Peers suspended over lobbying sting

In a statement, the party said the pair "have been suspended from the Labour Party pending further investigation.

"The Labour Party expects the highest standards of its representatives and believes that they have a duty to be transparent and accountable at all times."

Lord Laird earlier resigned the Ulster Unionist party whip after being targeted by the same investigation.

All three deny breaching the rules and have referred themselves to the House of Lords Commissioner for Standards.

The three peers are alleged to have told reporters posing as lobbyists representing a fake solar energy firm they could help push its agenda - in apparent breach of a ban on paid advocacy.

It comes just two days after MP Patrick Mercer quit the Tory whip, referred himself to the Commons sleaze watchdog and announced he would quit the Commons in 2015 over similar allegations.

It is claimed he tabled parliamentary questions and a motion, offered a security pass and set up a parliamentary group for a lobbying firm paying him £2,000 a month to push for the end of Fiji's suspension from the Commonwealth.

They were in fact undercover reporters from the BBC's Panorama programme and the Daily Telegraph.

Lord Laird was also targeted by that investigation and is alleged to have offered to get parliamentary questions asked in return for ash.

The latest controversy - described as a "new low for British politics" by a Labour shadow cabinet minister - has reignited calls for the Government to act on a pledge to introduce a statutory register of lobbyists and "recall" powers against wrongdoing MPs.

In a statement, Lord Cunningham said the report of his meeting with the bogus lobbyists was "misleading" and that he was taking legal advice.

He is alleged to have offered to ask parliamentary questions on behalf of the firm and take concerns directly to the Prime Minister.

Recordings appear to show him asking for £12,000 a month rather than the offered £10,000 and telling the bogus lobbyists that he offered "value for money" because of his access to senior figures.

Lord Cunningham, who was an MP for 22 years and served in Tony Blair's cabinet, insisted he had been testing his suspicions that he was being targeted by a scam.

"The Sunday Times story contains a highly sensationalist and misleading account of one meeting with journalists posing as business people," he said in a statement.

"I quickly became suspicious of them and the money they were offering and sought to test my suspicions during the meeting.

"What the article does not make at all clear is that I told the undercover journalists that I always stick to the rules and declare any interests.

"The article also fails to properly acknowledge the important fact that I informed them the next day that I wanted nothing more to do with them.

"That same day I notified Baroness Royall, the Labour Leader in the House of Lords and Lord Bassam, the Chief Whip, of my suspicions and what had occurred. I also reported to the Clerk of the Parliaments and the Registrar of Members Interests.

"In addition I have referred the matter to the Lords Commissioner for Standards.

"I will fully cooperate with any inquiry the Labour Party may hold.

"Unfortunately this is something that I will need to discuss with my lawyers which I will be doing first thing next week and I have no further comment to make at this time."

The Sunday Times said the peers had made it clear to the undercover reporters that they would have to declare any money they were paid.

But it said there were discussions of ways to get around declaration of interest rules by asking colleagues to table questions and host events.

Lord Laird said he had "not broken any rules".

"I did not agree to act as a paid advocate in any proceedings of the House nor did I accept payment or other incentive or reward in return for providing parliamentary advice or services," he said in a statement.

"I have not broken any rules. However, I have referred the situation to the appropriate authorities and I will be making no further statement until I have received their ruling."

Ulster Unionist leader Mike Nesbitt said he had spoken to the peer after reviewing footage and media reporting of the two stings, leading to him relinquishing the party whip pending the watchdog review.

"The Ulster Unionist Party expects and demands high standards of our elected representatives," he said in a statement.

"This includes an awareness that rules must be followed in spirit as well as in letter. No member, no matter what their status or length of service, will be given special privilege against a breach of these standards."

Lord Mackenzie, the former president of the Police Superintendents Association, also denied any wrongdoing.

The Sunday Times reported that he explained he had "devised a ruse" that allowed him to host events for paying clients, by asking colleagues to hold them for him.

The paper also alleged that he was happy to ask questions and approach ministers in the Lords to "bend their ear".

Lord Mackenzie told the Murnaghan programme on Sky News that he was "convinced I will be vindicated" by an investigation.

He conceded that "morally it may well look as though it's not right" but defended his comments about switching event hosts.

"It's a very complex area, but I made sure I knew the rules before I went into any of this and it's an important thing to do obviously because what we don't want is parliamentarians breaking the rules.

"But there may well be case for changing them."

Commons and Lords codes of conduct prohibit "paid advocacy" by parliamentarians.

Cabinet Office minister Francis Maude expressed confidence that lobbying reform would proceed before the election as Labour demanded urgent cross-party talks on the stalled introduction of a register.

David Cameron warned in 2010 that lobbying was the "next big scandal waiting to happen" and changes were promised in the coalition agreement.

But there has been no sign of legislation, with Deputy Prime Minister Nick Clegg blaming his Tory coalition partners for the delay.

"We are going to do this. We need finally to resolve the issues about scope and so long and then we'll get on with it," he told the BBC's Sunday Politics, adding that he would be "astonished" if both that and recall powers were not in place by 2015.

Mr Maude suggested the only effect a register would have had in the most recent cases however was to make it "easier for those people who were duped by a bogus lobbying company to discover that no such company existed".

Shadow defence secretary Jim Murphy said the latest claims were "a new low for British politics" and voters would rightly be "sickened".

"The public, who have looked on with a sense of astonishment and with a sense that there is one rule for those who govern and another set of rules for those who are governed, will just be utterly sickened by it, and they are right to be sickened." he told the BBC's Sunday Politics.

A recall power was needed for MPs guilty of "serious financial misbehaviour that brings politics, parliament and the process into disrepute", he said.

And parties had "only scratched the surface" of what needed to be done to clean up the Lords, including expelling those who broke the law.

"I think the public probably thought things couldn't get any worse. This is a new low for British politics."

A Labour Party spokesman said: "Where there is genuine evidence of wrong doing, including non-compliance with the Code of Conduct, the Labour Party will consider appropriate disciplinary action as and when necessary."

Former chairman of the Parliamentary Labour Party Lord Soley said he was convinced the stings were related to efforts to impose tougher regulation on the press in the wake of the phone-hacking scandal.

He told BBC Radio 4's The World This Weekend: "I do say, I have said it to both MPs and peers at times, be very alert at the moment because remember there is a call for proper regulation of the press as well.

"That doesn't justify anything that may or may not have happened, but recognise there is a Leveson agenda here and what we need here is a proper regulatory body for the press as well."

He also suggested that London-based peers should receive higher allowances than at present.

Former chairman of the Committee on Standards in Public Life, Sir Alistair Graham said the latest cases illustrated the "vulnerability of our democratic system to people who want to use money to gain access to influence our parliamentary processes".

The upper chamber was "ripe for reform" he told Sunday Politics.

"Why have we got such a second chamber of such a size which is clearly so vulnerable to the sort of lobbying influence that we've been hearing about?

"People have to call for reform and people have to follow it through. Even if Nick Clegg's proposals were not the most ideal, they would have been very much better than what we've got at the moment."