Brown hit by row over aides' pay

GORDON BROWN will this week come under fresh pressure over the extent of his links with Geoffrey Robinson, after it emerged that the former Paymaster-General helped to fund the Chancellor's office in opposition and subsidised the salaries of his staff.

Mr Robinson's contribution to the pay of Mr Brown's key advisers has cost the taxpayer tens of thousands of pounds, because their opposition salaries had to be matched from the public purse when Labour won power in May last year.

The subsidy led to a furious row between Lord Burns, then Sir Terence Burns, the most senior civil servant at the Treasury, and Mr Brown's office. Sir Terence queried the pay requests made for Charlie Whelan, Mr Brown's press secretary, and Ed Balls, his chief economics adviser. Sir Terence did not understand why the salaries asked for were so high - around pounds 50,000 for Mr Whelan and pounds 60,000 for Mr Balls.

The issue was referred to the ministerial committee responsible for special advisers' salaries - which included Peter Mandelson, then minister without portfolio. The committee approved the aides' pay, but relations between Sir Terence and Mr Brown never recovered. Sir Terence was eventually edged out and given a peerage.

Tony Blair will today seek to draw a line under the loans row, distancing himself from Mr Mandelson. "He made a mistake, he did something wrong and he paid a very heavy price for it," he will tell the BBC's Broadcasting House. "The Labour Party is New Labour. It's bigger than any individual." However, the Government will face further questions about Mr Robinson's generosity. He also helped pay for the cost of leaflets detailing Mr Brown's achievements, which have been sent to activists around the country. While in opposition he funded research into the windfall tax and other economic issues through a special trust called the Smith Political Economy Unit.

The revelation of the extent of Mr Brown's reliance on Mr Robinson, who resigned as Paymaster-General last week after details of his pounds 373,000 loan to Peter Mandelson became public, will be embarrassing to the Chancellor and Tony Blair.

It is believed that at least some of the money came from the profits of offshore trusts of which the former Paymaster-General is a beneficiary. Labour has pledged to close the loopholes which allow millionaires to profit from such arrangements.

A statement from the Chancellor's office confirmed that before the election Mr Robinson helped fund Mr Brown's "general political research", such as the advisers' salaries, and "publications on economic issues". Treasury sources said Mr Robinson's contribution to Mr Brown's office costs was on top of money from the Labour Party and funds from the Industrial Research Trust, a "blind" trust.

In his statement, Mr Brown insisted that any money received from Mr Robinson had been properly declared in the Commons register of members' interests. It was "support that Mr Robinson has been fully entitled to give. Mr Brown has enjoyed no personal financial gain or loans. There has never been any issue of a conflict of interest arising and throughout he has acted in accordance with House of Commons rules."

Mandelson's fall, pages 4 and 5

`DEAR GORDON...

PETER MANDELSON faxed Gordon Brown a copy of his resignation letter to seek his advice before sending it to Tony Blair last Wednesday, writes Rachel Sylvester.

The Chancellor made several amendments before the then Secretary of State for Trade and Industry delivered the letter to Downing Street.

Mr Brown also gave Mr Mandelson tips on what to say in his media interviews following the resignation.

The Chancellor's involvement in drafting the statement and his coaching will surprise MPs.