PMQs: MPs taxpayer-funded mortgages should be banned – says Clegg

5.48.00pm BST (GMT +0100) Thu 14th May 2009

Nick Clegg urges Prime Minister to reform MPs expenses

In the week that revelations of MPs expenses dominated the news, Nick Clegg challenged the Prime Minister on his ideas for reform of the expenses system.

Nick questioned the Prime Minister on the issue of taxpayer-funded mortgages, describing it as "the biggest loophole of all". He called for the practice to be banned, noting that the role of MPs was to serve constituents, not to speculate on the property market.

Nick pledged that Lib Dem MPs would pay back the taxpayer "every pound" of profit made from selling second homes funded by the taxpayer, and challenged the Prime Minister to commit to this as well.

Click here to learn more about Nick Clegg's proposals for MPs expenses reform.

Please see the full exchange below:

Nick Clegg: I would like to return to the issue of MPs' expenses. I suspect that many people are a little baffled by all the different proposed solutions, because none of them seems to deal with the biggest loophole of all: MPs making hundreds of thousands of pounds buying and selling properties funded by the taxpayer. Surely the only long-term solution is to get all us MPs out of the property game altogether.

The Prime Minister: I know that this is an issue on which the right hon. Gentleman feels strongly, and it is exactly the kind of issue that the Kelly committee will be looking at. Let him and others put their proposals to the committee and let us come back with a solution. I say to him that any solution that is put forward for the longer term will have to command more than the confidence of this House-it will have to command the confidence of the general public.

Nick Clegg: I am grateful to the Prime Minister for his reply, but I still think he is making this a little too complicated. A really simple principle is at stake: we are here to serve our constituents, not to make a fast buck on the property market. That is why I have always thought that we should do what they do in Scotland: simply end-stop-any taxpayer-funded mortgages altogether. Until the new rules are in place, we Liberal Democrat Members have committed ourselves to handing back to the taxpayer every pound of any gain made from the sale of second homes funded by the taxpayer. Will he commit -[Interruption.]

Mr. Speaker: Order. Let the right hon. Gentleman speak.

Mr. Clegg: Will the Prime Minister at least make that commitment?

The Prime Minister: I hope that people will also speak up for decent, hard-working Members of Parliament who are going about their duty in their ordinary way and who are not trying make any money out of being a Member of Parliament, but simply trying to serve the public. It is very important that we get some context in this debate. Where there are abuses, they must be sorted out. Where there are disagreements about future policy, I agree that recommendations should be made to the committee by MPs and by parties but, as I have said before, I do not believe that we will command the confidence of the public unless people outside this House believe that what we are doing is also right. This cannot be an issue for just Members to make long-term decisions upon.

As for the right hon. Gentleman's proposal about houses, I know that capital gains tax has to be paid on these second homes. That is the first priority, and the other matters can be dealt with in representations to the committee.