Tuesday, September 1, 2009

Nick Harvey on second homes - a damn disgrace

While generally admiring the man as an excellent LIbDem MP, I have long been rather perplexed by some statements by Nick Harvey. His role as spokesperson for the Commons Commission has often led to him defending rather uncomfortable positions. Defending what many see as House of Commons profligacy is a case in point. Now, Liberal Democrat Voice draws attention to Nick Harvey's statement, concerning MPs' second homes, to the Committee on Standards in Public Life. In summary, as the LDV headline puts it, Nick Harvey says that 'MPs should be able to profit from second homes'.

This leads me to ask: Has Nick Harvey gone native? Has a bit too much of the inherent self-righteous pomposity of parliament rubbed off on him?

He doesn't seem to get it, does he? I mean, the public's absolute disgust for the whole MPs' expenses scandal. On the specifics of his statement, he says:

The MP has borne all the risk, which may prove painful for some in the current market, and
maintained the property in marketable condition. The taxpayer could not be expected to bear any capital loss. The fair and equitable sharing of any capital gain is through the capital gain tax system.

But surely, if the taxpayer has actually paid the mortgage over years, the poor old taxpayer should see the benefit if there is any, should they not? And it doesn't take a genius to work out that, under Nick Clegg's plan, if the state takes the profit from a second home sale, then, logically, the state should also absorb the loss, if there is one.

But come off it, the likelihood of a loss forthcoming is fairly low.

I am inclined to sympathise with Andrew Duffield, commenter on LDV:

What risk? Even with the current downturn, anyone who bought a property 4 or more years ago has made money on it – from doing absolutely nothing.
The proportion of this unearned uplift on an MP’s second home that has been financed with public funds belongs wholly and completely to the taxpayer – all 100% of it. Nick Harvey’s assertion that it is ok for him to pay a mere 18% CGT on this value, while pocketing a massive 82% for himself, not only flies in the face of Nick Clegg’s line on the matter, but also 100 years of Liberal policy and any sense of moral decency. Harvey should be hung out to dry.

While I personally would like to see publicly owned MPs' accomodation, I have also re-read Nick Clegg's proposal, which I think I slightly misunderstood. It is an admirable proposal and should be supported by all LibDem MPs. Here's what it says on his website:

First, if an MP wants to own a second home they should pay for it themselves. Right now MPs can claim almost £25,000 a year to cover the mortgage interest payments on their second home and to furnish it. It’s true that MPs representing constituencies outside of Greater London need a base near Westminster so that they can do their job properly and attend late night votes. But it isn’t right that taxpayers foot the bill for properties that could potentially yield politicians huge capital gains.
The second homes allowance should be cut and restricted to rental properties and basic bills. Greater London MPs, and Ministers given ‘grace and favour’ accommodation, shouldn’t get the allowance at all.

The Times, quoted on Nick Clegg's website, added:

MPs who already have properties would be given 36 months before Parliament refused to fund their mortgage interest payments. MPs who then sold their second homes would be forced to return to the taxpayer a proportion of the mortgage interest they had claimed, out of the profit. The precise formula to determine how much MPs should return has yet to be finalised, with party officials still examining how best to deal with houses in negative equity.The Liberal Democrat leader is determined, however, to lay down the principle that MPs should not continue to profit from huge capital gains at the taxpayers’ expense. Research in 2006 by House of Commons authorities found that 485 MPs — three quarters of the total — claimed mortgage interest payments. MPs have benefited considerably from the tripling of property prices since 1997, which have pushed up the average price of a Westminster flat from £171,000 to £543,000 last year. Despite being able to claim more than £20,000 a year for mortgage interest payments, MPs can keep any profit from second home sales when they leave Parliament.

Quite frankly, it is a damn disgrace that Nick Harvey is not supporting our leader on this. It is clear that Nick Clegg's radical stance is needed both from a principled viewpoint but also from the point of view of public anger on this.

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