'Chain of events' ties Blunkett to nanny's fast-track visa

David Blunkett's hopes of winning a clean bill of health from an inquiry into the affair that cost him his cabinet job were dashed yesterday when it concluded there was "a chain of events" linking him to the fast-tracking of a visa application by his former lover's nanny.

The former home secretary hoped his resignation a week ago would take the sting out of the investigation by Sir Alan Budd, a former Treasury adviser. When he quit, Mr Blunkett predicted the inquiry would conclude the Home Office did not speed up the application by Leoncia Casalme for indefinite leave to remain in Britain (ILR).

Sir Alan concluded yesterday: "I believe that I have been able to establish a chain of events linking Mr Blunkett to the change in the decision on Ms Casalme's application for ILR." Her case took 52 days to process, at a time when the average for domestic workers applying for ILR was 172 days.

However, Sir Alan delivered what was seen as an open verdict on whether Mr Blunkett personally ordered the case to be speeded up. "I have not been able to determine whether Mr Blunkett gave any instructions in relation to the case and, if so, what they were," said his report.

He declined to rule on whether Mr Blunkett, who handed his private office a letter about the delay on the nanny's application, was making it a "special help" or using it to highlight performance failings at the Immigration and Nationality Directorate (IND).

Sir Alan dismissed growing speculation of a cover-up at the Home Office designed to hide the truth from his inquiry. "I have no reason to believe that those who have spoken to me are concealing anything from me," he said.

The investigation fell short of exonerating Mr Blunkett, as Tony Blair forecast confidently when it was set up last month. It may make it harder for the Prime Minister to bring him back into the Cabinet immediately after the next general election.

Yesterday, Mr Blair's official spokesman said he still regarded Mr Blunkett's integrity as intact, adding: "The report today brings this chapter to a close and enables us to draw a line under the issue and move on."

But the Tories and Liberal Democrats showed no signs of doing so, calling for a judge to head a new inquiry into the crucial questions left unanswered by Sir Alan. They complained about an outbreak of "collective amnesia" at the Home Office after the report said that neither Mr Blunkett nor his officials could recall the details of the contacts between his private office and the IND.

The opposition parties were suspicious that faxes from the Home Office to the IND about the case were missing.

Michael Howard, the Tory leader, accused Mr Blunkett of lying. "There is no doubt that David Blunkett did not tell the truth," he said. "David Blunkett began by saying the visa hadn't been fast-tracked and that it had nothing to do with his office. Now we know that those things are not true. It was fast-tracked and it did come through his private office."

He widened his attack to include the Prime Minister. "Tony Blair heads a grubby government that gives favour for finance. A grubby government that is a stranger to the truth. A grubby government that intimidates people who don't agree with it. In short, a grubby government low on integrity, light on honesty and lacking in all humility."

David Davis, the shadow Home Secretary, said: "A judicial inquiry is needed to clear up the massive hole at the centre of the Budd inquiry. There are more absence of answers than real answers."

Sir Menzies Campbell, the deputy leader of the Liberal Democrats, described the outcome as unsatisfactory. "There appears to be a remarkable number of lapses of memory among most people concerned with this matter." He added: "If you resign in these circumstances, that is to acknowledge responsibility and to acknowledge guilt. It means we are left with an unsatisfactory situation."

The Government moved quickly in an attempt to show that lessons had been learnt from the crisis which had engulfed Mr Blunkett this summer after Kimberly Quinn, the married publisher of The Spectator magazine, ended their three-year affair.

In a written statement to MPs, Charles Clarke, the new Home Secretary, said: "What went wrong here is that a case in which a minister turned out to have a personal interest was dealt with, without that interest being clearly recorded."

He announced that "clear and formal rules" were being drawn up for handling and recording all cases brought to ministers' attention.

Mr Clarke concluded: "David Blunkett took full responsibility for this matter and resigned last week. I believe on the basis of this authoritative report the matter should now be closed."

In a message to staff, John Gieve, the permanent secretary at the Home Office, said it had been "a difficult few days for the Home Office" and admitted: "It is clear that something went wrong with this case." He said: "There is nothing in the report which suggests that officials have acted improperly or which calls for disciplinary action.

"However, there are lessons to be learnt. We need to clarify the arrangements for handling and recording individual cases brought to the attention of ministers and ensure that everyone understands them. I am setting out today clear guidelines for all staff and these will be incorporated in the detailed rules and procedures in all parts of the Home Office."

Ministers have a three-week breathing space as the Commons began its Christmas break last night. But they are certain to face demands for a new Civil Service Act when MPs return next month. The long-delayed legislation could clarify the role of officials in sensitive cases involving ministers and allay fears that the civil service has been "politicised" by Labour since 1997.

Jonathan Baume, the general secretary of the First Division Association representing senior civil servants, said the Blunkett crisis highlighted the needed for such an Act.

He said: "We are uneasy that once again there is widespread public concern that the boundaries between the activities of ministers and civil servants may have been blurred. This has been a recurring problem under both Conservative and Labour governments."

Sir Alan conceded that he had not been able "to discover the complete truth. I'm not saying anything was concealed from me - I am pretty sure of that. I think that people are honestly recollecting events and they have not been able to allow me to choose between the two possible explanations for what happened." The former Treasury chief economic adviser said that he had found no evidence of anything wrong being done.

He concluded: "I was not aware of any wrong-doing. If I had discovered any wrong-doing, I would have reported it in my report," he said. "I haven't been able to establish that any wrong has been done, certainly not by the people that I interviewed. It is not a question of not pinning blame, but of not establishing that wrong was done."