Last week Prescott was forced to apologise after The Sunday Times revealed that he was not required to pay council tax on any of his three properties out of his own pocket.
The deputy prime minister, who has presided over a 76% increase in council tax since Labour took office, said last week that an “inadvertent error had occurred, based on a genuine misunderstanding”, which meant he had not paid council tax since 1997 on his official London residence.
The taxpayer had been footing the bill for the £2.3m apartment in Admiralty House and Prescott has now repaid £3,830 to the exchequer after owning up to the mistake.
He has also offered to pay “several thousand pounds” extra to Westminster council because the government was charged the discounted rate for a second home.
Questions have also been raised about the tax he pays for the benefit in kind he enjoys from living in a government-owned flat in central London. One tax accountant suggested he should pay £46,000 a year.
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However, the situation with his family home is still not clear. In a statement Prescott said that he had been paying council tax on his Hull constituency home, an eight-bedroom turreted residence on the outskirts of the city.
Officials insist that the tax has been paid at the “full rate”, not at the discounted second-home rate, but they refuse to say whether he subsequently claims the money back as a “parliamentary expense”. If Prescott’s house is in Hull city council’s top band, it will be liable for council tax at £2,285.
According to a well-placed House of Commons source, virtually every MP with a constituency outside London does claim their council tax bill as an expense — on the basis that it is a second home. A spokesman for Prescott said: “He abides by the rules.”
Prescott has claimed almost £40,000 between 2002 and 2004 for the upkeep of his constituency property. This sum is likely to include the costs of council tax.
Prescott also has the use of an official country residence, Dorneywood in Buckinghamshire, the council tax for which is paid by the charitable trust that looks after the house.
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Yesterday the Conservatives said they would be asking the parliamentary authorities to investigate the system and to establish what has happened in Prescott’s case. Sir Gus O’Donnell, the cabinet secretary, is also planning to set out clear procedures to ensure that ministers who are allocated official residences are given clear guidance on dealing with their council tax liabilities.
Caroline Spelman, shadow secretary for the Office of the Deputy Prime Minister (ODPM), said: “Council tax payers up and down the country are struggling to pay their bills. It is only proper that we discover exactly what arrangements Mr Prescott has made to pay his. There appears to be a case for the Commons authorities to have another look at his allowances.”
The council tax debacle is the latest lapse of judgment by the deputy prime minister, whose early career included a stint as a steward on a cruise liner.
He earned the title “two Jags” because, until recently, he enjoyed the use of two Jaguars, one official and one privately owned, and a Rover saloon to take him to Labour party events. In 1999, during the Labour party conference, he used his official Jaguar to make the 200-yard journey to the venue where he was making a speech on fuel conservation.
The Sunday Times previously disclosed that Prescott enjoyed the use of a subsidised flat owned by the RMT union in south London in addition to his two official residences and constituency home.
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He lost the flat in 2003, which was rented to him at a fifth of the going rate, after the RMT ended the arrangement in the wake of Prescott’s refusal to renationalise the railways. The deputy prime minister has also enjoyed holidays at the luxury villa of a millionaire Cypriot businessman.
Prescott’s professional record is under scrutiny because of rising council tax and failures in the transport system, for which he was previously responsible. He has made outspoken criticism of Blair’s plan to give schools independence from local authorities.
Last week The Sunday Times revealed a leaked internal study of ODPM officials that described Prescott’s department as unfocused, lacking leadership and compared it to a “pantomime horse”.
It depicted the department as poorly managed, “outgunned” by other departments and suffering from “reorganisation fatigue”.
This week another report will expose his lack of leadership on one of the government’s flagship projects.
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The Thames Gateway development, a 40-mile stretch along the Thames east of London, earmarked for tens of thousands of new homes and intended to generate hundreds of thousands of jobs, is described by the ODPM as “a national priority for regeneration and growth”. It includes the proposed site of the 2012 Olympics.
It is central to Prescott’s plans to build new homes in the crowded southeast of England, with 120,000 dwellings planned in the area by 2016. It is also integral to the ODPM’s vision for so-called “sustainable communities”.
But according to a survey of businesses and other organisations involved in the scheme, conducted by Hornagold & Hills, the management consultants, it has “no effective leadership” and is “rudderless”.
Asked who was leading the project, one of the businesses surveyed said “not a soul” while another said: “There is not much direction.” In all, 87% of the organisations surveyed said the scheme had no effective leadership.
Prescott had been expected to stand down from parliament at the next election, although recent reports suggest he may carry on after Blair retires, possibly continuing to serve as deputy prime minister.