A Tory source added: "This was not a meeting of the Conservative Foundation – it was a meeting to discuss Lord Hesketh's replacement."
Nevertheless, the meeting could be judged as a breach of the Ministerial Code, which states: "Facilities provided to ministers at government expense to enable them to carry out their official duties should not be used for Party or constituency work."
The Conservative Foundation was set up in 2005 and launched by Lady Thatcher and Sir John Major. The foundation's website describes it as "an integral part of the Conservative family".
It is a separate company with a board of directors, including Michael Spencer, the former party treasurer, Lord Feldman and other Tory grandees, including Lord Saatchi and Lord Fink.
Its accounts show that the foundation received income of £497,307 in 2010, much of which came from the estates of deceased supporters. In the same year the foundation paid salaries of £219,557 to its three staff – equivalent to more than £73,000 each.
Lord Hesketh told The Sunday Telegraph that he was "wholly unaware" of any rule that forbade ministers from using government buildings for party business. He even sought to defend the Prime Minister's use of Downing Street for a party meeting.
"David Cameron is very busy," said the peer, who last year defected to the UK Independence Party. "He can't be expected to move from building to building to discuss different matters.
"It may have been a massive piece of misjudgement from Lord Feldman. He was the person who told me to come to the meeting."
However, Sir Alistair Graham, who was chairman of the Committee on Standards in Public Life between 2003 and 2007, said the meeting represented a clear breach of the ministerial code.
"It really is unfortunate that the Prime Minister is setting a bad example for his colleagues if, in a cavalier fashion, he is using government resources for party ends," Sir Alistair said.
"It does throw up a question mark about his credibility in terms of the regular statements he's making about what is unacceptable."
He added: "The ministerial code is there to ensure that when you're involved in your public duty you don't easily confuse what are party political matters and what are essential to carrying out your public office."
While in opposition, the Conservative Party attacked Labour for allowing the Smith Institute, a Labour-leaning think tank, to holding functions in Downing Street.
Labour last night called for an investigation into the meeting and urged ministers to disclose all cases when party matters have been discussed at Number Ten.
Michael Dugher, the shadow minister without portfolio, also said this represented a breach of the ministerial code. "This is further evidence that David Cameron is using Government buildings as his own personal fiefdom," he said. "This should be investigated and we will certainly be following this up."
Lord Hesketh said he was "shocked" by the way the Prime Minister's staff behaved while he was in Downing Street. "People were walking around with no ties, wearing trainers," the peer said. "I put the whole of the rot down to Alastair Campbell moving the whips' office from 12 Downing Street. Modern government has suffered appallingly as a result.
"In 1997 sofa government came in and all of these infectious bad habits came with it. The civil service should have been monitoring this sort of thing. It's part of this very casual attitude. This is about a collapse in standards. It's about principles, judgments and common sense."
i'm a grown man and i'm close to tears looking at this. Bring back capital punishment, the scum that did this are utter cowards and they should hang for it - real slow.
- tony, Chippenham, 31/3/2012 20:42
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