ACA REVIEW

THE REVIEW'S APPROACH TO THE ACA RULES

Note bv Sir ThomasLegs

This note gives background information about the Review's approach to the
interpretationof the rulesgoverningthe Additional CostsAllowance (the ACA).

Executivesummary

The main points can be summarisedas follows:-

1) To judge the validity of payments,the Reviewhas to interpretand determine

the rules and standardsgoverning the ACA during the review period; this is
not a straightforwardtask;

2) The ACA was governed by the Green Book rules, supplementedby the
practiceof the FeesOffice; but this was also subjectto fundamentalprinciples
of propriety derived from the Green Book itself and from the Code of
Conduct;

3) ACA paymentsthereforehad to be both within the defined scopeand purpose

of the allowance, and also compliant with the fundamental principles
(together,the' overridingprinciples');

4) It followed, in particular, that the ACA was to be regarded, not as a

supplementary source of income, but as a support for specific and
proportionate expendifureon accommodationneededfor the performanceof
Parliamentaryduties;

5) The validity or otherwiseof ACA paymentsunder the rules was not affected
' by the views, words and actionsof the FeesOffrce at the time;

6) Recommendationsfor repayment of invalid ACA payments carry no

implication aboutthe conductor motivesof the MPs concerned;
 were requiredby the
7) Mortgageintereststatementsand similar formal records
rulesand are essentialto justiff ACA payments;

g) MPs who did not provide suchevidenceat the time will thereforebe requested
allowanceinvolved
to do so now, in default of which repaymentof the whole
will be recommended;
evidence' certain de
9) In other comparatively minor cases of insufficient
minimis wili be allowed,for reasonsof proportionality;
"*r.piiorrs
Book rules, they will be
10) Where ACA paymentsbreachedspecific Green
judged invalid;

11) Heretoo, certainde minimisexceptionswill be allowed;

principles,they will alsobe
12) where ACA paymentsbreachedthe overriding
judged invalid;
claims for
13) One frequent example of this was allowing disproportionate
to have been in
secondaryitems; in such cases'specificlimits must be taken
place;
maintenancewill be
14) on this basis, the costs of cleaning and garden
and f'1'000 a year
regardedas having been acceptableup to limits of f2,000
respectivelY,but not more;
include conflicted
15) Other cases affected by the oveniding principles
transactionsand multiple householdpurchases'

The needto determinewhat the rules were

ACA madebetween2004
1. The Review's core task is to identiff paymentsof the
any repayments
and2009which shouldnot have beenmade,and to recornmend
to apply the rules
which Mps shouldmake.In doing this, the Review is required
purpose' the Review
and standardsgoverning the AC--Aat the time. For this
standardsin force at
therefore has to int.rpr"I and determinewhat the rules and
the time were.
 As other authorities,including the
2. This is by no meansa straightforwardtask.
comptroller and Auditor
Information Tribunal, the court of Appeal and the
was flawed in various
Generalhave publicly observed,the wirble ACA system
tensions between the
respects. One of these was that there were gaps and
gaps and tensions are
elementsof the rules governing the allowance. These
of interpreting and
difficult to reconcile, Jnd this In turn complicates the task
applyingthe rules.

Elementsof the rules

3. The rules and standardsin force during the review period ('the rules') consisted
'Green Book rules', based on Resolutionsof the
of three elements:(a) the
of Resources)in
House; (b) the practice of the Fees Office (Department
principles' also
interpretingand applyingthe rules; and (c) certainfundamental
or the Speakeron its
in the Green Book or otherwiseapprovedby the House
Housein 1995'
behalf,or containedin the Codeof bbnduct adoptedby the
less specific, though not
4. The Green Book set out a framework of more or
This framework
exhaustive,rures under which the ACA was to be administered.
for identifuing,
was basea on the principle that MPs were primarily responsible
and for the
claiming urrJ ,"iigrirr! their own .*p.nditutr on allowances,
audit check on the
propriety of that ."i.naiture. At that iime, there was no
on the ACA or other
amount or proprieta of individual items of expenditure
Parliamentaryallowances.
the scopeand purpose
5. The relevantsectionof the GreenBook beganby defining
Membersfor expenses
of the ACA as follow s;- "The allowance reimburses
away from their main
wholly, exclusivelyand necessarilyincurred when staying
duties' This excludes
UK residencefor the purpose of performing Parliamentary
political purposes"
expensesthat have been fnruiia-for puiely personal or
(formulationof APril 2005)'

6. The practice of the Feesoffice supplemented the GreenBook rules,in line with
for example' the Fees
rulings and guidancefrom the House authorities'Thus,
for certain heads of
office ,ror-iuy allowed claims of up to f250 a month
(until 2008-09' when the
expenditure,and up to f,400 for food, without receipts
officially informed
limit was set at f1i);and it applied,althoughMPs were never
'John Lewis list' as a benchmark for certain household
of it, the so-called:
purchases.
7 . The fundamental principles requiredMPs personallyto ensurethat their use of
the ACA was: (a) necessaryfor the performanceof their Parliamentaryduties;(b)
not extravagantor luxurious; (c) in accordancewith the Nolan principles of
selflessness,accountability,honesty and leadership;(d) strictly in accordance
with the rules goveming the allowance;(e) abovereproach;(f) took accountof
the needto obtainvalue for money;and (g) avoidedany appearance of benefit,or
a subsidyfrom public funds, or diversion of public money for the benefit of a
political organisation.Theseprinciplestogetheramountto a generalrequirement
of propriety.

8 . In short,all ACA paymentshad to be both within the definedscopeand purpose

of the allowance, and also compliant with the requirement of propriefy as
embodied in the fundamentalprinciples. These requirementsmay together be
calledthe 'overridingprinciples' of the ACA.

