Shadow Chancellor faces expenses probe

London: A sleaze investigation has been launched into the expenses claims of George Osborne.

The Shadow Chancellor has been accused of flipping' his designated second home from London to his constituency farmhouse.

It is alleged this happened after he took out a £450,000 (Dh2.7 million) mortgage on the rural property - nearly £5,000 more than the price of the house.

A Labour Party activist claims he then made expenses claims to cover interest payments on the whole debt.

Osborne insists that he has not taken advantage of the expenses system and did not gain personally from the move. Tory sources have dismissed the complaints as 'a stunt'.

But the decision by Parliamentary Standards Commissioner John Lyon to investigate is a blow to David Cameron's closest ally.

It came as Lyon rejected complaints about Chancellor Alistair Darling's repeated 'flipping' of his second home to make claims on multiple properties.

If he launches a full-blown inquiry it would mean a cloud hanging over Osborne's career for months, until a verdict is reached.

It will also fuel discontent on the Tory backbenches over the harsh treatment meted out to MPs outside Cameron's inner circle over their expenses claims.

Though several members of the Shadow Cabinet, including Osborne, have repaid money to the Commons fees office, senior MPs complain that they have got off lightly compared to others.

Lyon was asked to investigate by Laurie Burton, the chairman of the local Labour Party in Osborne's constituency in Tatton, Cheshire.

And after consulting the Commons standards and privileges committee, led by Tory grandee Sir George Young, he replied saying: "I have accepted your complaint and am inviting his comments."

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

Lyon said he had put the claims to Osborne and will decide how to proceed when he gets a response.

The Commissioner dismissed another complaint that Osborne avoided paying capital gains tax when he 'flipped' his second home.

"This is a matter for HMRC [HM Revenue and Customs]", he wrote.

Burton denied his complaint was politically motivated, claiming he believed Osborne had breached the MPs' code of conduct and brought the Commons into disrepute. Liberal Democrat Treasury spokesman Lord Oakeshott said the allegations against Osborne suggested he was "not fit to be Chancellor".

A spokesman said Osborne had changed the designation of his second home on the advice of the fees office.