Greg Hurst, Political Correspondent
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Read about the controversy on Sam Coates's new Westminster blog
Peter Hain is being urged by one of the team involved in his attempt to win the deputy leadership to resign over his admission that he failed to declare £100,000 in campaign donations.
The team member said that the Work and Pension Secretary’s position had become untenable after he disclosed that half the money was originally intended for a fledgeling left-wing think-tank but was instead used to pay off campaign debts.
“He cannot stay in the Cabinet,” the source told The Times. “He should have resigned yesterday but he wants to battle it out.”

The claim came amid further signs of disarray among members of Mr Hain’s deputy leadership campaign, as Parliament’s standards watchdog considered opening an inquiry into whether he had also breached Commons rules by failing to register the donations.
A second minister was dragged into the row as Phil Woolas, who acted as chairman for Mr Hain’s campaign, was blamed privately for running up debts. Another person involved in the Hain campaign described as “bonkers” an eve-of-poll media blitz costing £60,000, including a full-page newspaper advertisement, glossy inserts in two left-wing magazines and mailings to all Labour Party members, and blamed Mr Woolas for the decisions.
A third team member told The Times: “It would be unfair to say that the media blitz was responsible for the overspend. The media blitz, in so far as decisions were taken during the campaign, was expected. The big question is why there was not a proper budget.”
The campaign was originally run by Phil Taylor, Mr Hain’s former special adviser, but midway through was taken over by Steve Morgan, a lobbyist and Welsh Labour activist. The two men have traded accusations in public over who was to blame.
Mr Hain’s long-term future looked in doubt after David Davies, the backbench Tory MP for Monmouth, asked the Parliamentary Commissioner for Standards to investigate Mr Hain’s failure to register the donations with the Commons within the required four-week deadline. The commissioner, John Lyon, was considering last night whether to set up a full inquiry. If Mr Hain were found to be at fault, it could lead to sanctions ranging from an order to apologise to the Commons to, in the most serious case, suspension from the House.
The Electoral Commission, the political funding and elections watchdog, is already investigating whether Mr Hain broke electoral law by failing to register 17 donations amounting to £103,000 within 30 days of deciding to accept them. Both inquiries are likely to examine Mr Hain’s admission that more than half the late donations, amounting to £51,613, were made by an obscure think-tank, the Progressive Policies Forum, on behalf of businessmen linked to Mr Hain.
Mr Hain has admitted that he approached the think-tank to ask for financial help to pay off his campaign debts after the contest in late June, but insisted that this was done with the permission of the original donors.
The Progressive Policies Forum published some pamphlets by Mr Hain in the “pre-campaign” period before the election for deputy leader was officially under way, meaning that donors to the think-tank could support his policies but remain anonymous.
Friends of Mr Hain said that the think-tank was set up by John Underwood, his campaign treasurer, to promote a soft-left agenda as a replacement to a similar organisation, Catalyst. This was squeezed out as trade unions backed a more challenging left-wing movement, Compass, which wanted Jon Cruddas as deputy leader.
Willie Nagel, a diamond broker who lent the Hain campaign £25,000 and gave another £5,000 via the think-tank, came to his rescue yesterday to deny reports that he had not been told that his donations would support the campaign, rather than the forum.
A statement issued by his solicitors, Ashurst LLP, said: “Mr Nagel donated and loaned money to PPF and had no objection that this money be used to support Peter Hain’s campaign.”
Mr Morgan, who ran the Hain campaign in its latter stages, also donated £5,000 to it via the think-tank, rather than directly.
Mr Hain, who declared £82,000 in campaign donations previously, blamed “administrative failings” for his failure to register the further £103,000 in grants and a loan.
