Baroness Warsi should stand down and an investigation opened into her expenses, the former standards watchdog has said, after it was alleged she claimed for overnight accommodation costs while staying rent free at a friend's house.
|House room: Baroness Warsi and Tory donor Dr Wafik Moustafa|
By Jason Lewis, Patrick Hennessy and staff1:41PM BST 27 May 2012
Baroness Warsi, the chairman of the Conservative Party and a Cabinet Minister without Portfolio, charged the taxpayer £165.50 a night for attending the House of Lords while staying at a house in Acton, west London. She also admitted failing to declare thousands of pounds in rental income.
The owner of the house said she had her own bedroom and front-door key and said he received no money in rent from Warsi or from Naweed Khan, the party official who was also staying there, it was reported.
She claimed £12,247 in over-night subsistence within six months of taking her seat in October 2007, records show. It was the equivalent of 74 nights' stay. The Lords sat for 84 days in the period. She was then the youngest peer at the age of 36.
Baroness Warsi says she stayed in the house for 12 days and made a financial contribution to Mr Khan.
Sir Alistair Graham, a former chairman of the Committee on Standards in Public Life, said: "At the moment it all looks very muddy and blurred and worthy of a full investigation."
Speaking to Sky News, he suggested that if the standards commissioner decided to investigate then Lady Warsi should relinquish her ministerial office until any inquiries were complete.
"I personally am always of the view when ministers face very serious allegations that seem to have some strength to them, then it's better that they stand down from their ministerial post while that investigation takes place, but of course that is a matter for the Prime Minister," he said.
The property was owned by Dr Wafik Moustafa, a GP. He said Warsi had stayed at the house over four months between Mondays and Thursdays and occasionally at the weekend.
He said: "Baroness Warsi paid no rent, nor did she pay any utilities bills or council tax. It was an informal arrangement, so no tenancy contract was drawn up.”
Mr Moustafa, 63, added: “I’m not exactly sure how many days she stayed in total, but I believe my home was her main London residence [at the time].”
Warsi also said she did not tell House of Lords authorities that she was receiving income from a London property she had bought and rented out.
She apologised last night for the breach of parliamentary guidelines, blaming “an oversight, for which I take full responsibility”. However, she claimed she had paid tax on the rent.
Warsi last night said she had stayed in the flat on "occasional nights" as the guest of Khan at the house but during the period she had "predominantly" stayed in two hotels.
She said when she did stay with Khan she gave him "an appropriate financial payment equivalent to what I was paying at the time in hotel costs".
Mr Khan, who later became Warsi's special adviser, said: "I confirm she made a financial payment on each occasion, which compensated for the inconvenience caused and additional costs incurred by me as a result of her being there.”
But Mr Moustafa said: "Naweed Khan never paid me any money."
Labour MP John Mann said he would write to the Lords commissioner for standards asking him to investigate Warsi's expenses.
"If you are paying no rent where you are staying, you can't possibly be claiming subsistence for staying there," Mann told the Sunday Times.
"It all seems very murky. We need a full investigation into the matter."
Shadow business minister Chuka Umunna told BBC1's Sunday Politics: "To rebuild trust and demonstrate this is being dealt with in a proper way there has to be a proper, independent investigation.
"So long as these stories endure, we are going to struggle to rebuild the trust and confidence we need there to be between Westminster and the people it exists there to serve."
Conservative deputy chairman Michael Fallon said the controversy was "embarrassing" but said Lady Warsi believed she acted within the "spirit and letter" of the rules.
The failure to make a declaration about the rental income from her flat means that the public was unaware that she had another source of income, over and above her salary, which is paid by the Conservative Party, and the £300 a day allowance which she is eligible to claim when she attends the Lords.
The baroness updated the register of interests for members of the House of Lords last Monday. It now states under “land and property”: “Flat in London NW from which rental income is received.”
The Prime Minister and Baroness Warsi have spoken of the commitment to transparency by the Conservatives and the Coalition.
In November 2010 Mr Cameron said “it is our ambition to be one of the most transparent governments in the world”.
In July last year the peer said: “This Government is delivering unprecedented transparency.” The total amount that she failed to declare is not known because Baroness Warsi did not disclose it last night.
Peers are required to register any rental income worth more than £5,000 in a calendar year but do not have to say how much.
