Lord Hanningfield said because it appeared that everyone else used the allowance system to recoup their costs, he would do the same thing.

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Mr Mikusek said the CO2 allowance system, managed by the European Commission, "gives a clear advantage to companies not as heavily based on coal as we are".

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Lord Hanningfield admitted that some of his claims had been made on days when he did not go to London and that he always went home at night, but he said he was using the allowance system to recoup his costs - and he claimed he wasn't alone.

BBC: England

In the longer term - the government plans to introduce of "universal benefit" - which would replace the current system of Jobseekers Allowance, income support and employment support allowance with a single benefit to try and simplify the system.

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But, whereas at the moment a member of staff who swaps to a day shift to undergo some training loses that allowance, under the new system they will not.

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Gordon Brown surprised Westminster by announcing plans for a new interim system of a daily allowance to replace the controversial cash for second homes.

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Under the new rules, lone parents in this category will be switched from Income Support to the tougher system of Jobseeker's Allowance.

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Speaking during oral questions on 25 May 2011, Leader of the Lords Lord Strathclyde told peers the proposal would cost more than the current system where peers are paid a daily attendance allowance.

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Disability living allowance, however, is expected to remain separate, with the new system allowing carers to take part-time or short-term work without losing their benefits.

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