Mr Jeremy Hunt - Standards and Privileges Committee Contents


Appendix: Memorandum from the Parliamentary Commissioner for Standards


Complaint against Mr Jeremy Hunt MP

Introduction

1. This memorandum reports on my inquiry into a complaint that Mr Jeremy Hunt, the Member for South West Surrey, claimed against the Additional Costs Allowance (ACA) for a second home in his constituency which was also used by his constituency agent.

Background

2. The matter was raised by Mr Hunt with the Registrar of Members' Financial Interests on 1 June 2009. Mr Hunt told the Registrar that he had bought a house in Farnham in his constituency in 2003, before he was elected to Parliament. From the spring of 2004, he had allowed his agent to stay there for three or four nights a week, free of charge. When he was elected in 2005, he designated the Farnham house as his main home for parliamentary allowance purposes. After he had been a Member for a few months, he had realised he was spending more nights every week in London, and had therefore redesignated his Farnham home as his second home and claimed for mortgage interest on it accordingly. However, his agent had continued to use a room there until she retired in June 2007. Mr Hunt asked whether he had inadvertently broken the rules of the House, adding, "I understand that taxpayers' money should not be used for party political advantage, and in this case I must admit that it did not occur to me that they were because the arrangements neither benefited me personally nor caused any additional cost to the taxpayer". He sought the Registrar's advice as to whether he had "made any mistakes and if so what I should do to rectify the situation".[22]

3. The Registrar explained that she could not give a view on whether Mr Hunt had broken the rules of the House as the matter fell outside her remit as Registrar. She also said that I would not be able to express a view as it could be a matter which I would subsequently have to determine on receipt of a complaint. And so it proved: Mr Mike Simpson wrote to me on 7 June with his complaint.[23]

The Complaint

4. In his letter, Mr Simpson alleged that Mr Hunt had breached the Code of Conduct for Members of Parliament and provisions of the Green Book on Members' Allowances. Mr Simpson said that the Conservative Party's constituency agent had been registered as an elector at Mr Hunt's constituency home until October 2008. The marked register showed that she had voted from Mr Hunt's home on 3 May 2007. Mr Simpson also said that other people, including a prominent Conservative Party activist, had been registered as electors at Mr Hunt's constituency home. He claimed that local residents had told a reporter that they never saw Mr Hunt at the address. According to Mr Simpson, Mr Hunt had told the press that his main home was in London; Mr Simpson said that Mr Hunt had owned the London property since 1997.

5. Mr Simpson said that Mr Hunt had told him that five months after the 2005 General Election he had re-designated his Farnham home as his second home and begun claiming for a mortgage on the property under the ACA. Mr Simpson said, "It is thus clear to me that Mr Hunt had claimed taxpayer-funded accommodation costs, which directly benefited the Conservative Party political Agent and possibly other political activists." He contended that this was a breach of the rules, namely that:

i)  there were grounds for a suggestion of misuse of public money;

ii)  Mr Hunt had entered into an arrangement with the Conservative Party agent which gave rise to an accusation that she had obtained an immediate benefit or subsidy from public funds; and

iii)  the arrangement gave rise to an accusation that public money was being diverted for the benefit of a political organisation.

6. Mr Simpson said that he had raised these matters with Mr Hunt at a public meeting on 29 May 2009. A digital film recording of the meeting had been made by a third party, who had placed an edited version on the web. Mr Simpson sent me a transcript of the relevant part.[24] On 30 May, he had e-mailed Mr Hunt to ask him about the contradiction between the statements which he had made at the public meeting and the fact that his agent had been on the electoral roll up to September 2008.[25] On 31 May, Mr Hunt had updated his blog, which Mr Simpson said changed his account of events from that given at the public meeting in three respects:

i)  He now described his agent as "a close friend" whereas he had described her at the meeting simply as "my agent";

ii)  He now said that his agent had lived at his Farnham property for "3-4 nights per week as she had been doing since long before the election" whereas at the public meeting he had said that he allowed her to stay for "3 nights per week", which Mr Simpson said "might well mean that she would not have been eligible to go on the electoral roll"; and

iii)  He now said she had stayed there until she retired in June 2007, which he accepted was longer than the seven months he had said at the meeting. Mr Simpson argued that "This admission means that she lived there at taxpayers' expense for at least 19 months after Mr Hunt had designated his Farnham property as his ' second home'. It also means that she was living there at the time when Mr Hunt first started claiming ACA on the property."

Relevant Rules of the House

7. The Code of Conduct for Members of Parliament provides in paragraph 14 as follows:

"Members shall at all times ensure that their use of expenses, allowances, facilities and services provided from the public purse is strictly in accordance with the rules laid down on these matters, and that they observe any limits placed by the House on the use of such expenses, allowances, facilities and services."

8. The relevant rules for the Additional Costs Allowance are set out in the Green Book published in April 2005. Mr Speaker Martin's Introduction to the Green Book says:

"Members themselves are responsible for ensuring that their use of allowances is above reproach. They should seek advice in cases of doubt and read the Green Book with care."

9. Section 3.1.1 sets out the scope of the allowance as follows:

"The Additional Costs Allowance (ACA) reimburses Members of Parliament for expenses wholly, exclusively and necessarily incurred when staying overnight away from their main UK residence (referred to below as their main home) for the purpose of performing Parliamentary duties. This excludes expenses that have been incurred for purely personal or political purposes."

10. Section 3.12.1 says:

"The following expenditure is not allowable:

11. Sections 3.1.1 and 3.12.1 were included in similar terms in the July 2006 edition of the Green Book, but this also includes the following section on Principles:

"3.3.1 You must ensure that arrangements for your ACA claims are above reproach and that there can be no grounds for a suggestion of misuse of public money. Members should bear in mind the need to obtain value for money from accommodation, goods or services funded from the allowances."

"3.3.2 You must avoid any arrangement which may give rise to an accusation that you are, or someone close to you is, obtaining an immediate benefit or subsidy from public funds or that public money is being diverted for the benefit of a political organisation."

My Inquiries

12. In essence the complaint against Mr Hunt is that he claimed expenses for a residence in his constituency which were not wholly, exclusively and necessarily incurred when staying away from his main home for the purpose of performing his parliamentary duties; and that these may have provided a benefit from public funds to a political organisation, contrary to the rules of the House.

