Select Committee on Standards and Privileges Minutes of Evidence

Examination of Witness (Questions 1 - 19)




  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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