David Cameron was dragged personally into the expenses row last night after it was revealed that he paid off a loan on his London home shortly after taking out a £350,000 taxpayer-funded mortgage on his constituency house.
The disclosure followed a powerful call by the Tory leader yesterday for the ‘full force of the law’ to be deployed against MPs who have abused allowances.
Following a Mail on Sunday investigation Mr Cameron could now face searching questions about his own expense claims.
He took out the £350,000 mortgage – close to the maximum amount that can be claimed for – to buy a large house in Oxfordshire in August 2001, two months after winning his Witney seat in the General Election. By nominating it as his second home, he was able to claim for the mortgage interest payments under the now-infamous Commons’ Additional Costs Allowance (ACA).
Just four months after securing the £350,000 mortgage, Mr Cameron paid off the £75,000 loan on his London home, taken out only six years earlier.
There is no suggestion that he broke any rules. But mortgage experts say that if he had kept the loan on his London home and borrowed £75,000 less on the Oxfordshire property, taxpayers could have been saved more than £22,000 between 2002 and 2007
The revelations came as Gordon Brown was warned that he faces a new threat to his leadership if Labour is beaten by the UK Independence Party in Thursday’s European elections.
And in today’s Mail on Sunday, Liberal Democrat Treasury spokesman Vince Cable calls for ‘immoral’ Chancellor Alistair Darling to resign for ‘being caught with his fingers in the till’ by abusing his expenses.
Last night, Mr Cameron insisted that his mortgage claims had been ‘perfectly reasonable’ and denied that reducing his Oxfordshire loan would have helped the taxpayer.
A statement said: ‘David Cameron paid off his London mortgage with his own money which came from the sale of shares and money built up while working at Carlton TV. He bought a home in his constituency and claimed for mortgage interest payments, which is perfectly reasonable and the intended use of the second-home allowance.
He later paid down a part of this mortgage and claimed for some basic utility bills.
‘He made it very clear several weeks ago that he would not claim for a second home if he became Prime Minister and lived in No10.
‘We are pleased that Gordon Brown and other members of the Cabinet have now adopted this policy and will no longer be able to claim for their second homes while living in grace-and-favour apartments.’
A later statement said: ‘If he had paid £75,000 toward Oxfordshire it would not have been cheaper for the taxpayer, as that mortgage is far higher than the amount he was able to claim for – particularly in 2001, when the amount you were able to claim for was much lower.’
Ten days ago, at a meeting with his Witney constituents to answer their questions on expenses, Mr Cameron candidly admitted claiming ‘close to the maximum’.
But he failed to mention that he had paid off his London loan shortly after he had secured it.
‘From 2001 to 2007, the only thing I really claimed for in respect of my second home was the interest on a mortgage – not the repayments, but the interest,’ he told the meeting.
‘It was a very large mortgage. It was £350,000 worth of mortgage. It was about £1,700 a month that I was claiming. That was quite close to the maximum you could claim at the time but I did not at that stage claim for anything else.
‘In 2007, I was able to pay down the mortgage a little bit [by £100,000], so it was a £250,000 mortgage, paying about £1,000 in mortgage interest every month, and so I also claimed for what I would call some pretty straightforward household bills – council tax, oil, gas and other utility type bills and insurance on the property.
‘I now claim less than the maximum. I don’t claim all of those utility bills. I claim a percentage of them, because I think that’s right and fair.’
Today’s disclosures may spark fresh criticism among some Conservatives about Mr Cameron’s forceful handling of the expenses row. They believe he is using the scandal as an excuse to clear out traditionalists who stand in the way of his modernising project, while largely protecting members of his inner circle.
Until now, Mr Cameron has made only one concession on his expenses – admitting that he was wrong to claim £680 to have wisteria removed from the chimney of his Oxfordshire home. He has repaid the money.
Now The Mail on Sunday can provide a more detailed account of his property dealings and how they relate to his expenses.
According to Land Registry documents, in 1995 Mr Cameron paid £215,000 for a house in Kensington, West London, which was part-funded with a £75,000 mortgage from Alliance & Leicester.
