Hain quits cabinet over donations

Peter Hain has resigned from the cabinet following the decision to refer donations to his deputy Labour leadership campaign to the police.

The work and pensions secretary said he had immediately come to the conclusion that he had "no alternative" but to resign.

The Electoral Commission had been investigating his failure to properly register £103,000 in donations to his unsuccessful campaign for the Labour deputy leadership.

Hain also faces questions over a mysterious think-tank through which six donations to the campaign were channelled.

The Commission confirmed on Thursday morning that it would be referring the case to the Metropolitan Police.

Resignation

Hain, who was also Wales secretary, is understood to have then called the prime minister to inform him he had been told of the police investigation and to offer his resignation without hesitation.

Giving a short statement outside the Department for Work and Pensions, he said: "In view of the decision of the Electoral Commission today I've come to the conclusion that I have no alternative but to resign as secretary of state for work and pensions and secretary of state for Wales and I have now done so.

"When I realised the problem had arisen I immediately issued a public statement on November 24 and I severely and seriously regret the mistake in declaring donations late.

"I have co-operated as soon as I was able to with the Electoral Commission, providing all the details they asked for and I will of course co-operate with the police and any other authorities that wish to ask questions about this."

He went on to say it had been a "real privilege" to serve in government since 1997, and said he wished the prime minister and the government "all the best".

In a letter to Hain, the prime minister said the decision was "right and honourable", adding: "I know you will continue to make a contribution to public life in the future".

"I recognise that, given the circumstances and your desire to clear your name, this is the right and honourable thing to do," he wrote.

"I also recognise that in making this decision you have as ever put the country's interests before your own."

Investigations

The Commission had earlier said in a statement: "On November 29 2007, Peter Hain MP informed the Electoral Commission that he had not fully reported to the Commission donations he had received for his Labour Party deputy leadership campaign.

"Mr Hain has since met with the Commission and provided additional information about donations he received. The Electoral Commission has undertaken a thorough review of this information.

"Following discussions with the Metropolitan Police Service and the Crown Prosecution Service, the Electoral Commission has now referred matters to the Metropolitan Police for them to consider whether an investigation should commence."

A Scotland Yard spokesman said the matter had been formally referred to the Metropolitan Police "in connection with potential offences under the Political Parties and Referendums Act 2000 regarding donations received".

"An investigation will now begin by detectives from the Specialist and Economic Crime command," the spokesman said.

Hain is also facing an inquiry by the parliamentary commissioner for standards, John Lyon.

Reaction

Commons leader Harriet Harman paid tribute to Hain as MPs demanded an urgent statement on his decision to quit.

Harman, who was speaking at business questions in the chamber as the news broke, said: "The work he has been doing on improving the income in retirement of pensioners and ensuring more people come off benefits and get into work has been important for people in this country.

"And I personally regard him as an excellent colleague and good friend," she added.

Harman is herself under fire for contributions to her successful deputy leadership campaign. She had to return a £5,000 proxy donation and apologise after failing to register a £40,000 home loan used for funding.

Conservative leader David Cameron said it was the "right decision" but had happened in the wrong way.

"I said some time ago the prime minister should have said to Peter Hain you've got to give a convincing explanation of your situation or you can't stay in the cabinet, instead we've had a long delay where one of the most important departments in government hasn't been led properly, and I think that was wrong.

"[DwP] is a huge department and a very big hole will be left by Hain's departure, which the prime minister will have to fill. The prime minister should not have allowed this to go on for so long."

Liberal Democrat work and pensions spokesman Danny Alexander said: "The transition from Blair to Brown feels increasingly like the transition from Thatcher to Major.

"We have had the return of government incompetence, economic turmoil and political sleaze.

"We all remember John Major clinging on to ministerial colleagues, only to lose them in the end, and now Gordon Brown is doing the same."