Did you lie to us Tony?

We believed you when you promised sleaze-free politics. We shared in your electoral triumph. We thought you were different. But now we're not sure

Tony Blair did not tell the whole truth and nothing but the truth. He prevaricated. He took refuge in a John Major-like charade of outraged dignity at the despatch box in the House of Commons. As the pressure grew, the Prime Minister fed out bits here and bits there, but there was no sign of the much-vaunted openness that we heard so much about in the run- up to the general election. The question must now be asked: has he forfeited the trust on which the whole grandiose edifice of his new Jerusalem was built?

At Westminster last week, the answer on all sides of the House was much the same: "probably, yes". Following the disclosures about Bernie Ecclestone's pounds 1m gift to Labour and Blair's sympathetic attitude to tobacco sponsorship for Formula One, a Labour peer approached a Liberal Democrat MP, and said: "I keep hearing words from Animal Farm - 'Tory sleaze bad, Labour sleaze good'."

In the Ecclestone affair, the Prime Minister has let down his great regiment of MPs, most of whom feel a mixture of shock, dismay and bewilderment at being found firmly on the wrong side of a sleaze campaign. For many young Labour backbenchers, this is their first nasty taste of the game of politics, and some of the old lags are already indulging in a little Schadenfreude at their leader's expense. "Blair came off at the chicane," chortled one senior Labour backbencher. "In fact, the whole thing's pure chicanery." But it is worse than that. Blair has made a massive error of judgement that will haunt the whole of his administration.

But let us start at the beginning. Last April, Blair launched his election manifesto amid much pomp and ceremony in Westminster, flanked by the members of his Shadow Cabinet. To the thudding pop refrain of "Things Can Only Get Better!", he declared that people had got cynical about politics and distrustful of political promises. Naturally, he blamed the Conservatives and their broken promises over taxes. In his "contract with the people", the Labour leader insisted that "our mission in politics is to rebuild this bond of trust between government and the people". He promised to clean up politics, tell the truth and give "a moral lead".

BLAIR also described smoking as the greatest single cause of preventable illness and premature death in the land, and made a firm pledge. "We will therefore ban tobacco advertising." It may be argued now that the manifesto deliberately left out the words "and sponsorship" because he was convinced by the arguments of the Formula One lobby that the very future of the motor racing industry was at stake if sponsorship was outlawed. But that was not the argument at the time. How very convenient, considering that less than three months previously, Blair had pocketed Bernie Ecclestone's pounds 1m cheque. Blair's manifesto also said that he had no time for the politics of envy. "We need more successful entrepreneurs," he declared. Nobody realised he was actually talking about the Labour Party, rather than the nation.

The issue of tobacco advertising did not figure prominently in the election campaign, not least because the argument seemed to have been settled. If the Tories won, it would stay. If Labour captured power, it would go. When Frank Dobson made a theatrical performance of walking into the Department of Health in Whitehall, rather than using his ministerial car, all the signs were that the New Labour would live up to its promises. In mid- May, as one of the first acts of government, Tessa Jowell, the Minister for Public Health, made a speech emphasising a prospective ban on all tobacco sponsorship. Because the media had missed the point, Mr Dobson spelled it out in his blunt style at the annual conference of the Royal College of Nursing on 19 May: "We don't want to harm these sports, but they must recognise that by helping to promote the sales of tobacco they are harming the health of many of their own spectators and viewers," he said.

That was when the ordure hit the fan. The next day, David Mills, husband of Tessa Jowell, resigned his directorship of the Benetton Formula One group after consulting the Health Secretary and his top officials about a potential conflict of interest. Mr Dobson got heavily involved in the negotiations in Brussels on the pending EU directive on tobacco sponsorship. He sent a memo to Downing Street warning about possible trouble ahead over sport, and asked for the Prime Minister's backing for his tough stance. Ms Jowell pursued the departmental line at a meeting of EU health ministers on 6 June, while hinting there could be "practical problems". Six weeks later, Mr Dobson submitted a second memo to the Prime Minister, this time offering a range of options on the EU directive - including some form of exemption for the Formula One industry.

