Elliot Morley, the former agriculture minister, continued claiming for the mortgage interest on his constituency home for more than 18 months after the loan had been repaid.
Lawyers last night said that the claims could constitute a criminal offence under the 2006 Fraud Act and the 1968 Theft Act.
The disclosure is the most serious to be uncovered so far by The Daily Telegraph during the week-long investigation into MPs’ expenses.
During 2007, the parliamentary fees office, which monitors expenses claims, asked MPs to provide annual mortgage documents relating to properties for which they claimed.
At the time, Mr Morley was claiming £800 a month for mortgage interest on a property in Scunthorpe. However, the mortgage had been repaid by March 1 2006, according to official Land Registry documents.
Last night, Mr Morley apologised and said that he had informed the Chief Whip and the parliamentary fees office. He said he had repaid some money but refused to disclose how much. In a statement issued to The Daily Telegraph, he said: “I do not believe any offence has been committed. I have reported this to the finance department and chief whip.
“I have made a mistake, I apologise for that and I take full responsibility. My priority was to repay and if I suffer financially as a result of that, I have only myself to blame.”
It can also be disclosed that, in November 2007, Mr Morley “flipped” his designated second home from the Scunthorpe house to his London property - and the dubious mortgage claims were never uncovered.
Mr Morley, a former government whip and privy councillor, was renting out the London property, which was designated as his “main residence”, to another Labour MP.
Ian Cawsey, a Labour Party vice-chairman, who was renting the house, said last night he was unaware that the property was also Mr Morley’s main residence. It is unclear where Mr Morley was actually living in London.
For four months after Mr Morley “flipped” his homes, the former minister claimed full mortgage interest on the London house and Mr Cawsey, who had designated the house as his second home, continued to claim £1,000 a month for the same property in rent. The rent money was paid to Mr Morley.
Mr Cawsey, a friend of Mr Morley, said that he had no idea about Mr Morley’s arrangements. In a statement he said: “I do not have any interest or ownership rights to [the London house] or on any other home except my family home in my constituency. I receive no financial or personal gain from these arrangements.”
The claims raise serious questions over how the expenses system was policed. The Daily Telegraph has seen dozens of cases where MPs failed to produce mortgage documents after they were requested by the fees office. It is understood that the fees office discovered that the two MPs were both claiming for the same property in March 2008. Mr Cawsey has not made any claims for the property since and Mr Morley’s allowance has been cut. However, the former minister’s arrangements were not reported or independently investigated.
Mr Morley was a minister under Tony Blair and was made a privy councillor in December 2006. Since January, he has been the chairman of the House of Commons energy and climate change select committee. He has claimed close to the maximum amount allowable in expenses over the past four years.
This newspaper has spent the past six days disclosing the systematic milking of the expenses system by MPs. The scandal has engulfed the Cabinet, junior ministers, the shadow cabinet and the Liberal Democrats.
David Cameron, the Conservative leader, yesterday attacked the Prime Minister’s handling of the issue and urged Gordon Brown to show leadership. He said that the repayment of unjustified expenses claims was an “ethical and a moral issue”.
Phil Hope, the Health Minister, said he would repay more than £40,000 he claimed in furniture and household items for a London flat.
Today, The Daily Telegraph’s investigation discloses the questionable expenses claims made by backbench MPs from both the Labour and Conservative parties, including:
Fabian Hamilton, a Labour MP, declared his mother’s London house as his “main” residence — allowing him to claim thousands of pounds for his family home in Leeds. In 2004, the MP admitted over-claiming on his expenses by nearly £3,000, charging for the full cost of his mortgage — rather than simply the interest as is permitted.
John Maples, the deputy chairman of the Conservative Party, declared that a room in his private members’ club in Pall Mall, London, was his main home. This allowed him to spend money on his family’s Oxfordshire home.
Stephen Crabb, a Conservative MP, claimed his “main home” was a room in a flat rented by another MP, after buying a new house for his family in Wales and claiming £9,300 in stamp duty. He had previously “flipped” his second home to the family house from another London flat that was sold for a profit after more than £8,000 in taxpayer-funded refurbishments.
There is expected to be pressure on the Prime Minister to take action against Mr Morley today. It is not clear why the former minister was not reported for further investigation when he informed the Chief Whip of his mortgage claims last week.
Steven Barker, a lawyer who specialises in fraud cases, said: “The Fraud Act was designed to deal with these types of offences. There is also a possibility of an offence of false accounting under the Theft Act.”