Poor fellow. He suffers from files. How Peter Hain, who was forced to resign as Work and Pensions Secretary yesterday, must wish he had the same obsession with detail that enabled his political hero, the late Aneurin Bevan, to put down a rival so crushingly. Mr Hain blamed poor administration for his failure to declare clearly and promptly £103,000 in donations to his Labour Party deputy leadership campaign. But it appears to be a more complicated matter than mere assiduous record-keeping. Had it been so straightforward, the Electoral Commission, which had been investigating the donations, probably would not have decided yesterday to refer the matter to the police.

Poor fellow. He suffers from files. How Peter Hain, who was forced to resign as Work and Pensions Secretary yesterday, must wish he had the same obsession with detail that enabled his political hero, the late Aneurin Bevan, to put down a rival so crushingly. Mr Hain blamed poor administration for his failure to declare clearly and promptly £103,000 in donations to his Labour Party deputy leadership campaign. But it appears to be a more complicated matter than mere assiduous record-keeping. Had it been so straightforward, the Electoral Commission, which had been investigating the donations, probably would not have decided yesterday to refer the matter to the police.

This was one of two courses of action open to the commission. The other was to give Mr Hain a mild rebuke. In calling in the police, the commission has sent a clear signal that it regards something serious as having gone wrong. Mr Hain had no option but to quit office, the first forced resignation of Gordon Brown's premiership. It has been written before, in different circumstances, but the timing could not have been worse for the Prime Minister. Any possible political capital to be made from changes, announced by Alistair Darling, the Chancellor yesterday, to the heavily-criticised planned tax regime affecting small businesses or from last night's vote on MPs' pay (they accepted a prudent rise) was lost before it could be banked.

The spotlight was firmly back on cash for favours. For a Prime Minister who came into office on a promise of breaking from the past of a cash-for-peerages investigation that dogged Tony Blair in the final months of his premiership, and doing politics in a squeaky-clean, honest and transparent way, this is very bad news. There are now two police investigations that affect his government: one into Mr Hain, the other into proxy donations to Labour, including Harriet Harman's deputy leadership campaign (successful and a fraction of the cost).

Of course, there is no evidence that Mr Hain has broken the law. He maintains he has resigned to clear his name. But he has a lot of explaining to do. Why did his campaign run up such big debts that donations were sought and obtained from wealthy individuals to pay them off after the contest was over? Why was nearly £50,000 channelled through an obscure think tank?

Ths shadow is long and stretches all the way to Scotland, where Wendy Alexander awaits the outcome of a separate commission investigation into the illegal donation to her Labour leadership campaign. She is confident she will be cleared of any intentional wrongdoing, but can she be so certain of a happy outcome after the commission's decision yesterday? The sum involved in her case is tiny by comparison but, perhaps crucially, the law was broken (or a donation was impermissibly accepted, to use her preferred phrase) when her campaign received £950 from a Jersey businessman. The commission has taken much longer to deliberate on this donation but, should it decide to refer the matter to the police, it is very hard to imagine how she could remain as Scottish party leader, given Mr Hain's resignation. Difficult as it might seem, things could only get worse for Labour on both sides of the border.