Leading Article: Mr Mandelson's most extraordinary lapse of judgement

PETER MANDELSON is not guilty of corruption; nor has he broken any law. But his loan from the Paymaster General, Geoffrey Robinson, does represent an extraordinary lapse of judgement.

Mr Mandelson is correct in asserting that there has been no direct conflict of interest between his debts and his job as Trade Secretary. He deliberately declined to be involved in investigating Mr Robinson's business dealings.

But that is not the end of the matter. In outlining the rules for MPs, Sir Gordon Downey made it clear that any benefits "which might reasonably be thought by others to influence his or her actions" must be declared. Ministers must not only be pure, but be seen to be. Company directors often take out loans from their companies at base rates of interest. But those in public life are necessarily subject to more rigorous scrutiny than private citizens, as Tony Blair made clear when he became Prime Minister.

Mr Mandelson's presentation skills seem to have deserted him. How has the spin doctor par excellence allowed himself to become ensnared in this way? Why did he not declare the loan at the time? It would have been a matter of comment, but not of scandal. Mr Mandelson is a member of a government committed to transparency and freedom of information; a government that came in on a tide of disgust at Tory "sleaze". He should have realised how this would look if made public.

His numerous enemies will seize on this with glee. His personal style, and his crusade to root out socialism in the Labour Party, have long made him a hate figure for the left, but there has been nothing concrete for them to attack. Now they will have all the ammunition they need. There are influential Labour figures not on the left, including some ministers, with more personal reasons to dislike Mr Mandelson; any of these could have released the information now doing him such harm.

He does seem to realise his mistake. He has admitted that it would have been better if he had revealed the loan, and has asked for the matter to be referred to the Commissioner for Standards in Public Life.

Mr Mandelson should have told his Permanent Secretary why he was declining to get involved in the investigation into Mr Robinson. He should have told the Prime Minister earlier than last Thursday. It was foolish not to. But if subsequent investigations show him to have done nothing else wrong, these are not resigning matters.

Mr Robinson seems to be getting off more lightly. But he has been even more lax than Mr Mandelson, for his reputation was already in the mire. Given his recent admission that he failed to announce a series of business interests, this highlights Mr Blair's mistake in not getting rid of his Paymaster General. This suggests that the Prime Minister is not as strong as he wishes to appear. He will be damaged by that impression, just as much as by his association with Mr Mandelson, for Mr Robinson is a malign influence at the heart of the Government. He seems to dispense favours even more frequently than he fails to abide by parliamentary regulations.

For the future, the Government needs to consider better ways of handling these scandals. Mr Blair had to decide personally how to handle this lapse; his close friendship with his former spin doctor must throw that responsibility into doubt. No one believes that he would be swayed from punishing wrong- doing by personal loyalty; but the suggestion is there.

The proposal to appoint a separate and independent "sleaze-buster" for ministers, taking such decisions out of the hands of cabinet colleagues, should be resurrected. That is the only way to lift that suspicion from the Government. If that were to be achieved, Mr Mandelson's misjudgement would have done us all a favour.