The row over Conservative donor Lord Ashcroft's tax status exposed David Cameron's "fundamental weakness" and his inability to change the Tory Party, senior Cabinet minister Lord Mandelson claimed today.
Lord Mandelson sought to place Mr Cameron at the heart of the Ashcroft affair, telling The Guardian that the billionaire businessman had the Tory leader "by the balls" and was able to "call the shots" in the party.
His comments came as the Conservatives accused Labour of "rank hypocrisy and political opportunism" over Lord Ashcroft's non-dom status, which allows him to avoid UK tax on earnings from overseas, despite an assurance he gave 10 years ago to become a permanent British resident.
Labour's deputy leader Harriet Harman admitted yesterday she did not know whether some of the party's big donors such as Lord Paul, Sir Ronald Cohen and William Bollinger, were also "non-doms".
But she insisted: "The question of judgment here and the question about trust and credibility is about an assurance that was given to get Lord Ashcroft into the Lords.
"Swraj Paul wasn't asked for an assurance because there weren't doubts about him in the way there were with Lord Ashcroft."
Conservative chairman Eric Pickles responded: "Harriet Harman has revealed the rank hypocrisy and political opportunism behind Labour's false indignation over non-doms.
"For a week she and other Cabinet ministers have been bleating about accepting donations from them. Yet when confronted with Labour's £10 million-plus of non-dom donations, she could only obfuscate. When will she learn that people in glass houses shouldn't throw stones?"
Lord Ashcroft announced last Monday that he had enjoyed non-dom status for the last decade, despite signing a written pledge to then Tory leader William Hague that he would take up permanent British residence as a condition of being awarded a peerage.
While negotiating the award in 2000, Mr Hague wrote to then prime minister Tony Blair, stating that Mr Ashcroft - previously based in the central American state of Belize - was ready to take up residence in the UK even though it would cost him "tens of millions" of pounds in tax.
Mr Hague last week said he had known about the peer's "non-dom" status for only a few months, while Tory sources indicated that Mr Cameron had known for less than a month.
Labour has called on Mr Cameron to sack Lord Ashcroft as Tory deputy chairman and maintained its attack today despite an Electoral Commission report finding that donations to the Tories by his company Bearwood, totalling around £4 million since Mr Cameron became leader, did not breach the rules.
Lord Mandelson told The Guardian: "William Hague gave very clear undertakings to then prime minister Tony Blair and to Parliament."
Those undertakings had not been met, said the Business Secretary, adding: "For 10 years that fact has been concealed from the British people.
"During that time, David Cameron and William Hague have repeatedly said that the undertakings were being met. So either they were misleading people or they were being misled by Ashcroft. Which is it?
"Either way, Mr Cameron has shown extraordinary weakness. If he knew the truth, he should have fired Ashcroft. If not, why was he too afraid to ask Ashcroft the awkward direct question?"
And he alleged: "Mr Cameron would rather be seen as complicit in Ashcroft's deception than take him on... (Ashcroft) has David Cameron by the balls.
"Stand up to him, and the Tories lose his money. Bow down in front of him, and Ashcroft continues to call the shots.
"Mr Cameron has zig-zagged his way through his leadership of the Tory Party. He speaks the rhetoric of change but on every hard issue - whether Ashcroft, Europe, grammar schools, dealing with the deficit - Cameron is too weak to pick a fight with his own party. That's why the Tories remain fundamentally unchanged."
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