One of the country’s longest serving peers has described the tax loophole exploited by peers as “a very English compromise, dressed up with an element of hypocrisy which to a certain extent works”.

While few peers are prepared to discuss the subject of expenses openly, Lord Onslow, a hereditary peer who was elected to remain in the House of Lords, said that generous expenses were necessary to maintain a high quality second chamber.

“Although, from an accountancy point of view, the system may not be completely right, I think there’s an element of rough-and-ready justice to it. I would rather that someone got generous expenses [to maintain standards] although I can see that some people would see this is completely wrong.”

“Above all, it’s public money, and one has to be meticulous. But this is not corruption and you are dealing with honest men doing an honest job for a combination of seeing their friends, public duty, contributing to the public weal and a bit of pocket money.”

Lord Onslow, whose family have sat in both chambers of Parliament since the start of the 16th century, said that peers had to be prepared to defend themselves publicly over the way they spend taxpayers’ money.

“There is an element of hypocrisy that people are given expenses in the Lords and there is an element of payment in it. But there are perfectly sound reasons for this, especially before the majority of the hereditary peers were asked to leave the Lords, because you could not be seen to inherit a salary.”

He said that a large increase in the expense allowances was an implicit part of House of Lords reform in 1999 to ensure a good quality of peers in the second chamber.

The amount that peers can claim for attending the Lords has risen sharply, with the day subsistence rate rising from £37 in 2001 to £79.50 last year. In July it rose to £82.50, and will be reviewed again next year.

The current report by the Senior Salaries Review Body, which determines the rules for claiming expenses, stipulates: “Receipts are not required but the Member’s signature effectively certifies that the amount claimed has been spent for the purposes of parliamentary duties.” The board’s latest report is due soon.

But there is widespread confusion in the Lords itself over the rules, and whether peers can automatically claim the maximum. A spokeswoman for the Lords said: “The day subsistence is a set amount, and if they attend, they get the money. They have ‘incurred’ the expenses by attending. It’s a day amount. It’s a bit like civil servants who go out of the country; that’s the principle.”

The Countess of Mar said that she had claimed the maximum possible amount for the 32 years she had sat in the House. “I do put in the maximum and I always have done. Everyone does it. It’s a procedure that’s always been the case. I’ve never had it queried. I don’t write down every single thing I spend and if you ask any of the other peers they would do the same. This is the way I have always done it. If they wanted receipts, I would submit them.”

Viscount Slim, a crossbench peer for 37 years, was registered as attending the House on 137 days yet voted in only 30 per cent of divisions — one of the least frequent in the House of Lords, according to the Public Whip website. He said: “It’s not a matter of voting. It’s not quite like the House of Commons, you know. No one can whip me, I’m an independent peer.”

“Why is it a discrepancy? I don’t have to vote. A lot of work goes on outside the chamber. I sit on committees too. Because I don’t vote it doesn’t mean I’m not there. I can listen to a whole debate about a subject and still feel I’m not qualified to vote on it.

“Most of us are incredibly busy outside, and I don’t mean on personal business, but on all sorts of things. I happen to think a lot of peers’ best work is done outside the House.”

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