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Lord Laing of Dunphail: Businessman and pioneer of corporate social responsibility who became Tory Party treasurer

Lord Laing of Dunphail built up his grandfather's already thriving biscuit business into a hugely profitable enterprise while, perhaps surprisingly, combining friendship with Margaret Thatcher with an affection for the welfare of workers.

As Hector Laing he was a leading business figure in the 1970s and 1980s, important both as an employer and, in political terms, as a substantial contributor to the Tory party.

Very much a business expansionist, he was associated at various times with many household names such as Wimpy, Pizzaland, KP Nuts, Callard & Bowser and Terry's of York. His drive and force of character was evident. "Hector is a charismatic leader," a former colleague said of him. "You can't be in the room with him for more than 10 minutes without realising you are dealing with an elemental force. He is the sort of man that most people would die for 90 per cent of the time - and the other 10 per cent of the time they could kill him."

Laing's biscuit empire began to take shape when his grandfather, a young baker from Morayshire called Alexander Grant, turned up at McVitie's bakery in Edinburgh and talked his way into a job. That was in 1887; by 1910 Grant was managing director of McVitie and Price, producing one type of biscuit for the Scots and Rich Tea for the English, who preferred a smoother crunch. He has been described as the inventor of the digestive biscuit, an honour which has secured him a small but important niche in social history.

Grant knew the value both of diversifying in different markets and of social and political contacts. As the business prospered he made many donations, including the gift of a car to the Labour leader Ramsay MacDonald. A gift of biscuits he made to an Arctic expedition received warm thanks and a commercially useful testimonial. "Every brand which you supplied had its devotees," the expedition enthused. "You can be certain that not one crumb was left uneaten. Any future expedition will find many of your tins on these icegirt shores – all empty, mute tokens of our appreciation of your biscuits."

When Grant's daughter married Hector's father, Hector Laing senior, Grant famously made him work in his bakery on the morning of the wedding. The family was wealthy by the time of Hector Laing's birth. He was educated first at Loretto, a Scottish public school, where he was less than a model pupil: one school report described him as "restive under discipline."

He was, however, well-behaved enough to serve as a page at the coronation of King George VI in 1937. Legend has it that when he was told he had passed his final exams he exclaimed, "Jesus!" leading his headmaster to agree that Jesus College, Cambridge was an excellent choice.

There he studied agriculture for a year before the Second World War intervened and he was commissioned with the Armoured 3rd battalion Scots Guards, equipped with tanks. His unit was unusual in including several personnel who were to hold high office, including Robert Runcie, later Archbishop of Canterbury, and the Conservative politician William Whitelaw. Other officers went on to hold prominent legal and business positions.

Laing, who was mentioned in despatches and awarded the American Bronze Star, kept in touch with many of the soldiers after the war, sometimes finding them employment. On Laing's death Ken Gow, son of Scots Guardsman Jimmy Gow, recalled: "Hector bought him and other surviving crew members shares in McVitie and Price, which enabled him to wine and dine them in the directors' dining room at the company's AGM. He flew his own plane from his private airfield at Dunphail House, and, on more than one occasion, flew my father down to Ingliston to attend the Scots Guards annual reunion in Edinburgh.

"On one famous occasion my dad attended a dinner in Hector's London flat, his fellow guests including the Archbishop of Canterbury and Home Secretary Willie Whitelaw. When Maggie brought in the poll tax he patently thought it unfair on those on a lesser income, and he paid it for his surviving crew members."

Arriving in the biscuit business in 1947, Laing emphasised expansion and automation. The system in one of his factories, said to be the most efficient biscuit operation in the world, was once described in The Independent with something close to awe:

"Dough is passed along a sweetly-scented labyrinth of belts and pipes or is joggled in small particles, through giant food mixers, between rollers, under moulds and stampers, and eventually into 300-foot long gas ovens, through which the digestives pass at a rate of 4,600 a minute.

"In the middle of all the machinery stands the baker: a white-overalled man in a glass cubicle, monitoring a bank of glowing digital displays on the computer that controls every stage in the procedure. No variation is permitted: there is even a specification for the width of the dark brown ring on the underside of every digestive, and it is checked, using electronic measuring equipment, every 15 minutes."

Laing spoke often to a wide variety of his staff, and was upset when he concluded that redundancies were inevitable. He was particularly embarrassed when he had to close a factory after helping to found the Per Cent Club, which encouraged businesses to assign part of their profits for good causes.

His paternalism extended to practices such as security of employment and involvement of trade unions as well as personal touches such as bringing doctors, dentists and hairdressers into his factories. He started a radio station to cheer the lives of those working on monotonous production lines.

He disapproved of what he regarded as ruthless business practices such as hostile takeovers and asset-stripping. His own acquisitions tended to be conducted affably, his company swallowing others as smoothly as his customers consumed their Rich Tea biscuits.

He believed that business fortunes were tied to those of local communities, explaining: "The business sector has a responsibility to give to society more than we have done in the past, by becoming more actively involved in projects designed to benefit the communities from which we draw our employees."

He persuaded the Prince of Wales to become president of the Per Cent club. Twenty-five years on Prince Charles recalled: "Hector Laing was really the man who began all this business of corporate social responsibility. It seems a long, long time ago, at a time of course when not very many people wanted to know."

The royal family were among the many institutions who benefited from Laing when he donated specially designed china to the Queen for the Golden Jubilee. While he had various reservations about Margaret Thatcher's political approach the two struck up a warm friendship when they met before she became leader of the Conservative party. He called her a "dear, dear girl."

She often holidayed at Dunphail, the Scottish estate gifted to Laing by his grandfather. He became Tory Party treasurer, and became too the largest corporate donor to Conservative party funds.

Hector Laing, businessman and philanthropist: born Edinburgh 12 May 1923; Director, McVitie & Price 1947-, Chairman 1963-; Chairman, Food and Drink Industries Council, 1977–79; Chairman, Business in the Community 1987–91; Treasurer, Conservative Party 1988–93; married 1950 Marian Clare (three sons); Kt 1978; cr 1991 Life Peer, of Dunphail in the District of Moray; died Buckinghamshire 21 June 2010.