Hain apologises for failing to declare £5,000 leadership gift

Peter Hain is fighting for his political life today over a donation from a high-cost loan firm that he endorsed.

The Work and Pensions Secretary faces questions in Parliament over a £5,000 gift to his failed deputy leadership campaign.

The donation from Neville Allport, chief executive of Picture Financial, followed a glowing tribute to the company from the minister.

Mr Allport's firm - which offers customers "sub-prime" credit - was "exactly the kind of energetic young company" the country needed, he said.

Critics said that, besides the apparent conflict of interest, it was "wholly inappropriate" for a minister to be praising a company offering "easy credit" when the UK was braced for an economic downturn following the collapse of the U.S. sub-prime mortgage market.

Picture Financial boasts on its website: "You can even borrow up to 125 per cent of the value of your home... something that traditional lenders won't consider".

Mr Allport was awarded an OBE for services to the financial industry and charitable work in Wales in December 2006, three months after Mr Hain ran for deputy leader. There is no suggestion that Mr Hain made the endorsement, in February 2006, in exchange for the cash gift 18 months later.

Mr Hain's endorsement reads: "Picture Financial's success is good news. It is exactly the kind of energetic young company we need. It is aiming for the top, with a vision to be a market leader in five years."

The endorsement was still on the firm's website last night.

A spokesman for Mr Hain said he had visited Picture Financial's offices in Newport, South Wales, in his capacity as Wales Secretary - a post he still holds - and the endorsement was made then because the firm had created local jobs.

Mr Hain has already been under fire for failing to declare tens of thousands of pounds in money for his campaign to be deputy leader of the Labour Party last year.

He has apologised for "administrative blunders" in failing to reveal the cash.

Downing Street said it was a Labour Party matter, but insisted the Prime Minister had "full confidence" in all his ministers.

Michael Fallon, chairman of the Treasury sub-committee which is holding an inquiry into cheap credit, said: "It is bad enough that there is an apparent conflict of interest, but for a minister to endorse a sub-prime borrower is wholly inappropriate."

Lord Oakeshott, LibDem pensions spokesman in the Lords, said: "There seems to be a pattern here. Mr Hain has been very casual in his declarations, and now he is endorsing a sub-prime loans firm when its chief executive is donating to his campaign."

A spokesman for Picture Financial said: "As a relatively young company, now employing almost 200 people, we welcome all support given by political figures in Wales and it was in that capacity that Peter Hain's comments were made."

Mr Allport said: "The donation was made in good faith to help Peter Hain. I felt his abilities, following on from his success in Northern Ireland, would be great for the UK and Wales in particular.

"The donation was given on a personal basis and I'm satisfied with the process."

It is the latest embarrassment for Gordon Brown over party funding, following the scandal of David Abraham's proxy donations.

In November, Mr Hain revealed he had not declared a £5,000 donation from Jon Mendelsohn, who is now Mr Brown's chief fundraiser.

He has declared £82,000 so far, but the true figure is thought to be over £100,000.

Mr Hain said: "It is no secret that there were organisational and administrative problems within my deputy leadership campaign. I reiterate that this is deeply regrettable and I sincerely apologise."