WHILE Michael Schumacher and Jacques Villeneuve battled it out on the European racing circuits, the Government went to sleep for the long summer recess, coming awake just before the triumphalist Labour Party conference in Brighton. On 23 September, Ms Jowell held talks with Max Mosley, Ecclestone's right-hand man, who heads the Formula One Association. Thereafter, the Government's position changed down several gears. In mid-October, Mr Dobson's updated memo to senior Cabinet colleagues laid the ground for a U-turn. He conceded that Formula One might need more time to replace the pounds 100m contributed by the tobacco industry. On 16 October, Blair had his celebrated meeting with Mr Ecclestone and Mr Mosley, at which no formal minutes were compiled, although Mr Blair's chief of staff, Jonathan Powell, took notes. Two weeks later, rumours of the U-turn began to emerge, to be confirmed by the hapless Ms Jowell on 5 November. Initially, the Tories were slow off the mark, using up a valuable Prime Minister's Questions with an orchestrated barrage about Europe and the Social Chapter. No one mentioned tobacco or motor racing.

Away from the Commons chamber, however, rumours about Bernie Ecclestone were spreading. Had the one-time donor of million of pounds to the Tory party switched his allegiance to Labour? If so, for what? Journalists began asking questions the following day - 6 November - and the inquiries intensified on Friday. That day, Blair decided he had no option; the issue would have to be referred to the Public Standards watchdog, Sir Patrick Neill. He havered over the contents of the letter to the "sleazebuster- general", which had to be lawyered, and was sent in the name of Tom Sawyer, Labour's general secretary. Of course, Blair knew about the million- pound donation, and he must have known that Labour had been in negotiations with Mr Ecclestone's associates after the election about the possibility of a further donation, amounting to half a million pounds.

Still Downing Street stalled. Alastair Campbell, Blair's press secretary, refused to return calls that Friday. Political correspondents were referred to the Labour Party press machine at Millbank HQ, where the chief press officer David Hill, a veteran apparatchik, stonewalled. The line was that it was difficult to verify the facts because the Labour Party had changed finance directors. It was pointed out that if Ecclestone had contributed to the "blind trust" that funded Blair's office prior to the election, that would be more difficult to establish. Late on Saturday afternoon - 24 hours after Blair had been discussing the wording of the letter to Sir Patrick Neill - Hill issued a statement. In the argot of the trade, it was a "non-denial denial". It read: "The Labour Party makes all donations over pounds 5,000 public at the time of the party conference. The party finance department has its own rules and will not divulge internally [our italics] or externally any information about whether individual donations have been made to the party in advance of the publication of accounts. Exemptions arise only where the donor wishes to make the information public at the time of the donation."

Hill's "spin" was also intended to scare newspapers off the story, while simultaneously presenting it as a Tory-inspired smear. Journalists were reminded that Ecclestone had been a significant donor to the Conservatives, who must, therefore, have had an interest in spreading the story. Hill then dropped heavy hints about Ecclestone's propensity to litigation: an allegation that the Formula One boss had given money to influence policy could be potentially very expensive for newspapers. Does all this amount to lying? The most generous interpretation is that Labour's public statements were highly economical with the truth.

On Sunday, only the Sunday Telegraph, which had learned before the election that Ecclestone had switched support to the Labour Party and therefore could be said to have more collateral for running a story, wrote that Blair was under pressure to reveal whether Ecclestone had given money. Because of Labour's statement, the paper pulled back from reporting that the money had definitely been given. Labour again damped down the story, telling journalists that it was relaxed about the issue, and was not investigating it. Only on Monday, when advice from Sir Patrick was received, did the the party finally confirm the donation. Again it sought to limit the damage, saying only that the cash gift was over pounds 5,000. Not until Ecclestone had a televised joust with journalists on Tuesday (during which he challenged one to reveal the size of his salary) did the the truth emerge, and Downing Street reluctantly confirmed the story.

THE HANDLING of the affair raises many issues. Blair argued in the Commons last Wednesday that, as soon as a potential conflict of interest arose, Sir Patrick was consulted. But Sir Patrick was contacted at 7pm on Friday, long after journalists had called Downing Street for information about Ecclestone's gift.

