Speculation grows that Whelan may resign

CHARLIE WHELAN, the Chancellor's controversial press secretary, could resign in frustration over allegations that he played a part in Peter Mandelson's downfall.

Speculation was mounting last night that Mr Whelan might leave his post at the Treasury, despite public backing from Margaret Beckett, the Leader of the Commons.

Downing Street yesterday insisted that his fate was a matter for Gordon Brown and not the Prime Minister.

A defiant Mr Whelan is due back in his pounds 50,000-a-year post at the Treasury today, after taking a walking holiday near Inverness. One friend of Mr Whelan's said: "People have predicted his demise before and have been proved wrong.

"He has done nothing wrong and so there are no grounds for any action against him."

But others were quoted as saying that Mr Whelan was furious at being made the scapegoat for the resignations of Mr Mandelson from his Cabinet post as secretary of state for trade and industry and of Geoffrey Robinson, the former paymaster-general.

Supporters of Mr Mandelson are convinced Mr Whelan passed on details of the former minister's pounds 373,000 personal loan from Mr Robinson to Paul Routledge, author of an unauthorised biography of Mr Mandelson. Mr Routledge denied his friend Mr Whelan was his source but tried to remove the revelation from his book as he believed Downing Street would suspect Mr Whelan of being the mole and demand his sacking.

Some ministers believe Mr Whelan will keep his job in the short term, but will switch to another post after the dust has settled. However, Mrs Beckett told BBC Radio Five yesterday that Mr Whelan was an "excellent communicator".

Yesterday police confirmed that they are investigating the circumstances surrounding the collapse of a fraud trial involving Mr Mandelson's former election agent in his Hartlepool constituency. Bernard Carr was due to appear before Teesside Crown Court last February to answer seven charges of obtaining money by deception, when Mr Mandelson was expected to appear in court to act as a character reference.

On the morning that the case was due to begin, proceedings against Mr Carr were halted.