MPs still playing the system

Her husband's home viewing habits ought not to be our concern, but thanks to the parliamentary expenses system the taxpayer covers the cost of the family's television package, which was used to pay for the films.

Now Jacqui Smith has let it be known that she has given her husband, Richard Timney — who is also her taxpayer-funded assistant — an "earbashing" and he has duly made a public apology for the error.

It is an undignified episode, though a good deal less important than the other aspect of the Home Secretary's expenses for which she is undergoing an official investigation. This is her claim that her sister's house in south London is her main home (she turned down the official residence that goes with her job), which allows her to claim a second-home allowance on her family house.

Meanwhile, her colleague Harry Cohen has admitted claiming a second-homes allowance, saying that his main residence is a seaside caravan and schoolhouse 70 miles from his constituency.
Most taxpayers, struggling to make ends meet in a recession, will be repelled by all this.

They are nonetheless entitled to know what at least some MPs are trying to get away with. Yet the Government appears more concerned with trying to establish whether there was a Commons mole who leaked the Home Secretary's expenses claims. MPs' expenses claims will shortly be made public, something they tried to prevent. Meanwhile, we should know as much as possible about their use and abuse of the system.

The Committee on Standards in Public Life is to carry out a review of parliamentary allowances but it will not report before the next election. Reform should come sooner. The best solution may be to scrap all allowances and simply pay MPs a flat rate, with an extra percentage for those outside London, which they can use as they please. They plainly cannot be trusted not to abuse the present system.

Another bail-out

MUCH to the Government's relief, the Nationwide has announced that it is to take over the healthy parts of the doomed Dunfermline Building Society, thereby saving jobs in the Prime Minister's constituency backyard. The catch, of course, is that the taxpayer is to take on its £1.5 billion worth of toxic assets.

The fall of Dunfermline shows that even a mutual building society can make serious errors of judgment in its lending. Mutuals cannot automatically provide new models of finance, as ministers hope, unless they are run on the old-fashioned principles of prudent lending which used to be their chief characteristic.

Certainly, the Chancellor was right to say that the company could not be shored up in its entirety by the taxpayer, when it was unlikely to be able to service its debts. However, we are back in familiar territory here, whereby the bad judgment of financial institutions' executives is to be borne by the public purse. This effective nationalisation of bad loans may now be unavoidable, and some of them may turn out to be less bad than they appear when the economy recovers. Nevertheless, it all adds to the already large burden of public debt — and the sense that taxpayers are, yet again, paying for the incompetence of financiers.

Green shoots?

THE housing market, it seems, is showing signs of recovery. Last month, the number of new mortgages rose to the highest level in nine months. Estate agents are cheering up. Financial institutions are starting to look kindly on first-time buyers, at least those with a 10 per cent deposit. Is this a sign of the fabled economic green shoots — nicely timed for spring? Let us hope so. We don't want the banks to return to their old reckless ways with lending. But signs of life in the housing sector is good news all round.