The contact was made through Peter Rose, a former government press officer, who is the spokesman for the Committee on Standards in Public Life. Last week was Sir Patrick's first on the job following Lord Nolan's departure, and Downing Street - and this is hard to believe of one of the world's legendary switchboards - did not have the number of the new sleazebuster's legal chambers. After being paged, Rose returned the call, gave the right number and Sawyer's letter was faxed to Sir Patrick. If Downing Street is to be believed, the gap between the instruction to prepare a report for Patrick - said to have been given on Thursday - and the execution was explained by the Prime Minister's schedule: he was hosting the Anglo- French summit at Canary Wharf. But, like many other explanations for this saga, it looks less than convincing.

So, too, does Blair's defence at question time. To begin with, it was incomplete, leaving out as much as was put in. He did not mention the intriguing question of the mysterious "second donation" raised in Sawyer's letter, denied by the Formula One boss and later retracted by party sources, who said it had merely discussed the possibility with Ecclestone's representatives. Could it be that, because it had not raised any new cash later, the letter was phrased to encourage a ruling that Labour could keep its pre-election donation? Blair did not admit that Downing Street only approached Sir Patrick at least 24 hours after the press began asking questions. He glossed over the weekend of official silence. Pressed by a Tory bruiser, Michael Fallon, who wanted to know why he did not refer the issue to the public standards watchdog immediately after his 16 October meeting, Blair replied irrelevantly "because the papers have been referred to Sir Patrick". Pursued with shouts of "when?", he added, "at the end of last week" - omitting to say precisely when, which would have revealed that he only did so after the press inquiries grew to a crescendo. Sounding for the first time like John Major, Blair lost his cool and yelled above the noise of braying Tory MPs that their leader William Hague had booted a penalty kick over the bar.

Even ignoring the inference that Blair had committed a foul, this was his worst performance by far at the despatch box since becoming Prime Minister. But he got away with it. The Opposition failed to ask the killer questions. The Tories could have exploited no less than seven of them: why did he procrastinate? Why did he order a news blackout? Why did his spokesmen peddle the racing industry's inflated claim that 50,000 jobs were at stake when the true figure is 8,000 - about the same number as are about to lose their jobs in the mining industry because the Government "cannot intervene"? Why did he only "refer the papers" (lawyers' jargon for "send a letter") after the media began making inquiries? Why did he allow his staff to make intimidating references to Ecclestone's alleged litigiousness? Why could we not be told what was discussed at the 16 October meeting? Why did Labour continue to seek money from the Formula One boss, knowing that he had been the beneficiary of such a comprehensive U-turn?

The Conservatives did go on the offensive, but many of their points were generalised rather than specific. One Shadow Cabinet source argued: "Courting powerful businessmen is a seductive business, but politicians ought to be very careful because businessmen have their own agenda. You cannot afford to be in any doubt about their objectives." He was saying that Labour has been outsmarted.

THE Ecclestone Affair raises two fundamental issues involving Labour's claim to occupy the high moral ground, and its relationships with donors. Having proclaimed a mission to rebuild trust between politicians and people, how can Blair make the transition from opposition promises to the reality of government? The Tories are cheerfully listing the Government's "broken promises" on university tuition fees, cold weather payments for pensioners, and a raft of other marginal claims like the swiftly forgotten minister for women. For the most part, they are trivial. But the exigencies of government were always going to bring the issue of "trust" back into centre- stage. Blair himself made sure of that. He said "there is unquestionably a national crisis of confidence in our political system" that Labour would address.

He is now hoist on his own petard. What will the voters be saying today in the Dog & Duck? That the Prime Minister was right to fight for Formula One? Perhaps. Or that Labour took loadsofmoney and then changed its policy? "They said they were different, and they ain't. Know what I mean?" You can hear it already. Moreover, the Government has many more interests to upset. For instance, when David Blunkett's White Paper on Rights at Work appears in the New Year, how will ministers respond to the argument that the unions have "bought" special privileges for themselves with their massive funding of Labour? And for that, read every interest of any generous donor to the prospective party of government.

THE REAL outcome of the Ecclestone Affair is that Tony Blair's preachy self-esteem is now a dead letter. He is exposed as just another politician, eager and willing to suppress information to sustain his position, dismissive of advice to come clean at the earliest opportunity, happy to listen to siren voices that he could get away with it.

There is only one means of escape. The Prime Minister should sack his most intimate ministerial advisers who told him to fib, fib and fib again. Otherwise the whole idea of a new bond of trust between the voters and the politicians is reduced to the status of a hollow laugh.