Ex-minister pays the price for ghost mortgage

Former minister Elliot Morley was suspended as a Labour MP today after it emerged he claimed £16,000 for a mortgage that did not exist. Gordon Brown used a speech to party members this afternoon to make the announcement.

Mr Morley, in a personal statement, said: "I deeply apologise for such sloppy accounting in a very loose and shambolic allowance system but there is nobody to blame but myself and I take full responsibility for this. I apologise unreservedly."

He is the first Labour MP to have the whip withdrawn since Clare Short was kicked out for calling on the public to vote against the party. His suspension will last until the full extent of the allegations against him is known.

Chief Whip Nick Brown recommended the suspension to Gordon Brown after he established some "outstanding facts" in the case today.

The Prime Minister said other excessive claims by Labour MPs would also be looked at. "If there has been wrong-doing it has to be put right as quickly as possible and if it is very serious there will be a very serious response," he said. "Each case is different, but there are cases where I think it is appropriate — even when people have behaved within the rules — that they repay money to the public purse."

Labour MP Colin Challen urged Mr Morley to step aside as chairman of the Commons energy and climate change select committee.

Labour's ruling National Executive Committee will meet next Tuesday to discuss the case and consider disciplinary action for every Labour MP involved in the expenses scandal.

Nick Brown said: "I have spoken to the Prime Minister about the general situation this morning. We are looking very carefully at every allegation on a case-by-case basis."

He said he had spoken to Labour general secretary Ray Collins and that the party would announce its final decisions after a business meeting of the NEC next Wednesday. "It will be discussing MPs who may have fallen below the standards that the Labour party expects of its MPs," the Chief Whip told the Newcastle Journal.

Mr Morley's case, described as one of the worst scandals of the MPs' saga to date, centres on his claim of £800 a month in mortgage interest for 18 months after he paid off the loan on his constituency home.

Although the former agriculture minister has repaid the money and said the claims were "inadvertent", lawyers said he may have breached the 2006 Fraud Act and the 1968 Theft Act. Conservative leader David Cameron said the case was "now a matter for the police and prosecuting authorities".

Matthew Elliott, chief executive of the Taxpayers' Alliance, said the revelations about Mr Morley were the "most disgusting yet" in the expenses scandal. He said he would consider bringing a private prosecution against the MP if no police action was taken.

The Scunthorpe MP said he would meet his local party in the next two weeks to consider whether he should remain as their representative. Mr Morley also owned a house in Southwark, declared it as his "main home", and yet let it out to fellow Labour MP Ian Cawsey. He charged his colleague £1,000 a month in rent and council tax, bills he in turn reclaimed from the taxpayer.

In November 2007, more than a year after he repaid his mortgage on the Scunthorpe house, Mr Morley "flipped" his home designation and claimed full mortgage interest on his London home. For four months he was being paid by the taxpayer while Mr Cawsey was also claiming his own rent — which he paid to Mr Morley.

Mr Cawsey told the Standard today that he was never aware of Mr Morley's arrangements. He also said he and Mr Morley lived in the Southwark house during the week and he claimed back his rent because he designated the house his "second home".

"I received no financial or personal gain from these arrangements," he said. Hundreds of MPs face the threat of demands to repay expenses stretching back four years.

More than 20 MPs of all parties have said they will pay back nearly £130,000. Last night's Commons members allowances committee agreed to establish an independent audit to check every claim was made "within the rules and for the purpose for which the allowance existed".