APPENDIX 1: REPORT FROM THE SUB-COMMITTEE
ON LORDS' INTERESTS ON THE CONDUCT OF LORD CLARKE OF HAMPSTEAD
Letter from the Sub-Committee Chairman, Baroness
Manningham-Buller, to the Clerk of the Parliaments, dated 22 March
2010
Introduction
1. I am replying to your letter dated 9 February
which, pursuant to the Report from the Committee for Privileges
on the procedure for considering complaints against Members (4th
Report 2007-08), invited the Sub-Committee on Lords' Interests
to help you to investigate a complaint about Lord Clarke of Hampstead's
use of the members' reimbursement scheme.
2. The facts of the case and our opinion on them
are as follows.
Members' reimbursement scheme: the resolution of
the House and the available guidance
3. The members' reimbursement scheme is founded
on a resolution of the House of 25 July 1991 and is explained
in a General Guide published by the Finance Department
and in a Quick Guide set out on the reverse of the claim
form. The Clerk of the Parliaments is responsible for administering
the scheme, subject to reference to the House Committee on points
of particular difficulty or doubt.
4. The resolution of the House says:
"(1) Members of this House, except any Lord
who receives a salary under the Ministerial and other Salaries
Act 1975 and the Chairman and Principal Deputy Chairman of Committees,
shall be entitled to recover (in addition to the costs of travel
for which other provision is made) expenses certified by them
as—
(a) expenses incurred (otherwise than as mentioned
in sub-paragraph (b) below) for the purpose of attendance at sittings
of this House or of Committees of this House, or
(b) expenses incurred in staying overnight away from
their only or main residence where it is necessary to do so for
that purpose."
5. The House of Lords Finance Department currently
holds records of individual members' claims from March 2006; all
members' earlier claims have been disposed of in accordance with
the Department's disposal policy. The 4th Report from the Committee
for Privileges (2007-08) says that the Sub-Committee will not
accept for investigation a complaint going back more than four
years. We have thus limited our investigation to the period from
March 2006 to July 2009 ("the period"). Lord Clarke
of Hampstead claimed night subsistence from the beginning of the
period until 29 April 2009.
6. The 2005 edition of the General Guide,
in force in 2006, read:
"1.2.1 Members of the House of Lords do not,
in general, receive a salary in respect of their parliamentary
duties. However, Members may be reimbursed actual expenses arising
out of these duties, in accordance with the rules of the Members'
Reimbursement Allowance Scheme...
1.3 Taxable status
1.3.1 All amounts paid in settlement of claims as
detailed in this guide represent reimbursement of actual expenses
arising out of unpaid parliamentary duty, rather than income from
employment. Consequently, they are not subject to income tax,
and need not be included on a tax return ...
4 ATTENDANCE AT SITTINGS AT WESTMINSTER
4.1 General - Expenses Related to Attendance ...
4.1.3 Members who wish to claim attendance expenses
must complete and sign the attendance expenses claim form and
forward it as soon as convenient after the end of each month,
or period of claim, to the Members' Expenses Section. A Member's
signature effectively certifies that the amount claimed has been
spent for the purposes of parliamentary duties as set out above.
Receipts are not required ...
4.4 Night Subsistence
4.4.1 Members whose main residence is outside Greater
London may claim for expenses of overnight accommodation in London
while away from their only or main residence. The maximum daily
limit is £154.50.
4.4.2 A Member whose main residence is outside Greater
London and who maintains a residence in London for the purpose
of attending sittings of the House may claim this allowance towards
the cost of maintaining such a residence.
4.4.3 Claims for night subsistence are only permissible
in respect of nights actually spent in London either immediately
preceding or following attendance at a sitting or meeting described
in paragraph 4.1.1 above. For example, a Member who necessarily
travels to London on a Sunday and attends sittings of the House
on Monday, Tuesday, Wednesday and Thursday and then returns home
on Friday or later may claim night subsistence for a maximum of
5 nights at up to a maximum of £154.50 per night (i.e. a
maximum of £772.50 for the week). However, if the Member
returned home on the Thursday evening, the maximum claim for night
subsistence would be 4 nights at up to a maximum of £154.50
per night (i.e. a maximum of £618 for the week).
4.4.4 Members who choose to travel home each night
or whose main residence is within Greater London cannot claim
the night subsistence allowance."
7. The General Guide was updated in January
2007, October 2008 and April 2009. The language used to describe
the scheme was the same in each edition until 2009, which left
out the word "allowance" in several places, including
in the title of the guide and in paragraph 4.4.2 in relation to
night subsistence.
8. The claim form throughout the period read:
"I certify that during the month of ............
I have attended a sitting of the House or of a Committee of the
House on the under-mentioned dates and claim reimbursement of:
(a) Night subsistence incurred in such attendance
or in respect of the maintenance of a London residence (other
than a main residence) used for the purposes of attending the
House (see note (i))."
