Clean-up Parliament bill becomes law following expenses scandal

The Parliamentary Standards Bill gained Royal Assent last night after being rushed through both Houses of Parliament in less than a month.

But the Government was forced into a series of climbdowns over key parts of the legislation to get it on to the statute books before the summer recess started today.

The bill sets up an Independent Parliamentary Standards Authority (IPSA) to regulate expenses and creates a criminal offence of making a false declaration about MPs' claims.

An errant MP caught fiddling the expenses system could face up to 12 months in jail if convicted of the new offence.

The Government suffered a shock three-vote defeat during the bill's passage through the Commons, as MPs voted to drop provisions which many MPs felt would curb their ability to speak freely on behalf of voters.

Among the proposals dropped was a bid to scrap Parliamentary privilege, which protects MPs from court action over what they say in the Commons.

In the Lords, the Government was forced into removing a section from the bill that would have created an offence of failing to comply with the register of financial interests that will be maintained by IPSA.

Ministers also agreed to remove IPSA's role in enforcing the allowances or financial conduct regime and the offence of paid advocacy.

They announced that the bill would be subject to formal post-legislative scrutiny within the next two years.

Critics of Prime Minister Gordon Brown's actions in railroading the new measures through Parliament have said he should have waited for the root and branch review of the expenses regime being carried out by Sir Christopher Kelly's Committee on Standards in Public Life.

Shadow Commons leader Alan Duncan warned of a "looming collision" between IPSA and Sir Christopher's committee, adding: "Far from being a great lasting solution to deep problem that has hit us all over the last few months, it looks now as though we should now be prepared for a substantial showdown between the new body we have established to set and administer our expenses, and the old body that we set up to advise on them."

Justice Secretary Jack Straw described it as "the most difficult piece of emergency legislation" he had dealt with, but added: "I am unapologetic about the fact that the bill has been changed on its way through this House - that has been the essence of parliamentary process."