13. I wrote to Mr Hunt on 11 June to invite his comments on the allegation.[26] I asked him how long he had owned his constituency property and the circumstances which had led him to designate it as his second home; following the designation of the property, who had been living at the property, for what period or periods, and on what terms; the nature of the accommodation, and what accommodation and other facilities at the property were available for use by residents other than himself; the value and nature of the claims he had made for this residence under the Additional Costs Allowance for each financial year since he designated it as his second home; his best estimate of the number of nights he had spent at the property in each of the last five years; whether, to the best of his knowledge, the terms on which his constituency agent was employed took any account of the availability of accommodation at his constituency residence; whether his constituency home was used for party political activity at any time; whether, and if so why, he considered the claims he made were within the scope of the Additional Costs Allowance, taking account of the requirement that public money should not be diverted for the benefit of a political organisation; and what advice, if any, he had taken from the House authorities about those arrangements.

14. Mr Hunt replied on 24 June.[27] He acknowledged at the outset that he might have made a mistake over the arrangements under which his agent lived in his second home, since with the benefit of hindsight he noted that it had allowed accusations to be made about his use of parliamentary funds; and if he had made a mistake he would seek to rectify it. The issue had first been brought to his attention by the complainant at a public meeting on 29 May. He had then contacted the Registrar but, as she was unable to deal with the matter at that stage, he had written to the House authorities the following day.[28]

15. Mr Hunt said that when the issue was raised unexpectedly at the public meeting on 29 May 2009, he had inadvertently made a mistake about the dates his agent had stayed with him. He said, "At the public meeting I stated she was with me for 7 months, when in fact it was 19 months. I knew she had retired after the Waverley Borough Council elections, but thought they were in 2006 when in fact they were in 2007. I corrected the mistake on my blog as soon as I became aware of it."

16. Mr Hunt outlined the chronology of events. He had bought a property in Farnham in November 2003 for £185,000, a year after his selection as the Conservative prospective parliamentary candidate for the constituency. It was "a two-up, two-down small terraced house". His agent had been appointed by the local party at about the same time, starting initially on a temporary basis. Mr Hunt commented, "She rapidly became a close friend as well as someone with whom I worked professionally." Because it was felt that the commute, daily, from her home would be too tiring, he and a number of others had offered her accommodation "for the few nights a week she needed to be in South West Surrey". She had chosen to stay with him and "she therefore had the use of a very small room free of charge during the week. This arrangement continued until she retired in May 2007."

17. After Mr Hunt's election in May 2005, he had initially designated his home in Farnham as his main home. Following the summer recess it had become clear to him that because of his parliamentary duties he was spending more nights every week in London. He had therefore re-designated his Farnham home as his second home from November 2005. As a result, his claims for mortgage interest had fallen from around £1,400 a month to around £600 a month. He commented that his agent "therefore had the use of the room free of charge for 19 months while the home was designated as my parliamentary second home. There was no financial benefit to me or the Conservative Party."

18. Mr Hunt did not accept the essence of the complaint, that he had claimed expenses for a residence in his constituency that were not wholly, exclusively and necessarily incurred when staying away from his main home for the purpose of performing his parliamentary duties. He commented, "All the expenses claimed were for my—and only my—use of the cottage in Farnham. Many MPs allow family and friends to stay in their second homes, and there is no suggestion in the Green Book that you are not allowed to do this." Mr Hunt also did not accept that any of the expenses he had claimed against the ACA had been incurred for purely political purposes. He commented, "The cottage was not used for political campaigning apart from the occasional meeting (by 'occasional' I would estimate not more than once or twice a year). Indeed it is much too small to be used for campaigning - there is not even room for a proper table downstairs. I accept that the arrangement probably strengthened the excellent working arrangement I had with [my agent]. However, by the time my Farnham home became my parliamentary second home, it was in essence a social arrangement with someone with whom a deep friendship had been forged in the previous two years and for whom I wished to reduce the stress of commuting mid-week … Had [my agent] not stayed with me she would have stayed with other friends locally. The Conservative party did not benefit financially from the arrangement and would have been unaffected had the arrangement not taken place." Mr Hunt added that the arrangement was one that had been in place for two years prior to the Farnham property becoming his parliamentary second home. His Farnham property becoming his parliamentary second home "reduced the cost to the taxpayer by nearly £10,000 per annum. I do not therefore believe it can be said in any way that this was an arrangement set up to divert funds from the taxpayer to the Conservative Party."

19. Mr Hunt added, "A further consideration might be the equity I own in the house. At the time it became a parliamentary second home, I owned around 30% of the equity in the house. As [my agent] used half the house for half the week, it could be said that I was giving her a quarter of the use of the property - less than the equity share I own."

20. Mr Hunt conceded that his agent did indeed use electricity and gas during her period staying in his Farnham property. He commented, "As it happens the standing order that pays those bills did not go down when she left, so in practice there was no additional cost to the taxpayer. However, this is probably more of a billing fluke than anything else, and I accept that in practice the ACA did cover some of [my agent's] living costs in Farnham". He nonetheless maintained that he "followed parliamentary norms that dictate that it has always been acceptable for friends and family to stay at parliamentary second homes and for the ACA to cover their costs, even if they are not involved in work relating to an MP's parliamentary duties". He went on to say, "It would be a significant change to the interpretation of the rules if MPs were only allowed to charge for their own personal element of the costs of second homes and not for other people who are staying there. I therefore believed I was following normal practice in undertaking the arrangement in the way I did."

21. As to whether providing accommodation for his agent in his parliamentary second home might give rise to an accusation that public money was being diverted for the benefit of a political organisation, Mr Hunt commented, "This is the area in which I am most uncertain. I do not believe public money was 'diverted for the benefit of a political organisation'. But with the benefit of hindsight I do accept that the arrangements did allow political opponents to make accusations along those lines. However it should be noted that during the period in question from November 2005 to June 2007 no such accusations were made even though [my agent]'s use of the property was well-known."

