EXPENSES SHOCK: New Deputy Leader Rents to MP on Taxpayer Dime

New Labour Deputy Leader Lucy Powell has been quickly drawn into a row over MPs' property dealings, following a series of previous scandals involving her colleagues. Powell is facing scrutiny for letting a room in her London flat to a fellow MP who claims the rent on expenses, a practice which the parliamentary watchdog, Ipsa, is now set to ban for new arrangements. This comes after former minister Rushanara Ali resigned over claims she evicted tenants and raised the rent on her property by 700, and as Powell replaces Angela Rayner, who stepped down amid a tax scandal over her housing arrangements.

Lucy Powell, the Labour MP for Manchester Central, was officially named the party’s new Deputy Leader on Saturday, October 25, 2025, following a party membership ballot. She replaces Angela Rayner, who resigned in early September 2025 amid a tax scandal. Powell secured the role with 54.3% of the vote, beating Education Secretary Bridget Phillipson.

However, Powell's victory has been quickly overshadowed by revelations that she is one of several MPs who act as a landlord to a parliamentary colleague, with the rent and bills being claimed on the taxpayer-funded expenses system overseen by the Independent Parliamentary Standards Authority (Ipsa).

Details of the Rental Arrangement-Ms Powell, who previously served as Leader of the House of Commons until a September 2025 reshuffle, has confirmed that she lets out a room in her London flat to another MP, who then claims the cost via their Ipsa expenses allowance.

The arrangement has been declared on the MPs' register of interests for 10 years, despite Ms Powell insisting the annual income is below the statutory threshold of £10,000 for mandatory disclosure. She maintains that she declares it only for transparency.

A spokesman for the new Deputy Leader defended the arrangement, stating: "In a long-standing arrangement, Lucy pays for all her own London accommodation costs instead of claiming £30,000 a year that she could have for the 13 years she’s been an MP."

The spokesman added that the colleague "shares with her as a lodger, contributing for rent and bills via Ipsa," claiming "well under the permitted allowance, and an amount independently assessed as value for money." A source close to Ms Powell also asserted that the arrangement saves taxpayer money because she charges below market rates.

Ms Powell herself addressed the matter in an interview with the Big Issue earlier this month, stating: "I don’t have a rental property in any shape or form. I have a lodger living with me. I declare it as though it is because I think that’s important for transparency. I share my own flat with another MP... and, by the way, in doing so, I save the public purse. I pay for all of that myself."

Crucially, there is no suggestion that Ms Powell has broken any rules. However, the disclosure will create unwelcome headlines for Prime Minister Sir Keir Starmer, especially as Ms Powell's victory is seen by some as a mandate from the membership for the government to be "bolder" and is expected to give Sir Keir a "headache" as she is now free to speak out from the backbenches.

Ipsa's Rule Change and Criticisms-The practice of MPs renting accommodation to one another has faced heavy public criticism for years. Figures revealed by The Daily Mail show that Ms Powell is one of five MPs who made more than £30,000 last year from letting properties to colleagues.

The parliamentary pay watchdog, Ipsa, had previously promised a review of the practice more than a decade ago and has now finally taken action:

New Rule: Ipsa's revised Scheme of MPs' Staffing and Business Costs, effective from April 1, 2025, will no longer permit MPs to rent accommodation from other MPs using Ipsa funding for any new tenancy agreements.

Transitional Period: Existing arrangements, such as Ms Powell's, are permitted to continue as long as the MP renting out the accommodation is not claiming for their own "second home" on expenses and the arrangement provides value for money for taxpayers.

Despite Ipsa's change, campaigners argue it does not go far enough. John O’Connell, from the TaxPayers’ Alliance, criticised the "cosy arrangement" and demanded "urgent reform," while Tom Brake, from Unlock Democracy, called for an immediate and complete ban on MPs renting properties to other MPs to combat the "perception of mates doing each other favours."