Thursday, May 14, 2009

Food Companies Try, but Can’t Guarantee Safety

The frozen pot pies that sickened an estimated 15,000 people with salmonella in 2007 left federal inspectors mystified. At first they suspected the turkey. Then they considered the peas, carrots and potatoes.

Threatened with a federal shutdown, the pie maker, ConAgra Foods, began spot-checking the vegetables for pathogens, but could not find the culprit. It also tried cooking the vegetables at high temperatures, a strategy the industry calls a “kill step,” to wipe out any lingering microbes. But the vegetables turned to mush in the process.

So ConAgra — which sold more than 100 million pot pies last year under its popular Banquet label — decided to make the consumer responsible for the kill step. The “food safety” instructions and four-step diagram on the 69-cent pies offer this guidance: “Internal temperature needs to reach 165° F as measured by a food thermometer in several spots.”

Increasingly, the corporations that supply Americans with processed foods are unable to guarantee the safety of their ingredients. In this case, ConAgra could not pinpoint which of the more than 25 ingredients in its pies was carrying salmonella. Other companies do not even know who is supplying their ingredients, let alone if those suppliers are screening the items for microbes and other potential dangers, interviews and documents show.

Yet the supply chain for ingredients in processed foods — from flavorings to flour to fruits and vegetables — is becoming more complex and global as the drive to keep food costs down intensifies. As a result, almost every element, not just red meat and poultry, is now a potential carrier of pathogens, government and industry officials concede.

In addition to ConAgra, other food giants like Nestlé and the Blackstone Group, a New York firm that acquired the Swanson and Hungry-Man brands two years ago, concede that they cannot ensure the safety of items — from frozen vegetables to pizzas — and that they are shifting the burden to the consumer. General Mills, which recalled about five million frozen pizzas in 2007 after an E. coli outbreak, now advises consumers to avoid microwaves and cook only with conventional ovens. ConAgra has also added food safety instructions to its other frozen meals, including the Healthy Choice brand.

Peanuts were considered unlikely culprits for pathogens until earlier this year when a processing plant in Georgia was blamed for salmonella poisoning that is estimated to have killed nine people and sickened 27,000. Now, white pepper is being blamed for dozens of salmonella illnesses on the West Coast, where a widening recall includes other spices and six tons of frozen egg rolls.

The problem is particularly acute with frozen foods, in which unwitting consumers who buy these products for their convenience mistakenly think that their cooking is a matter of taste and not safety.

Federal regulators have pushed companies to beef up their cooking instructions with the detailed “food safety” guides. But the response has been varied, as a review of packaging showed. Some manufacturers fail to list explicit instructions; others include abbreviated guidelines on the side of their boxes in tiny print. A Hungry-Man pot pie asks consumers to ensure that the pie reaches a temperature that is 11 degrees short of the government-established threshold for killing pathogens. Questioned about the discrepancy, Blackstone acknowledged it was using an older industry standard that it would rectify when it printed new cartons. Government food safety officials also point to efforts by the Partnership for Food Safety Education, a nonprofit group founded by the Clinton administration. But the partnership consists of a two-person staff and an annual budget of $300,000. Its director, Shelley Feist, said she has wanted to start a campaign to advise consumers about frozen foods, but lacks the money.

Estimating the risk to consumers is difficult. The industry says that it is acting with an abundance of caution, and that big outbreaks of food-borne illness are rare. At the same time, a vast majority of the estimated 76 million cases of food-borne illness every year go unreported or are not traced to the source.

Home Cooking

Some food safety experts say they do not think the solution should rest with the consumer. Dr. Michael T. Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota, said companies like ConAgra were asking too much. “I do not believe that it is fair to put this responsibility on the back of the consumer, when there is substantial confusion about what it means to prepare that product,” Dr. Osterholm said.

And the ingredient chain for frozen and other processed foods is poised to get more convoluted, industry insiders say. While the global market for ingredients is projected to reach $34 billion next year, the pressure to keep food prices down in a recession is forcing food companies to look for ways to cut costs.

