It suggested ministerial misdemeanors be assessed by an independent panel of "wise men". But Mr Blair ignored the advice and now David Blunkett, one of his key cabinet allies, has been forced to resign.
The sleaze watchdog resists gloating. But a flicker of a smile crosses his face as he sits back in his chair at a polished table in his Westminster office. After years of being ignored by the Government on how to avoid sleaze scandals, the Committee on Standards in Public Life has found its advice is finally being noted by ministers.
"It is very important that ministers are seen to be subject to a rigorous ethical regime. One of the complaints we sometimes get is the ethical standards framework for parish councillors and district councillors is a much tougher regime than it is for ministers," the committee chairman says. "They have a relatively lenient regime, so when a breach of those rules takes place it's very important something happens."
In an interview with The Independent on Sunday, the burly former trade union leader calls for an urgent review of the Ministerial Code. "I think that an immediate review of the code of conduct might be valuable to see if it needs tightening up in any respect."
He warns that more sleaze scandals will not only have a corrosive effect on the Government's public standing but, acting as a distraction, will hamper Mr Blair's ability to deliver his public reform programme.
"I do not think this Government has a smell of sleaze about it but of course we do know the public perception can be strongly influenced by a relatively small number of incidents which have enormous media coverage," he says. "I think that the danger for this Government is that it seems to be so obsessed with public service reform that it hasn't been seen to give equal prominence to standards-related issues."
Sir Alistair asks why the Prime Minister, as the enforcer of the Ministerial Code, took no direct action when it emerged that Mr Blunkett had broken the rules.
"In the end it is a matter of the style, tone and leadership of the Prime Minister. In the end, that is the central issue - to make sure that those rules are strictly adhered to and that everybody knows that if they step out of line they won't get a second chance."
The standards watchdog suggests that Mr Blair's unwillingness to act over breaches of the code could open him up to the accusation that he is "weak" on tackling sleaze.
"It is certainly true that if you sign up to a foreword to the Ministerial Code in which you expect ministers not only to sign up to the letter but the spirit as well, which is what the foreword says, then if your actions don't live up to those words you're in danger of getting criticised and being perceived to be weak on these issues; and there is a danger that the Prime Minister could be under that charge," he says.
He does not agree with the Prime Minister's statement last week that Mr Blunkett was not guilty of any form of impropriety. "The Prime Minister is saying in his view there has been no impropriety. I am not sure I quite take the same view as he does. How many people in this country have the opportunity to invest £15,000 to possibly get back £300,000 within a few months' time?"
Sir Alistair says the recent arrival of Sir Gus O'Donnell as Cabinet Secretary has led to ethical standards being taken far more seriously in Government.
But he suggests it is the Prime Minister himself who needs to send out a firmer message on the matter.
"You can give a rather obscure and muddied message about ethical standards," he says. "These issues in the end are always matters of leadership."
He says scandals, including the Blunkett affair, reverberate throughout Britain and damage the Government.
"I am just saying, in terms of public perception of the situation, the danger was that it would bring politicians and the whole political class into serious lack of confidence from a public point of view," he says.
Sir Alistair is reviewing the wording of the seven principles of public life that ministers sign up to when they take office. He is reviewing whether the principles, which include honesty, integrity and leadership, need to be expressed more explicitly.
He is also in talks with the Government about a full-scale inquiry by his committee into the Ministerial Code. But the immediate priority is for the Government to institute a review.Reuse content