MPs have exploited their expenses for personal gain, the watchdog responsible for devising a new system declared yesterday.

The withering assessment of MPs’ behaviour came as Shahid Malik, a minister cleared by Gordon Brown of any wrongdoing, faced a second investigation into his living arrangements and as it emerged that Brian Binley, the Conservative MP for Northampton South, claimed £57,000 in rent for a flat owned by his own company.

Sir Christopher Kelly, chairman of the Committee on Standards in Public Life, said that the public would like to see MPs housed together in barracks in the Olympic village after 2012, and demanded a new culture rather than new rules in Westminster to restore MPs’ integrity.

The committee is conducting a series of hearings before determining a new system of allowances for MPs. But the opening meeting was overshadowed by the announcement that Mr Malik was under investigation again.

Mr Malik, who was reappointed recently to the Government as Communities Minister, was cleared by Mr Brown of breaching the ministerial code last week after allegations that he was paying below market rates on his flat. He now faces an investigation by John Lyon, the Parliamentary Commissioner for Standards, over complaints that he took public money for a second office inside his house. Downing Street continues to defend him.

The expenses affair ended the careers of two more MPs yesterday. Jim Devine, MP for Livingston, was barred from standing as a candidate at the next election by Labour’s “star chamber” endorsements panel. The decision follows allegations about claims for alterations to his constituency office and London home.

Ian Taylor, the Tory MP for Esher and Walton, announced that he would step down at the next election, in part because of opposition to his ownership of a second home in London despite living within commuting distance of Westminster.

In the case of Mr Binley, The Daily Telegraph said that he had claimed £1,500 a month for three years to rent the flat in Pimlico, Central London. Land Registry records show that the property is owned by a company called BCC Marketing, of which Mr Binley is the founder and chairman.

Mr Binley’s claims directly contravene Commons rules forbidding MPs from renting from themselves or from their companies. Although he insisted that the rent he paid to the company did not fully cover the mortgage repayments, if he had bought the flat directly, he would have been able to claim only for the mortgage interest.

Mr Binley told the Telegraph that the mortgage had initially been cleared by the Fees Office. When the rules changed, stating that he could not rent from a company in which he had an interest, he appealed but lost and “found another flat which unfortunately costs the taxpayer more money because that is the going rate”.

The Speaker’s office confirmed last night that the details of MPs’ expenses would be published on the Parliament website tomorrow.

The political parties set out their views to the committee on how the system should be reformed, but Sir Christopher made clear that it was not the rules but the lack of principles that had led MPs into problems.

“There can be no doubt about the extent of public anger at the way in which arrangements [work],” he said. “The reimbursements to MPs of the expenses they necessarily incurred in performing their public duties have been exploited for personal gain. Those feelings are shared by many MPs as well.”

Harriet Harman, the Leader of the Commons, told the committee that a new public body would be set up to oversee the payment of expenses before the summer recess.

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