22. Turning to other points related to the specific questions I had put to him, Mr Hunt said he had not been aware of any formal mechanism to demonstrate a change of designation [(of a parliamentary second home)] but commented, "although on reading the Green Book carefully I accept that I should have written to the parliamentary authorities to notify them that I had done this."

23. During the period when his Farnham home was designated as his second home, Mr Hunt said that he lived there around two nights a week (essentially coming down to the constituency for constituency work on Fridays and for part of the weekend). His agent stayed there "for around three nights a week from November 2005 to June 2007". No one else stayed there on a regular basis. The house was "extremely small", and he and his agent shared the use of the kitchen, bathroom and living room.

24. Mr Hunt's ACA claims for the relevant period were as follows:

November 2005 - March 2006  £4,911

April 2006 - March 2007    £12,173

April 2007 - May 2007    £2,033.

25. Mr Hunt said that his agent's employment "did not include a guarantee or even an offer of accommodation at my constituency home". He enclosed a copy of his agent's contract, which I noted made no reference to her accommodation. Mr Hunt reiterated that his home was too small to be used for political activity, although he had had "the odd meeting with local volunteers on my campaign - the latter probably no more than once or twice a year". He continued, "I believe that the money I claimed from the ACA for my parliamentary second home was wholly, exclusively and necessarily incurred when staying away from home for the performance of my parliamentary duties. Had the arrangement with [my agent] not taken place, there would have been no less cost to the taxpayer. Nor did the Conservative Party or my campaign receive any additional benefit as a result of her staying there as she could easily have stayed elsewhere."

26. Mr Hunt said that he had not taken advice from the House authorities on the arrangements until the matter had been brought to his attention at the public meeting on 29 May 2009.

27. Mr Hunt said that the other person on the electoral roll for the Farnham property had worked as his press officer until December 2005. She had spent time at the property until the 2005 General Election, but after that she did not stay there on a regular basis and "having spoken to her I believe it was on no more than a couple of occasions". She was removed from the electoral roll in the year after she left Mr Hunt's employment.

28. Mr Hunt provided me with a printout of his electronic diaries to corroborate his account of the use he had made of the Farnham property, and indicated, for each week, the number of nights he believed he had spent there. Mr Hunt's estimated totals were as follows:

November 2005 - March 2006:  31

April 2006 - March 2007:    61

April 2007 - May 2007:    10

Total:        102

29. I wrote to Mr Hunt on 30 June to ask for further information[29]. I said that in many cases it was not clear to me which night of the relevant week he had in mind, nor which engagement he was relying on as corroboration; nor was it clear whether the engagement was of a parliamentary character rather than personal or party political. Mr Hunt replied on 1 July with the information I had asked for, and identifying a number of additional nights he believed he had spent at the property.[30]

30. I wrote again to Mr Hunt on 6 July[31] and attached to my letter a schedule showing the summary of nights in his constituency based on his original estimate and the slight revisions I proposed based on the further information he had provided. There was very little difference between the two. My estimates of the number of nights Mr Hunt spent at his Farnham property in connection with his parliamentary duties in the relevant period were as follows:

November 2005 - March 2006:   34

April 2006 - March 2007:     60

April 2007 - May 2007:     9

Total:        103

31. Meanwhile, I had written on 30 June to the Director of Operations in the Department of Resources to ask for his advice and comments on the complaint.[32] I asked when Mr Hunt had notified the Department of the change in the designation of his main home; whether in the circumstances described by Mr Hunt it was within the rules of the House for the property against which he made ACA claims to be regularly used by another person, in this case his constituency agent who was also a close friend; and whether, in those circumstances, it was within the rules of the House for the Member to make in his claims no allowance for the benefit in terms of accommodation and outgoings received by that other person, taking account of the extent to which the Member and his agent respectively made use of the house. On 6 July, I wrote again to the Director, to let him know the outcome of my more detailed checks on Mr Hunt's diary, to which I had referred in my earlier letter.[33]

32. On 20 July the Director of Strategic Projects replied to my letter on behalf of the Department of Resources.[34] [35] He noted that Mr Hunt had claimed ACA against his London home from 5 May to 31 October 2005, and against his Farnham home from 1 November 2005. His amended designation form had been signed and dated 6 January 2006. The Director commented that, although Members were "strongly advised" against subletting or renting out any part of a property on which ACA was claimed, if no rent was paid to the Member - as it was not in Mr Hunt's case - there was no rule which governed who might or might not live in, or stay at, a home on which ACA was claimed. He commented "In these circumstances, I do not believe that [his agent's] occupancy of the house was outwith the rules." He added that, from the evidence I had sent him, there appeared to be no evidence that the agent's occupancy was either part of her emoluments or was for the purpose of political activity.

33. The Director went on to say that the Green Book made it clear that Members could not claim under the ACA for the living costs of anyone other than themselves. The implication of Mr Hunt's evidence was that he had not abated the costs which he charged to the House in respect of his agent's occupation of the property. It would in his view have been appropriate for him to have done so in respect of charges such as fuel consumed. The question of mortgage interest costs was in his view different, since they were unaffected by Mr Hunt's agent's occupation of the house. This principle applied to other fixed costs, though possibly not to council tax if Mr Hunt had been eligible for a single occupancy discount.

34. I wrote to Mr Hunt on 22 July[36] enclosing copies of my correspondence with the Department of Resources, drawing his attention to the Department's views, and inviting his comments.

35. Mr Hunt responded on 25 July.[37] He described himself as "broadly happy" with the views of the Department of Resources, and continued:

"I do perhaps have a small question over the suggestion that I should have reduced the bills. This is not really over the principle. It is more that the rules do not mention this as something that should be considered and the norm is clearly for MPs to have friends and family to stay in their second homes without refunding any of the additional costs incurred. It would therefore be useful to have clarification as to when this should or should not be a consideration."

36. While I was preparing to interview Mr Hunt, the Director of Strategic Projects in the Department of Resources wrote to me again on 20 August.[38] He said that the Department had looked further at the papers it held in relation to Mr Hunt's ACA claims. He stated that, on 11 May 2005, Mr Hunt nominated his London address as his second home, and this was repeated on a nomination form of August 2005. On 6 January 2006, Mr Hunt had signed two nomination forms. One gave the address of his main home as his London address, and the address of his second home as his Farnham address. The other gave the address of his main home as his Farnham address, and the address of his second home as his London address. The Director commented, "It appears that the second of these nominations was regarded by the Department as made in error."

