Blunkett - The inside story

Tony Blair said he left office 'with no stain of impropriety'. The record suggests otherwise. Francis Elliott, our Whitehall Editor, whose exclusive story last Sunday led to Blunkett's resignation, reveals the letters that cast doubt on the ex-minister's version of events

"It's over. Let's go." With these words David Blunkett had called his aide to his side and returned to Downing Street to resign from the Cabinet a second time in 11 months, shortly before 10am on Wednesday.

The formalities were then disposed of during a brief, dry-eyed meeting with Tony Blair in No 10. Now he faced the ritual of the resignation press conference.

The first departure, in the wake of the Kimberly Quinn affair last December, had been emotional, almost tearful. This time, however, he quickly mastered himself and went on the offensive against those in the press he blamed for harrying him from office and still insisted that he had done nothing wrong.

Mr Blunkett was generous in his tribute to this newspaper for revealing his breach of the Ministerial Code in not seeking the advice of the Advisory Committee on Business Appointments (ACBA) before becoming a director of the DNA testing firm, DNA Bioscience.

For nine weeks, journalists, he said, had been "delving into every aspect of my private and public life". The only revelation that had reduced Tony Blair's confidence in him had apparently been his failure to consult Parliament's independent sleaze watchdog. Mr Blunkett continued: "I wish I had spotted it earlier, then I would have been able to tell the world I had made a mistake."

But as we have revealed, last weekend's revelation cannot have come as much of a surprise to the former minister.

The former secretary of state for work and pensions had sought to head off a potential controversy less than a week before it broke.

Two weekends ago Mr Blunkett was a man under pressure. He faced a gathering media storm over a shareholding he had bought in a company bidding for government contracts - including one from Mr Blunkett's own department.

The shareholding had emerged as a detail of a rather more salacious saga concerning the minister's private life. He had been introduced to DNA Bioscience by the same couple, Lucy and Tariq Siddiqi, who had set him up with a 29-year-old blonde estate agent, Sally Anderson.

While he was confident that he could prove that he had not broken the Ministerial Code in buying the shares, he knew there was one gaping hole in his defences.

Mr Blunkett had been fretting about his failure to consult ACBA for at least a week before the story broke. As we reveal today he wrote to ACBA on 24 October. That letter was marked "Private and Confidential" and remains under lock and key in the committee's distinctly unglamorous offices on the third floor of a gloomy building in Great Smith Street, Westminster.

It is not hard to surmise its contents, however, from the reply sent the next day by Tony Nichols, the committee's clerk. In it Lord Mayhew, the chairman, "notes the course of events concerning your appointment with DNA Bioscience". He also insists that ACBA "would need to say that it had not been consulted ... if enquiries were made of it as to your compliance with the Ministerial Code".

The reply presented Mr Blunkett with a choice. He could go public and admit to and apologise for the breach - to "tell the world I had made a mistake", in his own words. Or he could keep quiet about it and hope that "enquiries" were not made of this quiet, obscure corner of Whitehall.

Unfortunately for him he lost that gamble when just three days later The Independent on Sunday called Mr Nichols, the clerk to the committee, and asked: "Did Mr Blunkett ask its advice before he took up his directorship of DNA Bioscience?"

Mr Nichols paused for a moment and then said: "David Blunkett did not seek the committee's advice about DNA Bioscience." It did not take long to locate the relevant section (5.29) in the Ministerial Code. It was unequivocal: Mr Blunkett had broken the rules.

What made the breach all the more extraordinary were three letters, released to this newspaper by the committee, showing that the minister had been repeatedly warned to obey the rules, once just a month before he took the DNA Bioscience job, relating to his work for lobbyists Indepen Consulting Ltd.

Downing Street heard of the impending disaster almost immediately. Mr Nichols, quite properly, informed the Cabinet Office of the press inquiry, and his response to it, late on Thursday afternoon.

By Friday morning news that The Independent on Sunday had found out about the breach had reached Mr Blair's senior officials, if not the Prime Minister himself.

It is unlikely, therefore, to have come as a complete surprise to Matthew Doyle, Mr Blunkett's special adviser, to receive a call from the IoS early on Saturday morning. In Washington for a friend's wedding, Mr Doyle was supposed to be preparing his best man's speech but was soon frantically checking his Blackberry as he tried to thrash out a response with Downing Street.

Eventually, with a print deadline looming, the response arrived. "Mr Blunkett believed he was acting within the Ministerial Code," ran the key paragraph. "But with hindsight it might have been better if he had written to the committee prior to Parliament returning."

