This Wednesday in the House of Commons Harriet Harman will announce reforms that Gordon Brown, David Cameron and hundreds of other MPs are hoping will bring the outcry over MPs’ expenses to an end. 

The details of the reforms proposed by Sir Christopher Kelly, have been widely leaked:  MPs will be stopped from claiming for second homes less than 60 minutes from Westminster, on claiming mortgage interest, on employing relatives and the £64,000 “golden parachutes” payments will be stopped.

Many MPs believe that Kelly review has gone too far and they are very angry, they now hope it will bring an end to the expenses row.  

Even though there is widespread anger amongst many MPs, it appears that neither Sir Thomas Legg nor Sir Christopher Kelly have considered the most serious offence of the system, which known as “flipping”.  It has been swept under the carpet, and is not expected to be included in the Kelly review.  As the reforms will not be retrospectively applied it  means that all “flippers” will escape censure.

A separate investigation into flipping was blocked last week by the Speaker, John Bercow – who himself happens to be a “flipper”.  In fact, it emerged that Sir Christopher’s reforms could allow current MPs to continue flipping for up to five years, as his new rules on banning mortgage interest claims, which restrict MPs from playing the property market , will be introduced over the same five year period. 

Liberal Democrat Leader, Nick Clegg, and a senior member of the Commons standards committee yesterday demanded that action be taken against MPs who have profited from the lax rules on second homes that allowed flipping to take place. 

Conspicuously, both Mr Brown and Mr Cameron, while asking their MPs to accept the “tough measures” of the Kelly review, have remained silent on the flipping scandal.  Westminster insiders involved in the Westminster clean-up point out that there are high-profile Labour and Conservative MPs, including senior frontbenchers, notably Alistair Darling and George Osborne, who have flipped their second homes, and claimed tens of thousands of pounds in the process.   

Liberal Democrat Leader, Nick Clegg said yesterday:

“Serial flipping for personal gain and avoiding capital gains tax were by far the largest abuse of the system. Unless there is a clean-up of these past abuses there will always be a stench of double standards around the whole expenses scandal.” 

Elfyn Llwyd, a member of the standards and privileges committee and leader of Plaid Cymru’s MPs in Westminster, said he believed that “three or four” MPs would face criminal prosecution for expenses misdemeanours, over and above the ones who claimed for loans that never existed.

Mr Llwyd refused to give further details, but said there were “several aspects” that could warrant prosecution or penalty, and the police could move “within months”, but this will not include flipping, as this was within parliamentary rules and no law has apparently been broken.

Yesterday Mr Liwyd said:

“I believe there will be prosecutions,

“They may end up with quite severe penalties.” 

The Speaker, Mr Bercow, who pledged a fresh start when he was elected Speaker in June, rejected a call by Nick Clegg last week for auditors to investigate flipping, saying that it would maen making “significant retrospective changes to the rules”. 

Following the Speakers decision Nick Clegg warned that the audit would not be “credible” if abuses such as flipping and non-payment of capital gains tax were not investigated.

 Nick Clegg said:

“This response shows that despite people’s anger at the expenses scandal the worst perpetrators are still being let off the hook, 

“Only in a place as mad as Westminster can MPs make fat profits playing the property market with taxpayers’ money and get away with it.  

“Despite all the rhetoric of cleaning up politics we now know that at the very heart of the Westminster establishment there is still no will to deal with the biggest offences.”  

Mr Bercow flipped the designation of his second home in 2003 from his constituency in Buckingham to London.  This year he flipped back to his Buckingham home.  Mr Bercow has insisted the moves were due to changes in family circumstances.  He apparently did not pay capital gains tax when he sold his London flat and constituency home in 2003.  Mr Bercow insisted his accountant said he was not liable for CGT, but he has since agreed to pay back £6,500.  

Mr Osborne, the shadow Chancellor, has been accused of flipping his second home from London to a house in his Cheshire constituency.  In 2001, he designated the London house as his second home after being told to do so by the Commons Fees Office.  In 2003, he flipped the second-home status back to Cheshire.  

The Labour MP for Luton South, Margaret Moran, who is standing down at the election, flipped her designated home three times – first claiming for a flat near Westminster, then for a property in her constituency and finally a home 100 miles away, where she claimed £22,500 for dry rot treatment, in what became one of the most notorious expense claims so far in the scandal