Lord Falkland uses loophole to net £140,000

He acknowledged this was "nonsense" but said it had been thrust upon him because peers do not receive a salary and he would otherwise have been "out of pocket".

Falkand, a Liberal Democrat, added: "I am quite prepared to accept the fact that a loophole has been here and a number of us have exploited it, there's no doubt about that."

He has not claimed the allowance since the summer when the whips' office flagged up problems with his expenses. The Lib Dems had been carrying out a review of peers' expenses prompted by disclosures in this newspaper.

"The chief whip said to me . . . you would find it hard pushed, wouldn't you, to claim you spent more time in what you declare as your main residence. I couldn't deny that," he said.

When asked whether he was prepared to repay the taxpayer, he replied: "If somebody said to me, 'in the spirit of things would you give some of the money back because you have been exploiting a loophole?' I would say I would certainly try to contribute to that if it were the right thing to do."

Falkland inherited the title but not the wealth of his illustrious ancestors. The 74-year-old former theatrical agent and company chief executive describes himself as an "impoverished peer".

He was a front-bench spokesman for the Lib Dems until

four years ago. Although he no longer works, his wife Nicole Mackey is managing director

of the UK arm of a film company.

The couple have lived mortgage-free in the same large terraced house in Clapham, southwest London, since 1989. The property is estimated to be worth at least £700,000.

Falkland has been giving Kent as his main address to the Lords since at least 2001. This is the only public record linking Falkland or his wife to Kent: both give the London address to Companies House and the electoral register.

Last week a reporter asked his daughter for his Kent telephone number and she replied: "He doesn't live in Kent." A second relative said the peer had been London-based for years.

When first confronted at his London home last Friday morning, Falkland dismissed his daughter's remarks saying, "She knows perfectly well that I've got something in Kent."

He added that neither of his daughters nor his elder son had been to the "main home", and for years he had not told its owner that he was using the address to claim expenses.

He was determined to keep its address a secret. "I'm not going to give it to you, obviously. I don't even give it to my whips' office because I know what's going on now," he said, referring to the campaign on lords' expenses.

However, this newspaper managed to track down his "main home". It was a two bedroom oast house on a farm near Maidstone owned by Ann Shortland, his wife's aunt.

The Shortland family were initially vague when asked whether Falkland lived there. William Shortland, who runs an adjoining farm, said: "He is married to my cousin and they come, you know, they live all over the place." The only close neighbour to the oast house said she had never heard of a Viscount Falkland.

Falkland, however, had warned his wife's aunt Ann that she might be approached by newspapers. She said Falkland did live in her property and was there "quite often", but not every weekend.

Later, Falkland gave a fuller account of his link to the property. He said he visited "every weekend" but had recently stopped claiming overnight expenses because he was not able to spend as much time there during the recess. When asked why his wife's aunt paid the utility bills on his "main home", he said: "I am never there for very long."

He said he had not informed the Lords about his change of main address to London because it might have drawn attention to his expenses. "I might as well do it . . . change

it formally. I wasn't going to do it because I thought it might look suspicious," he said.

He argued that he and other lords were forced into claiming allowances because they were not paid for their work, even though he admitted the expenses were a "nonsense" and did not reflect actual expenditure.

"If you have been confronted with a situation which you have known all along to be deeply flawed and you are one of those who has gone along that path because you are not rich enough to have your castle in Scotland . . . then you get caught up in it and that has been the situation," he said.

He added that while he might pay back some of the money if asked to do so, he

was not, however, sufficiently wealthy to "produce a cheque for even a proportion of the total amount".

Family tree

Lucius Edward William Plantagenet Cary Falkland is the 15th viscount in an aristocratic line that stretches back to the early 17th century.

It is a Scottish peerage that was first created for Sir Henry Cary, a colonist and military officer, in 1620.

His son Lucius Cary was a poet and statesman, once described as the "incomparable Falkland", who debated important theological and political matters at his Great Tew estate in Oxfordshire.

Cary was active in parliament before the civil war and became Charles I's secretary of state. He died charging into a hedge lined with musketeers at the First Battle of Newbury in 1643. His statue still stands in parliament.

The Falkland Islands were named after Anthony Cary, the fifth viscount, by the explorer John Strong during an expedition in 1690. Cary, who was Strong's patron, went on to become the First Lord of the Admiralty before his death in 1694.

The ninth viscount was killed in a duel and was succeeded by his five-year-old son, Lucius Bentinck Cary.

Great Tew was sold off at the end of the 17th century, and there was no grand family estate to inherit when the current Viscount Falkland took the title in 1984.