So who will end up paying for Geoffrey Robinson's low-cost loan?

Old Labour was mindlessly hostile to corporate Britain. New Labour risks becoming mindlessly in hock to it
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The Independent Culture
FOR AN awful lot of Peter Mandelson's colleagues, Christmas has come early. Revelations of his embarrassment are a present for all the governing family. What a delight for the left, who loathe Mr Mandelson for his leading role in the party's reforms and unguarded pleasure in driving them to the margins of influence. What a festive treat for the hyper-active supporters of Gordon Brown, who resented Mr Mandelson's desertion of their swordsman for Tony Blair in the leadership election and have been eating their revenge cold and heartily ever since.

Even the most on-message of New Labourites cannot forebear to smile at the spectacle of the man who demands the highest standards of everyone else being so thoroughly hoisted on his own self-made mishap.

Knowing him a little, I can imagine that this last humiliation will be felt by Mr Mandelson most keenly. All his professional life, he has been driven to make the Labour Party electable. He has worked tirelessly and ruthlessly to strip it of its self-mutilating instincts.Yet, in a single lapse of judgement, he has inflicted a wound to the Government's reputation. You cannot reasonably expect voters struggling with the Bank of England's interest rate Yo-Yo to feel warm towards a senior minister who has avoided such vicissitudes through a privately negotiated base-rate loan.

Had this happened to a Tory minister, Labour would, of course, have been unleashing allegations of sleaze with the abandon of a drunk letting off party poppers - and Mr Mandelson would have been co-ordinating the assault. All the more extraordinary that a man of his political sophistication should have been unaware of the possible consequences of a large and undeclared loan from someone whose business past was, we may say, colourful, and who, like Mr Mandelson, was bent on a government job.

It must have been clear to both sides that they would be linked by the shared knowledge of the debt and that this would affect their dealings with one another. Hidden links between ministers break the first rule of transparent government by creating a back-channel unknown to colleagues and the public.

As Mr Mandelson now concedes, he should, at the very latest, have declared the existence of the loan when the DTI, where he had become a minister, started investigating Mr Robinson's affairs in September. His failure to register the loan or, as far as the record goes, to share news of its existence with the Prime Minister, indicates that he felt badly about it all along - the surest sign that he was ill advised to make it.

Mr Robinson retorts that he was only seeking to help a "friend in need". Friends in need are one thing; friends in greed are quite another. A true friend would have said to Mr Mandelson, "You can't afford a house in Notting Hill. MPs' salaries are open to public scrutiny and everyone is watching you. Le tout Westminster will speculate about where you got the money from. That house, which you intend to design along starkly modernist lines to aid your repose and reflect your general coolness, will not give you a moment's rest. Make do with the Islington flat for now."

But the Paymaster General possesses a dangerous, almost pathological generosity. His pleasantly dithering manner hides a sharp instinct for power and patronage. Like a lot of catalysts of misfortune, he is a one- man Santa's Grotto: source of a free holiday home for Mr Blair, trips to the South of France for his Treasury in-crowd and World Cup tickets for the young Brownites.

It is quite hard to stop Geoffrey giving you things when he has a mind to. Once, when I went to lunch at his hotel apartment, he greeted me, as is his way, with a profusion of extravagant compliments and then said, "But your hair's all messed up. I'll get the hairdresser here to come up and do it for you." It took half an hour's strenuous discussion of the Public Finance Initiative to distract him from unleashing his minion on me.

This eager, slightly importune manner draws people closer to him than they might come were they in possession of full and sober judgement. Mr Robinson is instinctively aware of the weaknesses and vanities of his colleagues and their heart's desires. Through his largess, he spreads a little happiness and a lot of his own influence in government. Mr Mandelson is one of Mr Blair's most trusted advisers. When it comes to deciding the future of Mr Robinson, whose continuation as Paymaster General has been under review once already since information surfaced about his off- shore funds and dealings with the late Robert Maxwell, the Trade and Industry Secretary's vote carries weight in No 10.

To speak, as Mr Mandelson has done, of "insulating myself from Geoffrey Robinson's affairs", in these conditions is meaningless.

The real question is why the Secretary of State for Trade and Industry felt he had to live in the splendour of a latter-day Trimalchio in the first place. Petronius's satire on the Roman nouveau riches remains the best guide to the ruling elite's desire to express its power in extravagance.

For all his flair, Peter Mandelson is an insecure man. He also senses keenly that Labour is an insecure party, still in awe of its own regained power. Old Peter wanted to emerge from the 1997 election into the bright dawn of government as New Peter. Blessed with personality, good looks and a rebarbative wit, he emerged from the dowdy chrysalis of the Labour Party to become the favourite of west London's salons. This was not solely the product of vanity. New Labour's fondness for garbing itself in corporate splendour encouraged Mr Mandelson to believe that any inter-penetration of money and politics was for the good of the party. A similar delusion has blinded Mr Blair to the way that his uncritical embrace of business is slowly but steadily damaging its reputation for plain dealing

Old Labour was mindlessly hostile to corporate Britain. New Labour risks becoming mindlessly in hock to it. I am not in the least hostile to business. But I am worried that men with deep pockets and shallow beliefs can gain undue access to and influence over government.

Mr Blair has been slow to see the implications of a pattern of behaviour that began with the acceptance of Bernie Ecclestone's donation and includes the appointment of first Lord Hollick and the Lord Sainsbury as advisers at DTI. Keeping Mr Robinson in a grace-and-favour job in the Treasury while his affairs are under investigation by another department has proved to be sorely misjudged.

New Labour cannot be both the People's Party and the party of Mammon. Forging a corporate Britain plc was not one of the five pledges. Mr Mandelson's deal with Geoffrey Robinson may turn out to be the most expensive low- interest loan ever negotiated. It will be repaid in full by the Government in the year to come.