In August 2001, just a month after the second-home allowance went up by a staggering £5,840 per annum – from £13,628 to £19,468 – and two months after he entered the Commons, he paid £650,000 for the constituency house in Chipping Norton, Oxfordshire, and used the property as security for a £350,000 loan from HSBC.
Mr Cameron’s spokesman said last night that his offer on the house had been accepted three months earlier in May 2001.
Then, in December of that year, the Land Registry removed the Alliance & Leicester charge from its records for the Kensington home after the loan was ‘discharged by electronic means.’
Mr Cameron sold the Kensington property in 2005 for £1,150,000 – a profit of £935,000 – and bought another house nearby. His Oxfordshire home
is estimated to be worth just under £1million, a paper profit of more than £300,000.
His mortgage claim is potentially contentious because, coincidentally or not, experts say that it corresponds approximately to the upper limit of the ACA, which covers the costs of running an MP’s second home. In the financial year 2002-03, the first full year Mr Cameron claimed under the ACA, he received the maximum £19,722.
In 2003-04, he claimed £20,328, just £5 less than the maximum, and in 2004-05 he took the maximum of £20,902.
In total, between 2002 and 2007 he claimed £102,874. If he had paid off £75,000 of the Oxfordshire loan, rather than clearing the mortgage on his London home, the bill would have been about £22,500 lower.
In an interview yesterday, Mr Cameron said: ‘When I was first elected, I was renting rather than owning a home and I couldn’t find my rent bill. The fees office said, “Don’t worry, just claim for food.” I said, “I haven’t had any food,” and I went and found my rent bill.’
In the interview, Mr Cameron maintained his hardline stance by calling for any MPs who have used taxpayers’ money to pay for ‘phantom’ mortgages to be investigated by the police.
He said he was outraged by Sir Peter Viggers, who claimed for a floating duck house, Douglas Hogg, who claimed for his moat to be cleared, and Anthony Steen, who recouped the cost of tree surgery and guarding his shrubs against rabbits.
All three – regarded by modernising Tories as anti-reform ‘bed-blockers’ – have announced that they will stand down at the next Election.
Only one Cameron ally, his adviser Andrew MacKay, has been forced to leave the Commons following revelations that he and his MP wife Julie Kirkbride had claimed more than £250,000 in second-home allowances by ‘double dipping’.
On Friday, Mr Cameron said that Bill Cash, a veteran Eurosceptic regarded as a troublemaker by the party leadership, had ‘serious questions’ to answer about claiming for rent payments to his daughter.
One Tory MP last night attacked Mr Cameron’s alleged ‘double standards’ crackdown on some MPs and soft handling of others. ‘It’s like living through one of Stalin’s purges,’ said the MP.
‘It’s all deeply divisive. Some people are being asked simply to apologise while others are being told they have questions to answer. That’s code for: let’s get all the lunatics in a local constituency to stage a public execution.
‘Although MPs have simply been obeying the rules as they were, Cameron is saying that’s not enough. He seems to want to make burnt offerings of other MPs. Fine, but on that basis, why doesn’t he repay years of mortgage interest claims above £1,250 a month that he’s claimed for?’
In his defence, it could be argued that what Mr Cameron has done with Commons expenses pales into insignificance next to Tony Blair. He used the ACA to help pay for a £296,000 mortgage on a house that he had bought for £30,000 in 1983. He claimed just under a third of the interest back from the taxpayer.
He remortgaged the constituency home in Trimdon, County Durham, in 2003 – shortly before he paid £3.65 million for a London townhouse which became his post-Downing Street home.
Gordon Brown has also been at the centre of controversy after claiming for payments of £6,577 to his brother Andrew over a 26-month period for a cleaner shared by the pair.
Moreover, Mr Cameron has said that if he enters Downing Street, and has use of the official country residence of Chequers, he will give up his second-home allowance completely, a ban that would extend to other Ministers who are entitled to use grace-and-favour apartments.