A decent way of funding our politics: Labour reveals its plan

The Prime Minister yesterday called on Sir Patrick Neill QC, new head of the official sleaze committee, to crack down on all party funding and spending. Our Political Editor, reports the Government's salvage attempt after the Formula One debacle.

Cabinet colleagues of Tony Blair are privately dismayed by the way in which he handled the donation of pounds 1m from Bernie Ecclestone, the head of Formula One - a donation which is to be returned because of the government decision to exempt the motor racing from a ban on tobacco sponsorship.

The brutal message was pungently put in Commons questions yesterday, when Martin Bell, who replaced Neil Hamilton on an anti-sleaze ticket in the May election, told Tony Blair: "The perception of wrong-doing can be as damaging to public confidence as the wrong-doing itself."

Mr Bell, a former television reporter, then asked the killer question: "Have we slain one dragon only to have another take its place, with a [New Labour] red rose in its mouth?"

In prolonged exchanges about the affair, Mr Blair told the Commons that Mr Ecclestone's donation had no bearing on the government decision; that Labour had acted swiftly to ensure propriety, not only by seeking Sir Patrick's advice, but by agreeing to return the money as he suggested; and that Sir Patrick was to be asked to open a full-scale, nine-month investigation into party funding - something the Tories had always rejected.

For the Conservative opposition, Mr Hague attacked the Government decision to discriminate between Formula One and other sports, he spoke of turmoil and chaos and added: "I'm not accusing the Labour Party of being paid to break their promises - they break them for free all the time.

"Isn't this what happens when a party seeks office without a principle, value or belief to its name?"

But senior Labour sources immediately pounced on the fact the Tory leader had not mentioned Mr Ecclestone's pounds 1m - because the Conservative had received pounds 10m and a pounds 4m loan from the same man, who is reputed to earn pounds 54m a year.

A Government source partially confirmed yesterday's Independent report that Mr Ecclestone's name was not on any honours recommendation put to No 10 by John Major, so it could not have been struck off by Mr Blair, as some senior Tories had suggested.

The Independent was also told yesterday that Lord Hambro, the banker who has also been a Tory treasurer, attended a Chequers lunch with Mr Major and Mr Ecclestone before the election. It is known that Mr Hague put Mr Ecclestone up for a knighthood.

Labour is clearly expecting that the Neill Inquiry will force disclosure of some of the Conservatives' age-old funding secrets. But the Prime Minister's prime aim, as he said three times in the Commons yesterday, is to get Sir Patrick to come forward with a package that will impose "a level playing field" on all parties, in terms of funding and spending.

Mr Blair told the House: "I can confirm today that we are asking Sir Patrick to look now into the whole area of party funding: whether donors should be disclosed; whether the size of donations should be disclosed; whether there should be a limit on individual donations, whether there should be a limit on overall spending; whether there should be different arrangements altogether, such as increased state funding.

"This is a long overdue investigation. It is one that we urged in opposition when the Conservatives refused to have it. So Sir Patrick will be able to make his recommendations and then we will all be playing on a level playing field."

Earlier Mr Blair gave a complete run-down of the decision-making process on the Formula One exemption, and there was general insistence last night, from Whitehall and Formula One, that exemption was not asked for in the meeting between Mr Ecclestone and Mr Blair on 16 October.