Seven explosive pages that leave a leader on the brink

Iain Duncan Smith's problems deepened yesterday when a leaked document raised fresh questions over whether he misused his parliamentary allowances to pay his staff.

The seven-page confidential report has been submitted to the investigation announced yesterday by Sir Philip Mawer, the Parliamentary Standards Commissioner, into whether the Tory leader made improper payments to his wife, Betsy, from taxpayers' funds when she acted as his diary secretary.

The potentially explosive document was leaked to the investigative journalist Michael Crick, whose dossier of information led to the commissioner's official inquiry.

Mr Crick said it provided evidence that two members of staff - Christine Watson, Mr Duncan Smith's private secretary, and her predecessor Annabelle Eyre - were wrongly paid from his allowances as an MP when they were working for him as Leader of the Opposition and should have been remunerated from a separate fund.

The memo was written by Ms Watson to Vanessa Gearson, who was head of the Tory leader's office, in October 2002. The timing could be crucial, since the document appeared to contradict a statement submitted by Ms Watson to the investigation on Monday.

Ms Watson told Ms Gearson: "I was concerned to learn that AE [Annabelle Eyre] had been paid for nearly one whole year out of the constituency allowance, when really I should have had some form of assistance myself.

"This now leaves a big question mark on the budget for 2001-02 and to date, although there is enough in the constituency allowance, I am still being paid through Parliament even though I am working for Iain as 'Leader of the Opposition'. There are obviously questions to be asked?" She describes this as a "sensitive matter".

According to Mr Crick, the leaked document also casts doubt on the amount of work carried out by Mrs Duncan Smith between September 2001, when her husband became Tory leader, and December 2002, during which she received £15,000.

Ms Watson wrote: "As you know, I was solely running Iain's very busy constituency office without assistance but also making sure the Leader's office was in order." When she raised her problems with Ms Eyre, she was asked to "juggle" both jobs.

However, there was some evidence in the report that Mrs Duncan Smith was carrying out some duties during the period in question.

Outlining who did what in the Tory leader's office, Ms Watson said: "Betsy has asked me to do what work she may have, keep her papers in order, invitations and draft letters where necessary. Also it is important to keep her informed at all times of changes in the diary."

Her report paints an unflattering picture of Mr Duncan Smith's office after he became Tory leader, saying that no filing was done for a year. There was an embarrassing slip-up when shadow cabinet members contributed £50 each for a present for the Queen to mark her golden jubilee. They were not paid into an account and remained in a drawer for at least three months.

The report may also fuel criticism of Mr Duncan Smith as a people manager, already under scrutiny after a high turnover of senior staff in his two years as Tory leader. Ms Watson makes a series of complaints about being overworked, and finding it difficult to secure a meeting with Mr Duncan Smith. "I do know that at times he was told I had gone home when in truth I was upstairs working!" she wrote.

MAWER STATEMENT

This is the full statement from the Parliamentary Standards Commissioner, Sir Philip Mawer, on the complaint against Iain Duncan Smith:

"I have studied carefully both the complaint I have received from Mr Michael Crick and Mr Iain Duncan Smith's response to that complaint.

"The nature of the information given to me - some of which is from anonymous sources - makes it necessary that I should undertake further inquiries before reaching a conclusion on the complaint.

"It is in the public interest that these inquiries should be conducted thoroughly, fairly and as expeditiously as possible.

"With that in mind, I have asked Mr Crick and anyone else who believes they have relevant information to let me have all of it immediately and in any event before the end of this week.

"In view of the public interest in Mr Crick's complaint, I expect to report the result of my inquiries to the Committee on Standards and Privileges.

"The fact that I am making further inquiries and expect to report to the committee does not imply that I regard the allegations against Mr Duncan Smith as substantiated, simply that I need additional information in order to be able to evaluate them properly."