Peter Hain’s downfall should be no more than a damaging distraction for the Brown Government, admittedly at an unwelcome time. Obviously the Hain affair will further tarnish Labour’s reputation in a sensitive area. The central question is how far it will be seen as an isolated story about his personal failings, and the large sums involved, and so different both in kind and scale from the separate inquiries by the Electoral Commission into Harriet Harman and Wendy Alexander.

For most voters, other events this week – such as the financial market turbulence, worries over a recession and reports of council tax increases above the rate of inflation – are likely to matter more, and hurt Labour more, in the longer run. At least yesterday’s events were clear-cut. Mr Hain went promptly when told of the police investigation, while Gordon Brown conducted a rapid and generally shrewd reshuffle.

James Purnell is a smart choice at Work and Pensions, where he previously served as minister of state. A firm Blairite, he now has a chance in a mainstream department.

The move by Andy Burnham, another Blairite, from Chief Secretary to Culture, will test whether he can turn promise into performance.

And Yvette Cooper, an economist by training, at last becomes a full member of the Cabinet as Chief Secretary. She could not serve there when Ed Balls, her husband, was either an adviser or junior minister.

Mr Brown has conducted a wider reshuffle outside the Cabinet, with Baroness Vadera, his former adviser, moving from International Development to Business, where she will be responsible for competitiveness and deregulation. The departure of Lord Grocott as Chief Whip follows murmurings about his tense relations with Baroness Ashton of Upholland, the Lords Leader.

Mr Brown has, however, missed an opportunity by not abolishing the separate posts of Scotland and Wales secretaries, and amalgamating them, possibly together with the Northern Ireland Secretary, into a new department of the nations and regions to handle relations with the devolved bodies.

That change is overdue, but is always put off because of apparently pressing reasons. Labour faces tricky local elections in Wales this May and the Tories have high hopes of winning seats. The experienced Paul Murphy has returned, nearly three years after being dropped. He will also chair two Cabinet committees, including one on Local Government and the Regions. The other story is what has not happened: no return for Charles Clarke, the strongest candidate among former Cabinet ministers.

And, despite the bookies’ speculation, Alistair Darling and Jacqui Smith remain in place. Their positions were anyway never remotely under threat and Mr Brown will not want to undertake a second reshuffle this year.

Yesterday’s mini-dramas – coming after Northern Rock, capital gains tax and the row over the detention of terrorists – show how hard it is for Mr Brown to put last autumn’s troubles behind him and to relaunch his Government. The donor inquiries will rumble on for some time, fuelling Labour’s “sleaze” image.

But all this is secondary to the economy and defending the Government’s battered reputation for competent management.

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