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Gordon Brown was under pressure today to carry out a major reshuffle as three Cabinet ministers faced renewed questions over their expenses.
Transport Secretary Geoff Hoon and Work and Pension Secretary James Purnell were hit with criticism over their property dealings while Communities Secretary Hazel Blears mounted a rearguard action to save her job.
Mr Hoon and Mr Purnell faced allegations that they saved thousands of pounds by not paying capital gains tax on the sale of properties which they at one stage declared to the Commons as second homes.
Both men strongly deny any wrongdoing and insist the taxman has confirmed that no capital gains tax was due. They gave detailed explanations of their property transactions.
Ms Blears went on the offensive to persuade Mr Brown not to ditch her. She has repaid £13,000 for capital gains tax she claimed on the sale of a London flat. Mr Brown has denounced her second home claims as “totally unacceptable”, appearing to earmark her for the axe in a reshuffle after the 4 June European and local elections.
Speaking in her constituency yesterday, she said: “You heard the Prime Minister's spokesperson say the Prime Minister had full confidence in me, he thought I was doing a great job.”
Whitehall mandarins expected a minor reshuffle, with Home Secretary Jacqui Smith reportedly set to leave to defend her Redditch seat where she has a majority of just 2,716.
Ministers now believe the Prime Minister may order a far bigger Cabinet shake-up. Sources close to Mr Brown have suggested Lord Mandelson could become Foreign Secretary, with Children's Secretary Ed Balls taking his post as Business Secretary.
Mr Brown would also have to consider promoting more female MPs if Ms Smith goes and Ms Blears is demoted. Children's minister Beverley Hughes is being talked up as a contender for a Cabinet job.
Mr Purnell did not pay capital gains tax on the sale of his London flat in October 2004, on which he claimed second home allowance. The flat had been his main home but this was switched to a property he bought in Manchester in 2002.
He also claimed £395 for an accountant's bill which, according to the Daily Telegraph, included “tax advice provided in October 2004 regarding sale of flat”. His spokesman said just £14.58 was for tax advice.
Under HM Revenue and Customs rules, sellers can claim a property is a main residence for capital gains tax purposes and not pay the 40 per cent levy as long as they lived there less than three years before the sale.
Mr Purnell's spokesman dismissed the allegations as “completely untrue”, saying: “James was not liable for capital gains tax on his London flat.” Mr Hoon did not pay capital gains tax on an estimated £300,000 profit from the sale of his London home in 2006.
The house was rented out while Mr Hoon, who also owned a family home in Derbyshire, lived in a grace-and-favour property from 1997 to 2006. After leaving this he sold the London house, telling tax authorities it was his “principal” residence. In the Commons Mr Hoon was claiming his Derbyshire home as his second residence and insisted he had abided by all rules.
He said: “I have been consistent in my declarations to both parties and I have been assiduous in ensuring that I have met my reporting obligations and my tax liabilities.”
The MP claimed his London house in Courtney Street as his second home before becoming a minister in 1997.
Reader views (2)
By His slowness to act it is clear that Brown wants to keep to the old ways of lucrative expenses.
- A.Taxpayer, London, 21/05/2009 12:25
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The best Mr Brown can do is to "suspend" those "thought" to have breached the law, those who have lived within the rules are left in position, what about the spirit of the rules, at least the Tories are dealing with this issue urgently.Which is what this PM should do.........
- Brian Hughes, wales, 21/05/2009 11:45
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