Ensuring the safety of ingredients has been further complicated as food companies subcontract processing work to save money: smaller companies prepare flavor mixes and dough that a big manufacturer then assembles. “There is talk of having passports for ingredients,” said Jamie Rice, the marketing director of RTS Resource, a research firm based in England. “At each stage they are signed off on for quality and safety. That would help companies, if there is a scare, in tracing back.”

But government efforts to impose tougher trace-back requirements for ingredients have met with resistance from food industry groups including the Grocery Manufacturers Association, which complained to the Food and Drug Administration: “This information is not reasonably needed and it is often not practical or possible to provide it.”

Now, in the wake of polls that show food poisoning incidents are shaking shopper confidence, the group is re-evaluating its position. A new industry guide produced by the group urges companies to test for salmonella and cites recent outbreaks from cereal, children’s snacks and other dry foods that companies have mistakenly considered immune to pathogens.

Research on raw ingredients, the guide notes, has found salmonella in 0.14 percent to 1.3 percent of the wheat flour sampled, and up to 8 percent of the raw spices tested.

ConAgra’s pot pie outbreak began on Feb. 20, 2007, and by the time it trailed off nine months later 401 cases of salmonella infection had been identified in 41 states, according to the Centers for Disease Control and Prevention, which estimates that for every reported case, an additional 38 are not detected or reported.

It took until June 2007 for health officials to discover the illnesses were connected, and in October they traced the salmonella to Banquet pot pies made at ConAgra’s plant in Marshall, Mo.

While investigators who went to the plant were never able to pinpoint the salmonella source, inspectors for the United States Department of Agriculture focused on the vegetables, a federal inspection document shows.

ConAgra had not been requiring its suppliers to test the vegetables for pathogens, even though some were being shipped from Latin America. Nor was ConAgra conducting its own pathogen tests.

Pelosi Acknowledges She Was Told of Waterboarding in 2003

Under fire from Republicans for what she knew about harsh questioning of terror detainees, House Speaker Nancy Pelosi on Thursday acknowledged that she had learned in 2003 that the C.I.A. had subjected suspects to waterboarding, but she asserted that the agency had misled Congress about its techniques.

At a tense press conference, Ms. Pelosi said for the first time that a staff member alerted her in February 2003 that top lawmakers on the House Intelligence Committee had been briefed on the use of tough interrogation methods on terror suspects.

But she said the fact that she did not speak out at the time due to secrecy rules did not make her complicit in any abuse of detainees. She accused the C.I.A. and Bush administration of lying to Congress about what was actually transpiring with the detainees.

“I am saying that the C.I.A. was misleading the Congress and at the same time the administration was misleading the Congress on weapons of mass destruction,” Ms. Pelosi said.

Ms. Pelosi said she was told at that briefing that waterboarding, one of the most controversial of the harsh techniques employed, was not being used.

The C.I.A., reacting to Ms. Pelosi’s remarks, said that agency records declassified last week and cited by congressional Republicans show that Ms. Pelosi had taken part in a September 2002 briefing on interrogation techniques was “true to the language in the Agency’s records.”

An agency spokesman, George Little, added that the C.I.A. director, Leon E. Panetta, had pointed out in a recent letter to Congress that the information “is drawn from the past files of the C.I.A.” and represented contemporaneous memoranda “and notes that summarized the best recollections of those individuals.”

According to the C.I.A. records, Ms. Pelosi attended the Sept. 4 briefing about the agency’s interrogation techniques with her Republican counterpart, Representative Porter J. Goss of Florida. Based on agency notes from the briefing, the two lawmakers were told the specific techniques “that had been employed” on Abu Zubaydah.

By then, that C.I.A. already used a number of harsh methods on Mr. Zubaydah, including waterboarding.

The C.I.A. records do not list the individual techniques that lawmakers were told about. However, in an op-ed last month, Mr. Goss said he remembers being told specifically about waterboarding during the September 2002 briefing.

“I am slack jawed to read that members claim to have not understood that the techniques on which they were briefed were to actually be employed; or that specific techniques such as “waterboarding” were never mentioned,” Mr. Goss wrote in The Wall Street Journal.

Other Republicans took sharp issue with the speaker’s remarks.

“The speaker’s comments continue to raise more questions than provide answers,” said Representative John A. Boehner of Ohio, the House Republican minority leader. “It’s pretty clear that they were well aware of what these enhanced interrogation techniques were; they were well aware that they’d been used; and it seems to me that they want to have it both ways. You can’t have it both ways.”