9 . It followed, in particular, from the overriding principles that the ACA was to be
regarded,not as a supplementarysourceof income,but as a supportfor specific
and proportionateexpenditureon accommodationneededfor the performanceof
Parliamentaryduties.

Apnlication of the rules

10.TheReview has identified over 147,000individual ACA paymentsmade by the

FeesOffice to MPs during the review period. Most of thesepaymentsappearto
have been valid. However, a number of them either (a) cannot yet be judged
valid, becausethey were not supportedby sufficient evidence,as requiredby the
GreenBook; or (b) must be judged invalid becausethey breachedspecificGreen
Book rules; or (c) must be judged invalid becausethey significantlybreachedthe
essentialrequirementof propriety,as ordainedby the overridingprinciples.

11.TheReview'sjudgmentsthat ACA paymentswere invalid cannotbe affectedby

views, words or actions of the Fees Office at the time to the effect that they
regardedthem as proper and acceptable.

l2.Equally, a recommendationby the Review that an MP shouldrepay all or part of

an ACA payment carries no implication or innuendo about the conduct or
motivesof the MP concerned.
Insufficient evidence

13.The most important single class of evidence to support ACA payments is

mortgageinteiest statements.Thesestatementsare essentialto supportwhat were
substantialpaymentsfrom the public purse, and their production
"u-rrlJirrely
was and is an explicit requirementof the Green Book. Other similar types of
essential supporting evidence include rental statements and completion
statementson salesand purchasesof housesand flats. ACA paymentsmade in
suchcasescannotbe regardedas valid unlessand untii theseessentialrecordsare
supplied. Bank statementsor other secondaryevidence are insufficient for this
purpose.

14.Mps who failed to producetheserecordsat the time will thereforebe requestedto

do so now. If on reisonablenotice an MP is unwilling or unableto producesuch
statements,the paymentsconcernedshouldin defaultbe determinedto be invalid
and the Mp wilibe recommendedto repaythe whole of the allowancegrantedfor
the mortgageetc.

15.Onthe other hand,the practiceof the FeesOffice before2008-09of not requiring

receiptsfor a variety oi expenditureslessthan 9250a month (€400 in the caseof
foodj has been acceptedfor the purposesof the Review. However, where
subsequentclaims or other evidencesuggestthat suchearlierpaymentsmay have
been materially incorrect,the Review will requestevidenceto substantiatethe
earlierpayments.

16.In addition,on a de minimis basis,the Review will not requirefurther supporting

evidencefor single paymentsof less than f,1,000 not forming part of a latger
pattern, and wheie there is no other reasonto doubt the validity of the payment.
This implies no judgment about the validity of the payments concerned, but
merely a recognilion that it would not now be a proportionateuse of public
resourcesto pursuethe evidencefor suchpaymentsfurther.

Breach of specificrules

l7.Where a payment made by the Fees Office was incorrect on the face of it, by
reference to specific rules in the Green Book, then the payment will be
determined to have been invalid and the MP who received it will be
recommendedto repaythe amountinvolved.
 l8.However, heretoo and on the samebasis,certainde minimrsexceptionswill also
be allowed.Theseare:-

a) singlepaymentsof lessthan f 100,erroneousunderthe GreenBook rules,but

not cumulativewith othersforming part of a larger connectedpattern; and

b) standingchargesfor utilities, Council Tax, etc. (but not more significantitems

like mortgageintereststatements)mistakenlyclaimedduring the Dissolution
that took placeduring the review period,in 2005.

Breach of overriding princinles

l9.Where a decisionor practiceof the FeesOffice was significantly contraryto the

overridingprinciples,it must bejudged to havebeenin breachof the rules.

20.Onefrequentexamplewas the practiceof allowing MPs to makedisproportionate

claims. For the central purposeof the ACA, namely putting a roof over Mps'
headsto enablethem to perform their Parliamentaryduties,the upper limit of the
{J
allowance may normally be taken as the relevant and sufficient control. T.he
Reviewwillthereforenotquestionthesizeandscaleofsecondhomesfinanced fI
by the ACA, or the necessityof providing them at all. However, for secondary
pufposes,though legitimate in themselves,some limits must be regarded as 5
having been in place to prevent disproportionateand unnecessaryeipenditure
from the public purse. i

2l.In some areas,such as householdfurniture and equipment (see paragraph6 7

\
above),the FeesOffice did in fact imposesuchlimits. In others'theydid iot, and
in these areasthe Review has to establish the limits which -rrsi be taken, in )
compliancewith the overriding principles,to have been in place at the time for {
certain recurring heads of subordinate expenditure. Two cases in point are
cleaningand gardenmaintenance.

22.On this basis,the cost of cleaningin the secondhome will be regardedas having
been acceptableup to f2,000 a year, but beyondthat will normally be held tJ
have been invalid; and paymentsabove that limit will be recommendedto be
repaid.

23.Similarly,costsup to f 1,000 ayear but not more will be regardedas having been
acceptablefor garden maintenance,and paymentsabove that limit wiil Jso be
recommended to be repaid.

6
24.Amongother casesalso affectedby the overriding operationof the fundamental
principlesare thoseinvolving conflictedtransactionsand multiple purchases.

25.Wherean MP usedthe ACA to enterinto a conflictedtransaction,for exampleby

buying or renting a secondhome from a closerelative,a companyin which he or
she had shares,or a close associatesuch as an employee,the transactionwill be
regardedas tainted, ffid the whole paymentaccordinglyinvalid. This will be so
even if the MP can show that it was effected at arms-length or that the public
pursehasnot suffered.

26.Further,exceptwherethere is an obviousand sensiblejustification on the face of

the record, tufpr will be recommendedto repay the cost of over-frequent
replacements of householdequipment.

Sir ThomasLegg

9 October 2009