Darling vows to pay back money claimed on second home while he was living in Downing Street

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Darling vows to pay back money claimed on second home while he was living in Downing Street

By Ian Drury and Nicola Boden
Last updated at 4:06 PM on 01st June 2009

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Payback: Alistair Darling will return half the public money used to cover a service charge on his south London flat

Alistair Darling's hopes of staying on as Chancellor looked even more perilous today after he was forced to return hundreds of pounds of public money in expenses.

The Chancellor pledged to return more than £600 paid towards running his own flat after he had already moved into a grace-and-favour home in Downing Street.

He was forced into the embarrassing U-turn after earlier denying he claimed for two homes at the same time.

Shortly before the turnaround, Gordon Brown had defended his Chancellor, insisting he had been assured the claims had 'no foundation' and that the minister would be the first to admit to any wrongdoing.

Quizzed later about his plans for a Cabinet reshuffle next week, the Prime Minister repeatedly refused to rule out dumping Mr Darling from the Treasury.

There are rumours in Westminster Mr Darling could be axed as part of a last-ditch reshuffle next week and replaced with Schools Secretary Ed Balls.

The latest allegation is only the latest in a string of accusations that he has milked the notoriously-lax system of MPs' expenses to allow him to profit from public money.

It emerged he used public money to cover a £1,004 service charge on his flat in Oval, south London, in July 2007.

The charge was paid in advance for six months but Mr Darling moved out of the property and into Downing Street after just three.

He then rented out his own flat and started claiming expenses on his new home at No.11.

The Chancellor has now agreed to repay half the charge, relating to the three months he was no longer living there.

'The service charge was paid in advance in six-monthly intervals. When I reclaimed the cost of the service charge in July 1, I was living in the flat,' he said this morning.

'However, because the service charge covered the period beyond September until December, I will repay the service charge from September to December.'

Gordon Brown had earlier given the Chancellor his backing and insisted he had been assured the claims had 'no foundation'.

'Alistair Darling is a very good Chancellor and he has been a very good colleague and friend. If he had done anything wrong he would be the first to admit it,' Mr Brown said.

The claims would be investigated by the House of Commons committee as part of their inquiry into all MPs' expenses, he added.

He later had to backtrack, describing the claim as an 'inadvertent' mistake which was not a case of running two second homes at the same time.

But he refused to comment when challenged about a reshuffle. Other ministers were also stopped short of giving the Chancellor their explicit backing.

Business Secretary Peter Mandelson, said: 'The Prime Minister will make the best choice and allocate the portfolios on the basis of what’s good for the country.'

LONDON: Alistair Darling claimed for service charges on this £226,000 flat. The charges covered up to six months after he moved out and starting renting it

Liberal Democrat leader Nick Clegg and Treasury spokesman Vince Cable have both publicly called for Mr Darling be sacked over his expenses claims.

They said he had been 'caught with his hands in the till' after he 'flipped' his second home four times in as many years and billed taxpayers for accountant's fees.

Mr Cable said this morning: 'The person who is in charge of the national finances should be someone who is regarded with moral authority, not just operating within technical rules, by the financial community and the country at large.

'I don't think the Chancellor is in that position.'

Bob Thomson, a former chairman of the Scottish Labour Party, said Mr Darling should have to resign for separate revelations that he 'flipped' his second home.

'He is the person in charge of our tax regime and should be cleaner than clean. Changing the designation of your house four times in four years, I think that, quite honestly, (is) reprehensible conduct,' he said.

Mr Darling submitted the service charge bill on July 2007, 10 days after his promotion to take charge of the Treasury when Gordon Brown took over as Prime Minister.

The charge covered the period to the end of that year, by which time he was also claiming second-home allowances on his grace-and-favour flat in Downing Street.

Tenants then started renting his south London flat in October, the tax advice for which arrangement Mr Darling allegedly also claimed from the taxpayer.

It would appear he broke Commons rules which only allow MPs to claim public money to fund and furnish one property.

EDINBURGH: The Chancellor 'flipped' his second home allowance to his family town house in Scotland so that he could claim back expenses

Since 2001-02, Mr Darling has claimed £827,000 of public money for housing, staff, travel, office costs and other outgoings. Some £111,000 went on funding and furnishing a second home.

Most serious among the charges are that Mr Darling avoided paying stamp duty, which has rocketed for hard-pressed homebuyers as Labour's raided personal income to swell the public coffers.

By classing his new £226,000 south London flat as his 'second' home in September 2005, Mr Darling dodged £2,260 in stamp duty by claiming it on his expenses.

He also stands accused of boosting his allowances for furniture, mortgage interest and maintenance on several properties he owned by 'flipping' his second home listing no fewer than four times in as many years.

In 2004-05, Mr Darling claimed a small London flat in Lambeth, south London, was his main home. He paid around £150 a week in rent to Lord Moonie, then a fellow Labour MP, for a bedroom.

It allowed him to claim that his £1.2million townhouse in Edinburgh - where his family lived - was his 'second' home. It enabled him to claim a total of £45,954 - including council tax - on the property in the heart of one of the city's most fashionable districts.

In September 2005, he bought a flat near the Oval cricket ground in Kennington, south London, for £226,000 and told the Commons Fees Office that it was now his 'second' home.

He charged stamp duty and £1,238 for legal fees to the taxpayer. He later used nearly £6,000 of his expenses, including buying furniture, a bed and carpets.

In June 2007, Mr Darling received a grace-and-favour Downing Street apartment after being appointed Chancellor which he classed as his 'second' home.

But he soon changed the designation back to the Edinburgh home and claimed up to £1,200 a month for his mortgage.

Despite being given a home by the Government, he continued to rent out his Kennington flat for personal gain. Current weekly rental rates in the area are £300 to £400.

Mr Darling has also received £1,400 tax-free over two years after billing the taxpayer for an accountant to keep his tax affairs in order - a benefit denied to ordinary voters.

And he claimed almost £10,000 last year in travel expenses to fly his wife and child between London and Edinburgh.

There is no suggestion that Mr Darling has broke any laws.

But yesterday Mr Clegg demanded his sacking. He said: 'As Chancellor, Alistair Darling occupies a very special position in Government.

'He needs to enjoy the public's trust when it comes to issues of financial probity, of money, of managing our nation's finances.

'And given that very unique responsibility that he has, it's simply impossible for him to continue in that role when such very major question marks are being raised about his financial affairs.'