Senator Kit Bond of Missouri, vice chairman of the Senate intelligence committee, issued a more scathing response.


“It’s outrageous that a member of Congress would call our terror-fighters liars,” he said in a statement released by his office. “Instead of prosecuting or persecuting, our country should be supporting our intelligence professionals who work to keep us safe.”

The Republican-driven furor over what Ms. Pelosi knew about waterboarding and other techniques has put the speaker on the defensive. She repeatedly referred to a carefully prepared statement to respond to multiple questions at the session with reporters.

Ms. Pelosi blamed the dispute on Republicans and others, saying they are trying to shift attention from those who authorized the interrogations and other tactics now found to be questionable.

Republicans have said the speaker was now criticizing the Bush administration for abusing terror suspects when she herself was aware of it at the time.

“This is a diversionary tactic to take the spotlight off of those who conceived, developed and implemented these policies, which all of us long opposed,” Ms. Pelosi said.

Ms. Pelosi said that at the sole briefing she attended as the senior Democrat on the House Intelligence Committee in September 2002, the only mention of waterboarding by C.I.A. officials was that while it was deemed to be legal, the technique was not being used.

On Friday, Congressional Republicans, citing a new accounting that showed some top Democrats taking part in briefings on harsh methods in 2002, had accused Democrats of full complicity in approving the Bush administration’s brutal interrogations.

The chart said that in a briefing on Sept. 4, 2002, attended by Ms. Pelosi, the interrogation methods that ”had been employed” against a prisoner, Abu Zubaydah, were described. But according to the legal memorandums released last month, Abu Zubaydah had been waterboarded 83 times the month before the briefing, so any objection from Democrats at the Sept. 4 briefing would have come too late.

Indeed, Ms. Pelosi said Thursday that she had learned only after the Sept. 4 briefing that waterboarding had already been used and that some administration experts had questioned its legality.

“We later find out that it had been taking place before they even briefed us about the legal opinions and told us that they were not being used,” she said, referring to the interrogation techniques.

Ms. Pelosi said she had supported a letter opposing the tactics sent in 2003 by Representative Jane Harman of California, who replaced Ms. Pelosi as the top Democrat on the intelligence panel when Ms. Pelosi took over as Democratic leader. But she said that she realized a letter would not change administration policy and said she instead set about to win Democratic control of Congress, then held by Republicans.

“It was clear we had to change the leadership in Congress and in the White House,” she said. “That was my job — the Congress part.”

Ms. Pelosi urged the C.I.A. to disclose the contents of the briefing she attended and said she did not believe there was more she could have done when she learned of the waterboarding.

Villagers in Afghanistan Describe Chaos of U.S. Strikes

The number of civilians killed by the American airstrikes in Farah Province last week may never be fully known. But villagers, including two girls recovering from burn wounds, described devastation that officials and human rights workers are calling the worst episode of civilian casualties in eight years of war in Afghanistan.

“We were very nervous and afraid and my mother said, ‘Come quickly, we will go somewhere and we will be safe,’ ” said Tillah, 12, recounting from a hospital bed how women and children fled the bombing by taking refuge in a large compound, which was then hit.

The bombs were so powerful that people were ripped to shreds. Survivors said they collected only pieces of bodies. Several villagers said that they could not distinguish all of the dead and that they never found some of their relatives.

Government officials have accepted handwritten lists compiled by the villagers of 147 dead civilians. An independent Afghan human rights group said it had accounts from interviews of 117 dead. American officials say that even 100 is an exaggeration, but have yet to issue their own count.

The calamity in the village of Granai, some 18 miles from here, illustrates in the grimmest terms the test for the Obama administration as it deploys more than 20,000 additional troops here and appoints a new commander, Lt. Gen. Stanley A. McChrystal, in search of a fresh approach to combat the tenacious Taliban insurgency.

It is bombings like this one that have turned many Afghans against the American-backed government and the foreign military presence. The events in Granai have raised sharp questions once again about the appropriateness and effectiveness of aerial bombardment in a guerrilla war in which the insurgents deliberately blend into the civilian population to fight and flee.

