Few were surprised when Peter Hain stood in a crowded upstairs room of a Brighton hotel to announce his intention to run for Labour’s deputy leadership in September 2006, launching a campaign eight months before there was a vacancy.

Last night friends and enemies alike reflected on the irony that a career characterised by the premature should be ended by tardiness.

There are many candidates for blame for his late declaration of £103,000 in campaign donations: squabbling aides, free-spending campaign staff and fairweather friends. But it was Mr Hain’s own hunger for power — and his vanity — that caused the conditions of his downfall.

He was the first to enter the race and far outspent the campaigns of his rivals for the post. Yet few at Westminster ever thought he had a serious chance of succeeding. When the votes were counted, and Mr Hain ended up a poor fifth out of six candidates, it was hardly a surprise.

Why, then, did he ever think he might win? The answer, as so often in politics, lies in a mixture of self-regard on the part of Peter Hain and cold brutal calculation. The deputy leader, elected by Labour’s members, trade unionists and MPs, is unsackable — witness John Prescott’s extraordinary survival under Tony Blair, despite policy failings and scandals. As one Labour MP told The Times: “The deputy leader is there for the duration. That’s the attraction.”

From the outset, the Hain camp saw their main rival as Alan Johnson, the working-class orphan with a tradeunion background, whose star was sufficiently ascendant in the troubled summer of 2006 for him to consider running for leader as well as deputy.

Mr Hain and his supporters thought that, if they ran a campaign appealing to Labour’s Left, they only needed to see off the Johnson campaign and perhaps another Blairite candidate.

His own background was not in the British Labour movement at all. He was born in Nairobi and brought up in South Africa, where his parents were opponents of apartheid. He moved with his family to England at 16 and first made his name leading protests against touring South African cricket and rugby teams.

In the early 1970s he was leader of the Young Liberals but joined Labour in 1977, soon after beginning work for the Communication Workers Union. He first stood as a Labour parliamentary candidate in 1983.

As he rose up Labour’s ranks, Mr Hain was associated with Labour’s soft-left Tribune group and, once Tony Blair’s brand of new Labour began unsettling the party’s traditional supporters, made a name for himself with occasional outbursts speaking up for Labour’s traditional left-wing and working-class members.

Despite his pedigree, by early April it was clear that Mr Hain’s embryonic campaign was running into trouble. Not only was he being squeezed by Mr Johnson and Jon Cruddas, another left-wing candidate, but cracks were starting to show in his team.

Tensions between Mr Hain, then Northern Ireland Secretary, and Phil Taylor, his special adviser who was in overall charge of the Hain4Labour campaign, were running high. Friends of Mr Taylor say that some of the arguments, even at this early stage, were about cash. “Politicians tend to say, ‘Spend now and we’ll worry about how to pay for it’. Peter was certainly in that category,” one member of his campaign staff said.

Relations between Mr Taylor and Mr Hain were tense, but those between the young, former Lib-Dem Mr Taylor and Steve Morgan, the man running the campaign in Wales, were poisonous. Mr Morgan, a veteran Labour fixer, had little time for Mr Taylor’s strategic and administrative ability. The appointment of Phil Woolas as Mr Hain’s campaign chairman — a close friend of Mr Morgan — sealed Mr Taylor’s fate.

The Hain campaign was launched on May 11 just two hours after John Prescott confirmed he was stepping down. Mr Taylor, now no longer in the campaign, warned Mr Hain of what he regarded as its shortcomings, specifically on financial oversight, in an e-mail shortly afterwards.

A leaked budget suggested a total spend of £88,904 for the three months of the contest. In the end Mr Hain was to spend more than double that figure.

Mr Morgan hotly denies responsibility for the ballooning costs. He has said that he “brought order out of chaos”. Friends insist that every donation that arrived at the campaign’s London HQ was faithfully registered with the Electoral Commission.

Unfortunately for Mr Hain, a second fundraising operation — largely conducted by the Cabinet minister himself — was being run in Wales. Insiders paint a picture of a hopelessly disorganised Hain tapping up wealthy friends and then forgetting to process donations correctly.

About eight of the undeclared donations are thought to fall into this category. They were received largely from Welsh business friends of Mr Hain and passed on to the constituency office in Neath, which failed to ensure they were correctly registered, it is claimed. This would have been embarrassing enough, but what proved fatal was the second class of undeclared donations — those solicited in the wake of defeat to cover huge debts run up in the pursuit of victory.

When the results of Labour’s complex electoral college were counted at a conference in Manchester last June, the worst fears of the Hain campaign were confirmed. He managed 15.32 per cent of the vote, enough to eclipse Hazel Blears but well behind the remaining four candidates.

As the bills continued to arrive Mr Hain realised he had far outspent his ability to pay for them. In the bitter aftermath of Mr Hain’s fall from grace some unions have been blamed for failing to deliver pledges of cash. Officials from two, TSSA and the Bakers, Food and Allied Workers Union, insist, however, that they were not chased — a claim that is angrily denied by Mr Hain’s friends.

It was left to the campaign’s treasurer, John Underwood, to try to sort out the pile of unpaid invoices. Mr Underwood, a former television journalist, had been involved in a soft-Left think-tank, Catalyst. In late 2006, he launched a new soft-left think-tank, the Progressive Policy Forum (PPF) to support the soft-left agenda of Mr Hain. People involved in the Hain4Labour campaign say it received funds from friends of Mr Hain who were unwilling to support his campaign director.

It published pamphlets by him in the period before the campaign was officially under way but had no staff, published no other research and was registered at the same solicitor’s office as the lobbying firm run by his campaign manager, Mr Morgan.

Mr Underwood has admitted that, to meet the campaign debts, “it was decided that contributions made to the PPF should be used to help to meet this overspend”.

This month, Mr Hain published figures showing that £51,613.75 was given to his campaign via PPF, including an interest-free loan of £25,000 from Willie Nagel, a diamond broker, and £5,000 from Mr Morgan.

It was exposure of this convoluted arrangement — open to the charge that it was designed to disguise donors — that shifted the public mood against Mr Hain.

But it was his defence that did as much to seal his fate. When he finally released the late declarations he apologised but implied that he had been too busy to comply with the law.

“I should have given higher personal priority to the day-to-day administration and organisation of my campaign,” he said, adding that it was his “second priority” after his government work in a statement on January 10.

When the Electoral Commission came to make its choice between referring the case to the police and taking no action it was this defence, described by an authoritative source as showing “contempt” for the law, which helped to tilt the balance — and Mr Hain — over the edge.

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