War! Tories battle over Ashcroft

Senior Cameron aides at loggerheads as bungled handling of the peer's tax status hits electoral chances

The Lord Ashcroft affair is causing deep divisions at the heart of David Cameron's inner circle, as it emerged that the man in charge of the Conservative election campaign has had a decade-long bitter feud with the controversial Tory donor and peer.

George Bridges, who was put in charge of the day-to-day running of the campaign last week, is among at least three close Cameron aides to express concern in recent months that the mystery surrounding Lord Ashcroft's tax status had not been cleared up.

The peer, who is running the Tories' strategy to win marginal seats, has previously accused Mr Bridges of contributing to a "venomous" newspaper campaign over his party donations.

In turn, Mr Bridges, along with Steve Hilton, Mr Cameron's director of strategy, and his chief of staff, Ed Llewellyn, are understood to have warned the leader that the party needed to force the Lord Ashcroft issue into the open.

In a desperate attempt to move on following Lord Ashcroft's admission last week that he is a "non-dom", it emerged yesterday that the peer will stand down from frontline politics after the election. Yet critics will point out that the millions of pounds Lord Ashcroft has used to fight in Labour and Lib Dem marginal constituencies will already have been spent.

Mr Cameron himself told aides three years ago that the party needed to end its "dependency" on one man – the Belize-based businessman.

There were fresh questions last night for William Hague, the Tory foreign affairs spokesman, over when he knew Lord Ashcroft was a "non-dom". Mr Hague, who secured the peerage in 2000 when he was party leader, said last week he knew "over the last few months". However, this form of words left room for doubt. But yesterday Sir Hayden Phillips, the senior mandarin involved in agreeing Lord Ashcroft's residency status, suggested that Mr Hague may have known back in 2000.

In a written statement given to Mr Hague as a condition of the peerage, the businessman gave a "clear and unequivocal assurance" that he would take up permanent residence in the UK by the end of 2000. But it emerged last week that a subsequent agreement promised only that he would become a "long-term" resident – which permitted him to claim "non-domiciled" status for tax purposes. Sir Hayden told Radio 4's Today programme: "Both the Political Honours Scrutiny Committee and the Conservative leadership at the time agreed with those words."

A spokesman for Mr Hague said the MP was "aware that the precise definition of Lord Ashcroft's undertaking would be settled with the committee and government officials, but he was not aware of the details of what was subsequently agreed".

In a further twist, authoritative sources told The Independent on Sunday that at the time the peerage was confirmed, senior Tory officials referred to the appointment as the "million-pound peerage". While there is no suggestion that Lord Ashcroft bought the peerage, the comments by some party members show the extent of his influence over the then leader and his cash-strapped party. However, a Tory insider said: "A peerage is a useful business tool on the international scene. It was cheap at half the price."

Electoral Commission figures on party donations date back only to 2001. But Lord Ashcroft, in his autobiography, Dirty Politics, Dirty Times, says that in the period of 1999-2000 he was donating "fractionally under £1m per year" to the Conservative Party.

Lord Ashcroft's spokesman said it was "ridiculous" to suggest there was any such deal and to do so was to further suggest a "conspiracy to commit a criminal offence". He added: "I never heard that ['million-pound'] phrase being used before."

Mr Hague denied that the peerage had been bought in any way.

There were continuing questions regarding Mr Cameron's comments over the past three years on the Ashcroft issue. On 2 December 2007, the Tory leader said: "I have had reassurances... that [he] is resident in the UK and pays taxes in the UK." But the next day Mr Cameron was less clear-cut, saying: "How he pays tax... is a matter that you should put to him."

Mr Cameron's spokeswoman refused to comment, but his office has said he discovered Lord Ashcroft's non-dom status a month ago.

In his memoir, Lord Ashcroft accused Mr Bridges, who in 1999 was a leader writer at The Times, of being "openly hostile" to him and Mr Hague, and of contributing to what the peer described as the newspaper's "Get Ashcroft Campaign". Mr Bridges, Lord Ashcroft claimed, formed an alliance with Lord Cranborne – now Lord Salisbury – who was allegedly bitter over being sacked by Mr Hague as Tory leader of the House of Lords.

"The Cranborne-Bridges alliance quickly appreciated that The Times could be a useful vehicle for their personal venom against William and me," Lord Ashcroft wrote.

A spokesman for Lord Ashcroft said: "We are talking about a period 10 years ago. The book was written around seven or eight years ago. It is fair to say they [Bridges and Ashcroft] get on very well now." Mr Bridges was unavailable for comment.

The Foreign Secretary, David Miliband, said: "The culture of concealment goes to the top of the Tory party. David Cameron took hard cash without asking the hard questions."

A ten-year mystery unravelled

March 2000 The Political Honours Scrutiny Committee rejects the Conservatives' nomination of Michael Ashcroft for a peerage for the second time.

March 2000 Ashcroft makes a pledge to William Hague that he will take up permanent residence in Britain "before the end of this calendar year" and the peerage is granted.

December 2005 New Tory leader David Cameron appoints Ashcroft as deputy chairman.

October 2007 Labour MPs accuse Ashcroft of being allowed to heavily fund local Conservative organisations in marginal seats and the Electoral Commission is asked to investigate.

2 December 2007 Cameron says he is "satisfied that the undertakings [Ashcroft] gave are being met and I have had reassurances... that [he] is resident in the UK and pays taxes in the UK."

3 December 2007 Cameron says: "I have sought reassurances that the guarantees he made at the time are being met and they are being met. How he pays tax... is a matter that you should put to him."

1 March 2010 After pressure to reveal his tax status by the Information Commissioner, Ashcroft admits he is a "non-dom". It emerges that he reached agreement with the Cabinet Office in 2000 that he could be known as a "long-term" resident rather than "permanent resident" – allowing him "non-dom" status.

3 March Hague says he knew about Ashcroft's non-dom status "over the last few months".

4 March Liam Fox, the Tory defence spokesman, says Cameron found out about Ashcroft's non-dom status only a month ago.

4 March Electoral Commission rules that £5.1m of donations to the Conservative Party from a firm owned by Ashcroft were legal.

Paul Bignell