Taliban insurgents are well aware of the weakness and are making the most of it, American and Afghan officials say. Farah, a vast province in the west, contains only a smattering of foreign special forces and trainers who work among Afghan police and army units. Exploiting the thin spread of forces, the insurgents sought to seize control of Granai and provoke a fierce battle over the heads of the civilian population, Afghan and American officials say.

After hours of fighting and taking a number of casualties, the American forces called in their heaviest weapon, airstrikes, on at least three targets in the village.

The rapid mass burial of the victims and the continuing presence of insurgents in the area have hampered investigations. Journalists were advised against visiting Granai. Villagers were interviewed here in Farah, the provincial capital, where they came to collect compensation payments, and in the neighboring province of Herat, where some were taken for treatment.

Much of the villagers’ descriptions matched accounts given by the United States military spokesman, Col. Greg Julian, and the provincial police chief, Colonel Abdul Ghafar Watandar. But they differed on one important point: whether the Taliban had already left Granai before the bombing began.

There was particular anger among the villagers that the bombing came after, they say, the Taliban had already left at dusk, and the fighting had subsided, so much so that men had gone to evening prayers at 7 p.m. and returned and were sitting down with their families for dinner.

The police chief said that sporadic fighting continued into the night and that the Taliban were probably in the village until 1 a.m.

Whatever the case, American planes bombed after 8 p.m. in several waves when most of the villagers thought the fighting was over; and whatever the actual number of casualties, it is clear from the villagers’ accounts that dozens of women and children were killed after taking cover.

One group went to a spacious compound owned by a man named Said Naeem, on the north side of the village, where the two girls were wounded. Only one woman and six children in the compound survived, one of their fathers said.

Another group gathered in the house of the village imam, or religious leader, Mullah Manan. That, too, was bombed, causing an equally large number of casualties, villagers said. Colonel Julian, the American military spokesman, said that the airstrikes hit houses from which the Taliban were firing. The enormous explosions left such devastation that villagers struggled to describe it. “There was someone’s legs, someone’s shoulders, someone’s hands,” said Said Jamal, an old white bearded man with rheumy eyes, who lost two sons and a daughter. “The dead were so many.”

A joint government and United States military delegation visited Granai last week, but came back sharply divided in their conclusions. The Afghan government said that 140 civilians were killed and 25 wounded, and that 12 houses were destroyed.

The United States military said the Afghan numbers were far too high. This week, a senior military investigator, Brig. Gen. Ray Thomas of the United States Army, arrived to conduct an in-depth inquiry for the region’s overall military commander, Gen. David H. Petraeus.

An independent Afghan organization, Afghanistan Rights Monitor, said Wednesday that at least 117 civilians were killed — including 26 women and 61 children — drawing on interviews with 21 villagers and relatives of the dead. The group criticized both the Taliban for fighting among civilians, and the United States military for using excessive force.

The police chief, Colonel Watandar, confirmed much of the villagers’ accounts of the fighting. A large group of Taliban fighters, numbering about 400, they estimated, entered the village and took up positions at dawn on May 4. By midmorning, the Taliban began attacks on police posts on the main road, just yards from the village, they said.

The fighting raged all day. The police called in more police, Afghan Army units and an American quick reaction force from the town of Farah as reinforcements.

By midafternoon, the exchanges escalated sharply and moved deeper into the village. Taliban fighters were firing from the houses, and at one point Marines Special Operations forces called in airstrikes to allow Marines to go forward and rescue a wounded Afghan soldier, said Colonel Julian, the United States military spokesman. After that, Taliban fire dropped significantly, he said.

A villager named Multan said that one house along the southern edge of the village was hit by a bomb and that one Taliban fighter was killed there. But villagers did not report any civilian casualties until the American planes bombed that night.

Tillah, the 12-year-old girl, whose face bears the scars of a scorching blast, still twisted in pain from the burning in her leg at the provincial hospital in Herat, where she and other survivors were taken to a special burn unit. Her two sisters, Freshta, 5, and Nuria, 7, were barely visible under the bandages swathing their heads and limbs.

The three girls were visiting their aunt’s house with their mother when a plane bombed the nearby mosque, at around 8 p.m., Tillah said. That is when they fled to Said Naeem’s seven-room home.

