Labour minister drawn into expenses row as taxman sets sights on disgraced MP Conway

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Phil Hope: Put his two children on the payroll when they did part-time tasks

The government has been dragged in to the row over MPs' taxpayer-funded expenses after it's emerged that Labour minister Phil Hope's son and daughter had done paid work for their father during their holidays from university.

Mr Hope, MP for Corby, put his two children on the payroll when they did part-time tasks in his constituency office during their summer vacations.

The 52-year-old Cabinet Office minister is among a host of senior Government figures embroiled in the row over MPs employing family members. Others include Jacqui Smith the Home Secretary.

Mr Hope said he had employed his son Nick, 23, who was studying politics at Bristol University, and daughter Anna, 21, during their holidays. The arrangement had been approved by the Commons authorities.

The former secondary school teacher said: "Both have done temporary work to cover staff absence, this is a summer holiday job.

"They are paid standard rates, £6 an hour or something like that. They have also done voluntary work."

It came as MPs appeared to finally be buckling to pressure for spot checks on their expenses. The Commons estimates committee, chaired by Speaker Michael Martin, was expected to approve in principle plans to allow auditors to pick expenses at random for scrutiny.

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Derek Conway with his son's friend Michel Pratte, also a member of his staff

Full details of the plan could see several dozen MPs coming under the spotlight. Although a step away from Westminster's tradition that "honourable members” should be above scrutiny by outsiders, the move is seen by some as a tactic to ward off pressure for much more sweeping reform.

Meanwhile, The Inland Revenue is to preparing to launch an investigation into parliamentary expenses following revelations about the large number of MPs employing family members.

Officials are concerned about widespread tax evasion at Westminster and are said to be "champing at the bit" to begin looking at members' financial affairs.

It follows the disgrace of Derek Conway, Conservative MP for Old Bexley and Sidcup, who paid tens of thousands of pounds to his sons from public funds and other disclosures.

But Mr Conway has hit back, claiming MPs were covering up family employees by registering them under different names.

He insisted he was "no crook" for handing more than £400,000 of taxpayers' money to his wife Colette and two Harrow-educated sons, who were full-time students.

He claimed he was open about running his Westminster office as a "family firm" but other MPs might not be as transparent.

"Colette is listed in the Commons directory under her married name," he said.

"I know many MPs with family members who have different names registered so that they are not so obviously spotted.

"Some spouses work under maiden names."

Mr Conway was suspended from the Commons for ten days after a Standards and Privileges Committee investigation concluded that his younger son Freddie, 22, had been all but "invisible" at Westminster while he completed a full-time degree in Newcastle upon Tyne.

It later emerged that his elder son Henry, 25, was given tens of thousands of pounds to "fillet post, scrutinise e-mails and stuff envelopes" while studying fashion at college in London.

It was also revealed at the weekend that Tory MPs Sir Nicholas and Ann Winterton have been claiming £30,000 a year Commons expenses in rent for a London flat which they used to own but transferred to a trust set up for their three children.

Shamed former Cabinet minister Peter Hain confirmed that his 80-year-old mother works part-time for him as a secretary.

And Tory MP Bob Spink was revealed to have employed his ex-lover's daughter when she was still a sixth-form pupil.

In his first interview since the controversy broke, Old Bexley and Sidcup MP Mr Conway defended himself against accusations that he used his Commons expenses to feather his family's nest.

He also suggested that estimates of at least 170 MPs operating similar schemes fell well short of the true number.

The Mail understands the practice of employing family members is firmly in the sights of HMRC officials, who have long suspected some MPs of using it as a tax dodge.

Under complex tax rules, MPs can deduct any money they pay to staff from their taxable income.

But to receive this benefit, the wage paid, for instance the £40,000 paid to Freddie Conway, must be commensurate with the amount of work carried out.

If it is not, the MP would not be allowed to deduct the sum from his taxable income meaning he would be forced to pay 40 per cent on it.

It means that if Mr Conway cannot prove his son had done the work - for instance, by providing timesheets or evidence of the work - he could be by HMRC for tax.

Maurice Fitzpatrick, tax expert at financial advisers Grant Thornton, said: "Bearing in mind how keen the revenue has looked at these matters in the private sector then it would be expected to act on the information that has come into the public arena recently."

Philip Hammond, the Tory Treasury spokesman, said: "If someone has come on to HMRC's radar because the Parliamentary authorities have found them guilty of malpractice, then they would be entitled to look at that person's affairs.

"They are clearly able to look at Derek Conway's affairs."

In his interview with the Mail on Sunday, Mr Conway - who has announced he will step down at the next election after suffering the humiliation of Tory leader David Cameron withdrawing the Tory whip - insisted he had done nothing wrong in employing his sons.

He said they had worked from their university libraries and from the family flat in nearby Victoria.

"Lots of MPs have family who work from home. I'm not unique at all."

He denied that MPs were overpaid and said a fair salary for a backbencher would be £80,000 to £100,000 - up from their current £60,000.

 

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