37. As to Mr Hunt's claims, the Director reported that Mr Hunt had made two claims on 6 January 2006. One was for mortgage interest against his London home for the period ending 31 October 2006, which the Director assumed was an error for 31 October 2005; the other was for mortgage interest and other costs against his Farnham home in respect of the period from 1 November 2005 to 6 January 2006. The Director went on to say that on 8 November 2005, Mr Hunt had submitted a claim against his Farnham address for utilities, council tax, telephones and food (but no mortgage) for the period May to October 2005. He commented, "If this was a claim for this period, it should have been in respect of his nominated second home—his London address. There is no evidence that this issue was picked up at the time." The Director said that there appeared to be some matters that should be taken up with Mr Hunt, and asked if I would want to do it myself.

38. I wrote the Director on 1 September to say that I had decided that I did need to deal with the additional matter he had raised as it dealt with a period when Mr Hunt's Farnham house was being used by his friend and agent and because it raised some potential uncertainties about the timing and intentions of Mr Hunt in changing the designation of his second home from London to Farnham.[39]

39. I wrote to Mr Hunt on 1 September, enclosing a copy of the Director's letter.[40] I commented that there appeared to be some uncertainty about the forms he had submitted in January 2006 in relation to his decision to change the nomination of his second home to his Farnham property from the end of October 2005. I noted that it seemed he had also made a claim against the ACA in respect of that property for utilities, council tax, telephones and food for the period May to October 2005, when that property was still designated as his main home, rather than his second home. Although this did not form part of Mr Simpson's complaint, I told Mr Hunt that I nonetheless needed to resolve this matter as it affected the factual description of the claims he had made for his Farnham property during the period when it was also being used by his constituency agent.

40. I therefore invited Mr Hunt's comments on this ACA claim, including how it came about and whether he considered it to have been a mistake. I also said that it would be helpful to have some clarification of why he had submitted two forms in January 2006, one identifying London as his main home and the other identifying Farnham.

41. Mr Hunt replied on 10 September.[41] He confirmed that he had changed the designation of his second home from 1 November 2005, and that he did not submit any expense claims until that point, something that "was not, with hindsight, wise". He had "asked [his] staff to prepare all my expense claims for [him] without scrutinising them closely". One of the mistakes made, as identified correctly by the Fees Office, was that the date for mortgage interest claimed said 2006 when it should have said 2005. The other mistake was that, for the period May to October 2005, he had claimed for utility expenses at his Farnham home, instead of his London home which, during that period, was his designated second home. He commented, "I think the reason this happened was when my staff member prepared the claim I had already changed the designation of the second home from London to Farnham and so he was confused. It is a mistake that I should have picked up but did not before the claim was signed off." He continued, "Because the Farnham house is considerably smaller than the London house the utilities bills would have been lower in Farnham so this mistake actually benefited the taxpayer rather than myself. Nonetheless, I have decided to repay the amount in full and a cheque has been sent to the Fees Office."

42. Mr Hunt concluded by saying that he "had always taken the view that it is important to be as transparent as possible about any mistakes in [his] expenses". He enclosed a copy of a webpage he had published in the last week of June. At that stage he "thought it may have been a clerical mistake with the wrong address being listed". However, he now believed "a claim was made for the wrong home". He had updated his website accordingly.

43. The original webpage, which Mr Hunt noted on the webpage as published in the last week of June 2009, stated, "During the period that my second home was designated as my London home (my first five months as an MP) I may have mistakenly claimed for utility bills on my Farnham instead of my London home. This was a clerical mistake caused, I think, because I did not claim anything for five months and by the time I made the claim I had already changed the designation of my second home to Farnham. The member of my staff who prepared the expenses form for me to sign therefore filled out the form with the Farnham rather than the London utility expenses. If that happened then it will have saved the taxpayer money because the Farnham house is smaller than the London one."

44. The subsequent webpage, as it was in September 2009, stated, "During the period that my second home was designated as my London home (my first five months as an MP) I now believe I mistakenly claimed for utility bills on my Farnham instead of my London home. This was a clerical mistake caused, I think, because I did not claim anything for five months and by the time I made the claim I had already changed the designation of my second home to Farnham. The member of my staff who prepared the expenses form for me to sign therefore filled out the form with the Farnham rather than the London utility expenses—a mistake for which I accept full responsibility. Because the London home is bigger that mistake will actually have saved the taxpayer money. However because it was a claim on the wrong home, I have now repaid the claim in full."

45. I replied to Mr Hunt on 22 September.[42] I asked for a response to the other point I had raised in my letter of 1 September—why he had submitted two forms in January 2006, one identifying London as his main home, and the other Farnham. He responded on 24 September. [43] He explained that although the two claims were submitted on the same date in January, one referred to the period when his London home was his designated second home and the other to the period when his Farnham home was so designated.

46. On 30 September, I copied to the Department of Resources my letters to Mr Hunt of 1 and 22 September, and Mr Hunt's responses, and inviting any comments they wished to make.[44] The Director of Strategic Projects replied on 1 October, commenting, "I can understand how Mr Hunt may have thought that he needed to submit these notifications to complement the claims which he submitted on the same day in respect of the two addresses".[45] I sent a copy of this exchange of correspondence to Mr Hunt on the same day, 1 October.[46] He replied on 2 October, saying that he had submitted the two notification forms, citing different addresses for his second home, "to highlight the fact that the claims submitted on 6 January 2006 referred to different properties since between these periods I had changed the designation of my main home from [Farnham] to [London]."[47]

47. I met Mr Hunt for interview on 12 November.[48] [49] He confirmed that he had purchased his Farnham property in November 2003 for £185,000. He had initially financed the purchase by increasing the mortgage on his London home. In November 2005, he had transferred £150,000 of that mortgage to the Farnham property. He also confirmed that, from November 2003, his constituency agent spent around three nights a week at the property. She had started working on a two month temporary employment contract in November/December 2003, and had started again in the spring of 2004. She had stopped living at Mr Hunt's house when she finished the temporary appointment, and started staying there again when reappointed until "the Waverley elections in May 2007 but then she came back for our final AGM and a farewell in June. Her formal retirement was in June". Mr Hunt agreed that he had himself spent on average between one and two nights a week at the Farnham property during the period when his agent had also occupied it.

