Maria Miller - Committee on Standards Contents


Appendix 3: Further Correspondence between the Clerk of the Committee and Mrs Miller


Letter from the Clerk of the Committee to Mrs Miller requesting further information, 25 February 2014

At its meeting today the Committee on Standards decided it required further information to assist in its consideration of the memorandum from the Parliamentary Commissioner for Standards and has directed me to request this from you. The questions are as follows:

1)  Did you increase your mortgage on the London home between the time you were selected as candidate for Basingstoke and the re-mortgage in November 2007? If you did increase the mortgage in this period, the Committee wishes for information, supported by documentation as far as possible, on:

·  the date of any increase;

·  the amount of any such increase; and

·  the purpose for which any additional money advanced was used.

2)  With regard to the increase in your mortgage in November 2007, did you notify the Department of Finance and Administration of the change in your arrangements and seek their agreement in advance? If so, please give details.

3)  In your response, dated 10 April 2013, to the letter from the Commissioner of 19 March 2013 inquiring about the reason for the mortgage increase in 2007 you say "The mortgage changed in the normal course of events." The Committee would like to know why you increased this mortgage and the use to which the money was put, with supporting documentation.

4)  The Committee wishes to confirm the mortgage companies used during the period 2005-2009. The records available indicate that the mortgages were held by the RBS followed by Coventry Building Society. The Committee needs to know the effective rates of interest (with changes and applicable dates) for the period. Documents held by the House are incomplete. The Committee suggest you ask lenders for any information they may hold relating to your mortgage arrangements and payment.

As I have indicated, it would be helpful to have this information by the morning of Wednesday 5 March, but do let me know if this is not possible.

25 February 2014

Letter from Mrs Miller to the Clerk of the Committee, 16 March 2014

Thank you for your letter dated 25th February 2014 and for the Committee's allowing me some further time to respond. Unfortunately, some of the information is still not available to me but it seemed sensible that I should answer the Committee's four questions as best I can; and I take them in turn below.

Question 1

1. Yes. As at June 2003, the mortgage facility stood at £375,000. At this time, I had a variable, current account mortgage. The mortgage facility was increased in November 2004 by £50,000 to £425,000. When I was first elected (on 5 May 2005), the amount of the facility utilized was £419,034.77 (statement attached).

2. In terms of the increase in borrowing during this period, I do not have records of the exact uses of the money. During this period, my affairs were not arranged so as to differentiate or keep separate the use of household income and the use of borrowings in meeting the differing expenses we had to meet. Thus, for example there was no strict division between using borrowings for capital expenditure and household income for domestic expenditure, there being no reason to do so at the time.

3. Whilst I am not aware of the exact reasons why the Committee might wish to focus on the particular period of my candidacy before I was elected, I would make clear (as is no doubt obvious from the above way I arranged my affairs) that, during the period I was a prospective Parliamentary candidate, I did not in any way arrange or alter my affairs or in particular increase my borrowings with Parliamentary expenses in mind. On the contrary, I did not give any consideration to Parliamentary expenses before I became an MP and they formed no part of whether I had borrowings or at what level before or at the time I became an MP.

Question 2

4. No, I have no recollection of speaking to the Department of Finance and Administration in advance about these matters. Whilst it is possible that I had a conversation, I had no intention of making any claims in respect of any additional borrowing.

Question 3

5. The money was used for domestic expenditure but I cannot now recall the specific use and did not keep particular records since these were not funds in respect of which any claim was ever intended to be made. As I have previously explained, however, I had to subsidise beyond the ACA in order to enable me to fulfil my Parliamentary and constituency duties and maintain my family life and responsibilities. In effect this required an increased level of borrowing in order to be able to do so.

6. The Commissioner's memorandum proceeds on the basis that not only did I claim an element of the interest on the additional borrowing after I entered the House but also that I thought I was entitled to do so. This is incorrect. I have never thought I was entitled to do so. I would like to make clear that I entirely accept that I could not claim for any mortgage interest in respect of any additional borrowing once I entered the House. The point was never put to me by the Commissioner but if she had raised it I would have made this clear.

