An investigation has been launched George Osborne’s expenses.

The Shadow Chancellor has been accused of ‘flipping’ his designated second home from London to his Cheshire farmhouse. 

It is alleged this occurred when he took out a £450,000 mortgage on the property, which was nearly £5,000 more than the price of the house.

A Labour Party activist has claimed that he made expenses claims to cover interest payments on the whole debt.  The activist was apparently so angry that he wrote to the Parliamentary Standards Commissioner. 

An investigation by the Commissioner John Lyon will now follow, and his decision to investigate will be a blow to David Cameron’s closest ally. 

The planned investigation came as Mr Lyon rejected complaints about Chancellor Alistair Darling’s repeated ‘flipping’ of his second home to make claims on several properties. 

If Mr Lyon launches a full inquiry it would affect Mr Osborne’s career until a verdict is reached, and it would also cause discontent on the Tory backbenches over the harsh treatment meted out to MPs outside Mr Cameron’s inner circle over their expenses claims. 

Although several members of the Shadow Cabinet, including Mr Osborne, have paid money back to the Commons fees office, senior MPs complain that they have been treated more leniently than others.

Mr Lyon was asked to carry out an investigation by Laurie Burton, the chairman of the local Labour Party in Mr Osborne’s constituency in Tatton, and after consulting the Commons standards and privileges committee, which was led by George Young, he replied

“I have accepted your complaint and am inviting his comments.” 

In a letter, Mr Lyon said he would look into a claim that “Mr Osborne claimed for mortgage payments that were not necessarily incurred, contrary to the rules of the House”. 

Mr Lyon said he had put the claims to Mr Osborne, adding:

“When I receive his response, I will consider how best to proceed.” 

The Commissioner dismissed another complaint that the Shadow Chancellor avoided paying capital gains tax when he ‘flipped’ his second home.

“This is a matter for HMRC (HM Revenue and Customs)”, he wrote. 

Spokesperson for the Treasury in the House of Lords, Lord Oakeshott said the allegations against Mr Osborne suggested he was “not fit to be Chancellor”. 

“George Osborne should know that you can’t tell the taxman one story and the fees office another,” he said. “We asked him to come clean and pay the taxpayer back weeks ago but he did nothing.

“This is a real test of David Cameron’s leadership – he needs to make his Shadow Chancellor pay back the tax he’s dodged. It looks like Cameron has either got one rule for the Notting Hill set and another for the knights of the shires, or that George Osborne is simply too close to chop.” 

A spokesman for Mr Osborne said he was ‘relaxed’ because he had done nothing wrong.