48. Mr Hunt confirmed that he had designated his Farnham property as his second home in November 2005, after which he had made ACA claims on the property. He accepted that he had mistakenly claimed for food, utilities, council tax and telephone charges in respect of this property for the period May to October 2005 when it was in fact his main home. He had repaid the full cost of this claim in September 2009. He had made no charge to the agent for the use of the property, and made no abatement of his claims against the ACA to reflect his agent's use of it. He had also claimed full council tax.

49. Mr Hunt accepted that his agent spent about twice as much time at the Farnham property than he did. Mr Hunt said that, if his agent had left any personal possessions in the property, they would have been very few, "She used to pack up her suitcase when she left each week. She might have left some small items, perhaps in the little cupboard in her room … but nothing in the rest of the house". She did not provide additional furniture or decorate her room, nor to his knowledge did she entertain her own friends or have them to stay. As to catering and food buying, Mr Hunt said, "I was there at the end of the week and she was there in the middle of the week, so we didn't often coincide. If we did, she might buy a supermarket ready meal which we shared. I don't think she ate any of the food I bought—I ate more of her food than she did of mine."

50. Mr Hunt described his constituency as "very active". Had he spent "ten or twelve hours a week commuting, [he] would have spent less time on constituency work". He pointed out that his predecessor had a second home. His constituency wanted "a very active local MP … I want to deliver this and it would be a lot harder if I had to commute …having the second home meant that I did more work for my constituents." He believed he had made "a right judgement when I set up a home in the constituency." Mr Hunt believed that the house gave him good value, describing it as "an absolute godsend. I have a dispersed constituency and although we have an office I don't have a computer and desk there. So if I was in the constituency I would often spend about an hour and a half in my home there in the middle of the day seeing to my emails." He said it was "a modest house that helped me to do a lot more for my constituents."

51. Mr Hunt accepted that his expense claims had included his agent's share of the living costs. He said, "My agent used electricity and hot water while she was there, even though there was no increase in the electricity bills. I think I made a wrong judgement in not reducing claims for the utility bills and the mortgage." Mr Hunt explained that, taken literally, the requirement for expenses to be 'wholly, exclusively and necessarily incurred' "would mean that no spouses or children could ever use a Member's second home funded by the allowances, or use the electricity or water. It would mean that I couldn't give someone a lift if my travel was paid for by Parliament, or share a bottle of milk. I took it that it was not meant to be taken absolutely literally, but that there was some leeway". He added, "I treated my Farnham house as my home. I believed that the Green Book allowed family and friends to stay on an occasional basis, equivalent to the way they could stay in my main home. I recognise that this wasn't occasional, but there was no definition of what was and was not acceptable… I now believe my judgement was wrong. I have explained why I made it."

52. Mr Hunt commented on the similarities of his own case to another recent inquiry of mine, which also involved others living in a Member's second home against which allowances were claimed.[50] He said "The Member did not abate the mortgage costs charged to the allowances. I did not abate living costs, but I would agree that if you abate the costs there is a strong argument for including the mortgage costs in the abatement. The argument about whether the expenses claimed were 'wholly, exclusively and necessarily incurred' is relevant to both complaints". He went on to say, "The differences are that my second home was not the main home of the person who stayed in it. My agent had a home in [another county] where she paid council tax and other costs. Then there was no financial benefit to my agent, to me or to the local party. Although my agent received a benefit, had we known the outcome she would have stayed with someone else; there were plenty of offers … This did not cost the taxpayer any extra except perhaps my agent's share of the utility bills … this was not set up as an arrangement to take advantage of parliamentary expenses. It started in 2003, before I was elected, so it predated my use of those allowances."

53. Mr Hunt thought he "was doing the right thing when I transferred my mortgage and designated the smaller house as my second home, as it would cost the taxpayer less". His agent "would have been horrified at the suggestion that she was trying to get something she was not entitled to from the taxpayer." He agreed that the use of his Farnham house enabled his agent to do her job more easily but noted that "others offered her the use of their homes nearer her office. It was immaterial where she stayed."

54. On his eligibility for council tax discount on his Farnham property if he had lived alone at the property, Mr Hunt commented, "I should have claimed it from the start. I could have had a single person's reduction even when my agent was staying there. I have now had a share of my council tax refunded and I have passed the money to the Fees Office."[51]

55. Mr Hunt told me that he did not wish to pursue the argument in his letter of 24 June[52] that he owned outright a proportion of the equity of his Farnham home and was therefore free to allow others to use the property to a similar proportionate extent. He agreed that "it is reasonable" for the rules of the House to cover the whole property.

56. Mr Hunt accepted that he was "at fault" in not being aware of the July 2006 clarification of the rules regarding the avoidance of arrangements that might give rise to an accusation that a Member, or someone close to them, was obtaining an immediate benefit or subsidy from public funds. He agreed that his arrangement by which his agent used his Farnham property rent free represented such a benefit or subsidy to her. He commented, "I made a wrong judgement on that. The reason was that I looked at the Green Book rules and thought they should not be interpreted literally, because otherwise no-one apart from the Member could stay in a parliamentary second home. It was the wrong judgement, not least because it gave rise to the possibility of an accusation - even if in reality there were no additional costs. It allowed the accusation to be made."

57. Mr Hunt went on to say, "I can say that we never hid this arrangement. My agent appeared on the electoral roll. It was quite public. The previous Liberal Democrat candidate was aware of it and hadn't mentioned it at all. But I accept it allowed accusations to be made."

58. Mr Hunt said that he was "hesitating" about whether his agent in fact derived any personal benefit from her use of his Farnham property, "The reason is that while there was a benefit in being given a bed for the night, I am resiling from saying that there was a financial gain because if my agent had not stayed with me, she would have been able and happy to stay elsewhere. I thought it was within the latitude allowed for her to stay with me. That was clearly wrong." He recognised that there was a distinction to be drawn between a benefit from public funds and a benefit from private funds, and commented, "But I am worried that if you say that there was a benefit from public funds people who are not familiar with the detail will make the assumption that there was a transfer of public funds. That would be completely different. There was no transfer of funds and no taxpayers' money went to my agent."

