Shock defeat for Tories over MPs' earnings defeated; Triumph for Nolan as backbench rebellion hands Labour victory

'Old institutions cannot change without a powerful catalyst. For Parliament, Nolan is just that. With this victory behind him, he can embark upon his work across the rest of the public sector with renewed confidence' Leading article, page 18
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Political Editor

John Major and the Tory high command last night suffered a humiliating parliamentary defeat when the Commons voted by 322 to 271 to compel members to disclose by the end of March the outside income they are able to earn as MPs.

Thanks to a much bigger than expected Tory backbench rebellion, Labour was handed a Commons triumph when MPs backed the most dramatic change this century in the rules which regulate their behaviour, by agreeing to earnings disclosure as well as an immediate ban on "advocacy" by MPs in support of commercial interests.

Although the decision was technically on a free vote, it flew in the face of a strong appeal from Tony Newton, the Leader of the House, not to back a Labour amendment calling for disclosure, and a clear signal last week by the Prime Minister that he was against MPs revealing their earnings.

Mr Major and Tony Blair, the Labour leader, did not vote last night because they were at the funeral of Yitzhak Rabin in Jerusalem. But the Prime Minister had made clear that while he supported the Tory majority on the Nolan Select Committee, which had proposed an advocacy ban, he rejected Lord Nolan's recommendations on disclosure.

Earlier, Sir Edward Heath had led a ferocious counter- attack on Labour's call for earnings disclosure saying that it was motivated by "a doctrine of envy and hatred". By contrast, John Biffen, a former senior Tory minister, broke rank with Mr Major to warn MPs that they could not, and in the end would not, ignore a "powerful mood of public anxiety" about their financial activities.

Mr Biffen, speaking with the authority of a former Leader of the Commons, and Sir Edward as a former Prime Minister, exposed the deep divisions within the Tory party over Nolan. Mr Biffen said there was an irreversible trend towards transparency of earnings outside Westminster: "I cannot see the House turning away from the requirement for financial disclosure."

Sir Edward insisted that the public did not have the "right to know" what MPs earned outside the Commons, over and above their pounds 33,189 a year salaries. The new rules will hit MPs with consultancies but will not affect income earned by MPs whose work as lawyers, farmers or industrialists has no bearing on parliamentary work.

The 23 Tory MPs who supported the Opposition in the vote - as opposed to merely abstaining - crossed a broad spectrum of party opinion and included: Emma Nicholson, Peter Thurnham, David Nicholson, Richard Shepherd, David Martin, John Biffen, Allan Stewart, Hugh Dykes, David Wilshire Stephen Day, Barry Legge, David Martin, Richard Shepherd, Tim Sainsbury and Patrick Thompson.

David Tredinnick - the MP censured earlier this year in the "cash for questions" row and Barry Porter, named in the Sunday Times as having allegedly agreed in principle last year to accept a pounds 1,500 payment to arrange a meeting between businessmen and ministers, both voted with Labour.

Mr Porter strongly denied that he did anything against Commons regulations or the law when he was approached by a Sunday Times reporter, posing as a businessman. But he said full disclosure was the "only way to lance the boil" of public criticism.

The advocacy ban, which had all-party agreement, and which was overwhelmingly endorsed by the Commons, will prevent MPs initiating debates, asking questions, or introducing Bills on behalf of their own commercial interests.

The Opposition's 51-vote majority over earnings disclosure was swiftly reinforced when the Commons went on, thanks to another Tory revolt, by 289 to 264, to back a second Labour amendment, extending the "advocacy ban" to MPs arranging and participating delegations "where the problem affects only the body from which he has a paid interest." Labour backers of the second amendment believe it would rule out the agreement Mr Porter allegedly entered into.

Mr Biffen's intervention helped to stimulate a Tory haemorrhage which appears to have had several causes: a sincerely-held view that disclosure was needed to restore the reputation of the Commons, fear that a vote against disclosure could affect the election outcome, especially in marginal seats, the effectiveness of some locally-run Labour campaigns designed to embarrass Tory MPs, and constituency pressure.

Edwina Currie, who abstained, said: "It has been made clear to me in my constituency by committed Conservatives that they're not happy about concealment."

There were also signs that, in the closing days before the debate, Government business managers had backed off from trying to twist the arms of potential rebels.

The Tory MP Sir Michael Neubert last night suggested that he may defy the new ruling and Nicholas Winterton, said "the House of Commons has committed suicide" as MPs voted to appoint - at a salary of pounds 72,000 for a four day week - Sir Gordon Downey as an independent commissioner to monitor MPs' interests.

Moving the disclosure amendment, Ann Taylor, the shadow Leader of the House, said: "There are members on both sides of the House who resent the fact that all MPs are getting a bad name because of the activities of a few."

After the vote, she added: "This has been a very good night for the reputation for Parliament and a terrible night for the reputation of John Major."

Nolan debate, pages 4, 5