Call Thatcher, Nolan told

The Nolan Committee on standards in public life must look at party political funding and should call Baroness Thatcher to give evidence, Labour said yesterday as it proposed a "Governance of Britain Act" to restore confidence in public life.

With the committee's hearings starting today, Jack Straw, Labour's home affairs spokesman, said: "It is the secret funding of the Tory party which lies behind a great deal of the corruption of standards in public life . . . If they stop themselves looking at that, they cannot get to the heart of the problem."

Party political funding has been ruled out of the committee's terms of reference by the Prime Minister.Lord Nolan, however, has said that if it was alleged that donations to party funds had led to any preference from government or officials, that "would

plainly come within our terms of reference".

Lord Nolan's committee has also let it be known that to date it has no plans to invite Lady Thatcher to give evidence, despite Lord Callaghan, the former Labour Prime Minister, being one of its early witnesses. Lady Thatcher should be called, Mr Straw s a id, because "she started the rot".

The fact that the Conservative Party was "in a panic" about any public scrutiny of its funding illustrated the extent to which they had matters to hide, he said.

Frank Dobson, Labour's environment spokesman, said all parties should publish their accounts and, after the donations to the Tories from Asil Nadir, foreign gifts should be barred.All donations above £5,000 should be made public, he maintained.

Labour's preliminary evidence to Nolan calls for a new code of conduct for public servants and ministers; restrictions of perhaps three years before former ministers can take up directorships with privatised utilities; and a register of all quango members and their financial and political interests.