Question 4

7. The mortgage companies were RBS until 2007, and Coventry Building Society thereafter.

8. Although I have requested it, I have still not received the information from RBS for the period 2005-2007.

9. The rates for the Coventry Building Society were on a base rate tracker mortgage set at 0.15 below base rate. These are set out in the statements provided to the House authorities at the time and in turn provided to the Commissioner and are contained in the material annexed to her Report.

Points of clarification

10. In order to answer the above question about whether borrowing was increased between 2003 and 2005, I had to obtain mortgage records from RBS for that period prior to my becoming an MP. This is information that I had not previously had and that has not previously been considered at any time during the Commissioner's inquiry. The question as to whether there was an issue in relation to additional borrowings before I became an MP first emerged with the Commissioner's letter to me of 11th November 2013, some 11 months into the inquiry; and in fact the Commissioner's inquiry only ever invoked a rule about pre-election borrowing for the first time in her memorandum to the Committee. As the Committee will be aware, following that letter of 11th November 2013, the exchanges between the Commissioner and me were confined to points of principle and there was no factual investigation in relation to events some 9 to 11 years ago. Until now, therefore, the information I had been working from was the bank statements I was able to obtain at the outset of the inquiry, which provided the basis of my response to Mr Lyon's original letter, and the documents provided to me by the Commissioner obtained from the House's records. Accordingly, the Committee's enquiries have caused me, for the first time, to make enquiries of RBS in relation to the position between when I was selected as a prospective parliamentary candidate and when I was elected. This does change the position in relation to some of the facts previously understood which I will deal with below.

11. In particular, my previous factual understanding was that borrowings after I entered the House increased by £50,000. Whilst I have not yet been able to obtain the mortgage records for 2005-2007 to be able to confirm the position precisely, since it is now clear that borrowing was at £419,034.77 at the time I was first elected to Parliament, it would follow that the mortgage borrowing was increased by an additional £100,000. This was not apparent from the records previously considered during the inquiry and, as explained above, until the Committee's questions, I did not previously have cause to obtain the pre-elections records and look at this aspect.

12. In the light of this information, I have looked back at the interest claims made, on the basis that no claim should have been made for interest over and above the capital debt of £419,0 34.77 as at the time I entered Parliament. As the Committee will be aware, I claimed a proportion of mortgage interest for each of the four years in question. By my calculations, I do not believe claims were made for an amount above the £419,034.77 figure for the years 2005-6, 2006-7, and 2007-8. However, I now believe it appears that there was an overclaim for the 2008-09 year which included an element of interest on capital borrowing above £419,034.77. This was inadvertent and I never intended to claim any interest in relation to any additional borrowing taken out after I entered Parliament. I am obviously deeply concerned as to how this could have arisen. The mortgage at the time was with the Coventry Building Society and was a base rate tracker mortgage set at 0.15 below base. I cannot now say for sure how the error occurred but, while at the beginning of the year I began by claiming a proportion of the mortgage as in previous years, as base rate dropped dramatically (from over 5 percent in 2008 to 0.5 percent by March 2009), I must have miscalculated the effect of this or failed to realize that this would also have a significant effect on the ratio of the interest payments to the debt such that the monthly amount attributable to the amount of the debt when I entered Parliament had to be adjusted further downwards. I had absolutely no intention to claim for any additional borrowing after I had become an MP and I entirely accept I should not have claimed any amount which could be attributed to additional borrowing after I became an MP. At the very first moment I have become aware of this, I am immediately informing the Committee. I sincerely apologise for this and accept that this amount needs to be repaid. I will of course work with the Committee to quantify this sum if it is separately relevant, although it is subsumed into a different picture if the Committee were to consider that there can be no claims for additional borrowings incurred even before becoming an MP. I turn to this briefly below.

