Tony Blair’s aides drew up ‘counter-sleaze strategy’ amid fears that decorating row had sparked loss of trust

A damaging row about the cost of the opulent redecoration of a ministerial residence. A government increasingly anxious that it is becoming irredeemably mired in sleaze. And a prime minister ordering that the fight be taken to the opposition.

Much as it may sound like a version of the present day, this was instead the picture inside Tony Blair’s Downing Street less than a year after New Labour came to power as concerns grew that the new government was becoming tainted by multiple complaints of disreputable behaviour.

Newly released papers held at the National Archives in Kew, west London, offer an insight into growing alarm in Number 10 that the Blair project was being put at risk by scandals including a row over the eye-watering cost of the refurbishment of Lord Chancellor Derry Irvine’s apartments in the Palace of Westminster.

Lord Irvine, who had been Mr Blair’s head of chambers while the future prime minister was a pupil barrister, found himself the subject of furious criticism over the £650,000 cost of the redecoration, which included nearly £60,000 spent on handprinted wallpaper. He complained that the project was aimed at restoring the residence in the style ordained by its original designer, Augustus Pugin, and the work was controlled by the Parliamentary authorities rather than himself.

But alongside complaints about extravagant ministerial travel with partners and spouses, party funding and blind funds being used by some Cabinet ministers, senior aides to Mr Blair became concerned by January 1998 that sleaze was inflicting serious damage.

Anji Hunter, the longterm adviser widely seen as the gatekeeper to the new prime minister, warned Jonathan Powell, Mr Blair’s chief of staff, in a memo that an unnamed senior Labour figure was warning of “problems” among voters.

Ms Hunter wrote: “We should not take our eye off the sleaze factor. [The unnamed figure] says out there, amongst his millieu, we are losing moral authority by the second as partners, refurbishments, tax hypocrisy takes hold. Feels we are letting it drift without doing anything about it.”

In a handwritten annotation addressed to Mr Blair, Mr Powell confessed that he was also “worried” by the situation and pinpointed the “flat-footed” response to well-aimed questions from Conservative ex-ministers as a key reason for New Labour’s travails.

Mr Blair responded: “Yes, and we need to stop it”. The prime minister then sets out a plan to take the fight back to the Tories by demanding details of all extravagant spending by ministers in John Major’s outgoing government.

Such was the level of concern inside Number 10 at the damage that could be done by the controversy of Lord Irvine’s renovations that Mr Powell and Alastair Campbell, Mr Blair’s famously robust director of communications, invested considerable energy into drawing up a list of options to blunt Conservative attacks.

In a memo to Mr Blair entitled “Derry’s Bed”, Mr Powell said he and Mr Campbell had a spent a day in February 1998 trying to finesse a proposed reply to a parliamentary question about the cost of the refurbishments.

While noting that they had managed to edit out the unhelpful revelation that two beds ordered by Lord Irvine would be costing £23,000 rather than the figure in the public domain of £16,000, Mr Powell said the Parliamentary authorities had robustly rejected other amendments.

The memo laid out options for Mr Blair and Lord Irvine to explain away the controversy, including the suggestion that the Lord Chancellor pay for some of the refurbishment himself, such as the cost of the beds, and then present them to the nation.

The prime minister’s annotated reponse was terse. After describing the proposals as “nonsense”, he wrote at the top of the memo: “We have to be more robust about these things.”

For his part, the file shows that Lord Irvine remained unapologetic about the refurbishment row. In a four-page letter to John Witherow, the editor of the Sunday Times, which had first reported on the cost of the redecoration including the infamous wallpaper, the Lord Chancellor defended the project by saying it had always been the intention that the refurbished residence would be open to the public.

He wrote: “Wallpaper of the quality your article made so much of can last 40-50 years. My successors and the public will thank me, whilst the short-sighted critics of today do not.”

In April, Mr Powell informed Mr Blair that he and other senior aides were working on a “counter-sleaze and perks strategy” in an attempt to prevent further damage.

He said that while they could not stop Lord Irvine moving into his newly revamped flat, the Lord Chancellor needed to “adopt a low profile” while they worked out a proper rehabilitation strategy for him.

He wrote: “We believe that we have a serious problem that the perception of sleaze has gone deep into the public consciousness and that only a fairly major step will begin to reverse the current climate.

“We should look at the concept of a commissioner for ministerial ethics, but we are worried we may be creating a rod for our own backs.”

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