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Please note "BBC Breakfast with Frost" must be credited if any part of this transcript is used

DAVID FROST: Well Roy Hattersley was of course deputy leader of the Labour Party throughout the period that Peter Mandelson was the party's director of communications, and very familiar with the man and with the task of modernising the Labour Party, and Roy Hattersley is here this morning and after his own personal crisis yesterday with Sheffield Wednesday - 3-1 was it?

ROY HATTERSLEY: Three-one. Robbed, as always. Robbed. Week after week we're robbed. It's quite extraordinary.

DAVID FROST: It's amazing. Was robbed, was robbed. And when we get the tape in from India we'll see what Mr Hinduja's got to say and we'll see what you've got to say about Mr Hinduja. But what we wanted to talk about first of all was the assessment of Peter Mandelson, I mean we've touched on it in the papers, the man who's achieved a lot in the party and yet at the end of the day he's had a second crisis following -

ROY HATTERSLEY: Peter was immensely important in the Labour Party. He was important in my day, he was an absolutely first class director of communications. Always a bit too concerned with the message and not sufficiently, in my view, concerned with the image that the message created. Always concerned with trying to make the Labour Party a non-socialist Labour Party, but he was nevertheless immensely important and a very good director of communications. I think he'd been a very good minister. I was rather offended on Friday when I heard Alastair Campbell was implying that he'd had some sort of crisis, but I must say this morning, reading his article in The Sunday Times, it's obvious that something very strange is going on inside his head. It's very sad, it will do him immense damage, it will do him more damage than the Labour Party. It's a terrible mess but it's a temporary mess, I mean it's not a deep wound for the Labour Party, it's a irritating rash, and now we've got to stop scratching it and get on with something more serious.

DAVID FROST: Yes, because I mean whatever the, even if all the allegations were true it doesn't amount to a - and obviously he says they're not - but I mean even if they were true it's not exactly a crime -

ROY HATTERSLEY: The basic facts - which people have argued - I believe that if Peter had simply said yes of course I phoned the Home Office, I met these people, they asked me about a passport, courtesy required me to do it. I don't think that would have been a terrible crime, indeed I don't think it would have been a crime at all. The problem was, as I understood it 'til today, and still believe it to be, that he didn't tell the truth about the representation that he made. Now everybody I know in parliament has made representations from people outside their constituencies. I think if he'd been honest about it, at worst it would have been half a day's embarrassment, but of course he blew it up into this great furore and I'm afraid that's a temperamental thing with Peter.

DAVID FROST: And what about the modernisation of the Labour Party, has it gone - now gone, not because necessarily of Peter now, we're talking - do you think - when I read you, you sometimes think it's gone too far now.

ROY HATTERSLEY: Well there's been two sorts of modernisation. There's one, in a sense organisational, we're no longer a party of dissent, that likes opposition, that fights in the constituencies, that has infiltration from crazy extremists. Peter was partly responsible for ending that, and that's all for the good and that's a wonderful thing for the party and for the country. Peter's other role was the one I mentioned in passing at the beginning, of trying to push the Labour Party away from democratic socialism towards the centre ground. Well I'm happy to say that process has very much ended. If you think of Gordon Brown's public expenditure review this year, it's much more like a proper Labour public expenditure review than anything we've had in four years. Public expenditure is now more important than tax cuts. If you heard the Prime Minister, as I'm sure you did, at this year's or last years party conference, heavens he sounded like a Labour prime minister - that's quite unusual for Tony Blair. We've moved back towards what the democratic socialism of Gaitskell of Wilson, of John Smith, of the people who wanted to reform the Labour Party but wanted to keep it socialist. So the idea that Peter's somehow going, going has somehow prevented the Labour Party from moving further and further to the right, is simply wrong because thank heavens that process has ended.

