Examination of Witness (Questions 1 -
19)
TUESDAY 18 MAY 1999
MR PETER
MANDELSON
Chairman
1. Welcome to the Committee, Peter. You
have seen copies of the letters from Mr John Redwood and Robert
Henderson and they raise three issues: one, whether the flights
you accepted from Ms Linda Wachner should have been registered;
whether the loan you accepted from Mr Geoffrey Robinson should
have been registered and whether the mortgage you obtained from
the Britannia Building Society was concessionary, or whether it
was improperly obtained. We are really concerned with the third
of these issues, whether the mortgage you obtained from the building
society was concessionary or whether it was improperly obtained.
The first question that I have to ask deals with the support expected
from your family. The next question I have to ask is what was
the basis of your belief that your family would provide the balance
of the purchase price for the house in Northumberland Place?
(Mr Mandelson) The basis of it was that my mother
had come into a considerable inheritance—a very considerable
inheritance—from my father when he died in 1988. My mother
had helped my brother and myself in one way or another since then,
very generously. When I decided, in the year before the election—1996—that
I wanted to move I talked to her about it. She did lead me to
believe that she would help me and she was wanting to see me settled.
I do not think either of us realised—I certainly did not
and my mother certainly did not because she is pretty out of touch
with the prices of houses and particularly houses in West London—what
the cost of it would be. Nonetheless, she was able to help me.
I did have a discussion with her about it and she led me to believe
that she would be able to help me. I felt reasonable confidence
about that. We did not discuss how much the purchase of my property
would cost, we did not discuss how much I needed—none of
these things were discussed between us; nonetheless, the principle
of her helping me was established. That is the basis on which
I proceeded. I did have a quite separate discussion with Geoffrey
Robinson, who is a very long-standing friend of mine. I have known
him since I first came to work in this House as a research assistant
in 1980/81 when I worked with Albert Booth. I first encountered
Geoffrey when he was a Whip on the Standing Committee on the transport
legislation at that time, and we became friends. Indeed, he helped
me considerably at that time, in 1980, when the transport trade
unions who were going to pay my salary to work with Albert Booth
found they could not agree on anything, let alone whether or not
I should be paid a salary, even though I came to work here on
that basis. Geoffrey went and sorted it out, banged their heads
together, rang the general secretaries up and said "For goodness
sake, we have got a kid who is working here for nothing. You said
you would give him a salary—fork out." That was in
1980/81, and we have been friends ever since. I did have a discussion
with him about my house purchase sometime after Easter. It was
sometime between Easter and somewhere—I cannot remember
precisely—in 1996. I did not go to him with the intention
of asking him to loan me some money, I went to him with a completely
different reason; partly it was social, partly to discuss a political
problem that the Party had at the time. It was completely unrelated
to my house purchase. It was during that conversation that I told
him that I was looking for a house—or a flat, as the case
then was—and we talked and he asked me how I was going to
pay for it. I said that I was going to sell my property in Clerkenwell
and that I believed my mother would help me with the remainder.
He said, almost casually, at the time, "Well, if you need
any help you know I will help. I will be very happy if you need
a loan." It was not substantially discussed any more than
that, at the time.
2. When did you have this discussion with
your mother originally?
(Mr Mandelson) At her home.
3. When?
(Mr Mandelson) When? It would have been sometime
around Easter—after Easter. I am sorry, I cannot remember
more precisely than that. My recollection of the time is that
in 1996 I felt I had an interval between the local government
elections in May and the autumn, really. That is a relatively
quiet period politically.
4. About Easter, shall we say?
(Mr Mandelson) Yes, it would have been about Easter
or thereafter.
5. When you had this conversation with your
mother did you have in mind yourself the sort of money that was
necessary?
(Mr Mandelson) Absolutely not. I had no idea.
I had no idea how much anything cost. I had no idea where I was
actually going—I knew I wanted to be in that part of West
London because earlier in the year I had originally come to an
arrangement with the two friends of mine who live in the country
who wanted to buy a flat in London in that part of West London
for their use at, sort of, weekends or holidays, and that I was
going to share it and use it during the week and then go back
to Hartlepool at the weekends. Indeed, my first excursion into
Notting Hill—where I had never been before in my life, let
alone West London—the first time I set foot in Notting Hill
in daylight was with these two friends, Robert Harris and his
wife. We walked round the area and they showed me the area. They
had lived there previously before they moved to Berkshire, that
was where they wanted to buy a London flat, and I was going to
come to an arrangement with them—a renting arrangement,
not buying it with them. But I had no idea how much anything was
going to cost. I did not know what sort of place I was going to
buy. It was a sort of adventure, but not one I thought very deeply
or long about.
6. So the question was not about getting
an inheritance but, rather, that you would expect some support
from your mother, and when that failed to materialise—if
it were to fail to materialise—you could rely on a loan
from Geoffrey Robinson.
