MPs should be banned from claiming towards mortgages and employing relatives at taxpayers’ expense, the long-awaited report from a parliamentary sleaze watchdog said today.

Its author, Sir Christopher Kelly, said the crackdown on claims for mortgage interest on second homes would stop the practice of “flipping” to maximise expenses and avoid capital gains tax.

Instead MPs should stay in hotels or rent, and only be allowed to claim for those costs as well as council tax, utility bills, telephone line rental and calls, security, contents insurance and removals at the beginning and end of any tenancy.

The report said the expenses scheme should cover only additional accommodation costs “wholly, exclusively and necessarily incurred in pursuit of MPs’ parliamentary duties”.

And it insisted all claims were accompanied by receipts or documentary evidence, which should continue to be made public to ensure the new regime was transparent.

Claims for other controversial items such as cleaning, gardening and fur- nishings – which have been seen to run into thousands of pounds – should no longer be permitted.

And the “golden goodbye” resettlement payout of £60,000 should only be given to MPs who lose their seats or “involuntarily” leave Parliament. Those who voluntarily go should receive eight weeks’ pay instead.

Outlining his recommendations, Sir Christopher said his proposals were “reasonable and fair” and aimed to “strike a balance” – recognising the unique circumstances of an MP’s life, but “shorn of the special features which gave scope for exploitation”.