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Ermine for captains of industry ... but only regrets for Lamont

Labour's friendship with big business is renewed today with four captains of industry created Labour life peers by the Prime Minister in a working list of 47 new peerages.

David Sainsbury, the supermarket chief, George Simpson of GEC, Terry Thomas of the Co-op Bank, and Andrew Stone of Marks & Spencer, are all made life peers by Tony Blair and will take the Labour whip in the Lords.

It came as the Tory leader, William Hague, rewarded Sir Graham Kirkham, a Yorkshire businessman and a major donor to Tory party funds, with the post of treasurer of the Tory Party.

Meanwhile, John Major today exacts his revenge against Norman Lamont, by excluding his former chancellor from a separate resignation honours list.

Mr Blair also uses a working list of 31 Labour peers today to repay some favours to former MPs who made way for Blairite candidates at the last election, including peerages for Roy Hughes, who was replaced by Alan Howarth, now a minister, and Stuart Randall, who made way for Alan Johnson, a Blairite union leader.

Life peerages for 10 former MPs included Mike Watson, who lost a vicious battle with the now suspended Mohammad Sarwar for Glasgow Govan last year. The businessmen outnumber the union leaders four to three in Mr Blair's list of peers, and there are also showbiz peerages for Sir David Puttnam and Ruth Rendall, the crime writer.

Women on Mr Blair's list include Helena Kennedy QC, and Barbara Scott Young, chief executive of the Royal Society for the Preservation of Birds. Sir Robin Renwick, former Ambassador to South Africa, also becomes a Labour life peer.

The union leaders with life peerages are Tom Burlison, deputy general secretary of the general union, the GMB, and Labour Party treasury; Garfield Davies, general secretary of the Union of Shop Distributive and Allied Workers, and Clive Brooke, joint General Secretary of the Public Services Tax and Commerce Union.

Downing Street sources said the Labour working peers were to correct the imbalance of Tory peers in the Lords, and that they are expected to be active.

The honours system is traditionally used to pay favours, but Mr Major's list is tinged with spite.

The Independent has learned that Mr Lamont, who left the Commons after being defeated at Harrogate in the general election, let it be known that he would be prepared to accept a life peerage, but it was turned down flat by Mr Major.

The former Prime Minister has never forgiven Mr Lamont for the resignation speech in which his former chancellor delivered a searing attack on his leadership, for being "in office but not in power".

Others excluded from the list included Sir Marcus Fox, the former chairman of the 1922 Committee of Tory MPs, and Dame Angela Rumbold, a former Conservative Party vice-chairman and a Euro-sceptic.

Mr Major has rewarded loyalists with ten life peerages including Norman Blackwell, former head of the policy unit at Downing Street, and former Cabinet ministers who lost their seats, such as David Hunt, Ian Lang and Tony Newton.

Knighthoods go to Robert Atkins, a former minister and close friend; Peter Brown, his agent in Huntingdon; Alastair Goodlad, the former chief whip; and Brian Mawhinney, former party chairman. There are knighthoods for two ex-Cabinet ministers; Michael Forsyth, former Scottish secretary, and Malcolm Rifkind, former foreign secretary.

Michael Heseltine, whom Mr Major had hoped would take over the leadership after the election defeat, until he had a second heart attack, is made a companion of honour. There are minor honours sprinkled among his former party and Downing Street aides, including an OBE for Rob Rumble, his driver.

Mr Blair also announced 11 life peerages for the Liberal Democrats, including former MPs Emma Nicholson and Diana Maddock. Delia Smith, however, the television cookery presenter, has turned down the offer of a working peerage. Ms Smith, who has a new television series planned, said she would not have the time to devote to attending the House of Lords on government business.

Honours list, page 8