(Mr Mandelson) That is correct.
7. Is that the situation?
(Mr Mandelson) That is correct.
8. Then you told Herbert Smith that you
expected your mother to provide the balance of the purchase price
on completion in October 1996, and that if you had not reached
that conclusion you would not have exchanged contracts. When did
you realise that she was not going to be able to provide that
sort of money—which, by then, you did know something about?
(Mr Mandelson) Finally, once I had embarked on
the purchase of it. I saw Northumberland Place in August, I made
an offer, the offer was accepted and I applied for a mortgage
and completed a mortgage application form. That was at the end
of August. Then, during September, I was proceeding. My mother—I
think my mother was unsure. My mother was genuinely unsure. My
mother is quite old. She was doubtful, she was unsure, whether
she wanted to part with that money—particularly that sum
of money. I do not think she ever realised—I did not realise,
but then, to me, it is a large sum of money but to my mother it
was a fantastic sum of money, really, considering she bought her
house with my father in 1951 for £4,000 and she has never
moved from that house, she has lived in it all her life and she
has never been involved in any property acquisition since then.
It suddenly seemed a lot of money. She was worried about if she
became infirm or needed medical help or whatever, she wanted to
be self-reliant. She is very independent. She never goes out anywhere.
She hardly leaves our home. I think, in the end, it became too
daunting for her, and I completely understand it. At the end of
the day, I did not press her and I did not press her very hard.
I did not say to her: "Look, you know, mother, my life depends
on this", partly because I could have withdrawn from the
purchase of the house. My whole life was not riding on the purchase
of this house—remarkable as it would seem now, in retrospect,
given all the publicity for it. Also, I knew that I had a second
option, I had somebody to fall back on, and Geoffrey was perfectly
prepared to help me.
9. When did your mother know about the sort
of sum of money that was required?
(Mr Mandelson) When I told her.
10. When was that?
(Mr Mandelson) I suppose I went into the detail
of it in September. It was after I had completed the application
form.
11. So, from, roughly, Easter to September
she was not aware of the kind of money that was required?
(Mr Mandelson) No, and that is entirely—that
is my fault. I am not saying it was a crime I committed but I
should have been more—I was not trying to mislead her, but,
at the same time, I did not want to discourage her from helping
me.
12. You did tell Herbert Smith that you
expected your mother to provide the balance of the money on completion
in October 1996, and that if you had not reached that conclusion
you would not have exchanged contracts. So you were still of the
opinion that your mother, at that stage, would be providing the
money?
(Mr Mandelson) I was still hopeful. She did not
supply the deposit. Geoffrey did that.
13. Indeed. I am coming on to that.
(Mr Mandelson) I thought she might still do that.
I hoped she would. I do not actually recall saying to Herbert
Smith, or making such a categorical statement that if she had
not helped me finally I would not have gone through with the sale.
When you look back on something you feel that everything should
be so precise and everything should be so ordered, and you should
know exactly what you are doing all the time, and that everything
was so logical and sequential. I am afraid it was not like that.
The main reason is that at the time—I know it sounds a slightly
casual thing to say—I had an awful lot of other things to
worry about. It was the year before the election, it was the last
Party Conference before the election, I had had an awful summer,
politically, because in August one thing after another had happened.
I was there dealing with it. I had an awful August. I cannot quite
remember what the August was, but it was just one thing after
another—as things are. I then went for a brief holiday when
the others got back from their holiday at the end of August, and
then came back in the second week of September, I think, after
a week or ten days, and immediately became totally re-absorbed
back into the run-up to the Party Conference and the management
of that, and all that that involves.
14. Can I now turn to the two loans that
you got from Geoffrey Robinson? First of all, how much did you
borrow from Mr Robinson for the deposit when you exchanged contracts
on Northumberland Place? What was the amount?
(Mr Mandelson) I am sorry, I do not remember how
much it was. I am sorry, I do not remember. It was ten per cent,
or whatever. Ten per cent of the price.[1]
15. I think it was about £40,000, but
I have not got the figure. It would be in that sort of area.
(Mr Mandelson) Yes, it would have been about ten
per cent, yes.
16. Something like that. Was it intended
to be a short-term loan or a long-term loan at that stage?
(Mr Mandelson) We did not discuss at that stage
anything about the terms of the loan at all.
17. He gave you the money without knowing,
other than this was a deposit——
(Mr Mandelson) He knew it was a deposit.
18. On that particular house?
(Mr Mandelson) Yes.
19. You told me in your letter of 4 May
that you reached agreement on the terms of the loan on 14/15 October,
or something.
(Mr Mandelson) I did not, my solicitor did. My
solicitor did. I did not.
1 Note by witness: In fact it was £23,000-five
per cent of the price. Back
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