MP Patricia Hewitt has told the Leicester Mercury that an expenses claim settling an unfair dismissal case ended up saving taxpayers money.

A £2,500 payout to one of her former office staff was agreed in August 2006 and is included in her Leicester West constituency office expenses, which were published on Thursday.

Speaking to the Mercury after returning from Australia, she explained what happened and said the expense claim was within the rules.

She also confirmed that an earlier expense claim, in April 2006, for £1,880 worth of legal advice "in relation to an employment matter" was connected to it.

However, she said it had no connection to a sex discrimination case a year earlier when a woman was chosen for a top job over a better-qualified male candidate on the board of the South West Regional Development Agency, while Ms Hewitt was Trade and Industry Secretary.

She said: "This concerned a former member of staff in my constituency office and this claim was part of the settlement of this case.

"The staff member concerned resigned and then claimed constructive dismissal.

"It was an extremely complicated matter and could have ended up in an extremely expensive employment tribunal hearing and eventually it was settled.

"The main purpose of the incidental expenses provision is to allow MPs to have an office and staff in the constituency.

"In the case of an employment dispute, this then can be used.

"The settlement is not an admission of guilt.

"I contested the claim very strongly, but in the end we settled the claim rather than risk a more expensive claim."

Ms Hewitt also spoke out about her appointment to a bigger role on the board of telecommunications giant BT. She has been on the company's board since March last year.

She was paid £75,000 by BT for the year to March 31, but this is likely to rise to more than £100,000 in her new role as senior independent director next month.

She said: "My current role takes up about two to three days a month and there will be little difference in the new role.

"I have been asked to take it on by the members of the board so clearly they must be happy with the contribution I have made over the past year, with my experience of Government and helping to develop the policy of Government.

"It is simply a development of the role of an executive director and will not impact in any way on my constituents."

Ms Hewitt is also a special consultant to chemist giant Boots, where she is paid about £50,000 a year, according to the House of Commons Register of Members' Interests.