Gordon Brown moved last night to shore up Peter Hain’s position, saying that the failure of his embattled Work and Pensions Secretary to declare campaign donations was a genuine mistake. Mr Brown predicted that both of the inquiries into Mr Hain’s conduct would clear him of deliberate wrongdoing and said that he expected Mr Hain to remain a member of the Cabinet.

He added that there was no suggestion of corruption and that he believed that the authorities would accept Mr Hain’s explanation that incompetence by his campaign team was to blame.

“It was a mistake that was made, it was an incompetence that he has readily admitted to,” the Prime Minister told ITN.

“This now goes before the Standards Committee in the House of Commons and before the Electoral Commission, and I believe that they will understand that this was a failure but there was no corruption involved, no illegal donation made, and I hope that they will be able to accept his apology.”

George Osborne, the Shadow Chancellor, learnt yesterday that he faces a full parliamentary inquiry over his own failure to declare £500,000 in the Register of Members’ Interests as the row over secret funding intensified.

The Prime Minister went much farther than he did at the weekend when he told The Sun that Mr Hain’s fate “must rest with the authorities, who will look at all these matters”.

It followed noticeably cooler comments about his plight from Ed Balls, the Schools Secretary and close ally of Mr Brown, who told the BBC it was important that Mr Hain answer all the questions in the inquiry and said Britain must have the highest standards in public life. John Lyon, the Parliamentary Commissioner for Standards, and the Electoral Commission are investigating Mr Hain’s admission that he failed to register donations of £103,000 to his unsuccessful campaign last year to be Labour’s deputy leader.

The Conservatives sought to increase pressure on Mr Hain by highlighting figures that showed that 896,170 non-EU citizens were given work national insurance numbers by his department between 2004 and April 2007.

This was more than three times the number of work permits — 270,000 — issued over a similar period. National insurance numbers were given to 21,300 people from Ghana, but only 755 work permits were issued.

The figures cover the period before Mr Hain took charge of the Department for Work and Pensions, but the Conservatives claimed they showed his department’s system for registering migrant workers was in chaos.

Mr Lyon confirmed that he had received a formal complaint about Mr Osborne, who insists he was told he did not have to name his donors as they were already listed as having given cash to the Tories.

David Cameron has admitted that other Shadow Cabinet members may have failed to declare donations, but blames confusion over the rules.

The Tories are now awaiting the outcome of an “urgent” request for clarification of the rules before revealing who else benefited from the secret funding arrangements.

John Mann, one of the Labour MPs who have lodged the complaint, said he believed the Tories had engaged in “a classic trick” and that other members of the Shadow Cabinet would also be shown to have done the same thing. He said: “The law was specifically formulated to stop people doing this — you could put any dodgy funding you got via your party and no one would know about it.”

Case for the defence

Peter Hain
Concealment or incompetence?

The Work and Pensions Secretary may have breached electoral law by failing to declare £103,000 for his failed deputy leadership bid until last week. Six of these donations, amounting to £51,600, were funnelled through the little-known Progressive Policies Forum think-tank. The reasons for this remain unclear. The Electoral Commission is investigating, and may call in the police; the Parliamentary Commissioner for Standards is also looking at this.

Under Commons rules, Mr Hain should also have declared in the Register of Members’ Interests donations made to his campaign within four weeks of receiving them. The Prime Minister has blamed incompetent staff.

George Osborne
Lack of transparency?

The Shadow Chancellor did not declare donations to Conservative headquarters, used to pay for staff in his office, in the Register of Members’ Interests. The rules appear ambiguous because he did not receive the cash directly, and the matter is being examined by the Parliamentary Commissioner for Standards and the Electoral Commission. David Cameron blamed a shake-up in June 2006 for the confusion. Some staff in the Conservative Research Department were transferred from the party’s headquarters to work in the Commons offices of senior frontbench spokesmen. The question of whether voters have the right to know which donors fund particular offices is unanswered.

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