Labour 'blind trusts' inquiry

A TOUGH new inquiry is likely into New Labour's lucrative "blind trusts" and their possible links with the honours system.

Conservative leaders have asked Lord Neill's Committee on Standards in Public Life to investigate the potentially embarrassing field of anonymous party funding, following allegations last week by Henry Drucker, the academic fund-raiser and former consultant to Labour.

Dr Drucker claimed that the trusts - which raised many thousands of pounds for top Labour ministers while they were in opposition, including Tony Blair, Gordon Brown, John Prescott and Margaret Beckett - were not genuinely "blind" and that politicians knew where the money was coming from.

The Prime Minister has flatly denied all knowledge of the donors.

Now the Tories have asked the Neill Committee to investigate the allegations and also to demand evidence from Baroness Dean of Poulton-le-Fylde, who is both a trustee of a political blind trust and a member of the Honours Scrutiny Committee.

Alan Duncan MP, a top aide to William Hague and a vice-chairman of the Tory party, has written to Lord Neill arguing that the committee would "benefit considerably" from the evidence of Lady Dean, the former Brenda Dean, general secretary of the print union Sogat.

"I believe she would be able to provide valuable information on three aspects of this issue," Mr Duncan writes. "First, as a Trustee of the Labour Leader's Office Fund, she is in a position to shed further light on the suggestion by Dr Drucker that the blind trusts used by Cabinet ministers during their time in Opposition were not, in fact, blind." Dr Drucker had implied that thetrusts' beneficiaries had had "a degree of awareness as to the identity of the donors", he says.

"Secondly, Baroness Dean is able - without disclosing the identity of donors - to give evidence concerning the allegation that the trust was used to channel foreign donations to the Labour Party.

"Thirdly, since Baroness Dean also holds office as one of the three members of the Honours Scrutiny Committee, she is well-placed to comment on the relationship - real or imagined - between donations to political parties and the conferring of honours."

Amid growing irritation in Labour's ranks, the Neill Committee has called Lord Levy, Mr Blair's senior fund-raiser, to give evidence on the operation of blind trusts. He is said to have vetoed personally an internal report by Dr Drucker calling for the trusts to be abolished.

Labour officials dismissed Dr Drucker, head of the highly successful fund-raisers Oxford Philanthropic, as "a seriously bitter man" but Mr Duncan said yesterday: "The viciousness with which Labour have denounced Dr Drucker suggests that they have something to hide.

"For if Dr Drucker is right that Labour's blind trusts were not really blind, it seems inconceivable that the Prime Minister did not know the names of those involved. That would be typical of a Prime Minister who, when it comes to standards in public life, seems to think that rules are for other people."

Lord Neill's probing into the blind-trust affair is infuriating Downing Street and some Cabinet ministers. Lord Neill is regarded as being too much of a loose cannon and demands are being made for him to be replaced, or at least reined in.

However, the Tories believe they have now exposed Labour's vulnerable flank. Mr Duncan said: "It is a constitutional outrage that one of the three people who oversaw the blind trust that funded Tony Blair in opposition, and who therefore knows the name of every secret donor, should have become one of the three people nominated for scrutinising those nominated for honours."