59. Referring to whether there had been any political benefit from his agent staying with him, Mr Hunt said, "Is there a political benefit from having discussions with a close friend about your political career? That would be a heavy handed use of the phrase. No public funds were used to give a benefit to the Conservative Party. The accounts of the constituency association were completely unaffected. Is there benefit in spending time together in this way? Of course there is—but political benefit? No. Socially, yes I did benefit." Mr Hunt said that he wanted "to avoid the suggestion that if [my agent] had not stayed with me, the Conservatives would have put her up in a hotel. That is not the case."

60. In his letter of 24 June,[53] Mr Hunt had said that his Farnham property was not used for the purpose of political campaigning, but had been used for occasional political meetings. At the interview, he described the nature of those meetings: "I may have said to councillors, 'Let's have coffee or a discussion in my house, to talk about the forthcoming election campaign.'". The property was "just a place to meet". As to whether his agent used the property for political purposes in his absence, Mr Hunt said, "She didn't view the place as her own house; she treated it as a borrowed home and she packed up her things each week when she went home. She was punctilious. Of course I don't know exactly what she did, but she worked very long hours in her office in Hindhead until 9 or 10 pm. Then she would come home and crash out. She did not work in the cottage. She never hid anything, but our meetings were in the office in Hindhead, not at home. She would only be in the house to get her head down for the night." As to constituents or party members calling or telephoning, he said that this did not happen much "The house is not big enough. I have had other meetings, not party political ones, with constituents there. But it was only a handful of meetings. It is the same now: it is not really practical to hold them there." Mr Hunt nonetheless accepted that he had "made the wrong judgement" in that his arrangements had enabled accusations to be made that he was diverting public money for the benefit of a political organisation.

61. Turning to the time he had taken to notify the Department of Resources of changes of designation of his main home, Mr Hunt said, "I accept that a lot of mistakes were made, and they have caused me a lot of embarrassment. I have explained them on my website. In that six month period I came from running my own company where I didn't do my own administration. I arrived in Parliament where I had no secretary and no office for the first two months … Claims were the last thing on my mind at that stage. I had a lot of turmoil as I assembled a team around me, and some of my staff worked for me only for a short period. Admin is not my strongest point, so I made no claims until November. I left it until January to submit my change of designation." Mr Hunt agreed that a designation of his Farnham property as his main home submitted at the same time was intended to cover a claim for mortgage interest on his London home up to October 2005. As to why, having already twice nominated London as his main home he needed to do it again in January 2006, he commented, "I don't know. I suspect I thought I had to because I was making a late claim. My office would have assembled the claim."

62. Mr Hunt went on to explain why he had not repaid until September 2009 the mistaken claim for expenses incurred in respect of his Farnham property for May to October 2005, when it was designated as his main residence. He said "After London had became my main home, through a clerical mistake I claimed for Farnham not London for the earlier period in 2005 when Farnham was my main home. I found out about the mistake this summer but I let it go then because the claim was lower than it would have been had I claimed for London as my second home. So the taxpayer has benefited. The Fees Office agreed that I saved the taxpayer money. But the climate has changed, and I felt that if the claim was not absolutely right then it needs to be repaid." He also confirmed that he had not claimed for his second home in the same period. He believed that the confusion may have occurred because he had as many as possible of the utility and other bills for both properties sent to his parliamentary office, where his staff could access them.

63. As to steps Mr Hunt was taking to avoid a recurrence of claims for the wrong property, Mr Hunt said, "I go through [the claims] like a hawk. This is public money and we should take great care over it. I have new staff in my office and we now have much stricter procedures. We are much more careful about submitting claims." As to why he had initially indicated that since there was no loss to the public purse he did not intend to repay the claim, Mr Hunt said, "I wasn't sure whether the expenses were for the right home but with the wrong address written on the claim form. As it just so happens my council tax bills in London and Farnham are the same to within £1. So initially, when I was alerted to the problem with the form, I thought that maybe these were expenses for my London house, but the form had the wrong address on it. It was just coincidence that the sums were similar. I have now repaid the money." As to the steps he had taken to find out what had led to him making an incorrect claim, Mr Hunt said, "I thought I had established that these were expenses for my London house. But when you raised the issue, I looked more closely at them."

64. Mr Hunt accepted the suggestion that, from November 2005, if it had been necessary for his agent to live in his Farnham property, he should have reduced his ACA claim to reflect his agent's living costs there, and by not doing so she received a personal and immediate benefit from public funds. He said, "I accept that I made a wrong judgement. That is clear from reading the Committee's ruling on another recent complaint. … I did not pro rata the living costs, including mortgage costs, for which I claimed, according to the number of nights in the house. I am willing to repay half the entire living and mortgage costs for which I claimed during the entire period." He added, "I would be grateful if you would acknowledge that there has been no financial benefit to me. This was a misinterpretation of the rules made in good faith."

65. Mr Hunt wrote to me finally on 18 November.[54] He asked me to convey his apologies to the Committee on Standards and Privileges for "the mistakes I made in my claims for ACA between November 2005 and June 2007". He said that had allowed his agent to stay in his parliamentary second home in Farnham for around three nights a week, in an arrangement designed to save her having commute daily to her main home. He had interpreted the rules to mean that he did not need to reduce the amount he claimed for council tax, utilities and mortgage interest while that arrangement took place. He accepted that his interpretation had been wrong. He said, "I apologise unreservedly for the mistake."

Findings of Fact

66. Mr Hunt purchased a small property in Farnham in November 2003, a year after he was selected as the Conservative Party's prospective parliamentary candidate for the South West Surrey constituency. Following his election to Parliament in May 2005, Mr Hunt had nominated this property as his main home for the purpose of his claims against the Additional Costs Allowance (ACA). In January 2006, he re-designated it as his second home with effect from 1 November 2005, from which point he has claimed against the ACA for the costs of this home.

