Labour's former master of spin in free-fall after revelations about secret house loan


Peter Mandelson - prime ministerial confidant, accredited architect of "New Labour" and close friend of the great, good and glitzy - awoke yesterday to the reality of a political career grievously, if not fatally, damaged.

The British Trade Secretary - and former master of "spin" - went on a sustained media offensive, insisting that he had done nothing wrong and vowing he would not resign. But neither the arrogance nor the assurance for which he is famed could mask his hideous embarrassment at the Guardian tale of "Mandelson, the minister and the secret £373,000 loan".

In his heart of hearts Mr Mandelson might have acknowledged that he probably deserved the "good kicking" administered by yesterday's British press. The most (by his own definition) "exotic" bird in Mr Blair's cabinet could hardly have expected anything else from the army of enemies, outside as well as inside Labour's ranks, he seems to have effortlessly acquired along the way to power and glory. But his personal discomfort was the least of it.

For Mr Mandelson's astonishing lack of judgment and good old-fashioned political nous had handed the Tories a gift-wrapped opportunity to revive the charge of "cronyism" - and, worst of all, brought allegations of "sleaze" to the door of No 10.

In a nutshell: just before the last election Mr Mandelson borrowed £373,000 from millionaire fellow MP Geoffrey Robinson to help him buy a £470,000 property in the Notting Hill area of west London. The loan, given on the understanding that it would be repaid in full in due course, was made available at the Midland Bank base rate, substantially lower than the market mortgage rate. Earning just over £40,000 at the time, Mr Mandelson would not have been able to generate such an amount from an ordinary lender, and is estimated thus far to have saved himself some £10,000 in interest payments. Reports yesterday said Mr Mandelson had paid back £40,624 by spring 1997 and nothing further since the election. He told nobody about the arrangement.

After the election, Mr Mandelson became Minister without Portfolio, took charge of the Millennium Dome, and awaited his certain reward with a first-wave promotion to the cabinet in Mr Blair's first reshuffle last July. Mr Robinson became Paymaster General, and swiftly found himself embroiled in controversy about share purchases, offshore tax havens and his business dealings with the late Robert Maxwell. Forced to apologise three times to the Commons for breaching the rules on the disclosure of members' interests, Mr Robinson last September faced allegations that his businesses had breached company law. Those allegations would result in an investigation by the Department of Trade and Industry - over which, of course, Mr Mandelson now presides.

The Trade Secretary told his permanent secretary he would play no part in the investigation, which would have involved one minister sitting in judgment on another. But he did not then inform his officials of his financial relationship with Mr Robinson - and only disclosed it to the Prime Minister, in the midst of the US/UK assault on Iraq, last Thursday when he knew it was set to become public knowledge.

A defiant Mr Mandelson yesterday insisted that, embarrassing as it doubtless was, the matter was also personal; an arrangement between two friends, entered into while still in opposition. He had not broken the ministerial code, done anything improper, or made any representations on Mr Robinson's behalf - either when Mr Blair was considering the composition of his first government, or subsequently.

Seemingly pained at the suggestion that the matter of Mr Robinson's suitability might ever have come up in conversation with Mr Blair, Mr Mandelson told the BBC: "I have no influence to deploy on his or anybody else's behalf."

As the story broke on Monday night, Mr Blair pronounced himself satisfied that there was no conflict of interest, and that Mr Mandelson had "properly insulated" himself from decisions relating to the DTI's investigation of Mr Robinson. And yesterday Number 10 insisted the Prime Minister had "full confidence" in both his ministers.

So that would appear to be that. When Mr Blair assumed power he made it known there would be no repeat of the Major experience, whereby Number 10 would pledge support for embattled ministers only, in the end, to see them picked off by a determined press. The Blairite rule is that ministers found guilty of wrong-doing go, and go quickly.

Hence the immediate certainty that the question of resignation does not arise - and, presumably, the comforting thought that, with parliament in recess and the holidays upon us, this latest local difficulty will be forgotten come January.

Yet that is anything but certain. For starters, Mr Mandelson has now had to write to the registrar for members' interests inviting her to determine whether he has breached Commons rules by not declaring the loan. More worrying, the Inland Revenue will almost certainly want to examine the deal - and calculations might be swiftly changed if there is any suggestion of impropriety on the tax front. But even assuming there is nothing further to challenge Mr Mandelson's position in the cabinet, he and Mr Blair have to reckon with the press and political fallout.

The minister may console himself that the press is working to its own agenda, and many British journalists are certainly eager to put the boot in. Mr Mandelson's celebrated bullying tendency will have created a desire for revenge in some quarters. The scale of the loan, and this single man's need for quite such a splendid home, will also have fuelled the unease elsewhere that a "Labour" man should be so conspicuously part of what one observer calls "the metrocentric cocktail party elite".

In the end, these are not the issues that matter any more in the grand scheme of things than that this exotic bird's continued ascent no longer seems so assured.

The real damage of this episode is that it again brings to the surface an underlying sense of this government's "arrogance" - what Michael Ancram described yesterday as a belief "that they can do anything and get away with it". The Tories, of course, would say that. But while Mr Blair will shrug off criticism from that quarter, he may reflect rather more seriously on the amazed and wounded reactions from within his own ranks.

Rhodri Morgan, chairman of the Public Administration Select Committee, did not think there had been a conflict of interests either. But nor had he any doubt Labour voters would be unhappy to find Mr Mandelson - the man behind New Labour's squeaky clean image - accused of doing "the kind of thing the Tories do".