Dangerous David

His familiarity with the code is hardly surprising. After all, the Work and Pensions Secretary became used to fending off unwelcome attention when he was being hounded out of his last Cabinet job. But in a quieter moment yesterday he could perhaps have reflected on how much better it would have been to have paid attention to the code of conduct for ministers, rather than on that for the Press.

It is now less than 12 months since Mr Blunkett last found himself the object of scrutiny into his private life. Then it was into his love life, and the repercussions of the collapse of his relationship with Kimberly Quinn, including allegations he had speeded up a visa for Ms Quinn's nanny.

Now it is over his financial affairs, particularly during the five months he was out of office until the reshuffle following this year's General Election. Then, the steady drip-drip of allegations eventually proved overwhelming and he was forced to resign. Last night he was remaining defiant, and seemed to retain the support of the Prime Minister.

But, in the meantime, the damage is being done, both to Mr Blunkett's career and to the Government's credibility, not to mention Mr Blair's efforts to push through reforms and avoid becoming a lame duck. So why is Mr Blunkett in trouble and what does this mean for the Prime Minister?

Q What is the row about?

A The controversy centres on his appointment to the board of DNA Bioscience, a company which specialises in DNA testing. In April this year, he was made a non-executive director of the company, resigning when he was reappointed to the Cabinet in May. He also bought shares in the company, which were put in trust for his sons after the General Election.

It also emerged yesterday that he took up paid employment with the Organisation for Research and Technology, an educational and vocational training charity also known as World ORT, during his enforced break from office.

According to Parliament's Register of Members' Interests, the post earned him £15-£20,000 between January and April.

Q What has Mr Blunkett done wrong?

A Although it seems a fairly trivial issue - he was on the board of DNA Bioscience for just two weeks and there is no suggestion he misused his position there or with World ORT - the row centres on his failure to comply with normal practice for former ministers.

According to the Ministerial Code of Conduct, ministers should seek advice from the Independent Advisory Committee on Business Appointments before taking up any private sector role within two years of leaving office. This is designed to avoid any suspicion of impropriety, either that ministers' decisions while in office have been influenced by the hope of subsequent reward, or that employers could make improper use of information gained while the minister was in office.

Not only did Mr Blunkett fail to seek the committee's advice, but any possible defence that he was unaware he was expected to do so has been shot down. In three letters from committee chairman Lord Mayhew of Twysden dating back to the end of last year, Mr Blunkett is explicitly told that he should consult the committee for advice on taking up any private sector or paid charity appointments.

According to Sir Alistair Graham, chairman of the committee on standards in public life, Mr Blunkett had "undoubtedly" breached the code. In contrast, when Darlington MP Alan Milburn took a post as an advisor to a private equity firm after resigning as Health Secretary, the appointment was approved, even though critics suggested the company's involvement in health care made it inappropriate.

Q What is his defence?

A He initially seemed to suggest that it was not compulsory to consult the committee, merely optional. But in a letter from the head of the Civil Service, Sir Gus O'Donnell, released on Monday night, Mr Blunkett was told that he should have consulted the committee, although he did not have to take its advice. In that case, the committee may well have made its advice public.

After the row had arisen, Mr Blunkett said he had asked his sons to dispose of the shares, reported to be worth £15,000, to avoid "continuing misinterpretation of the position".

Mr Blunkett also insisted that there had been no conflict of interest, in that DNA Bioscience did not have any contracts with his department or with the Child Support Agency, and that he had not made representations to any government department or agency on the company's behalf.

Q What does it mean for his career?

A In an interview last night, Mr Blunkett insisted he was not going to resign, and accused the Conservative Party and its allies in the Press of trying to hound him from office. As of last night, the line from Downing Street was that the Work and Pensions Secretary has accepted he made a mistake, and that the Prime Minister's judgement was that did not stop him from doing his job.

But Mr Blunkett's experience last year will have made him very aware of how much damage can be caused by a steady stream of revelations and allegations. Not only does the constant questioning of his judgement undermine his authority, but it also threatens to overshadow whatever else the Government is doing. Unless these revelations dry up, the pressure could eventually become overwhelming.

And the affair does raise serious doubts over his judgement. For many people, the most remarkable aspect is that a minister who was hounded from office just a few months earlier, should not have gone to the most extraordinary lengths to ensure he would not be so vulnerable in future.

He may also have done well to note the example of the only man, so far, to have resigned twice from the Cabinet. Peter Mandelson's return to office less than 12 months after resigning lasted just over a year before scandal forced him to quit again. If the knives are out for Mr Blunkett, it may partly be a result of Tony Blair's defiance at bringing him back so quickly, just as he did with Mandelson.

A suggestion emerged yesterday that the purchase of the shares and the decision to seek private sector rewards were motivated by a desire to restore his eldest sons' inheritance, apparently spent on trying to secure access to his child with Ms Quinn. But it can also be seen as illustrating the belief common among those in power that they are exempt from the standards - and the scrutiny - which apply to everybody else.

Q What does this mean for the Government?

A The damage to Mr Blunkett's reputation is a serious blow. He is one of the few ministers able to identify with and articulate the concerns of what the pollsters refer to as "ordinary people". A poll taken after his resignation as Home Secretary showed a significant majority wanted him to return to Government, largely due to his ability to make people feel he shares their concerns.

Whatever the outcome, the row will also inevitably affect his ability to carry through reform on what are expected to be two of the most contentious issues facing the Government: incapacity benefits and pensions.

For Mr Blair, the damage goes deeper still. The working class lad from Sheffield provides some much needed balance to a Government led by a public school-educated barrister. And whatever their differences in background, the two are ideologically close, with Mr Blunkett one of the few able to stand up to the heir apparent, Gordon Brown.

Mr Blair will also worry about the shortage of senior ministers lining up to defend his embattled lieutenant. Some may still be smarting over comments attributed to Mr Blunkett in a biography published last year, when he rounded on several of his colleagues, but their reluctance may also be a sign that the Prime Minister is losing his grip on his own Cabinet.

Coming after last week's embarrassing splits over school reform and smoking, it could be further evidence that Mr Blair's decision to announce he would not fight another election has turned him into a lame duck and left his erstwhile supporters now looking beyond his premiership. He may have pledged to serve a full third term, but this will only increase the pressure on him to go sooner rather than later.