Last updated: March 22, 2010 11:47 pm

Labour suspends ex-ministers in lobbying row

Three former Labour Cabinet ministers were suspended from the parliamentary party last night over claims that they tried to sway policy decisions by lobbying the government.

Stephen Byers, Patricia Hewitt and Geoff Hoon were cut adrift as the government sought to limit the fallout from the allegations.

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Lord Adonis had earlier described claims that Mr Byers had intervened to influence rail contracts as “pure fantasy”.

The transport secretary admitted he had had a “brief conversation” with his predecessor, Stephen Byers, but insisted that he rejected his advice on the National Express franchise.

Gordon Brown, the prime minister, resisted calls for a full government inquiry into whether senior Labour figures unduly influenced policymakers, prompting the Conservatives to cry foul over an alleged “cover-up”.

The controversy over former cabinet ministers allegedly trying to profit from political contacts is a big setback for Labour as it approaches a general election in which all parties are promising to clean up politics.

Mr Byers, MP for North Tyneside and a former trade and transport secretary, was recorded by Channel 4’s Dispatches programme offering himself “like a sort of cab for hire” at up to £5,000 a day. He said he had changed government policy on at least two occasions but later retracted his “exaggerated” claims. The business and transport departments issued statements saying all decisions had been made “without responding to undue influence”.

Mr Byers asked Sir John Lyon, Commons standards watchdog, to examine the allegations.

Mr Brown rejected calls for a government inquiry after being “satisfied” by assurances from Sir Gus O’Donnell, the cabinet secretary, that no civil servants were aware of decisions being inappropriately influenced.

The Tories attacked Mr Brown’s “outrageous” decision. Eric Pickles, Tory party chairman, said it “looks increasingly like a cover-up at the heart of government”.

Lord Adonis denied Mr Byers’ claim that he enabled National Express to jettison the loss-making east coast rail franchise without penalties last year. National Express lost £72m in effective penalties and would lose two profit-making franchises – East Anglia and C2C – after forfeiting the east coast contract.

Lord Adonis said: “I told [Mr Byers] that despite the company’s difficulties, I had no intention whatsoever of renegotiating the east coast franchise on terms favourable to the company.as the company was seeking in its approaches to my department.” He added: “I told Mr Byers that such a move would undermine the rail franchise system and would not be in the best interests of taxpayers.”

Mr Byers’ claims to have helped water down regulations on food labelling on behalf of Tesco were dismissed as “completely fictitious” by the supermarket.

Meanwhile, MPs’ conduct is poised to come under further scrutiny after claims last night of widespread abuse of rules governing free overseas trips from foreign governments. The BBC alleged that more than 20 MPs from all three main parties broke rules on declaring hospitality.

Labour MPs showed little sympathy for Mr Byers. Paul Flynn told the Commons that the episode highlighted the need for a ban on “MPs for hire”.

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