The Hain situation has been aired thoroughly on various 'blogs in recent days and weeks, and has been very revealing, once one sifted through what was written to find the wheat (quite a lot, actually) and the chaff (not too much of that, fortunately).
On the other side, the statement he put out yesterday, though plausible, looks at least partly phony in the light of revelations about how the whole matter would have been handled within his campaign. He personally has overall responsibility, and should have been aware of all that was going on regarding funding. It was his duty, and an obvious one at that.
A second question is that recent matter of donations coming in via a third party -- the so-called Progressive Policy Forum. I have today read a comment indicating that at least one donor to that Forum was not aware that the money was going to Hain's campaign fund.
Another issue on this is the sheer amounts involved. Hain's deputy leadership campaign appears to have cost far more than that of any of his rivals. Why? Was it really all spent on the campaign (especially as the current revelations concern bills paid after the deputy leadership contest ended)? A few commentators have speculated that some (most?) might have gone to Hain personally, in subsidy of an apparently lavish lifestyle. On the other hand, at least one person (who claims to know something about this from the inside) claims that Hain was passionate about becoming Deputy Leader.
Hopefully the investigation now under way will bring some hard facts into the public domain, as no amount of speculation can substitute for the truth. I just hope it does all come out, and nothing significant is held back.
Personally, I do not yet know whether he should resign, though he almost certainly ought to lose his front-bench Ministerial position. Unlike Blunkett, this needs to be permanent -- he must never become even a Junior Minister again in the future. He is currently in charge of a Department that handles billions of pounds of public money -- as do most Ministerial positions, one way or another -- and the public clearly can have no confidence in someone with this kind of "baggage" which will stay with him for life.
If he is charged and successfully prosecuted, then he should resign as an MP, again permanently. It is the only way to restore any kind of faith in politicians, which is always at its lowest when it appears that they can get away with what would result in punishment for anyone else, under similar circumstances.
I also believe that the Wendy Alexander and Harriet Harman cases should not have been dropped so easily, as this is the exact impression that those give: they have got away with it, especially Ms Alexander. With the publishing of the thank-you letter to the Jersey donor at his overseas address, this looked like a clear-cut breach and should have been dealt with accordingly.
Overall, I don't want to demolish the Labour Party; but they do need to behave properly and get rid of anyone found to be abusing the system (and it was their own laws and rules that these individuals have been breaching) in an effort to clean-up British politics. Our National Government needs to lead this quest and set an example to others. The way things have gone so far, the exact opposite has happened.
Gordon Brown has to deal with this decisively and more-or-less mercilessly if he is to retain any personal credibility. If he doesn't, I imagine the knock-on effect will be a further reduction in Labour's vote in this coming Spring's local elections, followed by (I'd expect) a move to oust him as Party Leader/Prime Minister. It's his future at stake too!
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