UK's Labour suspends second MP in expenses scandal

LONDON (Reuters) - British Prime Minister Gordon Brown said on Saturday parliament must do more than clean up its expenses system to restore public trust, after his ruling Labour party suspended a second lawmaker in a damaging perks scandal.

On its ninth day of disclosures from leaked expense claims by members of parliament from all parties, the Daily Telegraph said Labour's David Chaytor claimed 13,000 pounds ($20,000) of taxpayers' money for a mortgage he had already paid off.

Brown's political spokesman said Chaytor, who has promised to repay the cash, had been suspended pending an inquiry. Suspension strips Chaytor of his membership of the parliamentary Labour party and converts him into an independent MP.

With two MPs now suspended and a junior minister stepping down while allegations about his finances are investigated, Labour has been hardest hit in a scandal which has scarred parliament's reputation and could influence coming elections.

"Unacceptable behavior will be investigated and disciplined. I do not rule out any sanction," Brown said in an article to be published in Sunday's News of the World newspaper.

"Trust has been badly damaged and cannot be restored simply by rectifying past mistakes and reform to the expenses system. As well as righting wrongs and cleaning up the system, there is now a clear need to go much further."

Claims for lawnmower repairs, dog food, porn films and moat cleaning have angered recession-hit Britons already disenchanted with the political classes. The affair has also fueled growing dissatisfaction with a Labour government in power since 1997.

With local and European polls due on June 4, analysts expect a backlash against the big parties in favor of smaller groups such as the Greens, the anti-European Union UK Independence Party and even the far-right British National Party.

The scandal could also spill into the next parliamentary election, which must be called by June 2010. Opinion polls point to a big win for the main opposition Conservatives.

"UNFORGIVABLE ERROR"

The Guardian newspaper reported that any Labour MP found to have made improper claims would be deselected and barred from standing at the next parliamentary election.

The paper, without citing sources, also said Brown had given ministers until Monday night to ensure that expense claims for the past five years were logged with parliamentary authorities.

The police have said they are considering launching a criminal inquiry into the expenses scandal next week.

Labour suspended former agriculture minister Elliot Morley on Thursday for filing 16,000 pounds ($24,330) in claims for a mortgage he had already paid.

On Friday, junior justice minister Shahid Malik became the highest-profile casualty of the scandal, stepping down pending an inquiry into allegations that he paid below-market rent for a house, breaching the ministerial code. He denies any wrongdoing.

Despite the suspensions, Labour has faced criticism for not punishing its MPs quickly enough, while the Conservative party has won some praise for cracking down on questionable claims.

A key adviser to Conservative leader David Cameron quit his post this week and the party's senior politicians have started to post their claims online to try to win back public trust.

The Telegraph said Chaytor, an MP in northwest England, had apologized "unreservedly" for the interest payments claimed.

"There has been an unforgivable error in my accounting procedures," he said in a statement to the paper.

Britain's 646 legislators receive an annual salary of almost 65,000 pounds and claimed 93 million pounds in expenses last year, an average of 144,000 pounds each.

(Editing by Mark Trevelyan)