Duncan Smith cleared of 'Betsygate' payments

Iain Duncan Smith is to be cleared of dishonesty by the parliamentary watchdog over the controversial employment of his wife, Betsy, in his office, it was reported last night. But Mr Duncan Smith is facing criticism over the fund from which his wife and two other members of staff were paid, it was claimed.

The scandal, dubbed "Betsygate", helped lead to the demise of Mr Duncan Smith as Conservative Party leader last November.

But Sir Philip Mawer, the parliamentary commissioner for standards, has concluded after a five-month inquiry that Mr Duncan Smith did not deliberately misuse parliamentary funds to pay his wife, newspapers claimed.

Mr Duncan Smith faces criticism, however over the way two members of his staff - his private secretary, Christine Watson, and personal secretary, Annabelle Eyre - were paid. The main part of those salaries and part of Mrs Duncan Smith's salary should have been paid by Conservative Central Office, not from Mr Duncan Smith's parliamentary allowance, because some of what they were doing was party political work, the report was said to find.

According to The Mail on Sunday, Sir Philip's report states: "I do not uphold the main complaints ... concerning Mrs Duncan Smith's employment by her husband or the complaint about Mr Duncan Smith's claims for a house in Chingford.

"I do uphold those elements of the complaints concerning the funding of part of Mrs Duncan Smith's salary and the main part of the salaries of Miss Eyre and Mrs Watson. However, I believe this is a misunderstanding rather than deliberate subversion of the rules and nothing casts doubt on the honesty and integrity of Mr and Mrs Duncan Smith."

Sir Philip's report has been made available to members of the Commons Standards and Privileges Committee, which is to consider the report on Tuesday and report on it later in the week.

The controversy erupted when BBC journalist Michael Crick claimed that £18,000 paid to Mrs Duncan Smith over a 15-month period was unjustified as she was not working enough to earn it. The accusations angered Mr Duncan Smith, who denied them repeatedly and said he supported Sir Philip's inquiry.

A spokesman for Mr Duncan Smith said last night: "Iain was right when he said he would be exonerated when this started and he is right to say that today."

Sir Philip has been so careful about the report's confidentiality that punctuation has even been changed slightly in each copy handed to members to ensure no one could leak without risk of detection, it was reported.