“When we reached there we felt safe and I fell asleep,” Tillah said. She said she heard the buzzing noise of a plane, but then only remembers coming to when someone pulled her from the rubble the next morning.

A second girl, Nazo, 9, beside her in another hospital bed, said she saw two red flashes in the courtyard that kicked up dust seconds before the explosion.

“I heard a loud explosion and the compound was burning and the roof fell in,” she said. Seven members of the family with her died, and four were wounded, her father, Said Malham, said.

“Why do they target the Taliban inside the village?” he asked wearily. “Why don’t they bomb them when they are outside the village?”

“The foreigners are guilty,” he continued. “Why don’t they bomb their targets, but instead they come and bomb our houses?”

BT chief cuts 15,000 more jobs and apologises for halving dividend

BT's chief executive, Ian Livingston, has apologised for more than halving the dividend to shareholders, many of whom bought shares on privatisation in the 1980s, after its IT services business plunged the firm deep into the red.

The failure of the loss-making BT Global Services, which made wildly over-optimistic projections about future profits, has forced BT into a cash squeeze as it must also pump an annual £525m into its huge pension scheme over the next three years to plug a widening funding gap caused by the recession.

As part of a plan to cut operating costs and capital expenditure by more than £1bn, BT will axe 15,000 jobs this year – about 10% of its workforce – on top of 15,000 who left the firm last year, 5,000 of whom went in the first three months of this year alone.

Its 1.1 million shareholders, meanwhile, many of whom rely on the company's dividends to augment their pensions, will see their income plunge as the company plans a final dividend of just 1.1p a share, making its payout 6.5p this year compared with 15.8p last year. The dividend cut will save BT more than £700m.

"It has been a really difficult year and yes I apologise to shareholders," said Livingston, who took over from Ben Verwaayen less than a year ago. "It has been a difficult year but ... I think the question is are the management team today doing the right thing to deliver for shareholders in the future and that's my real duty."

Sir Michael Rake, the chairman, added: "We are all extremely unhappy; it is very disappointing, given the performance of the other three divisions, that we have had these issues in Global Services but the best thing that we can do for all our shareholders is fix it quickly and grow the dividend again from a sustainable base."

Union leaders, however, reacted angrily to the news that jobs would be cut because of the failure of BT Global Services. The company has already frozen pay for all staff. Andy Kerr, deputy general secretary of the Communication Workers Union, said: "Global Services has been a disaster and the staff in BT are having to pay the price for their mismanagement."

BT employs 147,000 people – 42,000 of whom are contractors who have already seen their pay drop by an average of 14% as the company squeezes costs. Last year BT made 10,000 contractors and 5,000 staff redundant and the firm is looking for a similar reduction this year. Livingston stressed, however, that he hoped staff jobs would go through voluntary redundancy and people taking early retirement. "We will do our best to avoid compulsory redundancies," he said.

Both Rake and Livingston said there had been no discussion, either internally or with investors, about a possible rights issue and the company would be able to generate more than £1bn in cash this year, enough to meet further dividend payments, investment and reduce the company's £10.4bn debts.

"We are absolutely confident that we will have a sustainable dividend," Livingston added. "We can do a number of things: we can invest for the future of the business, we can pay down debt, we can support the pension scheme and do that with a dividend.

"Shareholders, of which I am one, would like to see a higher dividend, obviously," he added.

"But we have seen a massive change in the market, we are certainly not the only company that has reduced its dividend ... but as a result of the change in the market, the amount that we have to put into the pension has gone up and that money has come out of the dividend."

BT dramatically warned on profits in October as it emerged that BT Global Services had overestimated the potential profitability of many of its biggest contracts, including its part in the upgrade of the NHS IT systems. Since then, 85% of the unit's senior managers have gone, including its chief executive, François Barrault, who was replaced by the group finance director, Hanif Lalani.

Lalani and the new group finance director, Tony Chanmugam, have been poring over the group's books and slashing the value of the business. Having already written down £340m from the value of BT Global Services late last year, BT has taken a further £1.3bn hit for the three months to the end of March. Resuscitating the business, meanwhile, has already cost £280m and will cost a further £420m over the next two years.