The response quoted selectively from the committee's letters, highlighting only phrases that contained the word "voluntary" and ignoring the explicit reminders that ministers should seek advice.

Finally, it said that Mr Blunkett had asked the Cabinet Secretary, Sir Gus O'Donnell, to "clarify the procedure".

Mr Blunkett's attempt to recruit the new head of Britain's civil service to his cause was to prove a major error, however. Sir Gus, who was once John Major's press secretary, must be acutely aware of what a drawn-out sleaze scandal can do to the credibility of ministers - and officials.

When Tony Blair, with the storm raging around him, called a meeting last week to review the evidence with his chief mandarin, the Cabinet Secretary was unequivocal. It was not sustainable to suggest, as Mr Blunkett contended, that there was any confusion about the rules. To seek the advice of the ACBA was mandatory, he said.

The shifting ground beneath the Secretary of State for Work and Pensions was felt as soon as Mr Blair was asked a direct question about his future, later that day. "I do give him my confidence," Mr Blair said. "But I think he should be allowed to get on with his job, which is very important." Seasoned watchers of the Prime Minister could not fail to detect the distinctly lukewarm nature of the backing.

In an effort to draw a line under the affair, Mr Blunkett announced that he had asked his sons to sell the DNA Bioscience shares he had bought for around £15,000, when he was briefly a director of the firm for two weeks between 21 April and 6 May. The shares, which could net £300,000, had been intended, friends say, to replace the sons' "inheritance", which Mr Blunkett had spent on legal fees to secure access to William Quinn, the child he had with Kimberly.

The fees had been "mega", said his allies, and he felt guilty that it had reduced the amount of cash his grown-up sons, Alastair, Hugh and Andrew, could expect to be passed to them when he died.

Giving up the profit was a bitter blow and must have made Mr Blunkett all the more determined to hold on to office. He was certainly in no mood to quit when his local newspaper caught him on the phone at his grace and favour home in Eaton Square early on Tuesday morning. "I have done nothing wrong," he told Anne Alexander, the Sheffield Star's political editor.

But he had done something wrong and the question of what Mr Blair - as the final arbiter of the Ministerial Code - was going to do about it hung over Westminster. When Sir Gus hosted a small press conference on boosting diversity in the workplace that afternoon it wasn't long before journalists started asking him pointed questions about whether blind people were to be given "preferential treatment".

And once the press pack began asking explicitly what was to happen to the Work and Pensions Secretary, the Cabinet Secretary, by now deeply embarrassed, was hurried away by his press minder.

At the same time, it emerged that Mr Blunkett had failed to ask the ACBA's advice on a third appointment, as a paid consultant to the Jewish educational charity ORT.

In the House of Commons on Tuesday, the mood among Labour MPs was sullen and unsupportive. Taking their cue from the deafening silence from the Cabinet, most backbenchers regarded Mr Blunkett as a liability whose position was untenable. It was a view conveyed to Downing Street with brutal honesty by Hilary Armstrong, the Chief Whip.

Mr Blunkett himself was snubbed when he tried to rally support in the Commons tearoom on Tuesday afternoon, according to some senior Labour figures.

Many remembered his disastrous attempt to garner backing the previous time he faced the chop, last December. Then he had hijacked a Christmas reception for backbench MPs, handed out songsheets for the Sinatra classic "Pick Yourself Up, Dust Yourself Off ..." and gave a lusty rendition. Next to the refrain "start all over again" one of his cabinet colleagues wrote "... in Sheffield", causing widespread sniggering.

But the fact of the matter was that he had "started all over again". After just over four months in the wilderness he had been ushered back into Cabinet over the heads of many Labour MPs who had worked without great political reward for decades. Now that the vultures were circling, few of the overlooked were rushing to his defence.

In No 10, meanwhile, Mr Blair railed against the media "frenzy" - even as he began to accept it was inevitable he would lose his friend and ally a second time.

The morning of Mr Blunkett's resignation began with another phone call from the Sheffield Star. He sounded weary, flat even - not as forceful as he had been the previous morning.

If there was any doubt about his predicament then the headline of the Daily Mail would have dispelled it: "Blunkett: the Screw Tightens." Inside, the newspaper listed details of further breaches of the Ministerial Code, as well as hints that there was yet more to come. And just to complete the misery, Ms Anderson, who sold the story of her dates with Mr Blunkett for a reported £50,000, added to her earnings with another interview in which she claimed Mr Blunkett had discussed business with Tariq Siddiqi after he returned to government.

Despite it all, the Sheffield Brightside MP was still desperate to cling on to his job. Tony Blair, suffering a heavy cold, took his friend's call in the family flat above No 11. Yes, he said, he would see him straight away to discuss the position.

