MPs round on Blair 'tainted' gift

Tony Blair was today engulfed in anger from his own party over a £100,000 donation to Labour from newspaper publisher Richard Desmond.

The opposition, scenting fresh sleaze, demanded to know whether there was any link between the handout and the way Mr Desmond was cleared, only days beforehand, to take over the Daily Express.

Downing Street was forced to deny that the way had been paved for a deal at a meeting between Mr Blair and Mr Desmond. To add to the embarrassment, the minister at the centre of the row was Stephen Byers - accused, yet again, of being economical with the truth.

It was Mr Byers who, as Trade Secretary, waved the Express deal through. And today he was accused of misleading in his claim at the weekend that he had no power to block it.

Some of Labour's most senior figures were at the heart of today's row. The deal with Mr Desmond was said to have been set up by Labour's general secretary, Margaret McDonagh. Within months she had left her party role - to take over as general manager of Mr Desmond's Express newspapers.

Mr Blair's strategy and communications boss, Alastair Campbell, was on Mr Desmond's party list, hitting the limelight when he introduced England football coach Sven-Goran Eriksson to Ulrika Jonsson.

Both Mr Campbell and Miss McDonagh were said to have attended talks at which Mr Desmond's donation was discussed, despite denials from Downing Street.

The first offer from Mr Desmond was for Labour to advertise free in his newspapers but the party asked for a donation instead.

Labour MPs, both loyalist and dissident, queued up to condemn the way the party, shortly before last year's General Election, had taken what they saw as tainted money.

The Labour chairman of the Commons Public Administration Committee, Tony Wright, said he felt "very uneasy". And he said of Mr Desmond: " He strikes me as a slightly unsavoury gentleman. I would like to have nothing to do with him."

Another influential committee chairman, Martin O'Neill, said that if he had been offered the money for his constituency he would say no. But it was Left-wing MP Lynne Jones who raised the spectre of steel tycoon Lakshmi Mittal, racing boss Bernie Ecclestone, pharmaceuticals chief Paul Drayson and the millionaire Hinduja brothers.

He declared: "There seems to be a long line of dubious donors to the Labour Party who do not share the values which are part and parcel of being a supporter."

The suspicion and anger was heightened by the timing of the £100,000 handout, at a black-hole moment which ensured that, had it not been leaked, it would not have been revealed until well over a year later. The Conservatives charged Mr Blair with "hypocrisy" and party chairman David Davis said: "The Prime Minister has a lot of explaining to do."

Mr Byers claimed he had no choice but to allow Mr Desmond to take control of Express newspapers last year because he had agreed a new policy in October 2000 to ensure that he must follow the advice of the Office of Fair Trading in deciding on mergers and takeovers.

Labour MPs complained, however, that Mr Byers still had power to block a newspaper takeover in certain-circumstances. Labour anger was heightened by the defiant line from Northern Ireland Secretary John Reid, put up to answer for the party against the growing tide of criticism.

He said Labour was not in the business of making "moral judgements" when would-be donors were prepared to be generous.

Some furious Labour MPs were suggesting the party should give back the money, as happened with the £1 million donation from Mr Ecclestone.

Opinion: Losing the moral high ground