Emergency legislation to clean up Parliament was badly holed last night after a shock Government defeat that will prevent parliamentary proceedings being used in court as evidence.

The Bill setting up an independent authority to regulate MPs’ allowances completed its Commons passage and will be debated in the Lords next week.

But it will arrive in the Upper House in a heavily modified form from the measure Gordon Brown announced nine days ago. Ministers had already dropped proposals to make a new code of conduct for MPs legally enforceable.

Last night - by just three votes - the Commons voted to throw out provisions which MPs claimed would curb their ability to speak freely on behalf of voters.

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Cleaning up politics is proving much less straightforward and rapid than Gordon Brown would like

Peter Riddell

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MPs rejected by 250 votes to 247 a Parliamentary Standards Bill clause that could allow Commons debates to be used in court as evidence.

Malcolm Jack, Clerk of the Commons, had given warning that such a move could have had a “chilling effect” on MPs’ freedom of speech.

Jack Straw, the Justice Secretary, said the Government would respect MPs’ decision but outside the chamber Labour sources blamed the Conservatives for the defeat.

A senior Labour figure said: “The Tories have succeeded in significantly watering down the power of the new parliamentary authority. The question has to be - do they and others who have voted for this understand the depth of public anger over the expenses scandal?”

He added the defeat would mean the investigator empowered with examining complaints against MPs would find it very difficult to look at financial abuses if he was not able to make use of anything that happened in Parliament. “The public will be bemused,” he said.

However, it emerged that around 25 Labour MPs had also voted against the measure including John Reid, the former Home Secretary, and Margaret Beckett, the former Foreign Secretary.

Earlier in the day, the cross-party Commons Justice Committee had advised that the clause be dropped and several MPs raised concerns about it during the debate.

The committee report said withdrawing the clause “would allow more measured consideration of issues of privilege than has been possible” in the tight Parliamentary timetable.

The clause would allow Parliamentary proceedings to be used in court against an errant MP, breaking the long-standing right to Parliamentary privilege.

Tory MP Gerald Howarth said the Commons vote had been a “serious affront” to Mr Straw.

The Government wants the bill, which also sets up an independent body to run MPs’ expenses, to be law by July 21.

But several MPs had argued it was being rushed through in response to the expenses crisis - when it raises important constitutional matters about the freedom of MPs to speak freely in Parliament.

The Government did, however, win another vote to keep three planned criminal offences specifically for MPs who break the rules.

Mr Brown suffered his first major defeat since taking over as Prime Minister in April over rights of residence for Gurkhas. But there was further embarrassment last week for the Government when it slipped up and lost a minor vote on regional grand committees.

The Labour rebels

Diane Abbott (Hackney North & Stoke Newington), John Austin (Erith & Thamesmead), Margaret Beckett (Derby South), David Borrow (Ribble South), Jeremy Corbyn (Islington North), Andrew Dismore (Hendon), Jim Dowd (Lewisham West), David Drew (Stroud), Mark Fisher (Stoke-on-Trent Central), Paul Flynn (Newport West), Kelvin Hopkins (Luton North), Lynne Jones (Birmingham Selly Oak), Andy Love (Edmonton), Fiona Mactaggart (Slough), Alan Meale (Mansfield), Doug Naysmith (Bristol North West), Greg Pope (Hyndburn), Gordon Prentice (Pendle), John Reid (Airdrie & Shotts), Virendra Sharma (Ealing Southall), Alan Simpson (Nottingham South), Gisela Stuart (Birmingham Edgbaston), David Taylor (Leicestershire North West), Rudi Vis (Finchley & Golders Green), Mike Wood (Batley & Spen).

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