Mittal fatigue as Blair faces fresh attacks

AN INFLUENTIAL Labour MP last night increased the pressure on Tony Blair over the Steelgate affair by calling for a new sleaze watchdog to be set up to police ministers' behaviour.

Tony Wright, chairman of the House of Commons public administration committee, warned that claims of improper conduct were doing "enormous damage" to the public's confidence in politics.

And he claimed that all government members, including the Prime Minister, should be answerable to a public standards commissioner.

Downing Street has insisted Mr Blair was right to send a letter supporting Lakshmi Mittal's bid to privatise Romanian state steel firm Sidex. No 10 attempted to draw a line under the affair, insisting the public were suffering "Mittal fatigue" and that the Prime Minister was now bored by the debate.

When the Prime Minister's official spokesman was asked how Mr Mittal's company could be considered British while it was lobbying against British interests, he dismissed the question as a "chin-stroking exercise for economists."

Dr Wright said that Downing Street's continued evasion of the hard questions demonstrates the need for a new watchdog.

"If you have an allegation about party funding, donations linked with politicians, there is no mechanism you can place that under and it's only the Prime Minister that can put in hand an inquiry," he said.

"If people have allegations to make, they should be able to submit their evidence to a public standards commissioner who would decide if there was the basis for an investigation."

Dr Wright's call came after a former government minister accused Tony Blair of acting against British interests by backing a £125,000 Labour donor's business deal.

Former minister Peter Kilfoyle issued a warning about the party's business links after it emerged Indian billionaire Mr Mittal was involved in lobbying for US steel import taxes that harm British business.

The former defence minister has already questioned the judgment of Downing Street aides who allowed Mr Blair to sign the letter to his Romanian counterpart.

He went further yesterday, saying: "I have always held the view that we have to sup with a very long spoon when you deal with corporate donors. I think it could do with being lengthened."

The European Bank of Reconstruction and Development said yesterday that Britain had not lobbied for the 100 million dollar (£70 million) "soft" loan given to Mr Mittal for the project.

Noreen Doyle, EBRD head of banking, said its loan was approved because the privatisation of Sidex by Mr Mittal's LNM Holdings met the bank's criteria.

Future applications from the Indian billionaire would be considered on their merits, she said.

John Whittingdale, Shadow Trade and Industry minister, said Britain should oppose any further loan until a "full independent inquiry" into Labour's links with LNM had been carried out.

Downing Street, however, said that the government would "play whatever part was necessary" in helping LNM secure a further loan from the EBRD.

John Monks, general secretary of the TUC, came to the Prime Minister's aid by saying that the Mittal affair had been overblown.

Mr Monks said: "The DTI and Downing Street write probably hundreds of letters a month in support of different companies doing different things abroad.

"I'm sure this was much more routine than the spectacular prominence it has had in the last few weeks.

Support for Tony Blair and his Government is up 2 per cent, despite what has been dubbed the Prime Minister's worst week in office – according to a poll out today. Just one in four voters said Steelgate has damaged his reputation. Of the 1,003 people quizzed by ICM for the Guardian, 47 per cent said they would vote Labour in an election. It was 45 per cent in January.