By Dominic Lawson

I spoke to one MP who said his failure to claim all the benefits is seen as a bit 'odd'

As Danny DeVito said in the film Other People's Money: "There's only one thing I love more than money. You know what that is? Other people's money."

The Business Dictionary defines "Other People's Money (OPM)" as follows: "Money borrowed as unsecured loans, or contributed by smaller shareholders. Equated with its abbreviation's homonym (opium) in its narcotic power on people who forget it is an obligation that must be accounted for, and repaid in some way."

On this definition, the banks are the pushers of this "opium", and make vast fortunes out of the people whom they have turned into debt junkies. Perhaps this is why so many members of the public are outraged by the way in which we are being forced to bail out the bankers. We tend to feel less hostile to the addicts themselves – those who have borrowed way beyond their means; thus the Government thinks it will enjoy greater popularity if it comes up with measures to subsidise the mortgages of those who would otherwise lose their homes.

Perhaps it will be praised for such action: to be made homeless is a dreadful thing, especially if it is caused by a sudden loss of income through unexpected redundancy. However, any such scheme is entirely reliant on the biggest source of Other People's Money – and one which the Business Dictionary fails to mention: taxes. It is an especially powerful form of the drug, theoretically almost limitless in its size and scope, and if anyone refuses to fund the addict's habit, he or she can be arrested and imprisoned.

Government ministers will argue that – unlike the corporate raider played by Danny DeVito – they do not gain personally as a result of appropriating Other People's Money: they claim to be the Robin Hoods of Whitehall, taking from the rich to give to the poor.

For as long as it is believed that politicians work purely as public servants, with not a thought for their own financial advancement, such an account would retain some credibility. Yet the recent series of revelations about the abuses of Parliamentary allowances has had the effect of destroying what was left of the myth of the MP as disinterested public benefactor – which is a shame, because I can think of a number who are entirely scrupulous in their conduct and have a vivid appreciation of how dangerous it is for the democratic process to be in disrepute.

Sunday's newspapers have thrown another couple of logs on to the blazing bonfire of parliamentary reputation. The Mail on Sunday revealed how the Labour MP for the East London constituency of Leyton and Wanstead, Harry Cohen, had claimed more than £300,000 for a "second home allowance" in London, on the basis that his "main home" is a single bedroom-schoolhouse and seaside caravan 70 miles away from his constituency. This is an even more spectacular anomaly than the Home Secretary's claim that her "main home" was a bedroom in her sister's London terraced house, thus enabling her to claim for the costs of financing her large "second home" – where her family live.

Mr Cohen's response to the newspaper's discovery of his record of expenses was disarmingly frank: "When MPs were given this allowance they were told 'Go and spend it, boys' and that is what I have done. It is my right." There is no sense in that retort that Mr Cohen has the slightest regard for the idea that the expense was originally designed to fund costs that were essential to the performance of an MP's duties.

Indeed, Mr Cohen may be right in thinking that his attitude is commonplace. I spoke to one MP last week, a man of the highest integrity, who said that his failure to claim all the benefits to which he could conceivably be entitled is regarded by some of his colleagues as a bit "odd". He added that if he ever expresses the view that this system be scrapped, he is regarded with fury as a member who has failed to defend the honour of the club. You see, they are all "Honourable Gentlemen" or "Honourable Ladies", so how could there be any question of their system of expenses needing to be monitored by a statutory outside body?

There is something almost comical in this: the very people who are whipping themselves up into a fury over the need to introduce more stringent regulation of bankers' pay can not accept that their own additional emoluments – paid for by the public – should be invigilated by anyone other than themselves.

Just how well they monitor their own expenses is made clear by the second Westminster blooper of the weekend: the discovery that the Home Secretary Jacqui Smith had claimed (apparently inadvertently) for the cost to her Commons advisor, a Mr Richard Timney, of watching two late-night films on an adult pay-per-view channel. The claim had been paid without any queries by the Commons authorities, before some mole leaked the fact to the Sunday Express.

You might think that Jacqui Smith would sack her Commons advisor for allowing such a claim to be made. She won't though: you see, she is Mrs Richard Timney. If she sacks her Commons advisor then her family will fail to get the £40,000 a year of taxpayers' money which is currently paid to her husband.

Many MPs would doubtless think, but not dare to say, that whatever their abuses of "other people's money", such amounts pale into insignificance compared with the excesses of the bankers, notably Sir Fred Goodwin with his £700,000 a year pension. It's certainly true that when banks are nationalised, then any excessive pay outs immediately become a public issue, rather than merely a matter for shareholders in the companies concerned.

The directors of many such companies, unfortunately, had become very corrupted by "Other People's Money". They behaved as if they were proprietor-owners, whereas in fact they were merely employees. Thus The Sunday Times was able to reprint a whistleblower's memos describing how Sir Fred Goodwin "spent" £100,000 a month on part-time chauffeurs, would have fruit flown in to his office every day from Paris and had "spent" more than £5m refurbishing an 18th-century building in Edinburgh "entirely and specifically for Sir Fred's hospitality use". We can be pretty certain that if Sir Fred had been forced to meet the full cost of such extravagances, then expenses on this scale would probably never have been incurred at all.

It is not, of course, only plutocrats and parliamentarians whose sense of value is distorted by "other people's money". The credit card can make addicts of us all: it doesn't seem like real money when you use the thing – the loss of funds comes later, detached from the act of purchase. This is why I always use cash when doing the family weekly supermarket shop: I am a glutton, and unless confined by the amount of "real"money in my wallet, then there would be almost no limit to my foodie extravagance.

When rescuing the banks last year, the Government pointed out that if they had not acted, the entire modern money transfer system would have collapsed and we would have been thrown back on to a purely cash economy. I suppose that would have been profoundly traumatic: but at least it would have injected a note of brutal reality in place of the fantasies made possible by "Other People's Money".

Republished from the Independent.co.uk on Tuesday, 31 March 2009

d.lawson@independent.co.uk