Nov. 4 (Bloomberg) -- British lawmakers face the biggest clampdown on their expenses system since the 1970s after a report said they should no longer be able to claim for mortgage costs on their second homes and employ family members.

Members of Parliament should only be reimbursed for rent or hotel costs, and claims should be limited to basic living expenses, Christopher Kelly, chairman of the Committee on Standards in Public Life, said in London today. Those who represent districts within “reasonable” commuting distance of Parliament should no longer be entitled to second home allowances.

With a general election no more than seven months away, Prime Minister Gordon Brown said he accepted the recommendations in full. Brown ordered the review after newspaper revelations of claims ranging from pornographic movies and a floating home for ducks to the cost of clearing a moat caused a public outcry.

The recommendations “strike a balance -- on the one hand ensuring that MPs are properly supported and fully reimbursed for necessary costs incurred in doing their important work and on the other providing strong safeguards for the taxpayer to prevent the abuses of the past,” Kelly told a news conference.

Brown’s Comment

Brown said, “People want to know the system in the future will be different; that it will be open, transparent and fair.” Conservative leader David Cameron and Nick Clegg, leader of the Liberal Democrats, also accepted the plan.

Cameron said adopting the plan is “an essential part in restoring faith in Parliament.”

Speaker of the House of Commons John Bercow said he would recommend the appointment of Professor Ian Kennedy as the first Chairman of the Independent Parliamentary Standards Authority to oversee lawmaker’s expenses and allowances.

Kennedy, who is Emeritus Professor of Health Law, Ethics and Policy at University College London, will be paid a maximum of 100,000 pounds ($165,280) a year, Bercow told lawmakers to gasps of derision. Lawmakers earn 64,766 pounds a year.

Lawmakers are currently allowed to claim for mortgage payments on their second homes to allow them to carry out their duties between London and the district they represent. Some “flipped” the designation of their second home, allowing for claims to be made twice.

‘Transitional Period’

This practice will no longer be possible, and any capital gain made during a “transitional period” of one Parliament or five years will be surrendered to the public purse, Kelly said.

The review is the second into the expenses scandal. A report by retired civil servant Thomas Legg into claims made by lawmakers over the past five years resulted in many being asked to pay back money. Among them was Brown, who agreed to repay 12,415.10 pounds, mainly for disputed claims for cleaning bills.

Since the Daily Telegraph began publishing leaked details of claims in May, at least 300,000 pounds in disputed expenses has been paid back and more than 40 lawmakers have said they will stand down at the next election.

“I accept your report,” Brown wrote in a letter to Kelly, released by the prime minister’s office today. “I am determined that we sweep away this old system and introduce a new system and in doing so move back to ensuring the focus in Parliament is on the issues that affect our constituents’ lives.”

Lawmakers’ Concerns

The clampdown on expenses and allowances has caused resentment among some lawmakers, who earn an annual salary of almost 65,000 pounds a year. An independent body being set up should determine their pay and pensions as well as their expenses, Kelly said.

“It will be bloody, there will be a lot of anger, a lot of defensiveness,” said Anthony Seldon, author of ‘Trust,’ a book about British politics. “Some MPs feel they have been wrongly impugned. There will be a lot of shouting.”

Kelly recommends the abolition of the communications allowance, currently worth up to 10,400 pounds a year, designed to make constituents aware of their Parliamentary activities. It had been abused by individuals for self-promotion and will now fall under normal office costs and have to compete with other priorities, Kelly said.

The report also proposes that lawmakers based in the U.K. Parliament should not be allowed to hold seats in devolved legislatures, such as in Scotland and Wales.

“This is the beginning of the end, but public confidence in Britain has been so badly shaken in the integrity of Parliamentarians in the last few years,” Seldon said. “This is the latest, biggest and worst.”

To contact the reporters on this story: Kitty Donaldson in London at

Last Updated: November 4, 2009 08:01 EST