Apology fails to take heat off Hain

PETER Hain was forced to make a humiliating apology yesterday over his failure to declare more than £100,000 he received in his failed bid to become deputy leader of the Labour party.

But his attempts to draw a line under the affair were immediately knocked back as opposition parties demanded to know further details of his campaign finances.

The Work and Pensions Secretary said it was "absurd" to suggest he had anything to hide and pledged to "get on with the job" of government.

Hain's apology comes amid widespread expectation in Scotland that the Electoral Commission, which governs party donations, will deliver its verdict on the failure of Scottish Labour leader Wendy Alexander to declare donations to her own campaign.

Hain first fell into trouble after it emerged he had broken rules on party donations by failing to register 17 donations amounting to £103,000 within the 30-day limit set down by the Electoral Commission.

He was plunged into fresh controversy last week after it emerged that more than half of the donations had been made by wealthy businessmen and channelled through a 'think-tank' called the Progressive Policies Forum (PPF). It was set up around the time Hain launched his campaign. But it employs no staff and has not published any work since it was set up in December 2006.

Hain decided to make a public statement yesterday afternoon in an attempt to clear the air over the affair.

He said: "I apologise for the embarrassment caused by poor administration and lack of early and clear disclosure. However, I make no apology for being a committed candidate in Labour's deputy leadership campaign or for raising the funds necessary to run a modern campaign.

"I was not involved in establishing the Progressive Policies Forum, but it was prepared and able to assist in making donations to the campaign."

Hain said he was also "now making immediate arrangements" to repay a £25,000 interest-free loan from PPF.

However, opposition MPs said it was now incumbent on Hain to explain why his campaign had sought to channel donations via the think-tank. Elfyn Llwyd, Plaid Cymru's Westminster leader, reiterated his call for Hain's resignation, saying the statement failed to explain the role of the PPF.

"I think we need to know precisely what was the purpose of the PPF – was it a vehicle for siphoning funds through?" he said. "On a cursory view, that appears the case. If so, there's something dodgy going on. To the best of my knowledge, nobody has explained who they are and Peter Hain's statement has not answered that at all."

Hain is facing three potential inquiries. The Electoral Commission will decide what action to take over his failure to register the donations.

Meanwhile, the Parliamentary Commissioner for Standards will examine Hain's failure to publish the donations with the Commons in time. If Hain was found guilty of breaking the rules, he could be suspended from the Commons for up to two weeks, in a move that would almost certainly bring about his resignation.

The Committee on Standards in Public Life, led by Sir Christopher Kelly, is also looking at the issue.

The PPF was set up by John Underwood, the treasurer of Hain's campaign. In total, it channelled £51,613 from wealthy businessmen to Hain's campaign.

Hain's campaign team has said that PPF donors were "content" for their contributions to be passed on to Hain and have pointed out that the arrangement is "entirely permissible". But at least one of the donors did not know his cash would be used for Hain's leadership challenge.

Hain came fifth out of six in the deputy leadership race after spending twice as much as any of the other candidates, including the winner, Harriet Harman.

• The Tories have doubled their lead over Labour to 10 points in the past two weeks in a new blow for Gordon Brown, according to a poll released last night.

The YouGov survey put David Cameron's Conservatives on 43%, up three since the previous poll at the end of December, and Labour on 33%, down two.

The Liberal Democrats, under new leader Nick Clegg, have dropped one point to 14%.

However, the Tories are still short of the 13-point lead they held over Labour in the same poll a month ago.