Questions have been raised about whether Livingston should have spotted the problems in Global Services when he was group finance director four years ago – before he switched to heading the company's retail business. Chanmugam, however, said the problems in the business centred around the terms and conditions that were attached to its contracts and how those contracts were actually run.

"I can be quite blunt with Ian," he said, "and he knows I am blunt and very straight in terms of what I say. These issues were not issues in relation to when Ian was chief financial officer. If they were, I would have told him that. They are not. These issues have come about as a result of poor management practices and changes in the economic environment that have taken place over the past few years."

As a result of Global Services' problems, BT made a £1.28bn loss for the last three months of its financial year compared with a £494m profit last year. Overall, the company made an annual loss of £134m compared with a profit last year of £1.97bn. Total annual revenue was up 1% at £5.47bn in the last quarter of the year, leaving full-year revenues at £21.4bn, up 3%. The company warned, however, that it expects revenue to decline by 4% to 5% this year at least in part because of the problems at Global Services.

BT Global Services made an operating loss of £2bn in the year to March on revenues of £8.8bn. The rest of the business, however, weathered the recession far better, recording its best performance for five years.

One of the few genuine bright spots in the results was a pledge by BT to speed up the roll-out of its next-generation super-fast broadband network. Under a plan announced last summer, BT plans to plug 10m homes into a new fibre-optic network over the next few years. Originally, it had expected to connect 500,000 homes this year and that figure will now be doubled to more than a million.

Barack Obama's US climate bill seen as a step forward

The first concrete steps by Congress to fulfil Barack Obama's promise to green America's economy were seen around the world today as a significant step forward, though they remain far short of what scientists say is needed to solve ­global warming.

Democratic leaders in Congress said yesterdaytoday they had defied conventional wisdom that they would be unable to ­persuade representatives from oil and coal, rust belt and southern states to support a bill. The slightly weakened draft now calls for a 17% cut in greenhouse gas emissions from 2005 levels by 2020. "It's a legislative Susan Boyle. Everyone underestimated it until it started to sing," said Ed Markey, who chairs the subcommittee on climate change.

Democrats hope to finish the draft in a week. Their initial compromise fell short of what some environmentalists in the US and in the international community hoped for. They said it failed to send a strong enough signal of the US commitment to action and would undermine efforts to reach a deal on emission cuts at the UN climate treaty talks at Copenhagen later this year.

But diplomats and environmental policy experts said todaytoday that the bill marked a hard-won victory for Henry Waxman, the California Democrat steering the legislation, in the face of strong opposition from oil, coal and rustbelt Democrats. "I think he has his own fight right now. I don't think we need to get involved as well," said one European official.

Elliot Diringer, of the Pew Centre on Global Climate Change, said the international community would be pragmatic. "I think there is growing recognition internationally that this would [be] very ambitious for the United States," he said.

Diplomats have told America's climate change negotiators that they must see a serious move to cut US carbon emissions if the world is to agree a global deal. The US is the biggest per capita emitter.

The bill taking shape shows a lowered cut for 2020, although it would keep the US ambition to cut carbon emissions by 80% by 2050. It also departs from the original intent of auctioning off pollution permits.

In the current version of the bill, 35% of pollution allowances are to be given for free to power companies. and 15% to cement, steel and other energy-intensive industries. Car makers are to get 3%.

The bill should, nevertheless, still be enough to persuade China, the world's biggest ­polluter, to come on board at Copenhagen, said William Chandler, of the Carnegie Endowment for International Peace. "I think it's close enough to the original," he said.

The PR offensive by the oil and gas industry against Obama's green agenda, revealed this week in the Guardian, is likely to intensify next week as Congress begins the formal drafting process.

Heads roll as Westminster reels from MPs' expenses row

Gordon Brown and David Cameron were tonight battling to salvage the reputation of parliament after the MPs' expenses scandal claimed the first scalps from both major parties, amid signs that the crisis is in danger of spiralling out of control.

Despondent MPs tonight voiced fears that Britain may experience a milder ­version of the "clean hands" affair that brought down Italy's postwar political settlement in the 1990s. There were ­growing popular demands for MPs to be prosecuted as common benefit cheats.