DAVID FROST: Fine, that's very to the point. Well let's, let's hear from Mr SP Hinduja, always called SP for short, and the man who has been at the centre of it all. SP Hinduja, following what some have called an improper intervention by a minister, Mr Hinduja was given a British passport in record time, a little under six months, his first application had earlier been rejected. Well Mr Hinduja's in Delhi facing up to corruption charges at the moment, which he's passionately saying he's not guilty of - that's a quite unrelated matter, but a little earlier this morning we managed to talk to him and I began by asking exactly what happened between him and Mr Mandelson.

SP HINDUJA: Well I just casually enquired from him, could you please let me know what is happening to my application. What is the progress of my application. I never thought that the developed world and the people in Britain, the media in Britain, would one good morning get up and tell me that well this donation which was given by my foundation is linked with the passport. And it was not only Peter Mandelson, I enquired from a couple of others, people in the political world, whether they have any idea of the legislation - or what is happening with my passport application.

DAVID FROST: Who did you have that conversation with SP?

SP HINDUJA: I had with many other, like I enquired from, if I'm not mistaken, from Keith Vaz, I enquired from a couple of other friends also - I exactly don't remember today.

DAVID FROST: And it says today, SP, in the Sunday Telegraph here, that in fact Keith Vaz was made a minister in the government after the Hinduja brothers had lobbied Blair to have an Asian in the government. Was that right?

SP HINDUJA: Well I am not the person to decide anybody's cabinet position but I have been suggesting not only to the Labour government but even the opposition, whoever has been ruling, that knowing Britain, a multicultural understanding, they should also promote, they should also introduce in the ministry ministers and civil servants from the minority communities also. No time I have written or I have said specially for Keith Vaz. That is totally false.

DAVID FROST: Totally false. Tell me something, you mentioned -

SP HINDUJA: Totally false and moreover, and moreover the decision is with the prime minister. Who am I to decide that?

DAVID FROST: And in terms of Keith Vaz, you mentioned before we got to Keith Vaz about political donations. You in fact have made as much, as many donations to members of the Conservative Party as to the Labour Party. You were very close to Mrs Thatcher were you not?

SP HINDUJA: Well every time the donation that we have given to Conservative or Labour has been for some good cause, like, I'll give you one example of a Conservative one. There was a Gulf War, and they had auction of whiskey bottle, knowing that we are teetotallers, despite that we win it, and still we are holding that whiskey in our bar room without using it. And that money was meant for the victims of the Gulf War. And we haven't contributed to the political parties the kind of figures that they are talking of - six million pounds given to the Labour Party? Again, it is totally false. Yes, our professionals, our group companies have a small budget of a few hundred pounds, or a couple of thousand pounds, Hindujas who they have been supporting, and that is with the professionals. It has nothing to do with us. As far as the brothers are concerned, we have only been contributing for the purpose of a cause like Gulf War.

DAVID FROST: There is also a story in the Mail on Sunday today, SP, that the, that Keith Vaz has attended a series of meetings with the brothers and allegedly gave them privileged government information to help their fight against extradition to face bribery charges in India, is that true?

SP HINDUJA: Now let me tell you, we have enquired from our lawyers, we have also enquired because he has been the foreign minister, that what is the protection they give to the British citizens, so that was an enquiry for our information and that was not only from Keith Vaz, we have enquired from few friends and the lawyers, not that we wanted to avail any such protection, therefore you know very well that we have come voluntarily to India, we haven't taken any shelter under the British citizenship, we have also voluntarily co-operated with the CBI to prove our innocence and we have answered all their questions and their queries. So we haven't taken any benefit, any privilege of the British passport.

DAVID FROST: And one final - and one final question -

SP HINDUJA: (TALKING ACROSS EACH OTHER) for your information David, David one thing more I would like to add

DAVID FROST: Yes, yes.

SP HINDUJA: That we had the right of remaining silent to these, with the CBI [Central Bureau of Investigation] agency. Despite that, we requested the judge that we would like to co-operate with the CBI to prove our innocence.

DAVID FROST: Right. And in terms of, in terms of the case there, the Bofors gun case in India, when do you, when do you expect to be able to leave India and come back here to London?

