Drastic reductions in the expenses members of the Welsh Assembly can claim have been proposed by an independent panel.

It would mean AMs would not be able to claim for second home mortgages.

Instead they would be given a furnished flat within five miles of the Senedd that would be either owned or rented by the Assembly.

The move would mean AMs could not profit from selling taxpayer-funded properties after the next election in 2011.

Those who buy a second home or rent from a non-approved agent would only be entitled to claim for utility bills and council tax.

The review also proposes cutting the number of AMs entitled to a second home from 51 to 25.

It also called for a ban on AMs hiring relatives as staff, although those already employing family members would be allowed to continue to do so.

The findings follow a 10-month inquiry launched after AMs were awarded an 8.3 per cent pay rise last year to recognise their growing workload and law-making responsibilities.

Montgomeryshire AM Mick Bates has welcomed the report.

The Liberal Democrat said: “Something has to be done to help restore the public’s faith in politics and we as a party will be accepting the recommendations.

“I haven’t seen the whole report yet but I think most political parties will have to adopt most of what is contained in it.

“In Wales we have always tried to be fairer and more transparent and we need to help lead the way.”