Cabinet husband and wife cash in on two homes loophole

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Cabinet husband-and-wife team Ed Balls and Yvette Cooper have been accused of exploiting Commons expenses rules to buy a £655,000 home and get their children into a top state school.

The pair, who were both promoted by Gordon Brown, have registered their four-bedroom North London house as a 'second home' under parliamentary rules, which entitles them to allowances of up to £44,000 a year to subsidise their £438,000 mortgage.

They also have a 'weekend' property in Yorkshire, which they used to call their second home. But by instead declaring their more expensive London house to be their secondary residence, they can claim more money from taxpayers.

The couple recently moved from inner-city Lambeth to a smart Edwardian townhouse in a more fashionable area of London, close to better schools.

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Didn't we do well: Yvette Cooper and Ed Balls

Nice pad: The couple's Edwardian townhouse in middle-class Stoke Newington, near good schools

The move, five months ago, came just 16 days after Mr Balls, the Children's Secretary, and his Housing Minister wife raised £45,000 by remortgaging their Yorkshire home, which had been paid for by their Commons expenses.

They moved from Lambeth, whose schools are notorious for poor standards, to Stoke Newington, a neighbourhood fashionable with young, middle-class families. Their children now attend a sought-after primary school praised for its 'strong leadership'.

Opposition MPs accused the couple of profiting from the taxpayer and 'breaking the spirit' of the Commons rules.

But friends of the Ministers insisted that they complied fully with the rules and claimed the house move had nothing to do with finding better schools.

The expenses come on top of generous salaries. Mr Balls, 40, earns £137,579 a year while Ms Cooper, 38, is paid £100,578.

It is the latest in a string of controversies over the way MPs benefit from the Commons Additional Costs Allowance, designed to assist members in carrying out their parliamentary duties by subsidising overnight stays away from their main home either in their constituency or near Westminster.

Criticism of Mr Balls and Ms Cooper centres on their decision to change the property registered with Commons authorities as their 'secondary residence' on which they claim expenses.

The Commons Green Book governing allowances gives the following guidelines: 'The location of your main home will normally be a matter of fact. If you have more than one home, your main home will normally be the one where you spend more nights than any other.'

Cash bonus: A remortgage has released equity in the house they claim is their main residence

Until 2005 the couple declared their weekend constituency property in Castleford, West Yorkshire, as their second home. This means that when they remortgaged the house earlier this year they were effectively realising profits from a house that had been subsidised by the taxpayer.

When Mr Balls was elected to Parliament two years ago, they changed their Yorkshire property to be their main home, allowing them to claim expenses on their London house.

Since moving to Stoke Newington, the couple have continued to maintain that London is their secondary residence – even though this is where their children go to school.

The loophole they are exploiting is potentially lucrative. If the couple, who represent neighbouring seats, claimed on their cheaper Yorkshire house with its smaller mortgage, they would be severely limited in the amount they would be entitled to receive.

Instead, however, they can claim the entire mortgage interest bill on their London home, which, assuming a standard six per cent rate, totals £26,000 a year. They can also ask to be reimbursed for furniture, white goods, utility bills, parking permits, home repairs – and even food.

This lack of a strict test for what constitutes a main home allows Mr Balls and Ms Cooper to argue they are not in breach of the Commons regulations. But opposition MPs claimed that they were exploiting a loophole which should be closed. Lib Dem Norman Baker said: 'It seems clear that to all intents and purposes the house in Stoke Newington is their main home. Being a Minister is a full-time job and they are expected to live in London. Besides, it appears their children go to local schools.

'It is clearly financially advantageous for them to maintain that their more expensive home in London is their second home – it means they can claim more money from the taxpayer. They may not have broken the rules absolutely but they have clearly broken their spirit.'

But a friend of the couple insisted: 'They genuinely regard Yorkshire as their main home. Yvette nominated it as her main home to the Commons authorities until she became a Minister in 1999. Their children were born there and they spend every moment they can there. But because of their jobs it is inevitable their children will be educated in London.

'The couple had previously lived near Stoke Newington. They moved back there because they had friends there and to provide more space for the children. The schools had nothing to do with it. They believe the school in Lambeth their kids attended was just as good as the one in Stoke Newington.'

Each MP can claim a maximum of £22,000 a year under the Additional Costs Allowance. As a married couple there is nothing to stop Ms Cooper and Mr Balls pooling their allowances and putting in a combined claim of up to £44,000.