9. Note (i) refers to the Quick Guide
printed on the reverse of the claim form which in 2005 read:
"Night Subsistence - Members whose main
residence is outside Greater London may claim expenses, within
a daily limit of £154.50 (from 1 August 2005 to 31 July 2006),
for nights spent away from their only or main residence for the
purpose of attending sittings of the House a) where they have
incurred expenses of overnight accommodation in London or; b)
as a contribution towards the costs of maintaining a London residence
in connection with their parliamentary duties. Claims can only
be made in respect of days of attendance."
Lord Clarke of Hampstead
The allegations
10. On 31 May 2009, Lord Clarke of Hampstead
was reported by the Sunday Times newspaper as having admitted
that he "fiddled" his expenses:
i) by claiming night subsistence on days when he
had not spent the night in London but had instead returned to
his main residence in Hertfordshire; and
ii) on nights which he did spend in London, by claiming
the maximum amount of night subsistence when he had not incurred
that expense because he had stayed for free with family or friends.
11. The Sunday Times has provided us with
the records on which the article was based: recordings of telephone
conversations and an interview with Lord Clarke. The records confirm
the contents of the article.
12. Lord Clarke made a personal statement to
the House on 2 June 2009 in which he referred his own conduct
to the Clerk of the Parliaments as the Accounting Officer of the
House. A member of the public, Mr Frank Cannings, complained about
Lord Clarke's reported conduct on 17 November 2009.
The Clerk of the Parliaments' reference and our
investigation
13. The Clerk of the Parliaments started to investigate
Lord Clarke's conduct but suspended his investigation when the
Metropolitan Police decided to investigate whether Lord Clarke
had committed a criminal offence. When the Crown Prosecution Service
decided not to prosecute Lord Clarke, the Clerk of the Parliaments
resumed his investigation by referring Lord Clarke to this Sub-Committee
for investigation. The Clerk of the Parliaments passed to us Lord
Clarke's claim forms since March 2006, a record of a meeting which
Lord Clarke had with the Finance Department on 2 June 2009 and
his subsequent correspondence with the Finance Department.
14. The Registrar of Lords' Interests corresponded
with Lord Clarke and that correspondence is attached. We have
not interviewed Lord Clarke or taken other evidence.
15. Although we have taken the reported allegations
as the basis of our investigation, we have not limited our investigation
to those allegations and have considered Lord Clarke's use of
the scheme in general. We consider that there are two relevant
issues: i) whether Lord Clarke wrongly claimed night subsistence
for nights which he had not spent in London; and ii) whether Lord
Clarke wrongly regularly claimed the maximum available amount
of night subsistence when he had not incurred that much expense.
Issue 1: whether Lord Clarke wrongly claimed night
subsistence for nights which he had not spent in London
16. The resolution of the House quoted above
enables members to recover "expenses incurred in staying
overnight away from their only or main residence where it is necessary
to do so" for the purpose of attendance at sittings of the
House. The General Guide quoted above says that "Claims
for night subsistence are only permissible in respect of nights
actually spent in London either immediately preceding or following
attendance at a sitting". The Quick Guide quoted above
says that members may claim "for nights spent away from their
only or main residence for the purpose of attending sittings".
17. It is clear to us that a member may only
claim under the scheme i) if they have stayed overnight away from
their main residence; and ii) they have attended the House. There
is no ambiguity about these conditions.
18. Lord Clarke's designated main residence throughout
the period was an address in St Albans, Hertfordshire. He was
thus entitled to claim night subsistence for nights spent away
from his main residence for the purpose of attending the House.
19. Lord Clarke has admitted that, on occasion,
he claimed night subsistence for nights when he in fact returned
to his main residence in Hertfordshire. He does not have a comprehensive
record of his movements but has, with the assistance of the Finance
Department, compiled a list of dates from 1 April 2003 to 23 June
2009 on which he believes he may have incorrectly claimed night
subsistence to the amount of £9,190. He has repaid this sum
to the House of Lords.
20. In so far as we can make any assessment of
the facts in the absence of a full account of Lord Clarke's real
movements, we accept Lord Clarke's account of the facts of his
conduct in relation to this issue. His repayment of £9,190
seems to reimburse the House appropriately for the claims for
night subsistence away from his main residence when he did not
spend the night away from his main residence. There is no ambiguity
in the scheme on this point and in no circumstances should he
have believed that he was entitled to make these claims. Lord
Clarke was at fault to have claimed night subsistence for nights
that he did not spend in London.
21. We consider the question of sanction at the
end of our report.
Issue 2: whether Lord Clarke wrongly regularly
claimed the maximum available amount of night subsistence when
he had not incurred that much expense
Our interpretation of the scheme
22. This issue only arises if the scheme is a
reimbursement scheme as opposed to a flat rate allowance scheme.
23. Our interpretation of the resolution, General
Guide and Quick Guide taken together is that a member
who maintained a residence in London for the purpose of attending
the House could reasonably claim that the night subsistence provision
was a flat rate allowance intended to reimburse the member for
the costs of maintaining such a residence (General Guide
paragraph 4.4.2). A member who did not maintain a residence in
London was however entitled only to claim for the recovery of
actual expenses (General Guide paragraph 4.4.1). The former
is no longer the case as the word "allowance" was removed
from the guidance in April 2009.