For Mr Blair the scenario was familiar - almost ritual - when he ushered his ally into his office in No 10. The Prime Minister had seen too many high-profile casualties to rate Mr Blunkett's chances of survival.

Still, Mr Blair repeated that, in his view, his transgression did not warrant a resignation. It was not, however, the full-blooded pledge of allegiance Mr Blunkett had been hoping for, and the meeting broke up after 15 minutes.

By coincidence, the Secretary of State for Work and Pensions was due to appear before MPs in a select committee that morning. Mr Doyle, his adviser, was still telling journalists at 8.50am that his boss was determined to stay - and to use the select committee appearance to demonstrate his appetite for the job.

But news that he would be delayed by 30 minutes was the first indication to the outside world of events within No 10.

Journalists then heard Mr Doyle swearing volubly into his mobile phone as he and Mr Blunkett arrived in Portcullis House (the building that houses MPs' offices next to the Palace of Westminster) for the delayed meeting. It was only when he learnt that the committee had not just been delayed but abandoned altogether that he knew the game was up. Later he said a lifetime's political experience meant that he could "smell and feel it was time to step away".

The red ministerial Jaguar was ordered to return to Downing Street for Mr Blunkett's formal resignation. No 10 press officers watching the rolling news coverage in their office heard the channels claim he had quit even before he returned to Downing Street. Soon the broadcast reporters, whose unofficial motto is "never wrong for long", were right.

The second meeting between Mr Blair and Mr Blunkett was not long and not marked by any great expressions of emotion, according to senior officials. Both men knew what needed to be done. They had both, after all, been here before.

The resignation spared Mr Blair what would have been a punishing grilling at Prime Minister's Questions. As the final arbiter of the Ministerial Code he faced the prospect of telling MPs that Mr Blunkett, one of his few allies, had breached the rules but that it didn't matter. It would have caused an outcry and made it still harder for the whips to ram through the controversial anti-terror laws - in the event passed by just one vote.

Nevertheless, Mr Blair was determined to do his old friend what favours he could when he faced Michael Howard across the despatch box. "I would like to say that whatever mistakes he has made, I've always believed and believe now that he is a decent and honourable man." He added: "He goes, in my view, with no stain of impropriety against him whatever."

His words were an uncanny echo of those he used on 21 December 2004 in his letter to Mr Blunkett accepting "with great regret" his resignation. "You leave Government with your integrity intact," the Prime Minister wrote.

Mr Blunkett resigned then after he admitted that a letter from his then lover Kimberly Quinn, concerning the immigration status of her nanny, had been processed by his private office when he was Home Secretary. An official had written "no favours but a little faster".

For the second time Mr Blair sought to downplay the significance of his friend's mistakes (even if this time he wrote that he accepted the resignation with "regret", not "great regret").

The nature of politics is that by 5pm on Wednesday evening Mr Blair's mind was fixed on the parliamentary calculations needed to win the vote on counter-terror measures, rather than on the fate of his old friend.

He was already praising Mr Blunkett's successor, John Hutton, as a moderniser who would succeed in getting the difficult welfare reforms he is planning through Parliament.

The man he replaced, meanwhile, was planning to see an old friend, Rebekah Wade, editor of The Sun, whose own career was to be in danger by the time the night was out. So the Labour MP who blamed the right-wing media for his downfall ended the day of his resignation with Ms Wade and, reportedly, Rupert Murdoch, at The Ivy.

Most of his friends accept that Mr Blunkett has shown a remarkable lack of consistency in recent years. His judgement has been flawed. Some of his behaviour in repeatedly failing to abide by the rules is baffling, some of his mis-statements too obvious to be effective.

The "mistake" that cost him his political career was more troubling than that, however, and unanswered questions remain. Why did he become a director of a firm two weeks before he knew he would almost certainly have to leave it? DNA Bioscience is refusing to say whether, as reported, Mr Blunkett was only entitled to buy those potentially lucrative shares while a director. Could it be that he deliberately evaded his responsibility to seek the ACBA's advice on the appointment because he feared it would recommend that he wait for three months - by which time he would be back in the Cabinet and unable to take advantage of this gilt-edged financial opportunity?

Mr Blunkett is due to attend a dinner thrown by the Leo Baeck Institute in London tomorrow, where he will introduce the guest of honour, the German Interior Minister. Doubtless the event will be portrayed by his friends as the beginning of his journey back to public life. Many believe that that journey should only be allowed to continue when the last questions over his financial dealings are finally laid to rest.

Francis Elliott, our Whitehall Editor,from The Independent & The Independent on Sunday