Labour confirms blind trusts to be abolished

Claims that Tony Blair's aides solicited donations for his "blind" trust comes just before the formal confirmation, expected in next month's Queen's Speech, that such trusts are to be abolished.

Claims that Tony Blair's aides solicited donations for his "blind" trust comes just before the formal confirmation, expected in next month's Queen's Speech, that such trusts are to be abolished.

Labour officials told a recent inquiry into political funding by Lord Neill of Bladen that the trusts had been designed to ensure that there was no link between policy and donations. But the party said it planned to phase them out and was happy to accept Lord Neill's view that the key to cleaning up politics was openness, not secrecy.

Identities of donors to the funds which backed Mr Blair and several other senior Labour figures in the run-up to the 1997 general election were meant to be known only to a handful of trustees. In Mr Blair's case these were: Baroness Thornton of Poulton-le-Fylde, formerly the Sogat leader Brenda Dean; Lord Merlyn-Rees, the former Home Secretary, and Baroness Jay, who is now leader of the House of Lords.

But as long ago as late 1996, when the existence of Mr Blair's trust became known, there were suggestions that the fund might not be truly "blind". It quickly became clear that the Labour leader's office fund was set up by Mr Blair's own chief of staff, Jonathan Powell, though there is no evidence that Mr Powell knew the identity of the donors. Later, an allegation that recipients of donations to blind trusts knew the identities of donors was made by Dr Henry Drucker, who raised millions for Oxford University and who was hired by Labour as a consultant on fundraising.

Mr Blair's senior fundraiser, Michael - now Lord - Levy, is an acquaintance of at least one donor to the trust. Among them was Sir Trevor Chinn, former chairman of Lex Service, who like Lord Levy was a leading fundraiser for Jewish charities in Britain. But despite the persistent rumours, many of the donors could demonstrate that they had no reason to be secretive about giving money to Labour. Among them were said to be Alex Bernstein, former chairman of Granada, and Bob Gavron, the publishing millionaire, who have both given publicly-listed major donations to Labour Party funds. Sir Emmanuel Kaye, a former leading figure in the Confederation of British Industry, is also believed to have given money.

Less is known about the donors to blind trusts set up for Gordon Brown, John Prescott and Margaret Beckett. The Industrial Research Trust, set up by John Smith but used later by Mr Brown, was wound down soon after the general election, as was the John Prescott Campaign Research Trust. The Margaret Beckett Research and Administration Trust, set up in 1996, continued to operate until April 1998 but was wound down amid mounting criticism. Other ministers, including Jack Straw and Mo Mowlam, benefited from a further fund, the Labour Frontbench Research Trust.

Lord Neill's committee rejected the argument that the trusts played a valuable role in ensuring that financial considerations did not play a part in policy decisions.

"The committee rejects the very concept of such blind trusts as being inconsistent with the principles of openness and accountability," its report said.