SP HINDUJA: Well we will be completing, as soon as we are completing our interrogation and we are expecting to complete hopefully tomorrow and, and then thereafter the judge will be briefed and he will take the decision. I don't think that we see any problem at this end and we are confident and we have full trust in the judiciary of India.

DAVID FROST: And one final question, SP - were you surprised, everybody says that to get a passport in six months is about three times quicker than usual. Were you surprised to get the passport in six months or had Peter Mandelson said he would speed it up?

SP HINDUJA: Now can I tell you, my application is made much earlier and I can give you several examples.Only yesterday my friend telephoned me from Hampstead, London, and he said "my wife got a passport in four months." You see, I'm really surprised to understand how the media is misleading, misinterpreting without checking the facts from us. I mean I don't see that there is anything wrong in enquiring about the progress of the application. And I think the duty of every politician is to assist and help, therefore they are voted, therefore they are made a minister. Their first duty is to attend to their people in the country. And why, why, why is all this being mixed up with the charitable thing when they know even before the birth of the Faith Zone or the Dome, we have already started the multicultural understanding programme over a decade. And what has that got to do with the passport and how has it benefited me in this few months, that I got this passport in six months. I have been only wanting to have this passport to have the privileges in Britain so that it makes me more convenient from investing point of view and at the same time I have been able to get my PIO, Person of Indian Origin, which gives me the privileges and the identity of India.

DAVID FROST: Well that's all very clear, so I mean, but did, did Peter Mandelson say he would help you with the passport, or just enquire about it?

SP HINDUJA: He said he, he just said that let me check and I'll report back to you. And as far as I remember that when I asked him, he was possibly not even the minister. And when I made the application I don't think that he was a minister.

DAVID FROST: That was SP Hinduja speaking to us just this morning about an hour before the programme began, 1pm Indian time, and trying to put there his side of the story, his version of the facts and so on. Roy, earlier on you were saying that really they were making a pig's dinner of this, Labour, this particular crisis, and obviously Keith Vaz and all those things that were brought up by Mr Hinduja there, I mean it's up to Labour really whether this crisis has any effect is it?

ROY HATTERSLEY: I don't think it has any effect at all. You know, I guess we'll have a May election but by the time the election comes this will be regarded as rather insignificant because I don't believe - I can be proved wrong - but I don't believe any major wrongdoing is going to be proved. I think until Friday Downing Street in general dealt with it very well, the Prime Minister was very decisive, Mandelson had erred, Mandelson must go. Mandelson quote, a great friend of the Prime Minister's, so this is the death of cronyism, nobody can accuse the Prime Minister of cronyism from now on - that all went very well. Friday things went wrong, partly I guess because there was a briefing against Peter, and partly because Peter was by then feeling pretty sore. And we have this little blow up this weekend, but it will blow away as long as people are sensible. What we don't want, probably, is people like me coming on television and talking about it - we probably want a fortnight of silence.

DAVID FROST: And what about, just in general, this huge Labour lead, we have the polls say there's dissatisfaction with the services, with health and education and so on - particularly with health and so on - and all of those things, no great enthusiasm for the personalities at the top of the Labour Party and so on, and yet this huge lead. Do you think these two things can continue peacefully through to the election -

ROY HATTERSLEY: Yes -

DAVID FROST: - an enormous lead despite dissatisfaction?

ROY HATTERSLEY: I've absolutely no doubt that Labour is going to win the election, and that it's going to win it very substantially. It may not win it by 189 votes or whatever we did last time, but you don't need to win by 180. I think there's underlying belief, and it's accurate belief, that Labour has made some gradual progress but there's a great deal more to do, but I think the gradual progress is established in people's minds. And you must ask Mr Portillo when he comes on, because one of the things that guarantees Labour leads is the performance of the Conservative Party and Mr William Hague. And Mr William Hague is not going to be elected as prime minister of this country, and therefore the Labour Party's support, which is not huge but substantial, is solidified by the way the Tory Party are behaving.

DAVID FROST: Thank you very much indeed. Great to have you with us and better days ahead for the Owls.

ROY HATTERSLEY: I hope so.

INTERVIEW ENDS

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