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Select Committee on Standards and Privileges Second Report


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:

    "If I have acted incorrectly then I will be guided as to how I can put things right and accept the consequences.

    I have no other interests which should have been registered"[5].

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:

    that Mr Beggs had misled the Committee and me on two counts

      -   by not telling me that his son had worked at premises which were the subject of an inquiry by myself, when he told me that he had "received no payment or benefit of any kind...since purchase" [10].

      -   by failing to register property he owned at 41 Station Road between 1989 and 1998, even when asked specifically whether he had any other property interests to register

    and also that

      -   by transferring the property to his daughters, he improperly increased his family's income at public expense by paying his parliamentary rent allowance to those daughters.

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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