Draft report `prepared by political adviser'

COLIN BROWN

Chief Political Correspondent

The leaked document that overshadowed the Cabinet meeting at Chequers yesterday was believed to have been prepared by Elizabeth Cottrell, the ambitious political adviser to Gillian Shephard at the Department for Education and Employment.

Conservative Party leaders are to hold an inquiry into how the damaging draft of a report for the Secretary of State for Education and Employment was leaked to David Blunkett, her Labour shadow.

"It has clearly been written very recently because it talks about the strategy for the meeting. It doesn't mention the initiative announced by John Major at the start of this week. It does show she is worried about underfunding for education, and not just grant-maintained schools. That is a cause of tension with Mr Major," a Labour source said.

Unlike past leaks, the Prime Minister's office distanced the Government from the document. A spokesman said it came from the "political net" - a reference to Mrs Shephard's political advisers - and was a matter for Conservative Central Office at Smith Square. Ms Cottrell recently put her name forward on the Tory candidates' list for a seat in Bedfordshire.

The leak confirmed the report in the Independent last Saturday that Mrs Shephard was involved in a row over her bid for spending on education with the Treasury, following an unsatisfactory bilateral meeting last week with William Waldegrave, the Chief Secretary to the Treasury.

It will spread alarm among Tory MPs who were already gearing up to the protest to Mr Major about the need for more money for education to avoid non grant-maintained schools having to lay off teachers.

The five-page document was headed "Draft presentation to strategy Cabinet". It carried the security rating "restricted - policy" which would limit it to minister, political advisers and the Cabinet Office.

It clearly had been produced for the Chequers conference, but a spokesman for the Tory party insisted that it had not formed the basis of the morning discussion on education.

Brian Mawhinney, the party chairman, denied that Mrs Shephard had raised the issue of resources, but there was confusion when Michael Heseltine, the deputy Prime Minister, appeared to confirm that she had. The Prime Minister's office was referring all calls to Tory Central Office.

Labour sources claimed that the document was sent in the post to the private office of David Blunkett at the House of Commons. They said they did not know who had sent the leaked documents, but officials were speculating that it could have been found on a photocopier by a department mole.