PM's supporters see hand of the Brownites behind media storm

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Indy Politics

A war of words between allies of Tony Blair and Gordon Brown has broken out amid the "cash for peerages" controversy engulfing the Prime Minister.

The fragile truce between the two men was shattered as Blairites accused the Brown camp of destabilising Mr Blair in the hope of forcing him out of office. The charge was angrily dismissed as "nonsense" by the Chancellor's aides.

Downing Street is furious with Jack Dromey, the Labour treasurer, for his outspoken attack on being kept in the dark by Mr Blair over the multimillion-pound loans made to the party by three businessmen who have been nominated for peerages.

Mr Dromey is married to Harriet Harman, the Constitutional Affairs minister, who is a close ally of Mr Brown and tipped as his possible deputy if, as expected, he succeeds the Prime Minister.

Although Mr Blair and Mr Brown have been working closely together in recent months, the row over the loans has renewed the tensions between their supporters. The Blair camp claimed Mr Dromey's attack, launched as the House of Commons voted on the Education Bill on Wednesday night, was deliberately timed to undermine the Prime Minister as he was weakened by having to rely on the Conservatives to save his schools reforms from defeat.

Accusing Brownites of whipping up a "perfect storm," one Blair ally said: "You have got to look at the timing and think it wasn't an accident. There seems to be an operation on to destabilise him.

"This is a battle between Blair and Brown. In my view, Brown put Dromey up to it. It is impossible that Gordon didn't know. It is a battle royal."

One senior Labour source dismissed Mr Dromey's allegations as "utter nonsense from start to finish". He added: "Every penny [of the loans] went into party funds and was shown up on the statements he was sent. Nothing went into any other account or slush fund. And every loan was made on a commercial rate with a full agreement that Dromey could have inspected if he had taken the trouble to read the monthly accounts properly."

The Blairites claimed Mr Dromey had given No 10 no advance warning of his criticism. Mr Dromey denied that. His spokesman said: "The reality is there was a top-level conference call with Downing Street early in the week. It is just not true that they didn't know. There has been a series of conversations going on at the top levels of the party."

Asked if Mr Dromey was involved in a conspiracy with the Brownites, his spokesman said: "No. There is nothing in that allegation at all."

Mr Blair did not repeat the claims by his aides when asked whether he believed Mr Dromey's intervention was politically motivated, which would only have fuelled the row. He told his monthly press conference: "I'm sure that's not the motivation."

A Blairite MP said: "Harriet [Harman] has always been obsessed about big donors. She can't stand them - because they are all men."

Shortly before her husband went public, Ms Harman gave up ministerial responsibility for party political finances to head off allegations that she faced a potential conflict of interest. She asked her boss, Lord Falconer of Thoroton, the Constitutional Affairs Secretary, to relieve her of her roles on electoral administration, which included party funding, and House of Lords reform. He agreed, handing her responsibility for justice, including the courts and legal aid.

Without her pre-emptive move, Ms Harman could have faced allegations that she had been in breach of the ministerial code of conduct since taking on the party funding brief after last year's general election. The code states: "Ministers must ensure that no conflict arises, or appears to arise, between their public duties and their private interests."

When in doubt about whether there is such a conflict, a minister should consult his or her permanent secretary. Whitehall sources said Ms Harman had not done so. But her department said she informed her top civil servant "as soon as" she realised that there was a potential conflict of interest.