Pre-election borrowing

13. In my letter of 3rct February 2014, I did not fully address the Commissioner's supposed findings as to my thought processes at the time. As I made clear in my previous letter, the Commissioner did not put her concerns to me, yet has purported to draw her own conclusions as to what I intended. As I previously indicated, these matters were only raised 11 months into the inquiry and then without any inquiry process since the Commissioner and I differed about the scope of the inquiry and she was then apparently very anxious to finish her report. The result is that her memorandum contains findings that could not have been made if I had been asked to comment or if a proper process had been followed. As the Committee will appreciate, the Commissioner's report will be published alongside the Committee's report and her unfounded criticisms will no doubt be reported.

14. The starting point is whether there was a rule as the Commissioner contends to the effect that additional borrowing extends to any borrowing after purchase of a property, even before the Member was ever elected. If the Committee agrees with my previous letter (to which I would again refer), then that is the end of the particular point. If, however, the Committee considers that such a rule should be applied, then I should make clear that it did not for a moment occur to me that the rules operated in the manner now contended by the Commissioner. If it did, I simply would not have made the claims I did. My actions clearly demonstrate that this was the case.

15. If I had understood this to be the rule, then apart from not claiming at all, there were steps I would have been entitled to take and would obviously have taken to avoid its consequences. On the basis of the Commissioner's finding I could have designated London as my main home. As it is accepted that the costs of my Basingstoke home would exceed the costs of my London home, then I could have made the claims I did and avoided the current problem altogether. There would have been no claims for mortgage interest at all and I would have been fully entitled to make claims in the amounts claimed. Alternatively, if I had understood this to be the rule, I would have minimised my claims for mortgage interest by claiming other allowable categories of expenditure, which I was clearly entitled to do. It is clear from the schedule provided by me to the Commissioner that there were number of other significant costs associated with the house that would have been unaffected by the issue and for which I did not claim. Indeed, I did precisely the opposite. I claimed a high percentage of mortgage interest in each year, ironically, because it seemed to me that it was simpler.

16. At the time of my election, my children were 11, 8 and 3. In order to fulfil my role as an MP and maintain my family life it was necessary to have two family homes. Because of my circumstances, the cost of each home exceeded the amount recoverable under the ACA. The purpose of the ACA was to compensate a Member for the cost of living in two places and this was the purpose I was using it for, which I sought to do in a reasonable and proper way and in circumstances where it was clear that I was entitled to claim in the amounts that I did and where in fact I was having to bear a considerable financial cost well beyond the ACA to be able to be both an MP and a mother.

17. Finally, I should make some brief observations about the Commissioner's figures. Her approach in her calculations is to treat mortgage interest and council tax by themselves in relation to the apportionment of 5/7 to take account of my parents. This is not the approach adopted by the Director General of Finance and Administration in his letter of 27th September 2014 in relation to this issue. His approach was to look at all the allowable expenditure as set out in my schedule and then apply the 5/7 rule to that. This seems to me to be a fairer approach as a proper apportionment needs to take account of what has and what has not been claimed. I would also suggest that it is relevant for the Committee to have regard to the fact that I did not make any claims at all in the 2009-10 year.

I am grateful to the Committee for continuing to consider this matter and I shall be happy to assist the Committee further in any way that I can.

16 March 2014

Letter from the Clerk of the Committee to Mrs Miller, 18 March 2014

Thank you for your letter of 16 March 2014. I have consulted the Chair, Kevin Barron MP, and there are some further questions where the Committee would find clarification helpful.

Please could you provide more details about your mortgage with the Coventry Building Society. The Committee would be grateful for as clear a description as possible as to how it worked and in particular, whether it was, as appears from the papers, an interest only mortgage, with some interest offset by savings accounts?

As you are aware, the documentation available from the House's records is patchy. Please could you obtain fuller information such as a full run of statements, from the Coventry Building Society? In particular, the Committee would be grateful for confirmation of the total interest paid by you both before and after the offset in the financial years 2007-2008 and 2008-2009.