In 2005-06, the last year for which figures are available, the two MPs between them received allowances worth a total of £27,000 – but these figures pre-date the new Stoke Newington mortgage, as details of this year's claims have yet to be published.

The revelations will be particularly embarrassing because of the couple's Cabinet responsibilities.

As the Secretary of State responsible for schools, Mr Balls is committed to ending so-called 'white flight' where middle-class families quit the inner cities in search of better education. But critics will argue that one of the advantages of his own move to Stoke Newington is the high quality of state schools there.

Mr Balls and Ms Cooper have three children, aged eight, six and three, and it is understood the two elder ones now attend a Stoke Newington school which Ofsted inspectors describe as a 'good' school with 'strong leadership'.

The youngsters previously went to school in Lambeth, although the couple refused to say which one. However, the primary nearest their former home is St Stephen's, where Ofsted said that the 'vast majority' of children arrived in the nursery class unable to speak English.

Lambeth, which has a high number of ethnic-minority families, also faces a critical shortage of secondary-school places, with pupils as young as 11 being forced take public buses to schools several boroughs away.

The children of Mr Balls and Ms Cooper can now expect to win places at Stoke Newington Secondary School, rated in academic league tables as the best mixed state school in the London Borough of Hackney, when they turn 11.

Ms Cooper, as the Housing Minister with rights to attend Cabinet, is responsible for controversial plans to build new homes on greenfield sites to help struggling young families.

The couple's own climb up the property ladder has mirrored their success within the Labour hierarchy. Ms Cooper was first elected MP for Pontefract and Castleford as one of the 1997 'Blair Babes'.

The following year she married her long-time partner Mr Balls, then Mr Brown's chief economic adviser.

At the same time, the couple paid £97,000 for their constituency home, a modern house in Castleford. Land Registry documents show it was paid for with a mortgage of an undisclosed sum from Direct Line.

In 1999, the year their first child was born, they purchased their Lambeth home, a 20-minute walk from the Commons, paying £225,000 and taking out another loan with Direct Line.

Also in 1999, Ms Cooper was promoted from the backbenches to become Minister for Public Health. At that time, the rules determined that Ministers had to declare their London home as their main base, so Ms Cooper's Castleford house would have been the secondary residence on which to claim the ACA.

However, in 2004 the rules for Ministers were relaxed, bringing them into line with backbenchers who were allowed choose the location of their main homes. In 2005, when Mr Balls was elected as MP for Normanton, the couple switched their 'secondary residence' to their house in Lambeth and begin claiming expenses on it.

On March 20 this year the couple released equity from their Castleford property by taking out a new mortgage with NatWest for £141,972 – almost £45,000 more than the purchase price nine years earlier.

Then on April 5, Ms Cooper and Mr Balls completed the sale of their old Lambeth house for £545,000, at the same time buying their new property in Stoke Newington for £655,000.

Land Registry documents show that they took out a mortgage for £438,000, also with the NatWest. The couple are believed to have extensively renovated the property.

Neighbours in Stoke Newington said they frequently saw the Ministers entering and leaving their house. One man who lives opposite said: 'I see them quite a lot leaving the house in the morning and coming back in the evening just like any other busy couple round here. It's obviously their main home.'

However, a spokesman for the couple said: 'Ed and Yvette's home is in Castleford. Their second home, on which they make ACA claims, is in London. They have at all times acted within the Green Book rules and always in full consultation with the House of Commons authorities. They claim substantially less than they are entitled to under the rules.

'The whole family travels between their Yorkshire home and London each week when Parliament is sitting. As they are all in London during the week, their children have always attended the nearest school to their London house.' A spokesman for the Commons Department of Finance and Administration refused to comment on individual cases.

He added: 'There is no written guidance issued to Members married to each other. We will provide advice on any aspect of allowances, and the Green Book encourages Members to seek it.'

Meanwhile, in a separate development, the Prime Minister was under pressure to explain why he had lifted the ban on Ministers holding directorships after it emerged that Lord Digby Jones, the former director general of the CBI appointed as a trade Minister by Mr Brown, was still listed as the director of a cleaning company.

A Channel 4 show, Dispatches: Nice Work If You Can Get It, presented by Peter Oborne, will examine in detail the loopholes and abuses of the Commons expenses system. It airs Monday at 8pm.

 

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