67. A new agent had been appointed by Mr Hunt's local party at about the same time as he had purchased his Farnham property. In order to save her a lengthy commute he had given her the shared use of the house, free of charge, during the week. Others in the constituency had also offered her rent-free accommodation. Her employment contract made no reference to the provision of accommodation. From November 2003 until her retirement in June 2007, she stayed at the property for about three nights a week, and became a personal friend of Mr Hunt. He himself spent on average between one and two nights a week in the property. Mr Hunt claimed a total of £19,117 against the ACA in respect of the property during the period between its designation as his second home and the retirement of his agent. He did not reduce the claims he made to reflect his agent's use.

68. Another person who had been on the electoral roll at the property had not stayed there on more than a couple of occasions after the General Election. She had left Mr Hunt's employment in December 2005.

69. Mr Hunt wrongly claimed against the ACA for utilities, council tax, telephone and food in respect of his Farnham property for the period May to October 2005, a period when it was nominated as his main home. He claimed for mortgage interest in respect of his London home for the same period. He made no other ACA claims in respect of his London home for this period.

70. The Department of Resources' view was given before the publication of the Committee's Report on Mr Tony McNulty, the Member for Harrow East.[55] It was that, provided no rent was paid, there was no rule which governed who might or might not live in, or stay at, a home on which ACA was claimed. However, as Members could not claim under the ACA for the living costs of anyone other than themselves, it would have been appropriate for Mr Hunt to have abated the costs charged to the House in respect of the agent's occupation of the property for such charges as fuel consumed and possibly council tax, but not for mortgage interest which was unaffected by the agent's occupation of the property. The Department considers that there is no evidence that the agent's use of the property was either part of her emolument or for the purpose of political activity.

71. Mr Hunt has from the outset acknowledged that he may have made a mistake over his arrangements. He accepts that he continued to provide his constituency agent with rent-free accommodation after he had started to make claims for his Farnham property as his second home, making no allowance for the full living costs of her use of the property. He considers that his agent received no financial benefit from the arrangement. She could have stayed with others in the constituency free of charge. Mr Hunt considers that his claims did not have the effect of diverting public money for the benefit of his political party, since the property was not used for party political purposes and because the party would not anyway have paid for his agent's accommodation costs. Mr Hunt has, however, accepted that he made a wrong judgement in not abating his agent's full living costs, including a proportion of the mortgage interest, in the claims he made against his additional costs allowance. He has unreservedly apologised. He has offered to repay half of his ACA claims for the period when his agent had use of the property (£9,558.50). Mr Hunt has also accepted that he made an error in claims for utilities and other items for his Farnham home in 2005 when it was still designated as his main home. He has repaid the sum involved, £1,996, in full. He has repaid the differential between his full and his discounted council tax (£466).

Conclusions

72. The question I am to determine is whether Mr Hunt was in breach of the rules of the House in providing to his constituency agent rent-free accommodation in his parliamentary-funded constituency home in Farnham from November 2005 until June 2007.

73. I need also to determine ancillary matters: the notification by Mr Hunt of the change in the designation of his main home from Farnham to London in November 2005, and claims he mistakenly made for his Farnham property while it was still designated as his main home.

MR HUNT'S USE OF HIS FARNHAM PROPERTY

74. I consider first Mr Hunt's decision to provide rent-free accommodation to his agent.

a) Mr Hunt's sharing arrangement

75. Mr Hunt has fully accepted in the light of the Committee's Tenth Report of Session 2008-09[56] that he was in breach of the rules of the House in claiming from his Additional Costs Allowance the full mortgage interest on his Farnham property, and for his utilities, council tax and phone bills in full. This is because Mr Hunt's claims made no allowance for his agent's use of the property. Mr Hunt has apologised unreservedly. He has offered to pay back half the costs he claimed from his Additional Costs Allowance from November 2005 to June 2007. The amount claimed from his ACA over the period is £19,117.

76. Mr Hunt's arrangement to provide rent free accommodation for his agent started in November 2003, well before he was elected to Parliament in May 2005. It continued while the Farnham property was his main home, from May 2005 to November 2005. Up to that point, the arrangement raised no problems in terms of compliance with the rules of the House. Once it became his second home, however, as it did in November 2005, Mr Hunt was in my judgement in breach of the rules in continuing the arrangement while claiming against his parliamentary allowances for the full costs of the property.

77. Mr Hunt has accepted that he was mistaken in his judgement that his arrangements were equivalent to visitors staying occasionally in a Member's home. Mr Hunt is, in my view, correct in thinking that it would be unreasonable to prevent a Member having guests to stay overnight at their additional home, even, on occasions, when they may not themselves be present. I accept Mr Hunt's evidence that his then press officer stayed in the house for only a few occasions after the May 2005 election and I judge that she therefore fell into that category. But there comes a point where the overnight guest turns into, in effect, a lodger. There comes a point where the property is being shared by that other person or persons. Mr Hunt's arrangements were well past those points. His lodger was staying overnight in the house for some three nights a week over a period of some 19 months while she was employed as the agent for the constituency.

b) Were political funds diverted to a political party?

78. The kernel of the complainant's concern was that Mr Hunt's arrangement diverted public money for the benefit of a political organisation. The allegation is a serious one. I have no evidence to sustain it. The agent's contract made no allowance for, or reference to, free accommodation. There is no evidence that the party was prepared to pay the agent's accommodation costs. It made no financial saving from Mr Hunt's arrangement.

79. I consider Mr Hunt's evidence credible that the house (which is small) was not used in any significant way for party political activity, either by him or by his constituency agent.

80. I have considered whether it could be argued that there was some less tangible benefit to the party. It could be argued that, because the arrangement helped the agent do her job better (by saving her from a long commute), the party benefited. The fact that the agent could have received a similar benefit from staying with someone else in the constituency does not detract from the point that in fact she stayed with Mr Hunt. It might also be argued that the social benefit which the arrangement brought must also have rubbed off on their professional relationship, to the benefit of the political party. But I consider that these possibilities, while reasonable in themselves, are a long way from sustaining an allegation that Mr Hunt breached the rules of the House because his arrangement permitted the diversion of public funds to a political party. There is no evidence that public funds were diverted in this way. I do not, therefore, uphold this part of the complaint.

c) Was there a benefit to another person?

