Fury over 'stitch-up' as Jacqui Smith escapes sleaze investigation into £116,000 second home claim



Expenses row: Home Secretary Jacqui Smith leaves her sister's home in Southwark, which she claims as her main residence

Jacqui Smith will not be investigated for claiming £116,000 of taxpayer-funded Commons expenses for her family home.



Parliamentary sleaze watchdog John Lyon said there was 'not sufficient evidence for an inquiry' while the Home Secretary broke her silence to say she had 'played by the rules.'



But critics claimed taxpayers had been 'stitched up' by the decision.



They pointed out that lax regulations meant she could exploit a loophole worth £24,000 a year in order to subsidise the West Midlands home she shares with her husband and two children.



Miss Smith was allowed to do this because she designated a room in her sister's three-bedroom terrace house in South London as her main home, and pays a 'market rate' for her lodgings.



MPs can claim expenses under the Commons Additional Costs Allowance to help cover the cost of a second home if their constituency is too far away to commute to Parliament each day.



It can cover interest payments on a mortgage, fuel bills, food, and furnishings including goods off the notorious 'John Lewis list' such as kitchens, bathrooms, televisions and fridges.



Under the rules, the main residence is usually where the MP 'spends more nights than any other'.



Critics find it hard to swallow Miss Smith's claim that she considers a single room in her sister's London home her main inhabitance, rather than the family home in her Redditch constituency.



She has also rejected the offer of a grace-and-favour flat in London that comes with her job.



However, Miss Smith told GMTV yesterday: 'I have always been open about my expenses.



'The thing with us MPs, if you are going to serve your constituents you have to have two houses.



'I took the decision which was best for my kids, to be where they grew up.



'But as Home Secretary you have to spend the bulk of your time in London. I have always been open. I have played by the rules here.'



Mr Lyon, the Parliamentary Commissioner for Standards, confirmed he would not be pursuing two complaints he received over Miss Smith's use of the expenses.



Miss Smith claimed the £116,000 between 2001 and 20007, although until 2004 Commons rules said ministers could not designate their constituency home as their 'main' one.

Shared house: Police outside the three-bedroom home in South London owned by Miss Smith's sister

But campaigners said taxpayers had been shortchanged and accused the Home Secretary of playing 'fast and loose' with the rules.



Landlady: Jacqui Smith stays with her sister Sara, above, several nights a week

Matthew Elliott, chief executive of the TaxPayers Alliance, said: 'The public will feel they are being stitched up by this situation.



'Jacqui Smith can hardly call a room in a shared house her "main" home so it looks like she is claiming additional costs allowance to subsidise and spruce up her proper home in her constituency.



'She should come clean because many hard-working taxpayers will look at her situation and feel she is bending the rules.'



The Lib Dems' Norman Baker accused MPs of designating their 'second home' as the one which would given them the greatest financial advantage.



He said: 'The test of appropriateness in terms of designation-must be what would appear to be fair and reasonable to an ordinary member of the public.



'To most people, the place where you and your family live and perhaps did so before your election, where you return to when you are not working, and which serves as a base for your children to go to school, is your main residence.



'A "pied-a-terre" in London, or a room in a relative's house, cannot sensibly be regarded as a main residence. It is clearly a second residence. Yet this test seems not to be applied by all Members.'



A ruling by Mr Lyon last year said: 'If a Member has his or her family living permanently in their constituency home and has modest accommodation in London big enough only for themselves, and which they use only when Parliament is in session, then it would clearly seem to be a matter of fact that Member's main home is in the constituency.'