Chief Secretary finds his innocence worthy of encore

Jonathan Aitken, Chief Secretary to the Treasury, came out fighting on two fronts at Question Time yesterday - defending his reputation over the arms-for-Iran affair and underlining his scepticism about a single European currency.

Professions of innocence by Mr Aitken are becoming a regular feature of Treasury questions. Six months ago he rebutted "scurrilous allegations" over his bill for a stay at the Ritz hotel in Paris. And in March he made a declaration about the arms trade allegations.

Yesterday he again slipped in what was in effect a personal statement, denying any knowledge that the arms manufacturer BMARC, of which he was a director, was exporting naval guns to Iran in the 1980s.

During a question on small businesses, Dennis Skinner, the Labour MP for Bolsover, said few people would take any notice of Mr Aitken's answers on anything, "because when he was going to this board meeting of BMARC, a small business, he sat there and didn't even know what they were doing".

The Chief Secretary replied by settling into a familiar routine: "I am glad to have this chance to repeat again to the House that I stand by the statement I made on 30 March, namely that I was given not the slightest indication or infor- mation, as a non-executive director, that any of these contracts which were going to Singapore were in any way going to be for onward shipment to Iran or anywhere else.

"I welcome these new inquiries that are taking place and I am absolutely certain that at the end of the day they will clear my name completely."

The Chief Secretary's dismissive remarks about a European single currency sounded more likely to endear him to what Kenneth Clarke yesterday described as "right-wing xenophobe" Tories than to the Chancellor himself.

Seemingly smarting at the jibe, Bernard Jenkin, MP for Colchester, said the vast majority of small businesses had no interest in a single currency.

Mr Aitken hoped the Federation of Small Businesses would take comfort from the Prime Minister's comments last week that the circumstances for a single currency "might not ever be right". "They might also like to see the encouraging signals in this direction coming out of President Chirac's government. From all these signs, I think that the prospects for economic and monetary union do seem to be receding into more distant and more uncertain horizons."

Mr Aitken added the loyal rider that whenever any decision was made it would be on the basis of what was best in the national interest, but the buzz in the House made plain that MPs thought this was fighting sceptic talk. Similar words about a decision taken "on a hard-nosed judgement of British interests" came from Mr Clarke, but the mood music was very different. He said the Government was now taking part in discussions on what form economic and monetary union might take.

Two Tory MPs rebelled last night, voting against the Government as ministers came under pressure to scrap local authority capping and let council-tax payers bear the full brunt of profligate town halls.

Civil servants are understood to have been asked to investigate the feasibility of ending capping, but John Gummer, Secretary of State for the Environment, avoided commitment as he opened the debate on an Order to restrict the budgets of seven councils - approved by 270 votes to 242.

The rebels were former Cabinet minister John Biffen, and Christopher Gill, MP for Ludlow, who condemned it as an "erosion of local democracy".

Mr Gummer acknowledged the temptation to see extravagant councils "stew in their own juice", but warned that ordinary people would have faced intolerably high bills without capping.

Rebellion in the Commons was followed by defeat in the Lords when peers voted by 94 to 50 for a Lab-Lib amendment to widen the definition of "disability" in the Disability Discrimination Bill. The move is intended to protect those who suffer discrimination but whose disability is so mild they might not be covered by the Bill.