81. I consider, however, that Mr Hunt was in breach of the rules of the House in his arrangements because his claims against his Additional Costs Allowance included the living costs of someone other than himself. Public funds were, therefore, used to provide a benefit to that person. I accept Mr Hunt's evidence that that person, his constituency agent, could have obtained the same benefit, namely rent-free accommodation, from others in the constituency. But the benefit would then have been provided through private funds and not through public funds. I accept also that, with the possible exception of utility costs, Mr Hunt's claims would not have been significantly less had the constituency agent not been sharing the house. I do not believe Mr Hunt received any real financial benefit from the arrangement. Nor is there any evidence that his agent acted improperly in any way.

d) Was Mr Hunt open to credible accusations?

82. Mr Hunt has also recognised that the July 2006 Green Book rules state that Members must avoid any arrangement that may give rise to an accusation that they or someone close to them is obtaining an immediate benefit or subsidy from public funds or that public money is being diverted for the benefit of a political organisation (rule 3.3.2). Mr Hunt has fairly accepted that his arrangements have indeed brought accusations both of personal benefit and of the diversion of public funds for political benefit. I have found that, in fact, there was a personal benefit from public funds. But there was no diversion of public funds for the benefit of a political organisation. Nevertheless, the accusation has been made. It would be in my judgement unreasonable that a Member should be held to have fallen foul of this rule if any accusation or allegation is made against them, however ill-founded or unreasonable. But in this instance, I think that Mr Hunt is right to note that his arrangements have allowed these accusations to be made against him.

83. I have found Mr Hunt in breach on the substantive issue, namely that his claims covered the living costs of someone other than himself and so provided a benefit to them from public funds. I do not believe that it would be reasonable in these circumstances also to make a separate finding of a breach against Mr Hunt because his arrangements allowed this accusation to be made. Mr Hunt should, however, have been able to avoid these accusations, either by charging his constituency agent a full rate for the use of his house once it had been designated as his parliamentary second home, producing a written agreement which he sent to the House authorities, and reducing his claims by the full cost of her accommodation, or by ensuring that once he had decided to claim for the house as his second home, she stayed elsewhere. The latter arrangement would have been more straightforward and in my view preferable.

OTHER ISSUES

84. In the course of this inquiry, Mr Hunt and the House authorities have identified some other issues which are ancillary to my inquiry. They were as follows:

a) Designation date

85. Mr Hunt changed the designation of his main home from Farnham to London in November 2005. The rules required that a Member notify the Department of such a change in designation "promptly". Mr Hunt notified the Department in January 2006, some two months after the change. Mr Hunt could have been more prompt in his notification, but I do not believe it would be reasonable to suggest he was in breach of the rules of the House in not notifying the Department earlier.

b) Claims on Mr Hunt's main home

86. Mr Hunt has readily accepted that he was in error, and in breach of the rules of the House, in making a claim for utilities and other services on his Farnham home in the period during which it was still his main home. He has repaid the sum claimed, £1,996, in full. It is clear that, as a new Member in May 2005, his office arrangements were at best disorganised. I accept that the mistake was made in Mr Hunt's office and that Mr Hunt did not pick it up when he signed off his claim form. He would, of course, have been entitled to have made a claim for utilities and other services on what was then his second home, his property in London, and so it is very unlikely that there was any loss to the public purse by the mistake, rather the reverse. But Members' claims have to be both accurate and transparent, and it is right that Mr Hunt should have accepted that his claim was in breach of the rules, and that he should therefore apologise, and repay it. I welcome his assurance that he and his office are now much more careful about his claims.

OVERALL CONCLUSION

87. My conclusion, therefore, is that Mr Hunt did not divert public money for the benefit of his political party by providing rent-free accommodation to his constituency agent from November 2005 to June 2007. I do not, therefore, uphold this part of the complaint. But Mr Hunt was in breach of the rules in not reducing his claims on the Additional Costs Allowance in that period to take full account of his agent's living costs. As a result, public funds provided a benefit to the constituency agent, a benefit which I accept she would otherwise have received through private funds by staying rent-free elsewhere. I therefore uphold this part of the complaint. Mr Hunt was also in breach of the rules in mistakenly claiming for utilities and other services on his Farnham property when it was still his main home. This breach did not form part of the complaint.

88. I consider it a serious matter that Mr Hunt allowed his constituency agent to stay with him in his second home rent-free while claiming the full costs from parliamentary allowances. But I accept that Mr Hunt received no real financial benefit from the arrangement and that the error was caused by his misinterpretation of the rules. The Committee will wish to note his unreserved apology and his offer to pay back half of all the costs he claimed for this property over the period for which it was used also by his constituency agent.

3 December 2009  John Lyon CB



22   WE 1 Back

23   WE 2 Back

24   See Appendix I to WE 2. Back

25   See Appendix 2 to WE 2. Back

26   WE 3 Back

27   WE 4 Back

28   WE 5 Back

29   WE 6 Back

30   WE 7 Back

31   WE 8 Back

32   WE 9 Back

33   WE 10 Back

34   WE 11 Back

35   This letter predated the Report of the Committee on Standards and Privileges on Mr Tony McNulty (Tenth Report of Session 2008-09, HC 1070). Back

36   WE 12 Back

37   WE 13 Back

38   WE 14 Back

39   WE 15 Back

40   WE 16 Back

41   WE 17 Back

42   WE 18 Back

43   WE 19 Back

44   WE 20 Back

45   WE 21 Back

46   WE 22 Back

47   WE 23 Back

48   WE 24 Back

49   This was after the publication of the Report of the Committee on Standards and Privileges on Mr Tony McNulty (Tenth Report of Session 2008-09, HC 1070). In preparing for the interview, I had drawn Mr Hunt's attention to the Report. Back

50   See the Tenth Report from the Committee on Standards and Privileges, Session 2008-09, HC 1070. Back

51   Mr Hunt subsequently confirmed that he had repaid £466 Back

52   WE 4 Back

53   WE 4 Back

54   WE 25 Back

55   Committee on Standards and Privileges, Tenth Report of Session 2008-09, HC 1070 Back

56   Committee on Standards and Privileges, Tenth Report of Session 2008-09, HC1070  Back


 
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