However, the amount is likely to run into five figures because it involves rental income from a home in London for at least 12 months.
As well as raising questions over her own financial affairs, it will further strain relations with grassroots members, among whom the 41-year-old baroness is not believed to enjoy widespread popularity.
The political career of her special adviser was also in question last night.
The revelations follow a dispute that emerged between Baroness Warsi and the Egyptian-born Conservative donor and fund-raiser, Dr Wafik Moustafa.
He was upset when the Conservative Arab Network, which he founded, was told earlier this year to sever its links with the party and was subsequently threatened with legal action by Baroness Warsi.
That prompted him to disclose that he had given her and her special adviser, Naweed Khan, accommodation in London.
In the course of inquiries made because of his public statement, the failure to make a disclosure about her rental income was discovered.
Baroness Warsi said last night that she bought a flat in Wembley, north-west London, in September 2007 to use after being ennobled.
However, she said that the property transaction was not “due for completion” until 2008 and so she had to find accommodation elsewhere, “predominantly” in two hotels.
“Not having made advance bookings for these hotels, there was a period of about six weeks when I spent occasional nights at a flat in Acton, which was occupied by Naweed Khan, at the time a member of Conservative Campaign HQ staff,” she said.
“For the nights that I stayed as a guest of Naweed Khan, I made an appropriate financial payment equivalent to what I was paying at the time in hotel costs.” However, Mr Naweed was actually staying rent-free at Dr Moustafa’s home in London, meaning that by extension Baroness Warsi was receiving his hospitality.
Baroness Warsi said she moved into the Wembley home in March 2008 and stayed there until June 2010, when “upon security advice, I moved to another address closer to the House of Lords”.
She said that some months later she began, “with the prior approval of the Cabinet Office and the Leader of the House of Lords, to let out the Wembley property”.
“Due to an oversight, for which I take full responsibility, the flat was not included on the Register of Lords’ Interests when its value and the rent received came to exceed the thresholds for disclosure,” she said.
“When the discrepancy became apparent this week, I immediately informed the Registrar of Lords’ Interests of its omission. I repeat: at all times my ownership of the flat and the fact that it was being let out was fully disclosed to Cabinet Office officials and HM Revenue and Customs, and was appropriately reported on the register of Ministers’ interests held by the Government.”
The disclosure means that she failed to declare rental for at least 12 months, and up to 18 months. An average rent for a one-bedroom flat in Wembley is currently £1,000 a month, meaning the amount undeclared could be as high as £18,000.
Conservative deputy chairman Michael Fallon said: "These sorts of thing are always embarrassing but the key thing here is that Lady Warsi has admitted she's made a mistake, she's apologised for it."
"She's corrected the record now and she's very happy to cooperate with any investigation back into her claims and I think it should be left at that until any investigation is reported."
Speaking to Sky News, Mr Fallon said Lady Warsi had paid the other tenant but not the owner of the Acton property.
"She stayed overnight in the other property before her own house was available and she believes she was fully entitled to claim the overnight allowance from that and to pay the other tenant for some of the costs involved," he said.
"She believes that was within the spirit and the letter of the rules as they were then and she's very happy to cooperate with any investigation."
Louise Mensch, the Conservative backbencher, wrote on Twitter: "What a lot of fuss about absolutely nothing on Lady Warsi. She declared her payments on one registry, forgot to declare on a second."
Asked where the money had gone given Mr Moustafa's claims to have received no rent payments, Mrs Mensch wrote: "Up to Khan to explain that as he's already confirmed Lady Warsi did pay him her rent."
Baroness Warsi has been criticised over her performance as Tory party chairman.
Some Conservative MPs want Mr Cameron to replace her with Grant Shapps, the housing minister. Earlier this month the Conservatives performed poorly in local elections, losing more than 400 council seats.
Baroness Warsi became the first Muslim woman to be selected as a parliamentary candidate by the Tories, contesting the Dewsbury seat in 2005, but failed to win.
She went on to be a special adviser to Lord Howard, the former Conservative leader, but saw her career take off under Mr Cameron, who made a special effort to promote ethnic minority candidates and party officials as part of his drive to modernise the Tories.
This month she said a small minority of Pakistani men saw white women as “third-class citizens” and “fair game” — following a case which saw nine Muslim men found guilty of grooming young white girls for sex.