The statement of 30th of April 2005 attached to your letter makes it clear that the mortgage facility at that date was £425,000. It is also clear from the account overview dated 16/11/2007 that the facility at that time was £525,000. The Committee will wish to know (with supporting documentation) when the facility and when your borrowing was increased. Please could you tell the Committee when your account changed from a variable current account mortgage (shown on the April 2005 statement you enclosed) to an offset mortgage and any practical consequences of the change.

In paragraph 12 of your letter you say "by my calculations, I do not believe claims were made for an amount above the £419,034.77 figure for the years 2005-6, 2006-7, 2007-8. However, I now believe it appears there was over claim for the 2008-09 year…." The Committee would be grateful for sight of these calculations, and the figures and documentation on which they were based.

18 March 2014

Letter from Mrs Miller to the Clerk of the Committee, 23 March 2014

Thank you for your letter of 18 March 2014.

I understand the Committee has further questions and I of course seek to answer these below. I also appreciate why the Committee wishes to have further information and these further questions arise because these are matters on which the Commissioner produced a memorandum without ever having investigated these aspects. The Committee and I have therefore both been put in the position of trying to deal with something which has not had the benefit of an inquiry or any of the proper process which should have occurred before this stage. With that caveat, I turn to the questions to assist the Committee doing the best I can to respond.

After the opening paragraph of your letter, there are then four paragraphs (ie starting with the second paragraph of your letter) setting out the Committee's further questions. To respond, I take each of those paragraphs in turn below as follows:

·  The second paragraph -the offset

·  The third paragraph-Coventry Building Society mortgage figures

·  The fourth paragraph -changes in the facility

·  The fifth paragraph -calculations

Second paragraph of your letter-the offset

You have asked how the offset arrangement worked. The mortgage was linked to a deposit account and any interest accruing to the credit of that deposit account was offset against the balance on the mortgage account. What this meant in practice was that the interest payable in relation to the mortgage was reduced by any amount of interest earned on the balance of the deposit account. The interest I earned was thus not paid directly to me as a cash balance credit but instead reduced the mortgage interest payments, and in effect I was making this payment towards the interest due. What this also means is that the interest paid in respect of the mortgage did not necessarily increase to reflect any additional borrowing if and to the extent such amount remained in the offset account.

In answer to the question as to what sort of mortgage it was, the Committee is correct that it was an interest-only mortgage.

Third paragraph of your letter -Coventry Building Society Mortgage figures

I cannot at present provide a full run of Coventry Building Society statements, as requested in your letter of 18 March 2014. These are not documents I have in my possession and I no longer have a mortgage or any banking arrangements with Coventry Building Society. I can request the statements from Coventry Building Society if the Committee wishes but I am not sure how long it will take them to provide as I am no longer a customer.

I am, however, able to say how much interest overall was paid in that period based on payments made from bank statements that met the interest due. This is what I did in my letter of 3rd January 2013 to the Commissioner. As set out there, in respect of the financial years about which the Committee has asked, the interest paid was as follows:

·  2007-08: £30,736

·  2008-09: £ 21,530

Fourth paragraph of your letter-changes in the facility

I am not at present able to tell the Committee exactly when the increases to the facility were after 2005 or the exact date when the variable current account mortgage was changed to an offset mortgage. This is because I can provide this information only when I have received the RBS account information for the period after 2005. Upon receipt of your letter of 25 February 2014, I made a request of RBS in relation to the mortgage from 2003 to 2007. Whilst they did provide information up to 2005, they did not send the information in relation to 2005 to 2007. I then made a further request and this request remained outstanding when I wrote to you on 16 March 2014. I have now received from RBS mortgage statements for a period post-2010, but this is not what I requested or relevant. As it takes approximately a week for RBS to send the information, I am in difficulty in responding in the meantime. In short, I have requested the documents twice but they have not yet been able to be provided by RBS.

Fifth paragraph of your letter-calculations

In looking at the Committee's queries on calculations, there are two elements I should address.

