Did Hague know that Lord Ashcroft was a non-dom?

Labour stepped up the pressure on William Hague last night, after the Tories' foreign affairs spokesman suggested he knew, 10 years ago, that Lord Ashcroft was a "non-dom".

Mr Hague had previously insisted he was aware only "in the last few months" that the billionaire Tory donor did not pay full UK tax on all earnings despite Michael Ashcroft being granted a peerage a decade ago.

At the time of the peerage, Mr Hague, then Conservative leader, told Tony Blair in a letter that the appointment of Lord Ashcroft would cost the businessman "tens of millions of pounds" – suggesting that he would be paying full taxes.

Yet, on BBC Radio 4's Any Questions on Friday, Mr Hague left the door open to the possibility that he knew, back in 2000, that Lord Ashcroft would not pay full tax.

When Jonathan Dimbleby, the presenter, asked Mr Hague if he interpreted "permanent residence" – the condition originally set by the Honours Committee for Ashcroft to be elevated to the Lords – as meaning "he would be paying tax on all his earnings", Mr Hague responded: "I interpreted that to mean that he would be paying taxes on his income from the United Kingdom."

Asked if this meant "only" UK income, Mr Hague said: "I couldn't know, nor could anybody know, whether he was domiciled in the UK."

The Schools Secretary, Ed Balls, on the same programme, seized on the remarks as an admission, in effect, that the Tory frontbencher knew more than he had previously revealed, or that he had wilfully ignored asking the right questions.

Mr Balls said: "We either have to believe that William Hague, for the last 10 years, has believed this was going to cost [Ashcroft] millions of pounds, because Lord Ashcroft was domiciled here for tax purposes, or we have to believe that for 10 years he has never known that the committee was being misled, he [Ashcroft] wasn't in fact paying tax in the UK and he [Hague] never asked the question.

"Either he [Hague] has not been telling the truth or he has been guilty of the most massive misjudgement for both him and David Cameron."

Mr Hague claimed the agreement – the wording of which was changed from "permanent" to "long-term residence", allowing Lord Ashcroft a loophole to remain a non-dom – did not refer to tax status, so the issue did not arise.

But the Foreign Secretary, David Miliband, said yesterday: "William Hague now admits that he knew 10 years ago that Lord Ashcroft was only planning to pay tax on his UK income – contrary to Hague's own claim that Ashcroft would pays 'tens of millions' in tax.

"Why did Hague conceal this for 10 years? When did David Cameron find out? And why did he do nothing about this when he did so?"