EXPENSES: THE YARD MOVES IN; Two MPs and a Peer Face Criminal Investigation for Fraud and Theft That Could Result in Ten Years' Jail

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Byline: James Chapman and Stephen Wright

THE EXPENSES scandal engulfing Parliament took a dramatic twist last night as Scotland Yard launched a fullscale inquiry.

At least two Labour MPs and a Labour peer are to be investigated over alleged fraud in their claims.

Detectives are also considering evidence against several more, who face the humiliation of being interviewed under caution, prosecuted and even jailed.

Labour MPs David Chaytor and Elliot Morley, who claimed interest payments for 'phantom' mortgages, and Baroness Uddin, who has been accused of fiddling subsistence allowances, all face police investigations.

Two other MPs, Labour's Ben Chapman and Tory Bill Wiggin, may also face further inquiries after they were exposed as claiming for mortgages that did not exist.

The MPs could be charged with fraud, theft or misconduct in a public office.

The maximum sentence under both the Serious Fraud Act 2006 and the Theft Act 1968 is ten years. Misconduct in public office carries a maximum life sentence. Officers believe there is only a realistic chance of prosecution in cases where it can be proved that individuals misled Parliament's fees office.

In an indication of the scale of the abuse of the system, around 180 MPs have joined an undignified scramble to pay back almost [pounds sterling]500,000 in wrongly-claimed expenses. And two senior Government figures were last night facing pressure over their claims after agreeing to hand back thousands of pounds. Business minister Rosie Winterton paid back more than [pounds sterling]8,000 after admitting claiming for mortgage capital instead of interest for years, in breach of the rules. International Development Secretary Douglas Alexander repaid over [pounds sterling]12,000 after admitting claiming taxpayers' money on a property while also receiving rent from a tenant living in an annexe.

Chancellor Alistair Darling and his Tory shadow George Osborne - in charge of the two main parties' financial policy - admitted further errors in their claims yesterday and repaid hundreds of pounds each. After the outcry over censorship of the officially-published expenses on Thursday, there is growing pressure on Commons authorities to change the system before this year's expenses claims are revealed in the autumn. The covering-up of scams such as 'flipping' of second homes to boost claims - revealed only by the leak 'Further casualties' Continued from Page One of uncensored Commons files to the Daily Telegraph - has deepened public fury. Both David Cameron and Gordon Brown vied to take the lead as they called for greater transparency yesterday.

The Tory leader ordered his shadow Cabinet to publish all claims, receipts and correspondence with Commons authorities on the internet as soon as they are filed. But doubts over Parliament's readiness to clean up its act mounted as a Daily Mail investigation showed many of the candidates to be the next Commons Speaker have had to repay money. Former sleaze watchdog Sir Alistair Graham said MPs were fooling themselves if they thought paying back money would be enough to rein in the anger. he said. 'It is going to take a very long time before an element of trust between the public and politicians can be restored.' The decision to formally launch criminal investigations follows a month-long exercise by detectives and Crown Prosecution Service lawyers, who have examined in detail the actions of a small number of MPs and peers.

The investigation will be led by Acting Commander Nigel Mawer and the CPS will decide who, if anyone, should be charged. Yard chiefs had been expected to announce next week whether they would launch criminal investigations. But, amid claims they had been dragging their feet over the scandal, the decision was made public late yesterday 'I'm sure this has got some way to run yet, and we will see a significant number of further casualties,' afternoon. …