, the level of rent claimed by him, which
was paid to himself and his wife, and subsequently to his daughters,
was set on the basis of a valuation higher than that provided
by the Valuation and Lands Agency. In addition, if the Fees Office
had known at the time that for the earlier years he himself was
part-owner of the property, they might well have declined to pay
any profit element from the OCA.
83. Because he took no advice about the payment of rent to
connected parties, and because he claimed above the level of rent
the Fees Office would have agreed had they known the full facts,
it is my view that Mr Beggs made improper use of the Office Costs
Allowance. He increased his family's income at public expense.
Complaint upheld
(iii) Misleading the Committee and me during the previous inquiry
84. Even if Mr Beggs had doubts about the registrability of
41 Station Road (on grounds which I have found during the present
inquiry to be invalid) he ought to have sought advice from the
Fees Office on the matter when he first claimed the rent allowance
for a property of which he was part owner. At the end of the previous
inquiry I had impressed on Mr Beggs the need to give me a complete
statement of his financial interests to enable me to give a full
and accurate account to the Committee and to ensure that any failures
were remedied. When commenting on my memorandum in draft Mr Beggs
did not correct his statement that "I have no other interests
which should have been registered". In my view Mr Beggs
was seriously remiss in failing at this point to mention the Station
Road property.
85. In my view, these failings on Mr Beggs's part to register
property, particularly when specifically asked to check whether
he held other registrable interests, led to his misleading both
the Committee and me. In doing so he fell short of the standard
of openness required of Members under the Code of Conduct.
Complaint upheld
Resolution of the overclaimed allowance
86. Mr Beggs has dealt properly and courteously with this
further complaint. He has responded fully to my inquiries on these
matters and undertook to reimburse the Fees Office for any allowance
he had overclaimed. Mr Beggs has reimbursed the Fees Office with
£2,454.05. The Director of Finance and Administration has
informed me that the matter is resolved to his satisfaction.
Further action
87. I have been informed by the Director of Finance and Administration
that he is minded to put the whole issue of close financial transactions
between Members and individuals/organisations (which he characterises
as not being "at arms length") to the newly-formed Speaker's
Advisory Panel.
23 October 2001
Elizabeth Filkin
4 HC
(2000-01) 377. Back
5 Ibid,
Annex L. Mr Beggs was responding to my file note and letter of
28 February and 1 March 2001 (Ibid Annexes J & K). Back
6 HC
Deb (29th March 2001) col 1120. Back
7 HC
(2000-01) 377 para 50. Back
8 Ibid
Annex E. Back
9 Ibid
Annex L. Back
10 Ibid
Annex E. Back
11 HC
(2000-01) 377 Annex D. Back
12 Ibid
Annex E. Back
13 This
information was provided in response to my query about 9 Carnduff
Road, Larne. Back
14 I
explained that I did not need information about his will but did
need to know why he made the property over to his daughters at
that time. Back
15 HC
(1999-2000) 710 para 29. Back
16 HC
(2000-01) 267, para 23. Back
17 Letter
of 12 February; HC (2000-01) 377; Annex D. Back
18 Letter
of 23 February 2001; Ibid Annex E. Back
19 Ibid
Annex L. Back
20 Presumably
my letter of 12th February 2001 (see para. 2). Back
21 HC
Deb 29th March 2001 col 1120. Back
22 In
a letter to me dated 25th September 2001, the Director of Finance
and Administration wrote of "Financial transactions between
Members and individuals/organisations ... These relationships
are characterised by not being "at arms length". Back
23 HC
(2000-01) 377, Annex L. Back
24 HC
(2000-01) 377 Annex D. Back
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