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If peter Hain does quit, he will be back in the fold within a short time. After all...look at the mendelson business. I can recall there also was a problem with hain about 40 years ago when it was thought, [not by me] that he would be out of politics. But as we all know, politics is not a clean game, although many do try to join.
victor arram, westcliff on sea, essex
You are looking at the start of another whitewash. As suggested he should go back to South Africa and join the ANC where his morals would apparently be highly valued; but he might land up in court like the ANC President
M. Cawdery, Portadown, UK
Why is Mr Hain still in Britain after the society he campaigned to create in South Africa has materialised? I concede that he has as much legal right to remain as anyone, but wouldnt a moral 'vote of confidence' in the new South Africa be apt?
E Skelton, Cardiff, UK
And still Labour's ministers continue to patronize us with their 'We'll go if WE think we should' attitude. What do the public have to do inform Mr Brown, prior to elections of course, that we despise these antics better suited to a banana republic . And he has just rebuked Kenya on their elections!
For God's sake man, run the country with some decency, That clown Hain must go.
Warwick, Bournemouth, UK
Yet another example of 'sleeze' being protected by Gordon Brown.
M Shipway, Gravesend, England
What damage new labour hs caused our great country-Blair and his talentless babes,together with acolytes such as Hain.The damage to our social cohesion exceeds what Hitler achieved with all his bombs,rockets etc.
ray barton, dereham, uk
A ffriend told me 25 years ago told that when there were scandals in British politics the Tories were caught with their
trousers around their ankles and Labour were caught with
their hands in the till. Hain is proving the second half of this
coment is correct..
Denver Watt, Osaka, Japan
Does anyone really expect this oily apostle of Blair to resign? He makes Harold Wilson (remember him?) look honest and open. Time for him to fall on his sword.
David, Wolverhampton,
Well what can one say just more of the same from our politicians. Is it any wonder people want no part in politics they are all just on a gravy train.
A Seymour, Peterborough, England
The £103k represents 54% of the total amount donated to his campaign - how can it be an "innocent mistake" or "an oversight"? How ridiculous.
Regardless of whether Hain took personal responsibility for administration of his campaign is irrelevant. He alone has the legal responsibility to ensure all donations and loans are declared and that all money donated through third parties are with the knowledge and consent of the original donor or lender. This didn't happen and Hain has full personal responsibility for the criminal offences that have been committed as a result.
He should be lucky to retain his freedom, let alone his job. He has broken several very serious laws. Unfortunately, as has been demonstrated with the other recent illegal Liebour donations, if you are a Labour minister you are exempt from the law.
Stuart Parr, Telford, England
As a great fan of Nancy Mitford's books, the question is whether Peter Hain is a 'swine' or a 'sewer'. The jury rests.
Anne Wotana Kaye, London, England
His excuse is that he was busy. Well I and most of the working population are bloody busy as well but I doubt that Plod would accept that as an excuse for our misdemeanours. Oh, silly me, I forgot that you are above the law.
Abe Lambert, Manchester,
They bring in new rules. Brown and Hain promptly ignore them as inconvenient when they are too busy.
And they wonder why politicians are regarded as disreputable and dishonourable!
Howard, Chester,
Theres many a criminal activity like drug dealing, gold smuggling or perhaps best known, the Mafia for setting up a supposedly legal front companies to disguise their financial affairs. Peter Hains and his campaign are no different joining those crooked bedfellows by setting up a factitious company called the Progressive Policies Forum for their nefarious schemes. Unless shown otherwise, its clear at the moment that the only reason for the PPF to exist was to launder money in a similar way to drug dealers around the world. Peter Hain certainly isn't the first Labour minister bending if not breaking the law and he certainly won't be the last by a long way.
Mike, Alicante, Spain
Hain seems like a very nice straight talking honest and upright man of the greatest integrity and totally without fault...............stop, stop ... they're taking me away!
BagginsAtSea, Torbay, UK
I note that there is no mention of G Brown in this article and any Number 10 reaction etc etc. Is it because, as so often happens when bad news comes around, he disappears.
Peter Andrew, Montreal, Canada
Get rid of him.
