Mandelson made mistake, says Blair

THE PRIME MINISTER said yesterday that Peter Mandelson had "made a mistake" in not declaring a pounds 373,000 loan from a fellow minister, and "paid a very heavy price for it".

But, in his first comments since Mr Mandelson resigned from the Cabinet over the loan from the former paymaster-general, Geoffrey Robinson, Tony Blair pledged that the New Labour project would carry on without him. "It's bigger than any individual," Mr Blair told BBC Radio. "He made a mistake, he did something wrong, and he paid a very heavy penalty for it.

"What is important now is that we keep a sense of perspective about it. The Government goes on, we move on, and the New Labour programme, the New Labour Government, remains in place and we carry on delivering on our promises."

Mr Blair said Mr Mandelson had "insulated himself" as Secretary of State for Trade and Industry from his department's inquiry into the business dealings of Mr Robinson, but taking a loan from him while in Opposition was "a misjudgement".

The loan was "not a wise thing to have entered into" but what was wrong, said Mr Blair, was that when the DTI inquiry was launched "it would have been wiser to have disclosed it".

Mr Blair confirmed he found out about it only "two or three days" before Mr Mandelson resigned, on the day he ordered the air strikes on Iraq.

"I wanted to be absolutely sure there had been no breach of the wall between what he was doing in the DTI and what Geoffrey Robinson was doing. But the mistake was made. It was wrong. It was a misjudgement. Let's get it in perspective. In the end he did not attempt in any shape or form to abuse his position in relation to Geoffrey Robinson ..."

Mr Blair insisted the affair was not an "earth-shattering event". Losing pilots over the Gulf or entering an economic downturn and having to raise interest rates would have been earth-shattering, he said.

"We both took the view that in the end, even though there had been nothing wrong in the sense of any interference with the inquiry into Geoffrey Robinson, none the less it was a serious misjudgement, it was a mistake and it was wrong not to have told the Permanent Secretary at the time of this arrangement and therefore it was right that he go."

Mr Blair was pressed over why he had not asked Mr Mandelson, whom he has described as a friend, how he could afford such an expensive house. He replied: "I really don't go round asking my cabinet members how they paid for their house."And he added: "[He]... could have earned many more times the money outside of politics than he did inside."

Had there been any evidence that Mr Mandelson had interfered with the inquiry into Mr Robinson, that would have put the affair into "a different bracket altogether", he said. Calls were made last night for Peter Mandelson to resign as an MP after aides confirmed the former secretary of state for trade and industry had accepted undeclared free trips from a millionairess with a big US franchise in the bra trade.

The shadow Chancellor, Francis Maude, said the Tories would ask the Parliamentary Commissioner for Standards to investigate the latest disclosures about Mr Mandelson.