Inside Parliament: Funding incites a free-for-all: Fowler defends right to keep donors secret; Beckett sniffs an 'odour of corruption'; Hunt returns fire with Maxwell ammunition

Sir Norman Fowler, the Conservative Party chairman, yesterday justified continued secrecy on the source of Tory funds with an inelegant rendering of a maxim from Lord Hailsham of St Marylebone. It was, he said, 'the most basic right, that what a man does with his money, like what he does with his vote, is his own affair'.

Donations, large or small, bought no influence or favours from the Conservative Party, Sir Norman insisted in the Commons. 'There are, therefore, no grounds to undermine the fundamental right to privacy.'

That assertion apart, rights and principles were not the general currency of the set-piece debate on the funding of political parties called by Labour to pile on the agony over the Asil Nadir affair. Government and Opposition waded in with abandon into what David Hunt, Secretary of State for Employment, called the 'sewer of politics', hurling accusations, smears and innuendo across the chamber.

A Labour motion calling for legislation to require all political parties to publish fully audited accounts disclosing the source of all large donations, and a ban on overseas donations, was defeated by 291 to 250. Robin Cook, Labour's trade and industry spokesman, said only a party with something to hide would 'vote to keep the lid on its accounts'.

Sir Norman repeated his pledge to repay the pounds 440,000 received by the Conservative Party from Mr Nadir's companies if it proved to be stolen. But Mr Cook said the Tories should stop prevaricating and give it back now. 'We know that the donor has been charged with that stolen money and, by any decent standard, that should be enough. It proves the truth of the saying among my people, 'Who lies down with dogs will surely rise with fleas'.'

A lone voice on the Tory backbenches was that of Richard Shepherd, MP for Aldridge Brownhills. 'I wish to defend the integrity of my party,' he said. 'I amunable to defend it because I cannot point to any published list of where the funds come from, in a way that would exorcise the malignness of these charges.'

Margaret Beckett, Labour's deputy leader, said public confidence was being eroded by the 'atmosphere of sleaze and odour of corruption' surrounding the Tory party. For years it had 'used the power and patronage of government, at least in part, for party political advantage.' Honours given in the name of the Crown were regularly assumed to be 'purchased' by financial contributions to the Conservatives.

Taunted with shouts of 'Maxwell' and challenges on trade union funding, Mrs Beckett said the unions gave just over pounds 7m to Labour's 1992 election campaign - all openly declared - the same amount 'apparently' received by the Tories in overseas donations alone. 'The British public had no idea when they cast their votes just over a year ago that the money to pay for all those seductive and untruthful advertisements attacking Labour was coming in secret from outside these islands.'

She refused a call by Sir Norman to dissociate herself from comments made in a Guardian article which he said 'slurred the Saudi Arabian royal family' with an allegation that it contributed millions to the Conservatives before the election.

Rumours existed because the Tories would not reveal where they got their money from, Mrs Beckett said. 'When they tell us, then there will be presumably no further rumours.'

Labour MPs protested as notes were passed to ministers from civil servants sitting at the side of the chamber. Bob Hughes, MP for Aberdeen North, said it was an ancient tradition that civil servants were non-political. 'If the Government does not have the decency to remove the civil servants from temptation wouldn't it be better if the civil servants took action themselves?'

According to Rhodri Morgan, Labour MP for Cardiff West, the DTI's companies division sent a request to Companies House last week for civil servants to go through files on 12 of the late Robert Maxwell's companies to see if they could unearth any undeclared donations to the Labour Party.

The relationship of the crooked Daily Mirror owner with Labour figured prominently in Mr Hunt's combative response to Mrs Beckett. 'I will not embarrass them by asking how many on the benches have had free lunches, free dinners, free drinks, from Mr Maxwell,' he said.

Mr Hunt recalled 'a very public cheque' accepted with 'grovelling gratitude' at a party conference. But Mrs Beckett said that the pounds 31,000 was all that had been received and it could not have been done more publicly, on prime-time television.

Mr Hunt said Labour's 'secret agenda' was to secure state-funding of political parties. 'The Labour Party want to get their paws on the public purse . . . They want the taxpayer to bail out their sinking ship.' To derisive laughter, he said Labour's 'slurs and innuendoes' would not succeed in bringing British democracy into disrepute. 'They are going to fail because the integrity of our system shines through what they say.'

Mr Hunt, Sir Norman and Tony Newton, Leader of the House, were at one in using attack as the best form of defence.

Deputising for the Prime Minister at Question Time, Mr Newton faced a call from John Smith to make it illegal for a political party to accept large sums 'from people who are not British citizens, do not live here and are not part of our democracy'. But Mr Newton replied: 'I will start listening to lectures from the Labour leader on this subject when he will tell me he will bring a stop to the position in the Labour Party in which votes can be bought at party conferences, in which votes can be bought in the selection of candidates and in which votes can even be bought in his selection as leader of the party.'

As the Speaker, Betty Boothroyd, tried to control the baying from both sides of the chamber, Mr Smith, perhaps inadvertently, summed up the whole strategy when he began: 'I know the Conservative Party want to drown this out . . .'