Blair forced to come clean over the secret backers

Tony Blair, who came to power on an anti-sleaze ticket, faces stinging criticism today by members of Labour’s ruling body that he has brought the party into disrepute over the “loans for peerages” scandal.

Last night Labour released the names of 12 millionaires who gave secret loans totalling £13.9m before the last general election, in an attempt to defuse the row before Mr Blair answers his critics at a meeting of the party’s national executive committee (NEC).

But the list raised further questions because it included Rod Aldridge, head of Capita, one of the biggest beneficiaries of government IT contracts, including the Criminal Records Bureau. Others include Richard Caring, owner of the Ivy restaurant in London, and Sir Gulam Noon, the so-called “curry king”.

NEC members and Labour MPs are discussing whether the allegations of sleaze will hasten the end of Mr Blair’s premiership and bring about an earlier than expected handover of power.

The Prime Minister will face questions today about the link between the loans and the peerages when he is confronted with a report on the affair by Jack Dromey, the party treasurer. Four lenders were nominated for a peerage but blocked by the Lords appointments commission, which was not told that they had given loans to the party when their names were put forward by Mr Blair.

Harriet Yeo, a trade union representative on the NEC, said: “The question I want to ask is: who knew about the loans and the peerages? If there is even the slightest hint of someone offering peerages for financial support, we should discipline them for bringing the party into disrepute - that has to include the Prime Minister.”

Ms Yeo said that if Mr Blair had done something wrong, his position would be untenable. “The party has got to reclaim faith in the leadership,” she added.

Christine Shawcroft, who represents the constituency parties on the NEC, said: “Al Capone was brought down by tax evasion. If this is what brings [Mr Blair] down, I don’t mind.”
Labour MPs have begun collecting signatures for a letter to Mr Blair in which they will express their “grave concern” about the affair. It will demand urgent answers about the loans, including why party officials were not told about them.

The row exploded last week when Mr Dromey protested publicly at the way he was kept in the dark. He is furious at being accused by Blairites of being part of a Brownite plot to bring down the Prime Minister. Allies of Mr Dromey said that he would focus at today’s meeting on his central allegation that “Downing Street” - code for Mr Blair - had treated his party with disrespect by keeping the loans secret from key party figures, including himself, John Prescott, the Deputy Prime Minister, and Ian McCartney, the party chairman.

Questions facing Mr Blair include: Why were the 12 lenders told to make secret loans rather than donations that would become public? Was it to avoid a scandal because four who made loans were also on the Prime Minister’s list for Labour peerages?

A member of the NEC said: “There will be some blood on the carpet.” Another added: “It could get nasty if Blair’s people have a go at Mr Dromey. There is resentment about how Mr Blair has used the party, but no one wants their fingerprints on the knife.”

Mr Blair has suffered a series of recent blows, including the controversy over Tessa Jowell’s husband, David Mills, and the Labour rebellion over the Education Bill. But he is expected to fight back at today’s meeting with support from Mr Prescott and Mr McCartney, who pointed out that Mr Blair began the process of cleaning up the party funding system.

The row has already led to further reforms. Lord Falconer announced yesterday that a Bill going through Parliament would require parties to reveal the names of lenders. The terms of reference published yesterday for a review of funding by Sir Hayden Phillips, a former Whitehall mandarin, also hinted that the affair could lead to an expansion of state funding for the main parties.

Colin Brown and Andrew Grice