A peer accused of lying about his expenses yesterday told a court he viewed the system as being “in lieu of salary”.

Lord Taylor of Warwick is accused of claiming for travel costs between his step-nephew’s home in Henley Street, East Oxford, and the House of Lords, when he actually lived in London.

He told a jury at Southwark Crown Court that he had acted on advice from Lord Colwyn that he should state his address as being outside London.

Lord Taylor said: “It was in lieu of salary because there was no realistic prospect – because of the image of the House of Lords – of lords being paid.

“The policy was to claim the maximum because the reality is, in terms of expenditure, you were spending far more than you were able to claim back.

“This was a contribution towards your costs.”

Lord Taylor, 58, of Lynwood Road, Ealing, West London, faces six charges of false accounting on various dates between March 2006 and October 2007.

Lord Taylor said he sometimes had letters delivered to the Oxford house, which is owned by his step-nephew’s partner Dr Tristram Wyatt.

“I was concerned that my ex-wife was opening my mail,” he said.

Asked if he told his relative he had put his address on his claim forms, the peer said: “Not in that context, no. I think in retrospect I should have done.”

The case continues.