24. Lord Clarke, in correspondence with the Registrar,
says that he has at no time maintained a residence in London.
In principle, we thus consider that the terms of the scheme applicable
to Lord Clarke throughout the period are those only for the recovery
of expenses actually incurred.
25. We accept that supervision of the scheme
is a matter for the House Committee, not this Sub-Committee, and
that the House Committee might reach a different conclusion on
this point.
Mitigating factors
26. Having given our interpretation of the scheme
in principle, we now consider whether there are any mitigating
factors which reduce or remove Lord Clarke's personal culpability
on this issue. If there are, they must be overwhelming if they
are to negate the meaning of the words of the resolution and guidance.
Widespread uncertainty
27. Many members and others in the outside world
have long suffered from uncertainty about whether the scheme is
a reimbursement scheme or one which provides flat rate amounts.
The Review Body on Senior Salaries (SSRB), responsible for advising
the Prime Minister on financial support for members of the House
of Lords and a body which might be considered to be an authority
on the subject, said in January 2008 in its Review of parliamentary
pay, pensions and allowances 2007 (Cm 7270-1):
"6.9 It seems to us that the House's arrangements
for reimbursing costs are not clearly understood. The basic day
and overnight subsistence are flat rate amounts which are not
taxable and are intended to reimburse all out of pocket expenses
arising from attendance at the House."
28. In its November 2009 Review of financial
support for members of the House of Lords (Cm 7746), the SSRB
said:
"1.10 ... the criteria for claiming are ambiguous
and no receipts are required under most headings of expenditure.
There is confusion about whether the scheme is intended to reimburse
actual expenditure or allows members to claim up to the maximum
under each heading regardless of what they have actually spent."
29. This uncertainty noted by the SSRB reflects
wider uncertainty or error and is, in our opinion, a factor which
mitigates Lord Clarke's personal interpretation of the scheme.
Advice from other members
30. In correspondence with the Registrar, Lord
Clarke says that he was advised by his Chief Whip (Lord Carter)
on his elevation to the peerage in 1998 that he should claim "the
full overnight allowance" and that "claims were treated
as attendance allowances and were paid as such in lieu of salary".
His mentor, Lord Gladwyn of Clee, and the peer who helped him
complete his first claim form, Lord Dean of Beswick, confirmed
that position to him. Lord Clarke says that he was "under
the honest belief that, notwithstanding the wording of the forms,
[he] was entitled to claim… the full allowance for any days
when [he] attended". All three of the members referred to
by Lord Clarke are now deceased but we accept his account. In
our opinion, his Chief Whip's and other members' interpretation
of the scheme further mitigates Lord Clarke's personal conduct.
Administration of the scheme
31. In correspondence with the Registrar, Lord
Clarke says that he understood that his Chief Whip's advice was
"an agreement reached and acted upon by the House authorities".
We are not aware of any such agreement. The resolution of the
House relies on self-certification that each claim was for the
recovery of expenses incurred, without vouching. This placed no
responsibility on the Finance Department to challenge members'
claims, nor did it give them a basis on which to do so; so they
did not. We consider that this may have led Lord Clarke to understand
that the scheme was one of flat rate allowances and not reimbursement
of expenses actually incurred. In our opinion, this further mitigates
Lord Clarke's personal conduct.
Conclusion on issue 2
32. Despite our interpretation of the resolution
and guidance that the night subsistence scheme as applicable to
Lord Clarke is a reimbursement scheme, we consider that the above
three factors cumulatively mitigate Lord Clarke's conduct to the
extent that we cannot find him personally culpable of breaching
the scheme in respect of issue 2. The question of remedial action
on issue 2 does not arise.
Sanction
33. We have found that Lord Clarke is in breach
of the scheme in relation to issue 1 but not in relation to issue
2.
34. The procedure for dealing with this matter
is not straightforward. If the House Committee endorses our report
on the facts and breach of the scheme, it is for the Committee
for Privileges to recommend to the House whether Lord Clarke needs
to take any remedial action and whether he should be sanctioned.
35. We consider that, by repaying £9,190,
Lord Clarke has already taken appropriate remedial action for
his breach of the scheme.
36. In his personal statement, Lord Clarke said
"I accept that my conduct may have fallen short of the high
standard that this House demands of its Members. I tender my humble
apologies to the House". He is the only member of the House
to have admitted misconduct. In correspondence with the Registrar
however, Lord Clarke steps back from the apology in his personal
statement and says that his "claims might well be described
as 'fiddled' by outside commentators in the midst of a hostile
public mood" and that he "made the claims, believing
[he] was entitled to do so". We consider that Lord Clarke
should make a further personal statement to the House to apologise
without reservation for his misuse of the members' reimbursement
scheme. The limited sanction is appropriate in the light of Lord
Clarke's self-reference to the Clerk of the Parliaments and his
cooperation with the subsequent investigations.
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