First, in her memorandum, the Commissioner included some calculations and a number of tables of figures. As the Committee is aware, these tables and calculations were never shown to me in draft before the Commissioner produced her report to the Committee and I was never asked to comment on them (nor indeed was this matter investigated in her inquiry). I believe the Commissioner's approach and calculations are flawed, as I explain below.

Secondly, the Committee has asked about my calculations in relation to whether interest was claimed on additional borrowing taken out in the period after I became an MP.

In preparing this letter to deal with the above two elements (as also with my letter of 16 March 2014), I have attempted to do some calculations. However, the figures can only be estimated as I do not know from RBS exactly when the mortgage increased to £525,000 or, as this was an offset, when the additional borrowing led to an increase in actual interest paid. There may also be a need for a more detailed analysis of the Coventry Building Society figures for the same reason.

In terms, first, of incorrect calculations by the Commissioner, there are two particular issues that I would highlight here as follows:

1. In calculating the amount of mortgage interest claimable (paragraph 146 of her memorandum), the Commissioner has taken the actual amount claimed in each year and then multiplied it by 40.95% (being the percentage of £215k to £525k). I do not believe, however, that this can be the correct approach. The correct approach ought to be to take the appropriate percentage of the total amount of interest paid in any year (not just what was claimed) to see whether the amount claimed included an element of additional borrowing. The Commissioner's approach would trigger a potential repayment even if no claim was in fact made in respect of additional borrowing. This cannot be right.

2. As I indicated in my letter of 16 March 2014, the Commissioner then goes on in the same table to reduce the interest figure produced by the calculation described above by 2/7 to take account of my parents. However, the exercise of making an adjustment for my parents by definition has to take into account the overall household expenditure and not just what was claimed. The reduction of interest claimable has an impact on that figure but the Commissioner's approach seems to run contrary to the approach she sets out in paragraph 134 of her memorandum. It is also not clear to me as to why the Commissioner has singled out Council Tax for a similar treatment.

The effect of the above is very significant and these are different issues from the point I have explained in previous correspondence about the Commissioner's approach to the rules. The Commissioner's calculation approach seems to incorrectly add very substantial sums to what she suggests could not be claimed on her interpretation of the rule. If one adopts what seems to be the correct methodology (assuming her approach to the rule that no interest is allowable on any additional borrowing taken even before a Member entered Parliament), the Commissioner's supposed figure of £49,746.18 is reduced to £33,404.40 when the additional borrowing is calculated based on the total interest paid in each year, and then reduces further to £28,576 if one takes into account what other expenditure would have been allowable under the application of 2/7. These figures are based on an accounting assumption for present purposes that the mortgage increased to £525,000 in April 2005 and to £575,000 in April 2007, which clearly was not the case, so the actual figures are likely to be lower.

The above figures also do not take account of the separate point from the Commissioner's finding (her paragraph 145) that the costs of the constituency home, on which she considers I could and should have claimed, would have been (even taking into account the 2/7 rule, and assuming it was also applicable) "at or around the ceiling of the relevant allowance from May 2005 to March 2009".

On the second element, involving my calculations about which the Committee has asked, as I indicated in my previous letter, I think the correct approach is to start from the point that I was not able to claim beyond the interest on £419,034.77. That was the amount of borrowing when I entered Parliament, and any borrowing beyond that after I entered Parliament was additional borrowing, for the interest in respect of which I have never suggested I was entitled to claim. A straightforward approach is then to calculate the claimable interest by applying to the overall interest payable the percentage of the allowable principal debt to any additional borrowing. In other words, if the level of the mortgage was £575,000 in a given year, the maximum claimable was £419,034.77 f £575,000 = 72.9% of the interest payable in that year.

Taking that approach, as set out in my letter of 16 March 2014, I believe the only overclaim is in the 2008-09 year. The overclaim in that year is about £5,800, reducing to about £4,000 when the 2/7 adjustment is made.

I hope the above is of further help to the Committee.

23 March 2014


 
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