Both houses of parliament, and the two main parties, were mired in the expenses and earnings scandal today when:

• Elliot Morley, a Labour former environ­ment minister, was suspended from the parliamentary Labour party after he admitted claiming £16,800 in mortgage payments on his constituency home 20 months after repaying the loan. Morley referred himself to John Lyon, the parliamentary standards commissioner.

• Justice minister Shahid Malik was revealed to have claimed thousands of pounds in taxpayer allowances on his ­second home while renting his main home. Malik had run up the highest expenses claim of any MP, claiming second home allowances – £66,827 over three years – on his house in London. He rented his main home in his Dewsbury constituency at a discounted rate of less than £100 a week.

• The veteran Conservative MP Andrew MacKay resigned as senior parliamentary adviser to Cameron after jointly claiming £170,000 over four years on properties with his wife, fellow Tory MP Julie Kirkbride. Cameron described his behaviour as completely unacceptable after it was revealed that MacKay designated Kirkbride's constituency flat in Bromsgrove, Worcestershire, as his main residence, allowing him to claim the annual £24,006 additional costs allowance on their joint London home. Kirkbride designated this property as her main residence, allowing her to make claims on her constituency flat.

• Two Labour peers were facing suspension from the House of Lords – the first since 1642 – after a report found them guilty of offering to amend legislation in exchange for payments. The Lords privileges committee found that Lord Truscott and Lord Taylor of Blackburn had "failed to act on their personal honour" after they offered their services to undercover reporters from the Sunday Times posing as lobbyists who wanted to amend government legislation.

• Michael Martin, the Commons Speaker, was on course to become a high-profile casualty, amid growing anger at his response. Nick Clegg, the Lib Dem leader, is expected next week to become the first party leader to call for Martin to resign after his frontbenchers said he no longer commands their confidence.

Senior ministers tonight voiced the fear that the crisis shows no signs of abating. "It gets worse every day," one cabinet minister said. The housing minister, ­Margaret Beckett, was heckled on the BBC's Question Time programme when the expenses issue was raised.

And a YouGov poll for the Sun tonight showed the effect of the crisis on the major parties. When asked about voting intentions in the European elections, the Conservatives were on 28% (down from 37% last week) and Labour down to 19%, the same as the UK Independence party. There was no sign of any surge in support for the BNP.

The prime minister attempted to regain the initiative when he announced that Morley had been suspended from the parliamentary Labour party and had been sacked as his climate change envoy. Speaking at the launch of Labour's European and local election campaign in ­Derbyshire, Brown said: "Where disciplinary action is necessary it will, and will immediately, be taken." He said that he hoped to restore trust in politics.

Amid cabinet worries that Brown has struggled to command the political landscape this week – as Cameron drew up tough procedures to deal with "wrong" expenses by Tories – the Labour leadership drew up its own plan of action.

Nick Brown, the chief whip, is to ask Labour's ruling national executive committee to rule next Tuesday on Morley and on Fabian Hamilton, the MP for Leeds North East, whose expenses were questioned in today's Telegraph.

There were further signs tonight of a backlash against MPs of all parties. A ­senior shadow minister, who has not been named by the Telegraph in its exposé of MPs' expenses, was yesterday asked by county councillors not to campaign for next month's local elections.

The shadow minister said: "The whole political class is in trouble. There are now no rules. We don't know where this is going to end. It has the ring of the 'clean hands' affair in Italy

Spanish economy shrinks rapidly

Spain's economy suffered its largest contraction in 50 years in the first three months of 2009, preliminary estimates have shown.

GDP fell 1.8% from the previous quarter and was down 2.9% year-on-year, the National Statistics Institute said. It will release final data next week.

Economists said the falls were the steepest seen since 1959.

Spain had enjoyed 14 years of consecutive growth before entering recession in the last quarter of 2008.

The near-collapse of its key construction industry has hit the economy hard.

The Spanish government has predicted GDP will shrink by 1.6% in 2009, while the European Commission has said it expects Spain to be the last European Union country to exit recession, probably in 2011.

"Although Q1 could mark the trough in the recession, any improvement in Q2 and beyond may be fairly modest," Ben May, European economist at Capital Economics said.

"Indeed, Spain's economic imbalances will ensure that it experiences one of the most prolonged downturns in the eurozone."