Door left open for inquiry on 'sleaze': Outside body to rule on MPs' ethics 'is option'. Patricia Wynn Davies reports

David Hunt, the minister for open government and public service, came close yesterday to accepting demands for a wide-ranging inquiry into rules governing the conduct of MPs.

Mr Hunt stopped short of calling for a body from outside Westminster to pronounce on MPs' ethical standards, because the Commons Committee of Privileges had already been set in train by MPs. But he said such a body was 'always an option and . . I'm sure that we're going to look at anything that is possible to prove to people that we have the highest possible standards'.

Mr Hunt's remarks came as David Alton, the sole Liberal Democrat on the committee, and Graham Allen, Labour's immigration spokesman, pledged to call for Michael Howard, the Home Secretary, to be questioned over his intervention in the application for British nationality by Ali al- Fayed, the brother of Mohammad al-Fayed, the Harrods' chairman.

Peter Preston, editor of the Guardian, wrote last Friday of Mohammad al-Fayed's antipathy towards Mr Howard, whose second cousin, Harry Landy, was deputy chairman of London City and Westcliff, a property company owned by Lonrho, which pressed for the 1987 Department of Trade inquiry that Mr Fayed believed had blackened his family name. Mr Howard was a parliamentary under-secretary at the time.

Last night, the Liberal Democrat MP, Alex Carlile QC, wrote to the Prime Minister to ask who paid for an injunction taken out against the Financial Times on Friday night.

The resolve of the privileges committee's Labour members, who withdrew following a Tory vote for secret proceedings, will be put to the test tomorrow when the committee holds its first substantive hearing.

The eight Tories and Mr Alton are scheduled to listen to Sunday Times' tapes of conversations between a reporter posing as a businessman and the Tory backbenchers Graham Riddick and David Tredinnick, who are alleged to have been prepared to each accept pounds 1,000 for tabling parliamentary questions. Next Tuesday, the two MPs are due to be examined in person.

One possible way of seeking to resolve the impasse could be a fresh Commons debate and vote. But John Biffen, a former Tory leader of the House, writing in the Mail on Sunday, said the parliamentary committee established to investigate the scandal over the sale of Marconi shares involving Lloyd George became an extention of the Liberal and Tory whips' office.

He said: 'John Major cannot afford to see that happen to the privileges committee, and if it does then he must be prepared to have a wider inquiry conducted by people drawn from outside the House.'

On the similarly vexed issue of quangos, Mr Hunt said he wanted to find ways in which people could nominate themselves or others they considered 'the best possible individuals' to sit on public bodies.

According to a Labour Research Department study published yesterday by the GMB general union, appointments to National Health Service hospital trusts of people with Tory connections is six times higher than of those sympathetic to other political parties.

John Edmonds, the union's general secretary, said: 'The Government has the opportunity to make 800 new appointments next month. If John Major is sincere in his wish to raise standards in public life then he must use this opportunity.'

Mr Hunt said there should be more openness in the whole system, and he was considering advertising appointments.

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