A root-and-branch review of parliamentary expenses was announced last night as David Cameron backed the introduction of spot checks and a Conservative MP couple defended their use of taxpayers’ money to rent a flat that they had already bought.

The Members Estimate Committee (MEC), chaired by Michael Martin, the Speaker of the Commons, resolved to consider all aspects of the controversial allowances regime brought into question over the past week.

It understood that the inquiry will be carried out by three senior MPs — Sir Stuart Bell (Labour), Nick Harvey (Lib Dem) and David Maclean (Conservative). All three are experienced MPs but their choice is certain to be criticised because of their reputation as establishment figures. Mr Maclean, a former Tory chief whip, tried to stop the Freedom Of Information Act applying to MPs.

The review is expected to be so detailed that it will not report to the Commons until October, when MPs return from the summer recess.

In a letter to MPs, Mr Martin said: “The review must consider a wide range of complex issues. The MEC agreed that this will require a root-and-branch examination of the current system and that the review should build its options for reform on the existing regime governing allowances.”

He added that the committee would draw up a programme of work this week.

Mr Cameron indicated that he backed the idea of MPs’ staff being paid centrally rather than by the MPs themselves. But he faced sharp questioning over the actions of Sir Nicholas and Ann Winterton in claiming about £165,000 since they paid off their mortgage on the flat and transferred the property to a trust administered by themselves and a solicitor.

The couple said in a statement yesterday that they had agreed the arrangement with the Commons Fees Office at the time that the trust was set up and would not have gone ahead otherwise.

The Wintertons, who both represent constituencies in Cheshire, said that they made the arrangement after advice about their likely inheritance tax liability. “As a result of the advice given to us we paid off the mortgage on the flat with the proceeds of a small legacy and an insurance policy which had just matured,” they said. “We no longer own the flat and, in order to meet the objectives and terms of the trust, we are obliged to pay the full market rent, which is recommended by an independent valuer-estate agent.”

Mr Cameron, who was said to be “unimpressed” with the way the Wintertons had used their allowances, said that sticking to the rules was not enough in itself. “Rules on their own are never enough; the whole point of transparency and accountability is that everyone should be comfortable defending the arrangements that they put in place. That is where we need to get to rather than just thinking everything can be dealt with by looking at specific rules.”

Asked about spot checks, he said: “Part of moving to a system where the House of Commons is to a greater extent the employer, quality audit and checks would be a part of that. It’s part of the culture that has to change; that wasn’t part of the culture as it grew up.”

Moves to tighten up on expenses by bringing in outside auditors are being opposed by traditionalists. The Times has been told that the MEC, which makes proposals on MPs’ allowances, is considering an in-house alternative to independent checks. Under this plan the National Audit Office (NAO) would be invited to advise on how a new system of random checks should be framed but the work itself would remain under the control of the Commons.

“The NAO would come in and advise on how the system should be set up and then you could validate it externally,” a Commons source told The Times. “The actual audit still would be conducted by our internal audit service.”

The key change would be to introduce auditing of how income from Commons allowances is spent as in-house checks are already in place on whether claims submitted are in order.

Critics are likely to say that these are the officials who approved the arrangement under which the disgraced MP Derek Conway paid excessive sums to one of his sons and hired his other son and his wife to work for his office.

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