Cleared Hain eyes Government return

Peter Hain was eyeing a return to the Government today after being cleared by prosecutors over donations to his campaign for Labour's deputy leadership.

The former Cabinet minister made clear he wanted to re-enter frontline politics after a police investigation into his finances came to nothing.

Prime Minister Gordon Brown hinted that a political comeback could be in the offing for the Neath MP, saying he had "much to offer in the future".

The decision by the Crown Prosecution Service not to bring charges, despite a 10-month inquiry, prompted fresh hand-wringing about the laws governing political finances.

Mr Hain criticised the Electoral Commission's "extraordinary" decision to refer his case to the police, claiming that MPs had now lost faith in the watchdog.

But the Electoral Commission pointed out that there was no doubt that donations to Mr Hain's 2007 campaign had been registered outside the legal timeframe.

It suggested that an overhaul of the law - introduced by Labour to clean up political finances in 2000 - may be necessary.

Mr Hain became the first member of Mr Brown's Cabinet to quit in January, when he was Secretary of State for Work and Pensions, and for Wales.

His resignation came after the Metropolitan Police started investigating alleged offences under the Political Parties, Elections and Referendums Act (PPERA) 2000.

Its inquiries concerned £103,157 of donations made to Mr Hain's campaign in Labour's deputy leadership elections, in which he finished a disappointing fifth out of six.

The CPS confirmed today that he did not report all of his donations to the Electoral Commission within the 30 days required under PPERA.

But Stephen O'Doherty, of the CPS special crime division, said it was impossible to prove a criminal breach because it could not establish who was legally responsible for the reporting.

A combined police investigation into Mr Hain's campaign finances and so-called "proxy" donations to the Labour Party - which are still being considered by the CPS - has cost at least £250,000.

The Electoral Commission insisted that the reporting of donations on time was vital to ensure public confidence in the political system.

"The Electoral Commission wants to ensure that there is certainty about where responsibility for reporting donations lies in such circumstances," it went on.

"We will therefore be reviewing the implication of the CPS's decision carefully and considering what steps will be needed to achieve this certainty, including possible changes to the law."

Mr Hain said he was "pleased" to have cleared his name over an "honest mistake" and turned his fire on the Electoral Commission for prompting a criminal inquiry.

He insisted the watchdog, set up under PPERA, needed an overhaul, claiming it had "lost respect throughout Parliament".

Mr Hain told Sky News the prospect of a return to the Government ranks was in the hands of the Prime Minister.

But, making plain his future ambitions, he added: "I didn't leave Government under a cloud of mistaken ministerial decisions or a problem in what I had done.

"On the contrary, I think people would accept that I've had a successful 11 years in Government.

"I want to make a difference. That's why I came into politics 40 years ago in the anti-apartheid struggle. I've always made that my watchword and I will continue to make a difference in whatever role I can."

In January, Mr Brown described the affair as "an incompetence", but said it was up to the Electoral Commission and the House of Commons to investigate.

The Prime Minister's political spokesman said today: "We obviously welcome the fact that Peter Hain has been cleared in this matter.

"Peter has been a great servant of the Labour Party and has much to offer in the future."

Mr Hain still faces further questions from the Parliamentary Commissioner for Standards, who postponed his own probe pending the police investigation.

John Lyon launched an inquiry in January after receiving complaints that Mr Hain had only belatedly declared donations in the Commons Register of Members' Interests.

A week later, the Commissioner suspended his investigation when the Scotland Yard inquiry was announced.

Mr Lyon, who reports to the Commons Standards and Privileges Committee, said at the time he would "review the position" after the police probe.

His office said today it had no immediate update on the status of the Commissioner's inquiry.