Cameron will not sack Tory chairman over nanny inquiry

Spelman's position bolstered by reprieve for Osborne

David Cameron is expected to spare Caroline Spelman even if she is found guilty by a parliamentary inquiry into the employment of her nanny, Tory insiders revealed last night.

Mrs Spelman will not be sacked as the Conservative Party chairman regardless of the outcome of the investigation by the parliamentary standards commissioner, due within weeks, a senior party source said.

The source said her position had been bolstered by George Osborne remaining as shadow Chancellor, despite admitting that he made a "mistake" over the Corfu donations affair.

However, Mrs Spelman could still resign if the standards commissioner, Sir John Lyon, rules that she wrongly paid her former nanny, Tina Haynes, out of taxpayers' money.

Mr Osborne has been warned that he cannot commit further errors after allegations were made – and strongly denied – that he tried to solicit a donation from the Russian billionaire Oleg Deripaska.

The allegations by the multi-millionaire Nat Rothschild emerged after Mr Osborne was blamed for stories that Peter Mandelson had "dripped pure poison" about Gordon Brown into his ear while holidaying in Corfu. The source said there was irritation at the highest levels of the party that the gossip had triggered a torrent of embarrassing headlines when the shadow Chancellor should have been on the front foot over the economic crisis. The source said: "George was indiscreet. He won't make that mistake again."

During the crisis and the Corfu saga, Labour cut the Conservative poll lead to eight points.

The strained relations between Mr Cameron and his shadow Chancellor were on display at Prime Minister's Questions last Wednesday.

Mr Osborne, normally at the right hand of the Conservative leader, found himself one seat away from Mr Cameron, with William Hague, tipped as a possible replacement as shadow Chancellor, in the middle.

Mr Osborne gave up his fundraising role as a result of the saga, but has kept his job and will also retain charge of policy and election campaigning.

Mrs Spelman has been effectively in limbo since a complaint was made about her conduct in June. Sir John Lyon is expected to publish his findings before the end of the year.

The probe centres on her alleged misuse of staffing allowances to pay Ms Haynes a decade ago. Mrs Spelman has insisted that Ms Haynes, her nanny for five years until 2002, also carried out work as her constituency secretary during 1997 and 1998, and has denied wrongdoing.

Meanwhile, links between Lord Mandelson and Mr Deripaska continue to raise eyebrows in Westminster. Last week in Moscow, the Secretary of State for Business hailed a £23m deal by the British firm JCB to help with construction at the 2014 Winter Olympic Games in Sochi. Mr Deripaska's firm, Basic Element, is constructing the Olympic village, media centre and airport.

Mandelson's quiz

Lord Mandelson will be questioned by peers for the first time on Thursday over his links to Russian aluminium tycoon Oleg Deripaska. What do they need to ask?

1. When did you first meet Mr Deripaska? Lord Mandelson now says this was in 2004 "to the best of my recollection".

2. Did you ever discuss European Union aluminium tariffs with Mr Deripaska before they were lifted in 2005?

3. Did you know (or care) that Mr Deripaska was refused a visa to the US before you held talks with the oligarch?

4. Did you discuss Montenegro's application to join the World Trade Organisation with Mr Deripaska? Lord Mandelson has openly supported the application, while Mr Deripaska is investing in a marina in the country.