He is an entirely expendable incompetent , which this Government is full of.
How dare they lecture us about accountability when they have none themselves. I wish I could "forget" about £100,000 that somebody had given me.
Catesby and Fawkes..where are you? We need you
N Wilson, Bourne, Lincs
If this campaign team member felt strong enough in his views, he would have put his name to them.
David Boothroyd, London, UK
Sir
It seems that when you are in government as a minister, the unwritten rule is that if in trouble bury you head until everyone hopefully forgets. Mr. Hain like all previous hipacrItes is following this rule. As once someone said to Mr. Chamberlain In the name of God go, resign.
David Rumsby , Croydon, London
so what changes? i doubt if he'll resign, even if he does he'll be brought back. just ignore it.
Phil Barnes, preston, england
I would like to thank the government for setting a guideline of forgetfulness about finances that the rest of us can follow.
At the moment they are closing local Income Tax offices and reducing levels of collecting staff, (until they are seen to be failing and have to be privatised of course), whilst relying on the public to return their taxes online and be 'honest' about their figures.
I shall follow government guidelines on this matter.
Robert, Nantwich,
Ignorance is no defence, I am afraid to say. In the normal course of their lives, citizens are told that it is their responsibility to know the laws and are accordingly held accountable if they break these. As an illustration, let's just say that suddenly and unknowingly over £100,000 was to show up in the account of any citizen that was deemed an illegal transaction (i.e. drugs, money laundering, undisclosed political donations, etc), surely that person would be arrested and under serious threat of jail unless they had reported the transaction as soon as possible.
In the case of Mr Hain, we have a politician who wanted to be the Deputy PM and therefore puts himself in a position whereby he must know the law and must be above reproach. Mr Hain, resign now to save yourself further embarrassment and your party further political emasculation. And just keep your fingers crossed you don't get thrown in the dock.
Brent, London,
Sir, you have sat too long for any good you might have been doing. Take your leave now before we throw you out!
dominic, Teddington,
Another open goal for the opposition - at last, 'back to the benches with you!' Institutionally corrupt and not fit for purpose - that's our wonderful government.
Ian Burgess, Bristol,
A friend of mine was at school with him in the same class at Pretoria Boys High School. He apparently even in those days was a pretty unsavoury character only interested in himself.
Yep he is welcome back in South Africa and he can join the ANC who's morals are about the same as his.
Graham, Cape Town, South Africa
Mr Hain's excuse that he was too busy with Northern Ireland affairs is a joke. During his tenure in NI, Mr Hain was known as the "part-time" minister who went there to get a tan at the Queen's residence in Hillsborough Castle when the sun was out, which was a rare phenomenon in itself. Of course he must resign if only to avoid the charge of hypocricy since he has chosen to hold the higher moral ground throughout his political career. "Hain the Pain", as he was also christened during his time in Ulster, is now an embarrassment to Gordon Brown and will no doubt be replaced by this son of the manse at the earliest opportunity. Brown is suffering enough pain at present without having to endure more at the hands of PH.
Dr David Green, Athens, Greece
Over the past two years Peter Hain was on the TV almost daily. Since the scandal broke no where to be seen? Time to go Mr Hain you know it and the electorate know it!! Don't worry your boss wont' be far behind you...
Neil Murray, Romsey, Hants UK
If he has nothing to hide why is he hiding?
Jonathan Findlater, Dronfield,
Amy chance of him being deported back to South Africa as an undesirable? Clearly he is not 'on message' with the electoral process underpinning British democracy. As to Brown'n insistence on 'British' vales of fairness and honour. Seems Hain after so many years in Britian has not assimilated these values. Failied the 'British' test I'm afraid.
d davies, cardiff, Wales
If he doesn't resign - maybe his colleagues should boycott Cabinet meetings?
Stephen, London, England
Couldn't have happened to a nicer sleezebag
Gordon, Glasgow,