The leader of the Scottish Liberal Democrats insisted yesterday his living arrangements in the capital are not costing the taxpayer money, after allegations he moved out of a flat in Edinburgh ahead of a change in the rules regarding accommodation allowances.

The leader of the Scottish Liberal Democrats insisted yesterday his living arrangements in the capital are not costing the taxpayer money, after allegations he moved out of a flat in Edinburgh ahead of a change in the rules regarding accommodation allowances.

Nicol Stephen bought the flat in Morningside in 2002 for £193,333 and for five years claimed thousands of pounds a year in council tax and mortgage interest from a controversial scheme for MSPs.

The Edinburgh Accommodation Allowance (EAA) - which permits MSPs whose first home is more than 50 miles from the capital to claim for council tax, mortgage interest and utility bills - is under review and expected to be abolished.

It has been claimed MSPs who own second homes in Edinburgh and claim the EAA are now moving out of the properties and arranging to rent them in anticipation of the scheme closing. Mr Stephen no longer lives in the Edinburgh flat, which he now rents out. However, he is no longer claiming the EAA.

He insisted yesterday the reason he vacated the flat was because it is not large enough for his family, which has moved from Aberdeen to Edinburgh to be closer to him. The MSP has four children.

A spokesman for Mr Stephen said: "His family home is still in Aberdeen. There has been no cost to the public purse."

Just 28 of the 129 MSPs at Holyrood claim the EAA. It has been examined by the independent Allowances Review Panel (ARP), a body chaired by Sir Andrew Langlands, principal of Dundee University, and as a result is expected to be abolished.

The ARP will make its recommendations later this week, but is widely expected to announce that the EAA be brought to an end by 2011.